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Accounting flashcards

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Topic 1: Sources and recording of data

The accounting equation, and why capital sits with liabilities: Assets = Capital + Liabilities. Under the business entity concept the business is separate from its owner, so capital is an amount the business owes back to the owner.
DEAD CLIC: Debit: Expenses, Assets, Drawings. Credit: Liabilities, Income, Capital. These are the sides on which each type of account increases.
Goods are bought on credit from Khan for $500, then $80 are returned. Entries and Khan’s balance?: Dr Purchases 500, Cr Khan 500. Dr Khan 80, Cr Purchases returns 80 (never credit Purchases). Khan’s balance: $420 credit, the amount still owed.
Invoice: The source document for a credit sale or purchase.
Credit note and debit note: Credit note: records goods returned. Debit note: a request for a credit note.
Receipt, cheque counterfoil and paying-in slip: Receipt: a payment made or received. Cheque counterfoil: a payment by cheque. Paying-in slip: money banked.
Statement of account: A summary sent to a credit customer.
What do the sales, purchases, sales returns and purchases returns journals record?: Sales journal: credit sales. Purchases journal: credit purchases. Sales returns journal: returns inwards. Purchases returns journal: returns outwards.
Cash book, petty cash book and general journal: what each records: Cash book: all cash and bank transactions. Petty cash book: small cash payments. General journal: everything else, such as opening entries, corrections and non-current assets bought on credit.
Sales ledger, purchases ledger and general (nominal) ledger: Sales ledger: personal accounts of credit customers (trade receivables). Purchases ledger: personal accounts of credit suppliers (trade payables). General (nominal) ledger: all other accounts.
The imprest system, and why it is a control: A fixed petty cash float is restored each period by reimbursing exactly what was spent, so the claim must equal the total of the vouchers. A difference signals an error or a missing voucher.
Where are cash sales recorded? Why not the sales journal?: In the cash book. Only credit sales of goods go in the sales journal; putting cash sales there is the standard error.

Topic 2: Verification of accounting records

Verification of the double entry records: Checking that the double entry records are accurate. The techniques named are the trial balance, control accounts (receivables and payables ledgers) and bank reconciliation statements.
Which four errors make the trial balance totals disagree?: Addition (an account added up wrongly), partial omission (one side missing), transposition (digits swapped on one side) and unequal posting (debit and credit amounts differ).
Omission compared with partial omission: Omission: the whole transaction is missing, so the totals still agree. Partial omission: one side is recorded and the other missing, so the totals differ.
Transposition compared with error of original entry: Transposition: digits swapped on one side only, so the trial balance disagrees. Original entry: the same wrong figure on both sides, so it agrees.
A balance of $3,270 is listed as $3,720. Effect, and what clue does the difference give?: The total is $450 too high. 450 divides exactly by 9 (450 ÷ 9 = 50), the sign of a transposition.
Trial balance: A two-column list of all the ledger account balances at a chosen date, debits on one side and credits on the other. It tests arithmetic agreement only.
Which balances go in the debit column and which in the credit column?: Debit: assets, expenses, purchases, returns inwards, drawings, opening inventory. Credit: capital, income, returns outwards, liabilities (trade payables, loans, bank overdraft).
A bank overdraft of $1,640 is entered in the debit column. Effect on the totals?: It should be a credit, so the totals differ by 2 × 1,640 = $3,280, with the debit column higher.
Uses and limitations of a trial balance: Uses: a quick arithmetic check; shows an error exists; source of balances for the statements. Limitations: six error types leave it agreeing; it does not say where an error is or show that amounts are valued correctly.
Draft totals: debit $28,980, credit $31,200. Rent $1,200 is in the credit column; electricity $680 is listed as $860. Corrected totals?: Debit: 28,980 − 180 + 1,200 = 30,000. Credit: 31,200 − 1,200 = 30,000. Both $30,000.
The trial balance totals differ. What should you not do?: Do not change any figure to force agreement. Re-add, find the difference, test the clues (twice a balance, equal to a balance, divisible by 9) and trace it to the ledger.
