ASHS Accounting 1.5

= Introduction =

This page is being created by a Year 11 Accounting Class at Albany Senior High School, as part of a Homework project

= Achievement Standard =

www.nzqa.govt.nz/ncea/assessment/search.do

90026   Prepare financial statements for sole proprietors     4 credits     External

= Link to Level 1 Appendix =

www.tki.org.nz/r/ncea/accountingappendix1_28jan10.doc

= Tasks =

Monday 10th May (due Thurs 13th May)

1 - Prepare a Statement of Financial Performace for 'Framed' - the 2nd business on the class handout

2- Prepare the general journal entries for the following Balance day Adjusments:

Additional Information • Office rent paid in advance $200 • Dividends owed to the business $50 • Tour drivers’ wages owing $300 • Depreciation on the tour vans is depreciated on a straight-line basis and is based on a useful life of  10 years and a residual value of $3 000 (cost $15,000) • Invoices sent to clients for tour fees $450 including GST

= Context =

Sole Proprietor
Sole means the business is owned by 1 person


 * Sole Proprietor has one owner. UNLIMITED LIABILITY. Can make all decisions. Get to keep all the profit and have to pay for all th expences. (Danny alive.L) Does not have to rely on anyone else. (Samuel)Francois =P

-No Share decision making or responsibilities -If you're having a holiday or sick, noone can run your business for you -Unlimited liability - Andy XD !
 * Disadvantage for sole proprietor..

Trading Entity
A Business Whose Main Income Is Derived From The Selling Of Goods (Stock/Inventory) *Alex*

Service Entity
Is a service business, has no inventory, no cost of goods sold, charges in fees. --Samuel P-- :) and Amy.

= 1. Statement of Financial Performance (Income Statement)  =

Purpose
To quantify a companies or business net profit or loss. Amy

Trading Entity
Trading entity is a business that deals with the purchasing and selling of inventory. (Rupesh)

Sales

Sales Returns

Cost of Goods Sold

Purchases

Purchase Returns

Freight Inwards

Customs Duty

Other Income

Distribution Costs

Administrative Costs

Finance Costs

Profit/Loss for the Year

Service Entity
Is a business entity that gets it's main source of income from fees. ---Amy--- and ~Erica~

Main source Other Income

Distribution Cost (or Business Specfic costs like Plumbing Expenses for a Plumber)

Administration Expenses

Finance Cost

Profit/Loss for the year

Limitations
= 2. Statement of Financial Position (Balance Sheet)  =

Components
Current Assets includes cash and those assets which are expected to be realised in cash (Bank,Accounts receivable,inventory)-Sung Jun

Non Current Assets

Investments

Property, Plant and Equipment Assets in the business that are not intended for sale tocustomers.They are purchased

to help the business make a profit.(Machinery,computers) -SungJunIsm

Intangible Assets assets which cannot be seen or felt, but which are still considered to have a dollar value to business(Good Will) - Sung Jun

Current Liabilities

Non Current Liabilities

Owners Equity

Net Profit

Drawings

Closing Capital

Limitations
= Balance Day Adjustments: =

e.g Trial Balance to use for this example:

Accrued Expense
Interest on loan           2000dr
 * Define: money that is still owing on balance day (MAX)
 * Journal Entry:

Accrued Expense                   2000cr
 * Impact on Trial Balance: Add interest on loan and creat a new current liability called Accrued Expense

Accrued Revenue
Are things like dividends or income that has not yet recieved on balance day. Francois =P and Max~

Prepayment
Expenses that have been paid in advance on Balance Day. Erica

Revenue Receieved in Advance
Revenue that has been paid before balance day but not yet done the work MAX

Accounts Recievable
Costumer outstanding debts not yet recorded on Balance Day - Sung Jun -

Straightline Depreciation
Is a measure of the loss of service potential on a non- current asset during an accounting period.

Formula:  HC- Residual (scrap)

useful life

Samuel :P

Credit purchase of Property, Plant and Equipment
When property, plant or equipment are brought on credit and not been taken off the bank before balance day MAX