Trial Balance

Question 1

What is a trial balance?

Answer 1

A summary of the debit and credit eateries for each ledger account

Question 2

Why do we need year end adjustments?

Answer 2

• so financial statements give a fair picture for the periods
• if not we might need to
  Amend figures
  Insert items not get included

Question 3

What is accruals accounting?

Answer 3

Income is recognised when it is earned.
Expenses are recognised when the entity recieves the benefit - in cost of sales, the entity receives the benefit from the inventory when it sells .

Question 4

What are debits and credits?

Answer 4

Debits: something that u spend on
- expenses
- assets

Credits: what you earn
- income/rev
- equity
- liabilities

Question 5

When is the cost of sales recongiseD?

Answer 5

When the entity sells the inventory

Question 6

How do you calculate the cost of sales?

Answer 6

Opening inventory + purchases - closing inventory

Question 7

What is FIFO?

Answer 7

First in, first out

Always use the oldest items first

Question 8

What is AVCO?

Answer 8

Average cost
Recalculate average

Question 9

What do you credit/ debit in accruals?

Answer 9

Dr expense
Cr accruals

Question 10

How do you calculate the expense in accruals?

Answer 10

Expense - opening accruals + closing accruals

Question 11

How do you calculate the pre payment amount?

Answer 11

Invoice amount x no. Years after years end/ no.months covered

Question 12

What is the ledger for ppe?

Answer 12

Dr property, plant and equipment at cost
Cr trade payables

Question 13

How do you calculate the depreciation expense?

Answer 13

Depreciable amount/ useful economic life

Question 14

How do you calculate the depreciable amount?

Answer 14

Cost - residual value

Question 15

What do you need for ppe ledgers?

Answer 15

Accumulated depreciation and depreciation expense

Question 16

How is ppe reflected in financial statements?

Answer 16

Statement of financial position - net book value

= ppe at cost / accumulated depreciation

Question 17

What are the two depreciation methods?

Answer 17

Straight line

Reducing balance - % x netbook value

Question 18

How do you calculate the profit or loss on disposals?

Answer 18

Sales proceeds - net book value

Question 19

What interest is put in the profit or loss statement?

Answer 19

Interest expense = interest rate x outstanding loan balance

Question 20

What is the interest paid in ledger?

Answer 20

Dr interest expense
Cr cash

Question 21

What interest is in the trial balance?

Answer 21

The interest paid during the year

Question 22

What is the accrual ledger for interest?

Answer 22

Dr interest expense
Cr interest payable

Question 23

What is PCTCT?

Answer 23

Profits chargeable to corporation tax

Accounting profit/ tax adjustments

Question 24

What is the ledger if a business gets a tax refund?

Answer 24

Dr tax receivables
Cr tax income

Question 25

How do you calculate dividends?

Answer 25

Pence per share x no. Of shares in issue
Or
% x nominal value x no. Shares in issue

Question 26

What is the timing if dividends?

Answer 26

Usually approved after year end so not recognised

Question 27

Where are dividends found?

Answer 27

In retained earnings

Brought forward
+ profit for the year
Less
Interim dividend
Final closing dividend
= closing balance

Question 28

What is the ledger if the dividend was paid before the year end?

Answer 28

Dr retained earnings
Cr cash

Question 29

What is the ledger is dividends are not paid before the year end?

Answer 29

Dr retained earnings
Cr dividend payable

Question 30

How do you calculate interest payable?

Answer 30

Interest expenses from SoPL - interest paid in trial balance

Question 31

On purchase, what is the inventory ledger?

Answer 31

Dr inventory
Cr trade payables

Question 32

When inventory is sold, what is the ledger?

Answer 32

Dr cost of sales
Cr inventory

Question 33

When a sale is made, what is the ledger?

Answer 33

Dr trade receivables
Cr revenue
= selling price

Dr cost of sales
Cr inventory
= cost og goods sold

Question 34

How do you calculate the net book Value?

Answer 34

PPE at cost - acc depreciation