Accounting Lecture Notes 19

Accounting Lecture Notes 19 - Lecture 19 Revision lecture 1...

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Unformatted text preview: Lecture 19 Revision lecture 1 Examination Structure 4 questions must be answered! 2 compulsory 1 Fin Acc ( out of 2) 1 Man Acc( out of 2) 25 marks....45 minutes 30 marks...54 minutes Time allocation very important Make sure you answer 4 questions 2 Revision Technique Re-work examples in chapters, lectures & workshops Review lecture and reading notes Revisit EQL Understand Accounts and Understand Management Accounting Work through sample revision paper and other past exam papers in the Library and on Moodle Re-work class tests...searching for answers Attempt practice and review questions at end of chapters in text book and also study answers at end of book 3 Numerical questions Show your workings Marks awarded for correct elements Important to show clear workings Layout is very important Don't waste time on: Parts you can't do Getting it to balance Balance is worth at most 1 mark! Accounting is not mathematics... you must apply the principles 4 Essay questions You must be able to explain why and how Learn advantages; disadvantages; problems Plan your answer Answer the question! Use EQL to develop your understanding and to remind yourself of the issues. Argue both sides of a discussion Draw conclusions Avoid: Unnecessary repetition Waffle 5 Recap of Financial Accounting Topics covered: Role of accounting, users and uses Financial Statement preparation from TB Sole trader and company accounts Learn the differences Cash flow statement Accounting principles and concepts Accounting for various assets & liabilities 6 Recap of Financial Accounting Layout of accounts...as a minimum Make sure you can prepare a profit and loss account with adjustments Compulsory question Make sure you can prepare a balance sheet. Compulsory question! Interpretation of accounts Learn formulae Working capital management Essay Cash flow statements Format is important 7 Adjustments you must be able to handle ! Adjusting entry 1 Closing stock P/L B/S Minus Add to current assets Add to current assets Add to current liabilities 8 2 Prepaid expense 3 Accrued expense Minus Add Adjustments contd. 4 Depreciation Add to expense add to provision 5 Bad debt Add to expense subtract from debtors 6 Provision for doubtful debts Depends Prov for doubtful debts subtract from debtors 9 Learn how to prepare a balance sheet Study the FA section Study the CA section Study the CL section Note where net current assets are shown Note how long term liabilities are shown Learn how the capital section is shown Especially Reserves in the Company situation 13 easy marks! Learn it; practice it; study solutions 10 Study the Fixed Assets section Balance sheet as at... Non Current Assets Cost Buildings Motor vehicles Total Accumulated Depn Net Book Value xxx 11 Study the Current Assets Section Current assets Stock Debtors XXX less provision for bad debts(XXX) Net Debtors Prepaid Cash Total less XXX XXX XXX XXX xxx 12 Study the Current Liab section Current Liabilities Creditors Accruals Bank overdraft Total Net Current Assets(CA-CL) XXX XXX XXX (xxx) xxx note this is subtracted from CA note this is added to NBV 13 Study the bottom half of the balance sheet! Total assets less current liab Less Long term liab Debentures Net Assets xxx (xxx) XXX note this is subtracted Capital at the start Add net profit Less drawings Capital at the end (Net assets) xxx xxx (xxx) xxx note this is subtracted 14 Learn the ratios! Memorise the 10 most important ratios! Learn what they mean Use Understand Accounts Profitability ratios 1. Return on Capital Employed 2. Gross profit margin 3. Net profit margin The higher the better 15 Liquidity, Efficiency and Gearing ratios Liquidity Current ratio Acid test Efficiency Stock holding period Debtors collection period Creditors period Asset turnover Gearing Gearing ratio 16 ...
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