O level Accounting Help

[Ibrahim Hasan]

I am giving my POA Paper in 2 weeks, and I have a few queries if anyone will be so kind as to help:
1. Is there any official format for the Financial Statements? Becasuse everywhere I find a different one.... My Sir taught me to make Income Statements with 3 columns but in the MS it only has 2, does that make a difference?

2. What is a Statement of Affairs?

 

[Romeo Sheikh]

Statement of Affairs is similar to balance sheet except that it doesnt have a financed by section and uses the opening values of each transaction for calculating old/opening capital of the business.

 

[Romeo Sheikh]

I am giving my POA Paper in 2 weeks, and I have a few queries if anyone will be so kind as to help:
1. Is there any official format for the Financial Statements? Becasuse everywhere I find a different one.... My Sir taught me to make Income Statements with 3 columns but in the MS it only has 2, does that make a difference?

2. What is a Statement of Affairs?

it doesnt matters whether how many columns you use because they are used just for easy reading purpose only other wise transactions can be recorded in one column or 5 columns too. hope it helps

 

[ABM]

This is a common problem which students have because in real life accounting there are different standards like IFRS and US GAAP or UK GAAP besides there are other local standards so how financial information is presented and recorded depends on that. This i learned when i was giving my Chartered Accounting Examination as some of the way accounting is done in real life was different from what i was taught in graduation. So there are no right and wrong methods of presenting financial information it depends on your country's laws.
For examination purpose if you follow books like Frankwood which is recommended for O levels by CIE it has two columns income statement while Catherine Coucom which is recommended if IGCSE has three columns income statement having said that according to CIE standards both are acceptable. However In June 2014 Q 1e it has specifically asked for two column trial balance so if it specifically asked like that then you are bound to make two column trial balance. I have checked the marking schemes again and have found no mention of the format to be used.
I have thought this subject for many years and my advice is that at your level it does not matter unless the examiner specifically bounds you. The examiner will not deduct marks for it, in the past the examiner has deducted marks for not writing the company name in the heading but never for format.

Your second question was what is the statement of affairs well legally in real life it is a sort of Balance sheet prepared usually in single entry and contains stuff required by the local law for a company applying for bankruptcy / insolvency. It displays information about assets and liabilities and their net value on the day of insolvency.
As far as your level is concerned think of it as a balance sheet showing the net book value.
Hope this answers your questions
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[Ibrahim Hasan]

Thanks for the answers! Can you also help me in the following question:
Q How does the Prudence Concept affect valuation of Work In Progress?
Q How does Going Concern affect valuation of Work in Progress?