Trade receivables and trade payables ledger control accounts: Summaries of all the individual customer accounts in the receivables ledger and all the supplier accounts in the payables ledger. Each is a memorandum record, not part of the double entry.
Receivables control account: which items go on the debit side?: Opening debit balances, credit sales, dishonoured cheques from customers, interest charged on overdue accounts, closing credit balances c/d.
Receivables control account: which items go on the credit side?: Opening credit balances, money received, cash discount allowed, sales returns, irrecoverable debts, contra entries, closing debit balances c/d.
Payables control account: main entries on each side: Credit: opening credit balances, credit purchases, interest charged by suppliers. Debit: money paid, cash discount received, purchases returns, contra entries.
A customer owes the business $1,800 and is owed $2,500 by it. Contra entry?: The contra is the smaller figure, $1,800: debit the trader in the payables ledger, credit the trader in the receivables ledger. The business still owes $700.
Opening receivables $12,400; credit sales $30,100; receipts $28,650; sales returns $900; discount allowed $350; irrecoverable debts $400. Closing balance?: 12,400 + 30,100 − 28,650 − 900 − 350 − 400 = $12,200.
Why keep control accounts?: They give total receivables or payables quickly; check the ledger against the list of balances; narrow the search when they disagree; and give a missing figure such as credit sales. Agreement does not prove the ledger correct.
Unpresented cheque and outstanding banking: Unpresented cheque: paid out and recorded by the business, not yet deducted by the bank. Outstanding banking: entered in the cash book, not yet credited by the bank.
Which items from the bank statement update the cash book, and on which side?: Credit side: bank charges, interest paid, direct debits, standing orders. Debit side: bank interest received, credit transfers received.
Layout of a bank reconciliation statement starting from the bank statement: Balance per bank statement, add outstanding bankings, add or less bank errors, less unpresented cheques = balance per updated cash book.
Bank statement $1,900 credit; unpresented cheques $300; outstanding banking $450. Balance per updated cash book?: 1,900 + 450 − 300 = $2,050.
Cash book error compared with bank error: A cash book error is corrected in the cash book. A bank error is not: it is adjusted on the reconciliation statement and the bank is told.
Use and purpose of a bank reconciliation statement: Confirms the cash at bank figure; finds errors in the cash book and the bank’s record; reveals unrecorded items such as charges; helps spot fraud; shows what is still to clear.
A payment of $85 was recorded in the cash book as $58. Correction?: The payment was understated, so credit the cash book with $27 (85 − 58).
Method for correcting an error with a journal: Name the error; write what was posted; write what should have been posted; journal the difference (through suspense if the trial balance disagreed); add a narrative beginning “being correction of”.
Which side of the suspense account takes the trial balance difference?: The smaller side. Credits bigger: suspense is a debit. Debits bigger: suspense is a credit. It should close to nil after the corrections.
A gas bill of $130 was debited to the telephone account. Error and journal?: Commission (both are expenses). Debit Gas $130; credit Telephone $130.
A $410 payment to a supplier was debited to bank and credited to the supplier. Journal?: Complete reversal: correct with double the amount. Debit the supplier $820; credit Bank $820.
Repairs to a van of $380 were debited to motor vehicles. Error and journal?: Principle. Debit Motor expenses $380; credit Motor vehicles $380.
The wages account was overcast by $700. Journal?: Debit Suspense $700; credit Wages $700.
How does a correcting journal change profit?: Credit to an income or expense account: profit up. Debit to an income or expense account: profit down. Only asset, liability or capital accounts: no change.
Draft profit $18,900. Rent overcast by $600; a credit sale of $1,400 omitted; bank charges of $250 not entered. Corrected profit?: 18,900 + 600 + 1,400 − 250 = $20,650.
Profit $9,500. Insurance was undercast by $400 and a sale of $650 was omitted. Corrected profit?: 9,500 − 400 + 650 = $9,750.
