Preparing P&L and SFP

Question 1

What is the exam technique/process?

Answer 1

1. Set up cost matrix for P&L expense categories
2. Work through notes in order and calculate numbers for P&L and BS
3. Input final numbers into appropriate lines as you go
4. When time is running out, input other unadjusted items
5. Calc P&L for year and retained earnings
6. TB complete by the end

Question 2

What are the headings of the cost matrix?

Answer 2

Cost of sales
Distribution
Admin
Finance
Tax

Question 3

What is the assumption made about inventory?

Answer 3

Cost<NRV

Question 4

What needs to be done to intangible assets?

Answer 4

Needs to be amortised (depreciated)

Question 5

Does depreciation need to be included for PPE?

Answer 5

Yes

Question 6

How is PPE calculated?

Answer 6

Pool method

3 pools - cost, depreciation, CA

Pool order - b/f, +, -, c/f

Question 7

How are disposals handled?

Answer 7

Debit - cash (proceeds)
Credit - PPE

Difference goes into P&L

Question 8

How is tax handled?

Answer 8

Previous year is an estimate that is paid current year

Credit/Debit difference to P&L

Question 9

What is the double entry for the current year tax estimate?

Answer 9

Debit - P&L
Credit - Payable

Question 10

Does land depreciate?

Answer 10

No

Question 11

How is an error where a transaction is posted to a trade supplier’s account corrected?

Answer 11

Add back to trade payables

Question 12

How is a provision handled?

Answer 12

Added to admin expenses

Question 13

Where is a P/L on disposal placed?

Answer 13

Cos

Question 14

What is the formula to factor out a mark up?

Answer 14

100/100+ % mark up x value = inventory

Question 15

How does an IDE affect receivables?

Answer 15

Reduces receivables, i.e. taken out

Question 16

How does an impairment affect COS?

Answer 16

Increases COS, added to it

Question 17

Where are IDEs added?

Answer 17

To admin expenses