F011 - Principles of Accounting

• Process two-column cash book, combining cash and band transactions into one account
  - Understand hour to deal with contra entires and bank overdraft
  - Balance off the cash book to show cash and bank balances
• Understand difference between cash and trade discounts (cash discounts are for prompt payment not neccisarily cash payment)
• Understand ledger accounts for discounts allowed and discounts recieved
• Process transactions into three column cash book which includes memo columns for discounts allowed and recieved
• Process accounts for discounts allowed and discounts recieved

• Define capital expenditure and revenue expenditure
• Explain the treatment of revenue expenditure in the Profit and Loss Account
• Explain the treatment of capital expenditure in the Balance sheet
• Discuss the effects on the final accounts of incorrect treatement of capital and revenue expenditure
  - What happens to the delivery, installation, maintenance and legal fees
• Apply and explain the concepts of going concern, accruals and materiality with respect to capital and revenue expenditure.

• Define depreciation and explain why it is provided for in the final accounts
• Understand the terms cost, useful like, and residual value and the causes of depreciation
• Explain and calculate depreciation using the reducing balance and straight line methods
• Evaluate the most appropriate method of calculating depreciation of different types of fixed assets
• Prepare Ledger accounts for fixed assets, depreciation and disposals
• Prepare the final account extracts for depreciation
  May need to discuss effect of accounting for depreciation on Income Statement of Statement of Financial Position
• Apply and explain the accounting concepts of going concern accruals, prudence, consistency, cost, materiality with respect to depreciation
• Selecting appropriate method for different types of fixed assets
• Estimating the useful life and residual value of a fixed asset
• Determining the cost of a fixed asset

• Explain bad debts
• Calculate bad debts and prepare ledger accounts and profit and loss account extracts
• questions may include debtorss accounts fully written off as bed debts and debtor accounts where a proportion of the debt is recovered and the remainder written off as a bad debt
• Explain and discuss factors used when determining provisions for doubtful debts (specific and general)
• Be able to do calculations for the creation, increase and decrease of the provision for doubtful debts
• Prepare the ledger accounts for the provision for doubtful debts and profit and loss acccount extract.
• Prepare balance sheet extracts showing net debtors
• Explain and use information from an aged debtors schedule
• you need to be able to discuss steps to help prevent bad debts and evaluate credit control policies
• apply and explain the accounting concepts of accruals, prudence, consistency, and materiality

• explain accruals and prepayments for expense accounts
• preparation of ledger accounts including opening balances for expenses both accrued and prepayed
• explanation of accruals and prepayments for revenue accounts
• preparatiin of ledger accounts including opening and closing balances for revenues both accrued and prepaid
• prepare profit and loss account extracts for expenses and revenues
• prepare balance sheet extracts for accruals and prepayments
• marks may be awarded for cerrect calculation and correct narrative including opening and closing balances
• balance sheet extracts must include the appropriate sub-heading of current assets and/or current liabilities

• Preparation if incomestatement (trading and profit and loss account) - "for the year ended" abd statement of financial position ( balance sheet ) - "as at"
• Remember correct labelling for statements - use a ruler underline relevant totals

Be able to explain and give reasons for and examples of the accounting concepts of:

• going concerns
• accruals
• prudence
• consistency
• historic cost
• materiality
• business entity
• money measurement

1 hour- 2 questions

Q1: Usually requires the preperation of final accounts with various adjustments.

Q2: Could be a question on:
     Cash books
     Capital and revenue expenditure
     depreciation
     bad debts and provision for doubtful debts
     accruals and prepayments

Both questions may require the discussion of accounting concepts or evaluation of action taken by trader.