Which errors change gross profit as well as profit for the year?: Errors in sales or purchases move both by the same amount. An error in an expense changes profit for the year only.
A suspense account closes to nil. Does that prove the books are free of errors?: No. Only errors revealed by the trial balance pass through suspense; omission, principle or compensating errors may remain.

Topic 3: Development of the accounting model

Business entity and money measurement: Business entity: the business and owner are separate (an owner’s personal bill is drawings). Money measurement: record only what has a money value (staff morale is not recorded).
Duality and historic cost: Duality: each transaction has two equal effects, a debit and a credit. Historic cost: record at the price paid (land bought for $30,000 stays at $30,000).
Going concern and accruals: Going concern: the business will carry on trading, so items such as prepayments are carried forward. Accruals: match income and expenses to the period they relate to.
Consistency and prudence: Consistency: the same methods each period. Prudence: do not overstate profit or assets; recognise foreseeable losses (such as a provision for doubtful debts).
Materiality and realisation: Materiality: only significant items need full treatment (a $9 stapler is expensed). Realisation: revenue is earned when the goods are delivered or the service given and the customer becomes liable to pay.
Inventory has been valued at selling price. Which concept is broken, and what happens to profit?: Prudence: selling price includes profit not yet realised, so profit is overstated.
Rent of $7,200 is paid on 1 October for 12 months; the year ends 31 December. Expense and prepayment?: Expense 7,200 × 3/12 = $1,800; prepayment $5,400 (accruals, with going concern supporting the carry forward).
Capital expenditure and revenue expenditure: Capital: buys or improves a non-current asset or gets it ready for use; benefit lasts more than one period; statement of financial position. Revenue: running costs and keeping assets working; income statement.
Capital income and revenue income: Capital income: sale proceeds of a non-current asset, capital introduced by the owner. Revenue income: sales, fees, rent, commission and interest received.
A freezer costs $2,500 with $150 delivery; $90 is spent repairing an old freezer. Treatment?: New freezer: capital expenditure of $2,650 (debit Freezers, credit Bank). Repair: revenue expenditure of $90, in the income statement.
Effect of charging a capital item as an expense, and of adding a revenue item to an asset: Capital item expensed: profit and assets understated. Revenue item capitalised: profit and assets overstated.
Repairs of $2,000 are wrongly added to the cost of an asset. Effect on profit?: Profit is overstated by $2,000 (before any depreciation effect).
Why do non-current assets depreciate?: Wear and tear from use, obsolescence (replaced by newer, better equipment) and the passage of time. Depreciation spreads cost over the useful life; it is not a market valuation.
Why is depreciation a non-cash expense?: Cash leaves when the asset is bought, not when depreciation is charged. The charge only reduces profit and the asset’s value in the statement of financial position.
A machine costs $36,000. Straight line with residual value $4,000 over 8 years, and 20% reducing balance for 2 years?: Straight line: (36,000 − 4,000) ÷ 8 = $4,000 a year. Reducing balance: Y1 7,200 (NBV 28,800); Y2 5,760 (NBV 23,040).
Entries for the yearly depreciation charge: Debit Depreciation, credit Provision for depreciation; transfer the depreciation to the income statement. The asset account stays at cost; NBV = cost − provision for depreciation.
Entries in the disposal account: Debit: the asset at cost. Credit: the provision for depreciation on that asset, and the sale proceeds. The balance is the profit or loss, transferred to the income statement.
An asset cost $30,000, provision for depreciation $21,000, sold for $7,000. Result?: NBV 9,000; proceeds 7,000; loss on disposal $2,000.
Other payables, other receivables, income due and income received in advance: effect on profit and where shown: Other payables (expense owing): profit down; current liability. Other receivables (expense prepaid): profit up; current asset. Income due: profit up; current asset. Income in advance: profit down; current liability.
Gas: $180 owing at the start, $2,150 paid, $240 owing at the end. Transfer to the income statement?: 2,150 − 180 + 240 = $2,210. The $240 is an other payable in current liabilities.
