IGCSE Accounting 0452

[MnMz]

How do u calculate list price ?!

Can anyone help me wid this :

Bought goods on credit from Ramy El Din, list price $680, subject to a trade discount of 20%
Returned goods, list price $120, to Ramy El Din

List price is calculated in this manner:

Ex: The selling price of a good is $50
and the trade discount is 20%

then 100%-20% = 80% or 0.8

there the original price or list price = $50/0.8 = $62.5o

vice versa is applicable

 

[Rahma Abdelrahman]

MnMz check this:
The part of income statement, what is it exactly?

 

[Gehad Mohamed]

List price is calculated in this manner:

Ex: The selling price of a good is $50
and the trade discount is 20%

then 100%-20% = 80% or 0.8

there the original price or list price = $50/0.8 = $62.5o

vice versa is applicable

Thnx soooooo much

 

[MnMz]

MnMz check this:
The part of income statement, what is it exactly?

It's the balance of the total depreciation for the year which is transferred to the income statement.
and it's always a credit balance because we treat depreciation as a loss, since our assets lose their value each year.

 

[Gehad Mohamed]

What exactly u don't get?

I got it thnxxx anyways

 

[Gehad Mohamed]

It's the balance of the total depreciation for the year which is transferred to the income statement.
and it's always a credit balance because we treat depreciation as a loss, since our assets lose their value each year.

So does that mean any loss is credit and any asset or income Is always debt in income statement ?

 

[Rahma Abdelrahman]

It's the balance of the total depreciation for the year which is transferred to the income statement.
and it's always a credit balance because we treat depreciation as a loss, since our assets lose their value each year.

Shouldn't losses be debited?
And what about the "Disposal account" part on the debit side?

 

[MnMz]

So does that mean any loss is credit and any asset or income Is always debt in income statement ?

It depends.
They are related. Depreciation is the amount of fixed assets used up during an accounting period. It is reported in the income statement as an expense. Accumulated deprecation is a contra asset account in which all past depreciation expanse for an asset is recorded.

Example:

You buy equipment (an asset) for $10,000 with a useful life of 10 years and no salvage value. The equipment account is debited $10,000 and cash is credited. Each year that passes 10 percent of the equipment is used up. The equipment may appear the same, but its useful life is shorter. You have gotten 1/10th of the benefit from your investment.

Using up an asset is an expense. To record the expense, you debit an expense account and reduce the cost of the asset by the amount used up. with equipment however, we don't reduce the $10,000 cost directly. We create a contra-asset account called accumulated depreciation, to that the cost is maintained in the asset account. At the end of the first year of use the entry is

dr - depreciation expense..........1,000
cr - accumulated depreciation ...................1,000

The expense is reported on the income statement. The accumulated depreciation account now has a $1,000 credit and is reported on the balance sheet right after the equipment account. The $10,000 debit in equipment less the $1,000 credit in accumulated depreciation shows that the book value of the asset is $9,000.

Next year the process is repeated, and accumulated depreciation will grow to $2,000. The equipment will have a book value of $8,000, and so on year after year. Each year the depreciation expense is $1,000 and the book value of the equipment declines.

Remember that the income statement accounts (temporary accounts) are closed at the end of the year, while the accumulated depreciation (a permanent account) keeps growing.

 

[Gehad Mohamed]

It depends.
They are related. Depreciation is the amount of fixed assets used up during an accounting period. It is reported in the income statement as an expense. Accumulated deprecation is a contra asset account in which all past depreciation expanse for an asset is recorded.

Example:

You buy equipment (an asset) for $10,000 with a useful life of 10 years and no salvage value. The equipment account is debited $10,000 and cash is credited. Each year that passes 10 percent of the equipment is used up. The equipment may appear the same, but its useful life is shorter. You have gotten 1/10th of the benefit from your investment.

