A S t t e p b y S t t e p A p p r r o a c h t t o P r r e p a r r i i n g F i i n a n c i i a l l
R e p o r r t t s s a n d P r r o c e s s s s i i n g J J o u r r n a l l E n t t r r i i e s s
[ [ m a n u a l l a a n d u s s i i n g M Y O B A c c o u n t t i i n g P l l u s s v 1 8 ] ]
Copyright Notice:
Copyright
©
2008 Marian Brown. All rights reserved.
No part of this material may be reproduced or copied in any form or by any means (graphic, electronic or mechanical, including photocopying or by information retrieval systems) without permission in writing from Marian Brown.
Written by:
Marian Brown Dip T [Commerce], MICB
Cert IV Workplace Training and Assessment, Cert IV in Financial Services [Bookkeeping]
MYOB Certified Consultant for 13 years
MYOB Accredited Author, MYOB Publisher, MYOB Accredited Trainer
MBS Training Services Pty Ltd sales@mbsts.com.au
www.mbsts.com.au
Publishers:
Software Publications Pty Ltd [ABN 75078026150]
Head Office – Sydney
Unit 10, 171 Gibbes Street
Chatswood NSW 2067
Phone: 1 800 146 542
Web address: www.softwarepublications.com.au
ISBN 1-74123-821-8
Printed September 2008
BSBFIA401A Prepare financial reports
FNSICACC306B Process journal entries
This book is dedicated to my Year 10 commercial teacher, Delmai Winnett who taught me my bookkeeping basics and encouraged me to further my accounting studies.
© Copyright Marian Brown 2008 A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] – Table of Contents

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Screen captures from MYOB Accounting Plus v18 reproduced with permission.
Limitations of Liability:
This material is designed to provide basic information on how to use MYOB Accounting/Accounting Plus v18. Because business circumstances can vary greatly, the material is not designed to provide specific GST or business advice for particular circumstances. Also, because aspects of the GST are complex and detailed, the material is not designed to comprehensively cover all aspects of the GST. Further, the laws implementing GST and rulings and decisions under those laws may change.
Before you rely on this material for any important matter for your business, you should make your own enquiries about whether the material is relevant and still current, and whether it deals accurately and completely with that particular matter; and as appropriate, seek your own professional advice relevant to that particular matter.
This information is for the general information of MYOB clients and is not to be taken as a substitute for specific advice. Consequently Marian Brown will accept no responsibility to any person who acts on information herein without consultation with Marian Brown.
The information in this book is relevant to MYOB Accounting Plus v18. Earlier or later versions of MYOB software could change the instructions in this workbook.
Table of Contents A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] © Copyright Marian Brown 2008

⌦
U n i i t t 7 : :
P r r e p a r r i i n g f f i i n a n c i i a l l r r e p o r r t t s s
In this Unit you will learn how to:
Prepare the Profit and Loss Statement [also known as the Revenue Statement,
Income Statement or Statement of Financial Performance] - unclassified
Prepare the Balance Sheet [also known as Statement of Financial Position]
This unit covers the following performance criteria in BSBFIA401A:
4.1 Prepare revenue statement in accordance with organisational requirements to reflect operating profit for reporting period.
4.2 Prepare balance sheet to reflect financial position of business at end of reporting period.
4.3 Identify and correct, or refer errors for resolution in accordance with organisational policy and procedures.
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The fundamental purpose of the accounting process is to translate the information from business transactions into meaningful reports that summarise the financial performance and financial position of the business.
Financial reports enable the financial affairs of the business to be communicated in an understandable way to interested parties such as banks, creditors, owners and employees.
In this unit, you will prepare a Profit and Loss Statement and Balance Sheet for Brocks
Tyreworld from the General Ledger and Trial Balance prepared in previous units.
@
Go to www.aasb.com.au
.
In this workbook you will look at some of the relevant legislation behind the preparation of financial reports, however this topic is dealt with in greater detail in the workbook “ A Step by Step Approach to Preparing Financial Statements using MYOB Accounting Plus ”.
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Unit 7 – Preparing Reports A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] © Copyright Marian Brown 2008