Insurance paid $1,500; $200 prepaid at the start and $260 prepaid at the end. Charge?: 1,500 + 200 − 260 = $1,440.
Rent received $3,300; the tenant owed $100 at the start and $180 at the end. Rent income?: 3,300 − 100 + 180 = $3,380.
Draft profit $12,000 omits income due $250, other receivables $180 and other payables $90. Adjusted profit?: 12,000 + 250 + 180 − 90 = $12,340.
Other payables compared with trade payables: Other payables are expenses owing, such as electricity or wages. Trade payables are owed to suppliers of goods for resale.
Irrecoverable debt compared with provision for doubtful debts: Irrecoverable debt: a named customer’s balance that will not be collected, written off (Dr Irrecoverable debts, Cr customer). Provision: an estimate of the loss on the remaining receivables, a credit balance.
Receivables $12,500; provision 4%; existing provision $380. Charge, and receivables shown?: New provision 500, an increase of $120 (an expense). Trade receivables 12,500 less provision 500 = $12,000.
Receivables $13,000; provision 3%; existing provision $520. Effect?: New provision 390, a decrease of $130: Dr Provision, Cr Income statement, so profit rises by $130.
28 units cost $40 each; each can be sold for $36 with $6 of selling costs. Inventory value?: NRV 30 each = $840, lower than cost of $1,120, so value at $840. Profit falls by $280 this year.
Closing inventory is too high. Effect this year and next year?: This year: cost of sales too low, gross and net profit too high, and the current asset overstated. Next year: opening inventory too high, so profit too low.
Which items in this area are not examined in 9215?: The recovery of irrecoverable debts, and FIFO, AVCO and LIFO inventory valuation.

Topic 4: Preparation of financial statements

Sole trader, partnership and limited company: owners and liability: Sole trader: one owner, unlimited liability. Partnership: two or more partners, usually unlimited liability. Limited company: owned by shareholders, limited liability.
Main strength and weakness of each type of business: Sole trader: keeps all profit and decides quickly; but bears the risk with limited capital. Partnership: shared skills and workload; but disputes and shared risk. Company: limited liability and continuity; but rules, cost, loss of control.
Share capital compared with loan capital: Share capital: provided by shareholders, who own the company and share its profit through dividends; part of equity. Loan capital: provided by lenders, who are owed repayment and fixed interest; a liability.
Why might a sole trader become a limited company?: Shareholders have limited liability, and the company can raise capital by selling shares and by borrowing. The cost is more rules and a shared say in running the business.
Layout of a sole trader’s income statement: Revenue; less cost of sales (opening inventory + purchases less own use + carriage inwards − closing inventory) = gross profit; add other income; less adjusted expenses = net profit.
The owner takes goods costing $280 for own use. Double entry?: Debit Drawings $280; credit Purchases $280, at cost. It is not an expense.
Opening capital $15,000; net profit $9,800; drawings $7,200. Closing capital?: 15,000 + 9,800 − 7,200 = $17,600. Net assets in the statement of financial position must equal this.
Revenue $58,000; cost of sales $39,500. Gross profit and gross profit percentage?: Gross profit 18,500; 18,500 ÷ 58,000 × 100 = 31.9%.
Gross profit $15,300; wages $6,000; rent $2,400 paid with $200 owing; depreciation $800; insurance $900 paid with $150 prepaid. Net profit?: Expenses 6,000 + 2,600 + 800 + 750 = 10,150. Net profit 15,300 − 10,150 = $5,150.
How does a service business’s income statement differ?: It has no inventory and no cost of sales: it runs from revenue to expenses, with no gross profit.
Order of the partnership appropriation account: Profit for the year; add interest on drawings; deduct interest on capital; deduct partnership salaries; the residual profit (or deficit) is shared in the profit sharing ratio.
Interest on a partner’s loan compared with interest on capital: Loan interest is an expense in the income statement, paid whatever the profit. Interest on capital is an appropriation of profit, credited to the partner’s current account.
A partner’s salary compared with employees’ wages: Wages paid to employees are expenses. A partner’s salary is an appropriation of profit, credited to the current account.
