Accounts Olevel Important topics and problem discussion

[muzirox]

kamidada
Can u explain the department a/c plzzzzzzzzz & cost or net book value of sold non-current asset given in adjustments shd b subtracted from cost or net book value of an asset or not???????

 

[AlphaBeta]

Yes, Departmental A/cs is there in the course
Donation/ Legacy/Gift given in general without a given purpose is an income for the year and would appear in the Inc and Expd A/c whereas gift (for purchase of specific equipment) given in receipts would not appear in the Inc and Expd A/c but in the Balance Sheet After the calculation of Accumulated Fund at the end as follows'


FINANCED BY:
Accumulated Fund (Opening) XXX
Add Surplus of Income over Expenditure XXX
Accumulated Fund (Closing) XXX

Add: Gift or Donation given specific purpose XXX
XXX

donation is a income unless it is stated in the question otherwise

 

[hashim2]

help me with loan interest. It has started to come in final accounts a lot

 

[kamidada]

donation is a income unless it is stated in the question otherwise

U r right thats why I ve written it as given specific purpose

 

[kamidada]

kamidada
Can u explain the department a/c plzzzzzzzzz & cost or net book value of sold non-current asset given in adjustments shd b subtracted from cost or net book value of an asset or not???????

There is no difference in the format of Income Statement (Trading and Profit and Loss Account) of a business as a whole and the departmental business. The only thing is that some of the expenses would be required to be divided over the departments on some basis given e.g Rent (Total) $ 15000 and the basis for division of rent is given as FLOOR AREA which is :

Department A 2000 square feet and
Department B 3000 square feet.

The calculation for Rent for Department A will be

(Area of Deptt A/Total Area) x Total Rent i.e
(2000/5000) x 15000= $6000

and similarly for Department B it would be (3000/5000) x 15000 = $9000. Sometimes, some of the expenses might require a division over the departments on the basis of TURNOVER. I hope u know turnover means Net Sales i.e. Sales less Sales Returns.

The other part of ur question is not clear to me, it would be good if u can refer some question from the past pprs. Best of luck.

 

[kamidada]

Thnk you very much,
ALLAH BLESS YOU

U r welcome!

 

[muzirox]

kamidada
In ths paper question # 3
Why we will subtract the net book value from the cost of non-current asset, i mean closing balance of asset is given in the information so why subtraction???

 

[kamidada]

kamidada
In ths paper question # 3
Why we will subtract the net book value from the cost of non-current asset, i mean closing balance of asset is given in the information so why subtraction???

U shud note dat the beg value ov assets is 40000 , assets ov buk value 1000 has been sold and assets worth 8000 hav been bot , ds shud giv u a total ov 40000-1000+8000=47000. Whereas da ending buk value is 42000 hence da value btw 47000 and 42000 dat is 5000 is da dep fr da year wch vil b shown in da income n expenditure acc. The value fr assets in da balance sheet however vil b same as given dat is 42000.

 

[scouserlfc]

http://www.xtremepapers.com/papers/...inciples of Accounts (7110)/7110_s09_qp_2.pdf

In this paper in Q3c they just ask for trading account but why in MS do they proceed to the profit and loss part ??????????

 

[MustafaMotani]

please anyone explain payroll.. ??
like how to make NIC adjustments in payroll, am still confuse..
help will be appreciated.....

 

[thughamza]

Can anyone help me understand suscription account in http://www.xtremepapers.com/papers/CIE/Cambridge International O Level/Principles of Accounts (7110)/7110_w08_qp_2.pdf Q3

 

[scouserlfc]

ANYONE TO help us all ??????

 

[kamidada]

http://www.xtremepapers.com/papers/CIE/Cambridge International O Level/Principles of Accounts (7110)/7110_s09_qp_2.pdf

In this paper in Q3c they just ask for trading account but why in MS do they proceed to the profit and loss part ??????????

In case of club accounts (Non Profit Organisations) although the whole organisation runs on a non profit basis but a part of it might be profit oriented for which we make a trading account as here its the cafe for which a trading account is needed. Although, we name it as a trading account but it will be made exactly as a TPL in full showing the Incomes and Expenses arising from this section (e.g cafe) only. The final profit will not be termed as Net Profit but Cafe Profit or Refreshment Profit depending upon the name give for the trading account itself.

