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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

Where will the VAT go?

SFP