Accounting Examination Preparation Notes
SECTION A
Topics:
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Multi choice (20)
Accounting equation
Depreciation
Accruals
Bank reconciliation
Payroll
Allowance
Inventory
Note: Questions include both theory and calculations. Know your formulas.
SECTION B
1. Five Elements of Financial Statements (5)
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Assets
Liabilities
Equity
Income
Expenses
Write one sentence explaining each element.
2. Profit & Loss vs Statement of Financial Position (8)
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State the purpose
Period covered
Provide 2 examples of each
3. Prepare the Statement of Profit or Loss (16)
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Net sales → Cost of Sales → Gross profit → Total operating expenses → Net profit
Practice the formula:
Cost of Sales = Opening Inventory + Purchases − Purchase returns − Closing inventory
4. Depreciation (10)
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Two methods:
Straight-line method (equal annual charge)
Diminishing balance method (% applied to carrying amount)
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Three factors:
Cost of assets
Estimated useful life
Estimated residual (scrap) value
5. Payroll (11)
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Agreed between employer and employee
Statutory vs Non-statutory deductions
Required by law (e.g. UIF, PAYE)
Net salary calculations:
Gross salary − PAYE − UIF (1%) − Pension (7.5%) − Medical Aid = Net Pay
Show all workings
6. Four Adjustments to Identify, Journal & Analyse
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Depreciation
Allowance for credit losses
Prepaid insurance
Accrued telephone
7. Identify Adjustment Types (4)
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Prepaid: Expense paid but not incurred (move to asset)
Accrual: Expense incurred but not yet paid (record as liability)
8. Adjusting Journals (16)
Prepare adjusting journal entries.
9. Effect Table (10)
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For each journal, show debit, credit, and narration
State whether each adjustment increases or decreases net profit and total assets