 

[scouserlfc]

In case of club accounts (Non Profit Organisations) although the whole organisation runs on a non profit basis but a part of it might be profit oriented for which we make a trading account as here its the cafe for which a trading account is needed. Although, we name it as a trading account but it will be made exactly as a TPL in full showing the Incomes and Expenses arising from this section (e.g cafe) only. The final profit will not be termed as Net Profit but Cafe Profit or Refreshment Profit depending upon the name give for the trading account itself.

So u mean that even if it comes as refreshment trading account we will add all the depreciation and all other stuff like expenses related to refreshemnt part !

 

[kamidada]

please anyone explain payroll.. ??
like how to make NIC adjustments in payroll, am still confuse..
help will be appreciated.....

NIC has two parts : one which is deducted out of the employee's pay and the other which the employer contributes on behlaf of the employee to the NIC authorities. Lets look at the example
Kya employs Rose as a receptionist. Rose works 35 hours per week at $7 per hour and
10 hours per week at time and a half.
Rose pays 10% of her gross pay NIC
In addition, Kya has to pay an employers’ NIC contribution at the rate of 5% of Rose’s gross pay.
REQUIRED
Calculate the gross pay of Rose for one week.
Calculate the net pay of Rose for one week
Calculate the total cost to Kya of employing Rose for one week.
Prepare Journal Entry to show the payment of Pay and Deductions

GROSS PAY =Normal pay + Overtime pay (35x7) + (10 x 7 x 1.5) = 245 + 105 = 350
NET PAY = Gross Pay - Deductions from employee's pay = 350 - (350 x 10%) = 315 (This will be paid to employee)
TOTAL COST TO EMPLOYER FOR EMPLOYEE = Gross Pay + Employer's Contribution= 350 + (350 x 5%) =367.5

Journal entry

Debit: Net Pay $ 315 Debit: NIC (both employee's and employer's) 35 + 17.5 = 52.5
Credit: Cash/ Bank $ 367.5

 

[scouserlfc]

NIC has two parts : one which is deducted out of the employee's pay and the other which the employer contributes on behlaf of the employee to the NIC authorities. Lets look at the example
Kya employs Rose as a receptionist. Rose works 35 hours per week at $7 per hour and
10 hours per week at time and a half.
Rose pays 10% of her gross pay NIC
In addition, Kya has to pay an employers’ NIC contribution at the rate of 5% of Rose’s gross pay.
REQUIRED
Calculate the gross pay of Rose for one week.
Calculate the net pay of Rose for one week
Calculate the total cost to Kya of employing Rose for one week.
Prepare Journal Entry to show the payment of Pay and Deductions

GROSS PAY =Normal pay + Overtime pay (35x7) + (10 x 7 x 1.5) = 245 + 105 = 350
NET PAY = Gross Pay - Deductions from employee's pay = 350 - (350 x 10%) = 315 (This will be paid to employee)
TOTAL COST TO EMPLOYER FOR EMPLOYEE = Gross Pay + Employer's Contribution= 350 + (350 x 5%) =367.5

Journal entry

Debit: Net Pay $ 315 Debit: NIC (both employee's andemployer's) 35 + 17.5 = 52.5
Credit: Cash/ Bank $ 367.5

Wont you just debit the Wages and salaries with the grand total of 367.5 and credit bank and NIC contribution with their amounts i guess thats what they do in Marking scheme !

 

[kamidada]

Can anyone help me understand suscription account in http://www.xtremepapers.com/papers/CIE/Cambridge International O Level/Principles of Accounts (7110)/7110_w08_qp_2.pdf Q3

Subscriptions account​

$ $
2007
1 Nov Balance b/d (given in info 1) 130 Balance b/d (given in info 1) 210
2008 Bank (130+1490+90*) (given in info 2) 1710
31 Oct Income & expenditure account 1700
31 Oct Balance c/d 90*
(as this is recd for next yr thus c/d)

pl follow the marking scheme for the dates and debits and credits as I m not gud at formatting in this editor of xtremepapers.

