4483035
Description
Mind Map by mcbarnes97, updated more than 1 year ago
|
Created by mcbarnes97
about 8 years ago
|
|
Chapter 2: Incomplete Records
Accounting
- What are incomplete record
- Incomplete records is
the term used where
some aspect of the
accouting system is
missing
- When information has been lost due to a disaster, flood or fire,
or the lose of information, ledger or computerised data
- when there is inadequate or missing
accounting records, which can concern
purchases, sales, payables and
receivables
- There area differences between
- Ledger accounts, non-current asset
register, the physical on-current assets
oin the business
- Inventory records,
inventory total and
the physical
inventory held by
the business
- Businesses cash book and the bank
statement given by the bank
- Purchase ledger account and the
statement received from suppliers
- Ledger accounts, non-current asset
register, the physical on-current assets
oin the business
- The timing difference, so when a
good has been ordered by not
received, payments have been sent
but haven't been recorded yet
- Incomplete records is
the term used where
some aspect of the
accouting system is
missing
- Information Available to the Accountant
- A business will have a cash book which is normally kept as a one entry account, but if it
hasn't been kept you usually reconstruct it by using the bank statements but its a time
consuming job
- Places accountant can get information from
- Cash book- this is a
basic record for any
single entry
- Banking Details- statements, paying in
books, cheque stubs and bank transfers are
included in this
- Invoices- invoices which
area both sent (sales) and
received (purchases)
- Expenses- from during the year
- Lists of account owing suppliers
(payables), and trade receivables from
customers, from the beginning and end of
year
- Assets and Liabilities- non-current and
current assets, long term and current
liabilities, at the beginning and end of
year
- Non-current assets- brought an sold
during the year
- Cash book- this is a
basic record for any
single entry
- Information which may not be available
- Capital at the
beginning of the year
- Purchases and sales for the year
- Cash book
summary for the
year
- Profit or loss
for the year
- Drawing for the year
- Capital at the
beginning of the year
- A business will have a cash book which is normally kept as a one entry account, but if it
hasn't been kept you usually reconstruct it by using the bank statements but its a time
consuming job
- Tools of Accouting
- Using the tools of
accounting to
construct the
accounts that are
required
- Accounting tools that maybe required
- The use of an opening trial balance,
or statement of assets and liabilities
- Construction of Cash
account or bank account
- The use of control account
- Sales ledger control
- Purchase ledger control
- VAT control account
- Sales ledger control
- Prep of financial statements
- Accounting equation
- Gross profit mark- up and margin
- The use of an opening trial balance,
or statement of assets and liabilities
- Using the tools of
accounting to
construct the
accounts that are
required
- Opening Capital
- This is needed for the
statement of financial
position
- In the situation of incomplete records, the opening
capital maybe known, if not we will use the
accounting equation, assets- liabilities capital
- If the bank balance is over
drafted it becomes a liability
- This is needed for the
statement of financial
position
- Cash Book Summary
- Enables us to
find out the
cash and bank
balance at the
year end
- In practise the
bank
statements
could be used
to produce a
summary of
bank receipts
and payments
- If the bank balance is
over drawn credit it
- At the end of the
summary, the credit
balance brought down
is an overdraft
- Enables us to
find out the
cash and bank
balance at the
year end
- Purchases and Sales
- Purchases for the year= payments - trade
payables (at beginning of year) + trade
payables (end of year)
- Sales for the year= receipts
- trade receivables
(beginning of year) + trade
receivables (end of year)
- Remember to include, returns and discount
received or allowed, irrecoverable debts (sales)
contra transactions (set off between sales ledger
and purchase ledger), goods taken for owners use
- Purchases for the year= payments - trade
payables (at beginning of year) + trade
payables (end of year)
- Purchases and Sales Summary
- For the calculations or control
account, 4 pieces of information is
required
- Opening Balance
- Closing Balance
- Bank and cash payments,
receipts for the year
- Purchase or sales of the year
- Opening Balance
- Providing that any three are known
you can calculate the other
- For the calculations or control
account, 4 pieces of information is
required
- Statement of profit or loss
- Expenses for the year
- Bank and cash payments - accruals (beginning of year)
+ prepayments + accruals at end of year -
prepayments at end of year
- Bank and cash payments - accruals (beginning of year)
+ prepayments + accruals at end of year -
prepayments at end of year
- Expenses for the year
- The use of Gross Profit Mark- Up and Margin
- It is often necessary to use
accounting ratios, percentage/
fractions in prep for financial
statements
- Two main percentages/ fractions
- Gross profit mark-up
- Gross profit margin
(gross sales margin)
- Gross profit mark-up
- Business establish its selling price by
reference to either the mark up or
margin, the difference between the two
are
- Mark- up, profit percentage or fraction added to
buying or cost price
- Margin,
profit
percentage
or fraction
based on the
selling price
- Mark- up, profit percentage or fraction added to
buying or cost price
- It is often necessary to use
accounting ratios, percentage/
fractions in prep for financial
statements
Want to create your own Mind Maps for free with GoConqr? Learn more.