Download
financial accounting n.
Skip this Video
Loading SlideShow in 5 Seconds..
FINANCIAL ACCOUNTING PowerPoint Presentation
Download Presentation
FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING

77 Vues Download Presentation
Télécharger la présentation

FINANCIAL ACCOUNTING

- - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

  1. Buckingham College of London FINANCIAL ACCOUNTING ABE (Diploma in Business Management) • Lecturer : M. M. Ahsan Email : ahsan6960@gmail.com • Session : 01 Week : 04 • Lecture No : 04Date : 07/02/2012

  2. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  3. Final accounts and Balance sheet Unit 03

  4. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  5. Elements of Final Accounts • Manufacturing Account • Trading Account • Profit and Loss Account • Appropriation Account • Balance sheet Note : You will often see manufacturing, trading and profit & loss accounts present together and headed simply ‘Income Statement’.

  6. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  7. Format for Trading Account

  8. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  9. Example (a) From the following balances extracted from the ledger of H&M Com On 31st December,2010. Prepare the trading account of the business for the year ended December 31, 2010 : (b) In what way would the trading account of H & M be different if the proprietor had withdrawn goods for his own use valued at £500 selling price?

  10. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  11. Elements of Profit & Loss Account Credit : • Discount received • Rents received in respect of property let. • Interest & dividend received • Bad debts recovered • Other items of profit or gain, other than of a capital nature, including profits on the sale of assets.

  12. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  13. Elements of Profit & Loss Account • Administrative expense : Rent, rates, lighting, heating, repair of office building; director’s remuneration & fees, salaries of the employee. • Selling and distribution expense : Travellers commission, sales staff salaries, wages for driver & packers, warehouse rent, advertising, bad debt.

  14. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  15. Elements of Profit & Loss A/C • Financial expenses : Bank charges; interest on loans, hire purchase agreement, debentures, mortgages, bank overdraft; Note : Capital expenses will not be debited to profit & loss account.

  16. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  17. Items requiring special attention • Bad debts • Bank charges • Debenture interest • Depreciation • Discount • Dividends paid(Limited company only) • Drawings (Partnership or sole trader ship) • Goodwill • Preliminary expenses(Limited company only) • Provision for bad debt • Provision for discount allowable • Expenses paid in advance or arrears(Prepaid and Accrual)

  18. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  19. Difference between Trial balance & Balance sheet • A trial balance is a list of all the ledger balances, not only assets & liabilities but also gains or losses. A balance sheet is a list of a part only of the ledger balances i.e. Those remaining after the profit and loss items have been dealt with, the assets and liabilities. • A trial balance is prepared before the revenue accounts are compiled. A balance sheet is prepared after the revenue accounts have been dealt with.

  20. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  21. Functions of the Balance sheet • Financial position of the business • Arithmetical accuracy of accounts • Bridge between financial years

  22. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  23. Elements of Balance Sheet Non-current asset Current asset Work in progress Inventory in trade Trade receivables Payment in advance Temporary investments Bank deposit account Cash at bank Cash in hand • Goodwill • Patents, trademarks etc • Freehold land & Building • Leasehold land & buildings • Plant & machinery • Motor vehicles • Furniture & fittings • Long term investments

  24. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  25. Elements of Balance Sheet • Internal Liabilities : - Liabilities to proprietors • External liabilities : - Long term liabilities - Current liabilities - Secured liabilities - Unsecured liabilities - Preferential liabilities - Contingent liabilities

  26. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  27. Distinction between capital and revenue • Capital expenditure • Revenue expenditure • Capital receipts • Revenue receipts

  28. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  29. Format of Balance Sheet

  30. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  31. Format of Balance Sheet

  32. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  33. Example From the following balances appearing in the ledger of the new manufacturing com on Dec 31,2010. Draw up the profit and loss account for the year ended 31 December :

  34. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  35. Example Notes/Adjustments : • Write off 10% depreciation on plant and machinery. • Rent owing on 31stdecember amounted to £2,000. • An insurance premium amounting to £500 was paid in july in the current year for the year to 30 june of the following year. The £500 is included in sundry office expenses.

  36. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  37. Example The following balances remain in william dean’s books after he has completed his profit and loss account for the year ended 31May,year 2 : Set out williams deans balance sheet as at 31 May, year 2.

  38. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------