Flashcards in Y-E Adjustments Deck (15)
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1
What are the 3 pair of account categories; and how do you increase them?
Income - Cr
Expenditure - Dr
Assets - Dr
Liabilities - Cr
Capital - Cr
Drawings - Dr
2
Which account go on the Statement of Profit and Loss (SPL)?
Income
Expenditure
The other 4 go on Statement of Financial Position (SFP)
3
How is VAT treated?
It always goes on the same side as the NET
4
Why are adjustments made at the year-end?
To:
Match the period of income with the expenses incurred;
Don't overstate the profits due to events that occurred outside the accounting period;
Allow the reader to compare the figures with those of other periods.
5
What is Inventory?
Stock that hasn't yet been sold and at the same time assets to the business.
6
How will depreciation be shown in the financial statements?
The annual depreciation will be shown as an expense in the SPL
The accumulated depreciation will be shown as a reduction in non-current asset value in the SFP
7
How will irrecoverable debts affect the financial statements?
They will be shown as an expense in the SPL; and
They will reduce the value of trade debtors (Receivables) in the SFP.
8
How will Debts Recovered affect the financial statements?
It will show as income (calculated after gross profit) in the SPL; and
It will increase the bank or cash in the SFP.
9
What effect will Allowances for Doubtful Debts have on the financial statements?
It will be an expense whenever it is created and whenever irma is increased (SPL);
Shown as income in the SPL whenever it is reduced; and
Reduces trades receivable in the SFP
10
How will Disposal Of Non-Current Assets affect the financial statements.
If it is a loss then it will show as an expense in the SPL;
If it is a profit then it will show as Income in the SPL; and
It will reduce the non-current asset in the SFP.
11
How are Goods For Own use recorded in the financial statements?
They will increase revenue in the SPL; and
Increase Drawings in the SFP.
12
By which other name are Interest Charges known by?
Finance Costs
13
Which accounts will be missing if there is a Cost Of Sales Account?
Opening Inventory;
Purchases; and
Purchases Returns
14
If there is a Cost Of Sales account, what happens to the closing Inventory account?
It still appears but it only affects the SFP as a debit entry.
15