@
1 Select “ Frequently Asked Questions ” and copy the answers to the following questions, paste into a “Word” document and print . File in your ring binder in the appropriate section.
(a) What is the AASB?
(b) What does AASB do?
(c) What is the purpose and importance of accounting standards in the corporate world?
2
(d) What is AASB101?
Read the above documents - realise these are the rules you are applying in this workbook.
In Unit 3 you learned about IAS 16 [AASB 116] in relation to Asset Registers.
Select the “ AUASB website” option. Review the contents and answer the following questions.
(a) What does “ AUASB ” stand for? ......................................................................
...........................................................................................................................
(b) What does this board do?..................................................................................
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
(c) In this website, search for AUS202 [Feb 2004]. Write here clause .24 which explains the bookkeeper’s responsibility.
...........................................................................................................................
...........................................................................................................................
...........................................................................................................................
3 BSBFIA401A Prepare financial reports covers the preparation of end-of-period financial reports for a NON-REPORTING ENTITY.
Use the internet to find what a “ Non-Reporting Entity ” is.
......................................................................................................................................................
......................................................................................................................................................
......................................................................................................................................................
......................................................................................................................................................
You are required to discuss these answers with your supervisor.
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In the General Ledger, your Trading Account and Profit and Loss Account looks like this.
980 TRADING ACCOUNT
Date Particulars
30/6/09 Sales
Purchases Returns & Allowances
GJ
GJ 530.00 36,630.00 Cr
Purchases
Sales Returns and Allow
Gross Profit - Transfer to Profit and Loss A/c
990 PROFIT AND LOSS ACCOUNT
Date Particulars
GJ 350.00
GJ 20,280.00
35,280.00 Cr
0.00
GJ 20,280.00 Cr
Gain on Sale
Advertising
GJ 200.00 21,172.00 Cr
Bad and Doubtful Debts
Depreciation
Lease of Premises
Motor Vehicle Expenses
Superannuation
Wages
GJ
GJ
GJ
100.00
2,000.00
190.00
20,005.14
9,751.18
9,561.80
Loss on Sale GJ 5,625.00 2,912.80
Transfer to Capital A/c GJ 2,912.80 0.00
This information is NOT very easy to analyse, interpret or understand is it?.
Therefore this information will be presented in a more user-friendly format called a Profit and Loss Statement .
This statement is also known as a Revenue Statement, Income Statement or a Statement of
Financial Performance.
The format of a Profit and Loss Statement [unclassified] is set out on the following page. It is now your job to fill in the figures from the Trading and Profit and Loss accounts above [or the Trial Balance] to complete this report.
Cr
Cr
Cr
Cr
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Unit 7 – Preparing Reports A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] © Copyright Marian Brown 2008

Complete the figures where indicated to complete the Profit and Loss Statement.
[This is just one method of presentation – your supervisor may prefer a different presentation – follow the instructions of your supervisor.]
For the year ending 30 June 2009
Sales less Sales Returns 350.00 35,750.00 less Cost of Goods Sold
Opening Stock (1/7/08) 15,000.00
Add
Less Purchases Returns
14,000.00
530.00 ……………….
28,470.00
Less Closing Stock (30/6/09)
GROSS PROFIT [from Trading]
Add other Operating Revenue
$20,280.00
……………
610.00 692.00 Insurance
Less Operating Expenses
$20,972.00
1,048.86
18.00
100.00
Advertising
Charges
Bad and Doubtful Debts
Depreciation
Lease of Premises
Motor Vehicle Expenses
Superannuation
Wages
NET OPERATING PROFIT
Add Non-Operating Revenue
…………….
2,000.00
190.00
84.00
$8,337.80
Gain on Sale
Less Non-Operating Expenses
Loss on Sale
…..…………
$8,537.80
5,625.00
NET PROFIT $2,912.80
This format is known as the Narrative Format.
A Profit and Loss can also be presented in a T-Format. This was covered in “A Step by
Step Approach to Maintain Financial Records [manual only]”. This format is rarely used today.
Instead of reporting the expenses as “ Operating Expenses ”, these expenses could have been reported under the following headings: Selling and Distribution, Administration,
Financial . [not required in this unit]
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Although not required in this unit, assets and liabilities are usually classified in the Balance
Sheet. This topic is covered in more detail in “ A Step by Step Approach to Preparing
Financial Statements using MYOB Accounting” .
Assets can be classified as:
Current Assets: assets which are either cash now or will be converted into cash within 12 months.
Non-Current Assets:
Liabilities can be classifed as: assets that will be retained by the business for more than 12 months.
Current Liabilities: liabilities which have to be repaid within the next 12 months.
Non-Current Liabilities: liabilities that the business does not expect to meet in the next
12 months such as long-term loans.
Classify each of the following accounts as an asset [current or non-current] or a liability
[current or non-current].
PAYG Withholding .....................................................................................................
Office Equipment
Trade Debtors
Stock on Hand
Bank Loan [5 years]
Prepaid Expenses
.....................................................................................................
.....................................................................................................
.....................................................................................................
.....................................................................................................
.....................................................................................................
Trade Creditors .....................................................................................................
Solutions can be found in Appendix.
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Unit 7 – Preparing Reports A STEP BY STEP APPROACH TO PREPARING FINANCIAL REPORTS [manual and MYOB] © Copyright Marian Brown 2008

Complete the figures where indicated to complete the Balance Sheet.
[This is just one format. Your supervisor may prefer a different format. Please follow the instructions of your supervisor.]
As at 30 June 2009
Assets
Assets
Bank
Accounts
Provision for Doubtful Debts
Stock on Hand
Prepaid
Accrued Income
Assets
Office
Less Accumulated Depreciation
Motor
Less Accumulated Depreciation
Low-Value Pool
Less Liabilities
Liabilities
Payable
Collected
GST
PAYG
Superannuation
Accrued
Payable
Expenses
Prepaid
Liabilities
Bank
Assets less Liabilities
Owner’s Equity
Capital
Less Drawings
Plus Net Profit
72,765.00
1,870.00
-100.00
………………
37.50
400.00 87,972.50
3,000.00
-98.63
………………
-410.96
731.25 43,221.66 $131,194.16
9,417.00
6,675.00
-5,924.64
…………….
…………….
1,000.00
1,000.00 ……………….
88,210.00 $100,681.36
$30,512.80
27,600.00
………………
27,600.00
2,912.80 $30,512.80
The Balance Sheet displays the Accounting Equation: Assets – Liabilities = Equity
This is known as the Narrative Form.
A Balance Sheet can also be presented in a T-Format. This was covered in “A Step by
Step Approach to Maintain Financial Records [manual only]”. This format is rarely used today.
Additional Exercises can be found in Unit 9.
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