Y11 Accounting
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Income Statement for a Service Firm
Income Statement for a Trading Firm
A Balance Sheet
A Cash Budget
Perform Balance Day Adjustments
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Being able to classify accounts
Knowing the order and layout of each
statement- memorise these layouts
Appropriate headings MUST be used
Writing a PPE note- know the headings and
labels
Knowing how to write the title for each
statement
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Any item on the left hand side of a Trial Balance is either:
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Any item on the right hand side of a Trial Balance is either:
◦ An expense (Distribution/Administration/Finance)
◦ Cost of Goods Sold (Opening inventory, Purchases, Freight in,
Customs duty)
◦ An asset (Current, PPE, Intangible or Investment)
◦ Drawings
◦ OR a negative account of anything from the other side e.g. Sales
Returns
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Income (including other)
Liability (Current and Non-current)
Capital
OR a negative account of anything from the other side e.g.
Purchase Returns
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The inventory figure for the Current Asset section
and Closing Capital is always given in the notes
and starts with 31st
Always classify the items in the trial balance and
put a line through them when you have put them
into the statements to ensure you have dealt with
all items
If you cannot do a particular adjustment move on
to the others. Always put an account and a figure
if you have done the adjustment or not under a
heading
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When classifying expenses ask the following
questions:
◦ If the expense can be directly linked to selling the
product it a distribution/selling expense e.g.
Advertising
◦ If it is a necessary expense, but cannot be linked to
selling the product it is an Administration Expense
e.g. Accountancy fees
◦ If it is an Interest Expense it always goes under
Finance Costs- The ONLY thing that goes under
finance costs is Interest
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Office Wages = Administration
Sales Wages = Distribution Expense
Deprecation on Office Equipment =
Administration
Depreciation on Delivery Van = Distribution
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Office always implies Administration Cost
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Prepayments- Current Asset = Left
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Accrued Income- Current Asset = Left
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Accrued Expense- Current Liability = Right
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Income in advance- Current Liability = Right
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If it says ‘invoices’ it means it is either
Accounts Receivable or Accounts Payable and
GST must be calculated
GST for any item purchased makes GST
Payable go down or GST Receivable go up
GST for income makes GST Payable go up or
GST Receivable go down
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It is states the word ‘owing’ it is either
Accrued income or Accrued Expense
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One account name is always given to you in
the question e.g. Invoice on hand for salesSales is the account name given
For any of the adjustments (Prepayment,
Accrued Income, Accrued Expenses and
Income in Advance, Depreciation expense)
you will need to hand write these onto the
Trial Balance
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When calculating depreciation there are only
ever two accounts affected- Accumulated
Depreciation and Depreciation expenseNEVER abbreviate
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Never include an item into the cash budget
where ‘actual’ cash is not changing hands
e.g. Depreciation, Drawings of inventory,
Invoices, any Liabilities or Assets.
Always circle if there is a surplus or a deficit