Financial statements of organisations (AS Level) flashcards

Topic 1.3: Financial statements of organisations

Sole trader: closing capital

Opening capital + profit for the year − drawings (+ any capital introduced).

Rates paid 5,400; 900 prepaid at the start and 1,100 at the end. Expense?

5,400 + 900 − 1,100 = 5,200.

Receivables 22,000 after write-offs; allowance 3%; last year's allowance 800. Effect on profit and SOFP figure?

New allowance 660, a decrease of 140, added to profit. Receivables shown at 22,000 − 660 = 21,340.

Departmental accounts: heating of 9,000 shared by floor area of 500 : 250 : 150 m²

5,000 : 2,500 : 1,500 (total area 900 m², so 10 per m²).

Convert these mark-ups to margins: 25%, 50%, 100%

25% mark-up = 20% margin. 50% mark-up = 33⅓% margin. 100% mark-up = 50% margin.

Profit 40,000; interest on drawings 600; partner's salary 8,000; interest on capital 4,600. Residual profit, shared equally by two partners?

40,000 + 600 − 8,000 − 4,600 = 28,000, so 14,000 each.

Fixed capital vs fluctuating capital accounts

Fixed: the capital account holds only capital introduced or withdrawn; salaries, interest, profit shares and drawings go to a current account. Fluctuating: everything goes through the capital account; no current account.

Section 24, Partnership Act 1890: rules where there is no agreement

Profits and losses shared equally; no salaries; no interest on capital; no interest on drawings; 5% a year on loans beyond agreed capital, charged against profit.

Goodwill of 40,000 (not kept in the books) on admitting Z. New ratio X 2 : Y 2 : Z 1. Debit to Z?

Old partners are credited in the old ratio; all new partners are debited in the new ratio. Z: 40,000 × 1/5 = 8,000 debit.

A club receives subscriptions of 4,870, including 120 owed from last year and 210 for next year. Income for the year?

4,870 − 120 − 210 = 4,540.

Closing finished goods at transfer price 13,200; mark-up 10%. Unrealised profit?

13,200 × 10/110 = 1,200. Deduct only the increase in the provision from profit; show finished goods at cost.

Opening accumulated fund 12,400; surplus 1,850. Closing accumulated fund?

12,400 + 1,850 = 14,250. The accumulated fund is a club's assets minus liabilities.