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Accounting Cheat Sheet (DRAFT) by

This is a draft cheat sheet. It is a work in progress and is not finished yet.

DEAD CLIC

Dr
Cr
Expenses
Liabilities
Assets
Income
Drawings
Capital
All accounting transa­ctions can be classi­sfied as one of those 6 catego­ries.
Bank and VAT can have both Dr or Cr bal., though 'natural' balances are: Bank (Dr)Asset and VAT(Cr­)Li­ability
Sales returns Dr
it's a reduction of Sales/­Income (Cr)
Purchase returns Cr
it's reduction of Expense (Dr)

Objectives of an effective accounts system

- to process all transa­ctions completely and effect­ively
- to report accurately (financial stmts are produced in cost-e­ffe­ctive manner, they are timely and reliable)
-to comply with laws and regula­tions

Organi­sat­ional Policies & Procedures

- in place to ensure that acc. records are true and fair refele­ction of business fianacial situation.
- stakeh­older who rely on this info: Bank (loans), Suppliers (credit checks), Employee (job security)

Control Procedures - examples

author­isation of transact.
signing off expend­iture
processing controll
bank reconc­ili­ation
physical control
locks, pin pads
reviews
monthly review, run reports
written record procedures
manual listing, policies and procedures
segreg­ation of duties
a number of people involwed

Year-end adjusting journals

Every adjusting entry will require at least one BS and one PL account. The purpose of adj. entry is to get both BS and PL accurate.
Accruals & Prepay­ments
Asset acquis­ition | deprec­iation | disposal
Doubtful & Irreco­verable debts
 

Gross Profit

Revenue / Sales
( COS )
= Gross Profit

Cost Structure

 
MARGIN
MARK-UP
Sales
100%
120%
( C O S )
(80%)
(100%)
Gross Profit
20%
20%
Margin-how much profit a business makes in proportion to what a business sells.

Cost of Goods Sold

 ­ ­ ­ ­ ­ ­ ­ ­Opening Inventory
plus: Purchases
plus: Carriage invards
less: Closing Inventory
 ­ ­ ­ ­ ­ = C O G S

Credit Transa­ctions

Credit transa­ctions are made possible by the agreement that a Supplier puts in place to extend credit to Customer / Client. Customer has applied to Seller for CREDIT; Seller has set up Customer account. Method of payment has no bearing on whether sale /purchase is cash or credit transa­ction. The crucial distin­ction is the TIMING of the payment.
Suppliers of GOODS sell to CUSTOMERS
Suppliers of SERVICES sell to CLIENTS.
In Credit Transa­ctions:
- money paid after time,
- initially transa­ction recorded in PDB, show asset (SLCA) or lliability (PLCA)
- posted to indyvidual client­s/s­upp­liers accounts
- not VAT analys­able, as VAT accountes for in SDB / PDB
NOTE: in cash transa­ctions: money change hands immedi­ately, first record of transact. in the accountin system is in Cash Book, analysable to VAT, net, total.

VAT treatment on N-C asset

VAT registered busines can claim the paid VAT back, so it is not a true cost for the business. Therefore CANNOT be capita­lised.
If business not VAT registered - VAT CAN be capita­lized along with other costs.

Capital accounts

Capital - the amount that a business, at any time, owes to its owner(s). It is not fixed; it changes as the business byus assets, borrows funds and makes Profit or Loss.
It is a constant and unremo­vable feature of accounts, but with a constantly changing balance.
Capital | Drawings | Profit - are all accounted for separetely throughout the year and only come together @ y.e.
 

CAPEX-­capital expend­iture results in:

acquis­ition, replac­ement or improv­ement of N-C asset
it is capita­lised and receorded in the non-cu­rrent asset register
cost of N-C asset includes: delivery | constr­uction, inc. cost of labour | site prepar­ation | testing | prof. fees
but not
repair | mainte­nance | admin & general overheads

Deprec­iation

Deprec­iation is a means of systematic spreading the cost of a N-C asset over its useful life in order to match the cost of the asset with the consum­ption of its economic benefit. It is writing down the value of the asset.
Straight line:
Reducing balance:
Units of produc­tion:

Disposals

1. Remove the cost of the asset
2. Remove the accumu­lated deprec­iation charged to date (NBV)
3. Account for the sale proceeds
4. Balance off the disposal account to find gain/loss on disposal

Gain or Loss on disposal calcul­ation

 ­ ­pro­ceeds
X
 ­ less NBV
(X)
 ­ ­equals
G/L on disp.
 
PROCEEDS 
less (NBV)
equals:G/Loss on disposal.

SOFP | Balance Sheet

ASSETS
Non-cu­rrent assets
 ­ ­ ­Pro­perty, plant and equipment
 ­ ­ ­Int­angible assets
Current assets
 ­ ­ ­Inv­ent­ories | Stock
 ­ ­ ­Trade and other receiv­ables
 ­ ­ Cash and cash equiva­lents
LIABIL­ITIES
Current liabil­ities
 ­ ­ Bank overdraft
 ­ ­ ­Trade and other payables
Net current assets
Net assets
CAPITAL
 ­ ­ ­Capital
 ­ ­ add: Profit for the year
 ­ ­ ­less: Drawings
Closing capital

SPL | Profit and Loss

Revenue
X
less COGS
Open INV
add: purchases
less: closing INV
(X)
GROSS PROFIT
X
add: sundry income
add:di­scounts received
Adjusted Profit figure
X
less Expenses (ovver­heads)
(x)
Profit­/Loss for the year
X

Prepay­ments and Accourals

 ­ ­ ­ ­ ­ ­ASSETS
 ­ ­ ­ ­ ­ ­LIA­BILITES
 ­ ­ ­ ­ ­ ­ service provided, not paid yet
Accrued Income
Accrued Expense
Dr Accrued Income
   Cr Expense
Dr Expenses
   Cr Accrued Expense
 ­ ­ ­ money changed hands, service to follow
Prepaid Expense
Prepaid Income
Dr Prepaid Expense
   Cr Expense
Dr Income
   Cr Prepaid Income

Payroll

Wages Control Account
Net wages
Gross wages
PAYE
E'er NI
NIC
E'er Pension
Student Loan
Wages Ctrl - a temp acc set up for the time when payroll is calculated

SLCA - Debtors - Receiv­ables

Bal b/d
Payments received
Sales
Discounts allowed
 
Sales returns
 
Contra
 
Bal c/d

PLCA - Creditors - Payables

Payments made
Bal b/f
Discounts received
Purchases
Returns of purchases
Contra
Bal c/d

VAT control

reclai­mable
liability
Credit Purch. (PDB)
Credit Sales (SDB)
Sales Ret. (SRDB)
Purchase Ret. (PRDB)
Bad Debt relief
Cash sales (CB)
EU acquis. charge
EU acquis. charge
 
Fuel Scale charge