Ratios:
Ø Performance: Ø Investor:
Question 1 (40%) > Income statement and balance sheet from Ø Equity= capital - drawings + p/l Ø Net Book Value = Cost - Accumulated depreciation ○ Gross profit margin ○ Dividend per share
+ made a big fuss about depreciation Ø Equity: Ø Depreciation at year end: Ø Company accounts Equity of a limited company:
a trial balance with period end adjustments ○ Operating profit margin ○ Earnings per share
○ Opening capital ○ dr depreciation expense Ø Ordinary share capital (from shareholders)
○ Equity: ○ Return on equity ○ Price earnings ratio
Question 2 (30%) - 2 financial accounting questions pick one ○ Less drawings ○ Cr accumulated dep (contra asset) Ø Reserves
§ Ordinary share capital ○ Return on capital employed(ROCE) Ø Lending ratios:
Ø Financial ratios - external stakeholders ○ Add profit Ø Balance sheet: non current assets > cost / accc dep / nbv § Share premium ○ Share premium Ø Liquidity: ○ Gearing ratio
Ø Brief commentary on the ratios § Retained earnings aka retained profits ○ Retained earnings ○ Current ratio
Equity for limited companies Ø Disposal of NCA 4 inputs ○ Interest cover
Ø Account for deprecation Ø Provision for doubtful debts(contra asset) - □ Dividends ( deducted from retained ○ Quick (acid test) ratio
Ø General knowledge Equity = share capital + reserves (retained profits - dividends ) ○ Dr cash this entry depends on increasing / earnings) Ø Efficiency:
○ Cr NCA decreasing provisions ○ Liability Reserve accounts are equity ○ Non current assets turnover ratio → Product costing
Question 3 (choice 1 of 2 ) (30%) Ø Period end adjustments ○ DR accdep ○ Dr bad debt § Debentures accounts and follow cr ○ Inventory turn over ratio → Direct costs
Ø Management accounting - internal use • Cost of goods Sold (COGS) ○ Dr/cr income if profit or loss ○ Cr provision for doubtful ○ Expense Capital reserves e.g share ○ Avg inventory → Indirect costs (overheads)
Ø Break even point / CVP analysis ○ opening § interest on debentures premium ○ Inventory turnover in days
Ø Relevant costs and decision making ○ Add purchases Ø Bad debts Ø Accruals § Taxation Revenue reserves e.e retained ○ Trade receivables in days
Ø General knowledge ○ Less closing ○ dr bad debt ○ dr relevant expense account
earnings ○ Trade payables in days
• Income Statement ○ Cr trade receivables ○ Cr accruals
Revision 1 Ø When a business
• Balance sheet Ø Prepayments
Monday 6 January 2025 08:08
Expenditure buys goods for ○ dr prepayment (current asset)
Ø Revenue = Expenses resale (or ○ Cr relevant expense account
Ø Capital = Assets materials) , this is • Depreciation / acc dep
○ Initial product and set up recorded as • Disposing of a NCA
○ Improvements purchases which is • Provision of doubtful debt
• Bad debt
○ an expense. Ø Trade discount = given at the
• Accruals / accrued expense
time of sale e.g 50% off • Prepayments
Ø Resources bought reflected in the lower price
Assets = Liabilities + Equity with the intention to
be used to generate Ø Cash Discount = reduction in
Equity: sales for many years amount a given credit
Ø +capital e.g. car treated as an customer has to pay if paid
Ø -Drawings asset within a certain time frame
Ø +/- PL (income / expenses) ○ Recorded at the time of
payment
Ø Balancing the accounts is
summing dr/cr entries in the
logbook -> trial balance
Ø
The provision for
depreciation is the
accumulated amount of
depreciation expense that
has been charged to the
income statement since the
asset was acquired. It is a
contra-asset account,
meaning that it is
subtracted from the asset's
cost to arrive at its net
book value.
Ø Performance: Ø Investor:
Question 1 (40%) > Income statement and balance sheet from Ø Equity= capital - drawings + p/l Ø Net Book Value = Cost - Accumulated depreciation ○ Gross profit margin ○ Dividend per share
+ made a big fuss about depreciation Ø Equity: Ø Depreciation at year end: Ø Company accounts Equity of a limited company:
a trial balance with period end adjustments ○ Operating profit margin ○ Earnings per share
○ Opening capital ○ dr depreciation expense Ø Ordinary share capital (from shareholders)
○ Equity: ○ Return on equity ○ Price earnings ratio
Question 2 (30%) - 2 financial accounting questions pick one ○ Less drawings ○ Cr accumulated dep (contra asset) Ø Reserves
§ Ordinary share capital ○ Return on capital employed(ROCE) Ø Lending ratios:
Ø Financial ratios - external stakeholders ○ Add profit Ø Balance sheet: non current assets > cost / accc dep / nbv § Share premium ○ Share premium Ø Liquidity: ○ Gearing ratio
Ø Brief commentary on the ratios § Retained earnings aka retained profits ○ Retained earnings ○ Current ratio
Equity for limited companies Ø Disposal of NCA 4 inputs ○ Interest cover
Ø Account for deprecation Ø Provision for doubtful debts(contra asset) - □ Dividends ( deducted from retained ○ Quick (acid test) ratio
Ø General knowledge Equity = share capital + reserves (retained profits - dividends ) ○ Dr cash this entry depends on increasing / earnings) Ø Efficiency:
○ Cr NCA decreasing provisions ○ Liability Reserve accounts are equity ○ Non current assets turnover ratio → Product costing
Question 3 (choice 1 of 2 ) (30%) Ø Period end adjustments ○ DR accdep ○ Dr bad debt § Debentures accounts and follow cr ○ Inventory turn over ratio → Direct costs
Ø Management accounting - internal use • Cost of goods Sold (COGS) ○ Dr/cr income if profit or loss ○ Cr provision for doubtful ○ Expense Capital reserves e.g share ○ Avg inventory → Indirect costs (overheads)
Ø Break even point / CVP analysis ○ opening § interest on debentures premium ○ Inventory turnover in days
Ø Relevant costs and decision making ○ Add purchases Ø Bad debts Ø Accruals § Taxation Revenue reserves e.e retained ○ Trade receivables in days
Ø General knowledge ○ Less closing ○ dr bad debt ○ dr relevant expense account
earnings ○ Trade payables in days
• Income Statement ○ Cr trade receivables ○ Cr accruals
Revision 1 Ø When a business
• Balance sheet Ø Prepayments
Monday 6 January 2025 08:08
Expenditure buys goods for ○ dr prepayment (current asset)
Ø Revenue = Expenses resale (or ○ Cr relevant expense account
Ø Capital = Assets materials) , this is • Depreciation / acc dep
○ Initial product and set up recorded as • Disposing of a NCA
○ Improvements purchases which is • Provision of doubtful debt
• Bad debt
○ an expense. Ø Trade discount = given at the
• Accruals / accrued expense
time of sale e.g 50% off • Prepayments
Ø Resources bought reflected in the lower price
Assets = Liabilities + Equity with the intention to
be used to generate Ø Cash Discount = reduction in
Equity: sales for many years amount a given credit
Ø +capital e.g. car treated as an customer has to pay if paid
Ø -Drawings asset within a certain time frame
Ø +/- PL (income / expenses) ○ Recorded at the time of
payment
Ø Balancing the accounts is
summing dr/cr entries in the
logbook -> trial balance
Ø
The provision for
depreciation is the
accumulated amount of
depreciation expense that
has been charged to the
income statement since the
asset was acquired. It is a
contra-asset account,
meaning that it is
subtracted from the asset's
cost to arrive at its net
book value.
