A Level Accounting 9706 (AS Level Accounts) ARD | English

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A Level Accounting 9706 (AS Level Accounts) ARD | English, AS Level Accounting 9706 FREE Course by Sir ARD in English.

You will learn these Concepts in this FREE Course

Accruals and Prepayments

  • Accrued and Prepaid Expense Concept
  • Expense Ledger Account
  • Accrued and Prepaid Income Concept
  • Income Ledger Account
  • Income Statement Extract
  • Statement of Financial Position Extract
  • Accounting Principles
  • Practice Question (Past Exam Papers)

Other payables and other receivables

• recognise the importance of matching costs and revenues

• prepare ledger accounts and journal entries to record accrued and prepaid expenses

• prepare ledger accounts and journal entries to record accrued and prepaid incomes

Accruals concept

The accruals concept is identified as an important accounting concept by IAS 1 Presentation of Financial Statements. The concept is that income and expenses should be matched together and dealt with in the income statement for the period to which they relate, regardless of the period in which the cash was actually received or paid. Therefore all of the expenses involved in making the sales for a period should be matched with the sales income and dealt with in the period in which the sales themselves are accounted for.


Sales revenue

The sales revenue for an accounting period is included in the income statement when the sales are made. This means that, when a sale is made on credit, it is recognised in the income statement when the agreement is made and the invoice is sent to the customer rather than waiting until the cash for the sale is received. This is done by setting up a receivable in the statement of financial position for the amount of cash that is due from the sale (debit receivables and credit sales revenue).


Purchases

Similarly purchases are matched to the period in which they were made by accounting for all credit purchases when they took place and setting up a payable in the statement of financial position for the amount due (debit purchases and credit payables).

Cost of sales

The major cost involved in making sales in a period is the actual cost of the goods that are being sold. As we saw in a previous chapter, we need to adjust for opening and closing inventory to ensure that the sales made in the period are matched with the actual costs of those goods. Any goods unsold are carried forward to the next period so that they are accounted for when they are actually sold.


Expenses

The expenses of the period that the business has incurred in making its sales, such as rent, electricity and telephone, must also be matched with the sales for the period. This means that the actual expense incurred in the period should be included in the income statement rather than simply the amount of the expense that has been paid in cash.

A Level Accounting 9706 (AS Level Accounts) ARD | English
A Level Accounting 9706 (AS Level Accounts) ARD | English
Free $0.00
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