Summary Business Account Tutorial Notes

BUSINESS ACCOUNTS


PREPARATORY TASK
You are a solicitor. Just over a year ago you set up in practice as a sole practitioner.
You are now reviewing your business’ performance during its first year. You have not
yet engaged an accountant, but the friend who has been helping you with the day to
day bookkeeping has prepared the following trial balance for you:




From the trial balance above, categorise the accounts (except drawings) under the
headings:


INCOME
Profit costs £190,000
Interest received £1,000


EXPENSES
General expenses £20,000
Rent £55,000
Loan interest £2,000




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, BUSINESS ACCOUNTS


ASSETS (what do we own)
Cars – fixed asset £35,000
Office equipment – fixed asset £60,000
Debtors – who owes us money £20,000
Cash - client £2,000
Client bank account £50,000 (balance sheet – list it in the
assets but its client’s money)


LIABILITIES - (who we owe money to)
Capital – classed as liability £15,000
Creditors £10,000
Amount due to clients £50,000
Bank loan £8,000


CAPITAL
Opening balance £15,000
Net profit £114,000
Drawings (£30,000)
£99,000


PROFIT AND LOSS ACCOUNT
Profit costs £190,000
Interest received £1,000
£191,000
General expenses £20,000
Rent £55,000
Loan interest £2,000
£77,000
NET PROFIT £114,000




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