AQA ACCOUNTING UNIT ONE

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  • Created by: katiexmc
  • Created on: 02-05-14 10:21
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  • ACCN1
    • definitions
      • assets
        • non current
          • owned
          • not for resale
          • Untitled
          • kept for more than one year
          • e.g. vehicles
        • current
          • owned
          • for resale
          • e.g. inventory
          • kept for less than one year
          • dont depreciate
      • liabilities
        • current
          • owed
          • payed within a year
          • e.g. loan
          • may have interest
        • long term
          • owed
          • paid back in more than one year
          • e.g. mortgage
          • has interest
    • income statement
      • 1 sales revenue
      • 2 less returns in
      • 3 total
      • 4 cost of goods sold
      • 5 opening inventory
      • 6 purchases
      • 7 less returns out
      • 8 add carriage in
      • 9 less closing inventory
      • 10 total
      • 11 total (3)- total (10) = gross profit
      • 12 less expenses
      • 13 total
      • gross profit - total (13) = net profit
      • remember
        • depreciation expense is for the year in question ONLY. not the total depreciation
          • straight line = original cost-residual value/ no.of years for depreciation
        • accruals are added to the expense in question
        • prepayments are subtracted from the expense in question
      • add anything recieved
    • balance sheet
      • 1 non current assets
        • original cost | depreciation so far | difference of above (net book value)
      • 2 current assets
        • accruals of income
        • prepayment of expense
      • 3 current liabilities
        • accrual of expense
        • prepayment of income
      • 4 current assets - current liabilities = working capital
      • 5 less long term liabilities
      • 6 working capital - long term liabilities =net assets
      • 7 financed by:
        • 1 capital
        • 2 capital introduced
        • 3 retained profit (net profit from income statement)
        • 4 less drawings
        • total (should equal no.6 (net assets))
    • reasons for keeping and benefits of accounting records
      • stakeholders and their interests
        • external
          • competitors
            • are they making more or less profit and why?
          • bankers
            • lenders
              • will they get repaid on time? and in full
          • customers
            • quality products at reasonable prices
          • community
            • are they affecting the environment and are they providing jobs?
          • suppliers
            • will they continue buying their goods?
        • internal
          • owner
            • profitability
          • employees
            • pay rise and secure job
          • managers
            • salary
            • promotions?
      • reasons for keeping accounting records
        • to help the process of making final accounts (income statement and balance sheet)
        • to provide enough information for HMRC so that they can take what is owed to them in taxes
        • to provide information for banks and lenders, increasing the chances of securing a loan
        • to ensure that enough profit is being made to pay trade payables
        • to look at past data and predict future data to help with choices
    • subsidiary books, source documents and ledgers
      • subsidiary books
        • general journal
        • purchase day book
        • purchase returns day book
        • sales day book
        • sales returns day book
          • cash book
      • source documents
        • cheque counterfoil
          • business expense paid via cheque
        • bank statement
          • paid a business expense with direct debit or standing order
            • direct debit is a variable amount leaving bank every month
            • standing order is a fixed amount leaving bank every month
        • credit note
          • returns
        • paying in slip
          • cash has been put into bank
        • till roll
          • evidence of cash sales
        • reciepts
          • paying a business expense with cash
        • invoice
          • request for a payment
        • evidence a transaction has taken place
    • trial balance
      • debit and credit should be equal
        • if they are not equal a suspense account is made
          • the difference between the debit and credit sides of the trial balance is placed on the lower of the two sides . names 'suspense account'
            • then a suspense account is created with the balance on the same side as it was entered in the trial balance
              • an entry doesnt need to be made on the opposite side because then there would be a balance
                • errors are in additional information
                  • draw both accounts that are used in the additional information
                    • correct the transactions and circle the adjustments
                      • if there is a circle on both the debit and credit side then the add.info doesnt go into the suspense account
                      • if there is a circle on just one side then the transaction goes onto the opposite side in the suspense account
                      • if there are two circles on one side then the amounts are added together and put onto the opposite side of the suspense account
      • record of all balances of all accounts
      • purpose is to check the accuracy of double entry bookkeeping
        • including arithmetical accuracy
      • the final accounts are created using the trial balance
      • errors
        • not shown
          • commission
            • wrong person's account
          • omission
            • a transaction is completely missed
          • reversal
            • wrong side of account
          • original
            • wrong amount entered on both sides
          • compensating
            • two errors cancel each other out
          • principle
            • the wrong account
          • TRIAL BALANCE WILL STILL BALANCE
        • shown
          • partial omission
            • only one side of the transaction is missed
          • calculation error
            • in one account
        • TRIAL BALANCE QUESITON
          • DEFINTION
            • 2 ERRORS NOT REVEALED
              • Untitled
    • control accounts
      • sales ledger control account
        • bal B/D on debit side
        • any thing adding to what we are owed goes on debit side
        • anything taking from what we are owed is put onto the credit side
      • purchase ledger control account
        • bal B/D on credit side
        • anything adding to what we owe is put onto the credit side
        • anything taking from what we owe is put onto the debit side

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