Using up an asset is an expense. To record the expense, you debit an expense account and reduce the cost of the asset by the amount used up. with equipment however, we don't reduce the $10,000 cost directly. We create a contra-asset account called accumulated depreciation, to that the cost is maintained in the asset account. At the end of the first year of use the entry is

dr - depreciation expense..........1,000
cr - accumulated depreciation ...................1,000

The expense is reported on the income statement. The accumulated depreciation account now has a $1,000 credit and is reported on the balance sheet right after the equipment account. The $10,000 debit in equipment less the $1,000 credit in accumulated depreciation shows that the book value of the asset is $9,000.

Next year the process is repeated, and accumulated depreciation will grow to $2,000. The equipment will have a book value of $8,000, and so on year after year. Each year the depreciation expense is $1,000 and the book value of the equipment declines.

Remember that the income statement accounts (temporary accounts) are closed at the end of the year, while the accumulated depreciation (a permanent account) keeps growing.

Thnnnnnnnxxxxxxx a lot

 

[MnMz]

Shouldn't losses be debited?
And what about the "Disposal account" part on the debit side?

Here are the steps for the disposal of fixed assets:

Step 1: Transfer the cost of Asset sold to the disposal Account
Credit - Asset account
Debit - Disposal account

Step 2: Transfer Provision for depreciation (that belongs to the asset sold) to the disposal account.
Debit - Provision for depreciation account
Credit - Disposal account

Step 3: Receipt of Cash/cheque.
Debit - Cash book
Credit - Disposal account

 

[Rahma Abdelrahman]

Here are the steps for the disposal of fixed assets:

Step 1: Transfer the cost of Asset sold to the disposal Account
Credit - Asset account
Debit - Disposal account

Step 2: Transfer Provision for depreciation (that belongs to the asset sold) to the disposal account.
Debit - Provision for depreciation account
Credit - Disposal account

Step 3: Receipt of Cash/cheque.
Debit - Cash book
Credit - Disposal account

I somewhat got it... But I think I'll have to memorise that!
Thanks very much for ur help

 

[Qtie Pie]

U first use the markup to calculate the Cost Of Sales : Sales=216000=125%

Cost price=? =100% Cross multiply to get cost of sales which is 172800... From here you can go backwards to find closing inventory...19500+174100-x=172800.... Hope u get it ​

why did you keep cost price as 100%?

 

[Rahma Abdelrahman]

why did you keep cost price as 100%?

In markup, we keep the cost price as 100% but in margin we keep the selling price as 100%
There is an easy way for me to remember it... Mark Up has "K" sound while cost price has the same sound as a C... so markup - cost price - 100%

 

[Qtie Pie]

In markup, we keep the cost price as 100% but in margin we keep the selling price as 100%
There is an easy way for me to remember it... Mark Up has "K" sound while cost price has the same sound as a C... so markup - cost price - 100%

oh i get it.. thank you
And have you practiced all the past papers?

 

[Rahma Abdelrahman]

oh i get it.. thank you
And have you practiced all the past papers?

Of course not!! Who's that genius who did that anyways?!!
I actually haven't practised much... But I hope that by the time of the exam I will be more confident in shaa Allah
What about you?

 

[Qtie Pie]

Of course not!! Who's that genius who did that anyways?!!
I actually haven't practised much... But I hope that by the time of the exam I will be more confident in shaa Allah
What about you?

Actually i didnt touch accounting for a month as i was concentrating more on other subjects.. i dont do all the past papers too
Just going through the 2010 to 2012 past papers seems efficient.. isnt it?

 

[Rahma Abdelrahman]

Actually i didnt touch accounting for a month as i was concentrating more on other subjects.. i dont do all the past papers too
Just going through the 2010 to 2012 past papers seems efficient.. isnt it?

I havent gone through it for like 6 weeks b4 i started last saturday
I dont know... I think u do as much as you can... if u get time do from the older papers too...

 

[mak kings]

Here are the theory notes.
if there is anything missing tell me

the formats and everything are coming up by tom.

P.S. sorry for the delay; I had an exam

THANX ALOT!!

 

[xpfaddict]

When are the formats coming? I am waiting!

 

[umair1161]

Rahma Abdelrahman....these are the bad debts accounts...sorry for the HUGE delay tell me if u dont understand anything!

hope this helps!