 

[kamidada]

help me with loan interest. It has started to come in final accounts a lot

loan from anyone be it the owner or outsiders is a LIABILITY
Interest on loan is an EXPENSE
The amount of interest expense for a period will depend upon the Interest and Time of loan during the year

CALCULATION:
If the loan is obatained in any previous year or at the start of the year; use Interest = Prinicipal x Rate of Interest
If the loan is obatained at any time during the current year; use Interest = Prinicipal x Rate of Interest x month from date of obtaining loan to year end

ENTRY IN THE P&L A/C
No matter what amount of interest loan is shown in the trial balance (this is the amount paid for interest), U will simply show the amount u have worked in the CALCULATION above (as this is the total amount biz is due to pay for the year)

ENTRY IN THE BALANCE SHEET

The entry here wud dpnd upon comparison of (i) CALCULATION and (ii) AMT IN TRIAL BALANCE

if (i) CALCULATION is greater than (ii) AMT IN TRIAL BALANCE means biz has paid less than due thus ACCRUED in the CURRENT LIAB

if (i) CALCULATION is less than (ii) AMT IN TRIAL BALANCE means biz has paid more than due thus PREPAID in the CURRENT ASSETS

TRY SOME QS USING THIS GUIDELINE IN FRONT AND U WILL LEARN THE RULES INSHALLAH

REMEMBER! LOAN ITSELF WILL APPEAR AS A NON CURRENT LIABILITY UNLESS IT IS PAYABLE IN THE NEXT 12 MONTHS FROM THE DATE OF BALANCE SHEET DATE (IN WHICH CASE IT WUD APPEAR AS A CURRENT LIAB TOO)

 

[MustafaMotani]

NIC has two parts : one which is deducted out of the employee's pay and the other which the employer contributes on behlaf of the employee to the NIC authorities. Lets look at the example
Kya employs Rose as a receptionist. Rose works 35 hours per week at $7 per hour and
10 hours per week at time and a half.
Rose pays 10% of her gross pay NIC
In addition, Kya has to pay an employers’ NIC contribution at the rate of 5% of Rose’s gross pay.
REQUIRED
Calculate the gross pay of Rose for one week.
Calculate the net pay of Rose for one week
Calculate the total cost to Kya of employing Rose for one week.
Prepare Journal Entry to show the payment of Pay and Deductions

GROSS PAY =Normal pay + Overtime pay (35x7) + (10 x 7 x 1.5) = 245 + 105 = 350
NET PAY = Gross Pay - Deductions from employee's pay = 350 - (350 x 10%) = 315 (This will be paid to employee)
TOTAL COST TO EMPLOYER FOR EMPLOYEE = Gross Pay + Employer's Contribution= 350 + (350 x 5%) =367.5

Journal entry

Debit: Net Pay $ 315 Debit: NIC (both employee's andemployer's) 35 + 17.5 = 52.5
Credit: Cash/ Bank $ 367.5

thnx I got it..

 

[hashim2]

loan from anyone be it the owner or outsiders is a LIABILITY
Interest on loan is an EXPENSE
The amount of interest expense for a period will depend upon the Interest and Time of loan during the year

CALCULATION:
If the loan is obatained in any previous year or at the start of the year; use Interest = Prinicipal x Rate of Interest
If the loan is obatained at any time during the current year; use Interest = Prinicipal x Rate of Interest x month from date of obtaining loan to year end

ENTRY IN THE P&L A/C
No matter what amount of interest loan is shown in the trial balance (this is the amount paid for interest), U will simply show the amount u have worked in the CALCULATION above (as this is the total amount biz is due to pay for the year)

ENTRY IN THE BALANCE SHEET

The entry here wud dpnd upon comparison of (i) CALCULATION and (ii) AMT IN TRIAL BALANCE

if (i) CALCULATION is greater than (ii) AMT IN TRIAL BALANCE means biz has paid less than due thus ACCRUED in the CURRENT LIAB

if (i) CALCULATION is less than (ii) AMT IN TRIAL BALANCE means biz has paid more than due thus PREPAID in the CURRENT ASSETS

TRY SOME QS USING THIS GUIDELINE IN FRONT AND U WILL LEARN THE RULES INSHALLAH

REMEMBER! LOAN ITSELF WILL APPEAR AS A NON CURRENT LIABILITY UNLESS IT IS PAYABLE IN THE NEXT 12 MONTHS FROM THE DATE OF BALANCE SHEET DATE (IN WHICH CASE IT WUD APPEAR AS A CURRENT LIAB TOO)

thanks a lot