ASHS Accounting 1.5
Contents
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
- Disadvantage for sole proprietor..
-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 !
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----
Components
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)
Purpose
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
- Define: money that is still owing on balance day (MAX)
- Journal Entry:
Interest on loan 2000dr
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