Profit for the year $27,640; interest on drawings $660; interest on capital $1,950; salary $8,000. Residual, shared 3 : 2?: Residual 27,640 + 660 − 1,950 − 8,000 = 18,350. Shares: $11,010 and $7,340.
Current account: opening debit $500, interest on capital $1,200, salary $6,000, share of profit $4,300, drawings $9,000, interest on drawings $270. Closing balance?: Credits 11,500 − debits 9,770 = $1,730 credit.
Where is a loan from a partner shown in the statement of financial position?: Under non-current liabilities, not in equity. Equity shows each partner’s capital account and current account (debit balances deducted).
Which partnership topics are not examined in 9215?: Admission and retirement of a partner, dissolution of partnerships and changes to the profit sharing ratio.
The five sub-headings of a limited company’s statement of financial position: Non-current assets, current assets, equity, non-current liabilities and current liabilities.
Dividend compared with loan interest: Loan interest is an expense, deducted after operating profit to reach profit for the year. A dividend is a distribution of profit, deducted from retained earnings, never shown among expenses.
A 6% loan of $50,000 was held all year and $1,800 of interest was paid. Interest owing?: Full-year interest 3,000, so $1,200 is owing (a current liability). The income statement deducts the full $3,000.
Retained earnings at the start $12,400; profit for the year $9,100; dividends $4,000. Closing retained earnings?: 12,400 + 9,100 − 4,000 = $17,500.
A loan is repayable eight months after the year end. Where is it shown?: In current liabilities, because it falls due within one year of the statement date.
Name items the 9215 specification says are not examined for limited companies: The statement of changes in equity, preference shares, general reserves, rights issues, bonus issues and the revaluation of non-current assets.
Prime cost and factory overheads: Prime cost: cost of raw materials used + direct wages. Factory overheads: factory running costs that cannot be traced to one unit, such as indirect wages, factory power, insurance, rent and depreciation of machinery.
Factory cost of finished goods, and cost of sales for a manufacturer: Factory cost of finished goods = prime cost + overheads. Cost of sales = opening finished goods + factory cost of finished goods − closing finished goods.
Raw materials used $17,300; direct wages $9,700; overheads $11,000; finished goods $3,000 opening, $4,500 closing. Cost of sales?: Prime cost 27,000; factory cost 38,000; cost of sales 3,000 + 38,000 − 4,500 = $36,500.
Manufacturing account or income statement: carriage inwards, carriage outwards, depreciation of machinery, depreciation of office equipment: Carriage inwards on materials and machinery depreciation: manufacturing account. Carriage outwards and office equipment depreciation: income statement.
Rent of $12,000 is shared two-thirds factory and one-third office. Factory overhead?: Two-thirds of 12,000 = $8,000; the other $4,000 is an office expense in the income statement.
Is the provision for unrealised profit examined in 9215?: No. Finished goods move from the factory at cost.
Receipts and payments account compared with income and expenditure account: Receipts and payments: cash only, including capital items, opening and closing balances. Income and expenditure: accruals basis, the year’s income and expenditure with depreciation, without capital items.
Surplus, deficit and accumulated fund: Surplus: income greater than expenditure; deficit: the reverse. Accumulated fund: the club’s capital, assets less liabilities; it rises by a surplus and falls by a deficit.
Subscriptions in arrears and in advance: In arrears: owed by members, a current asset (other receivable). In advance: received for next year, a current liability (income received in advance).
Subscriptions received $8,400; arrears $250 opening, $180 closing; advance $120 opening, $160 closing. Income?: 8,400 − 250 + 180 + 120 − 160 = $8,290.
How is a club’s bar or shop shown?: In a trading account for that activity, which finds its gross profit or loss (sales − cost of sales). The result is carried to the income and expenditure account.
Income $12,400; expenditure $10,950; opening accumulated fund $6,700. Surplus and closing fund?: Surplus 1,450; closing accumulated fund 6,700 + 1,450 = $8,150.
Single entry compared with double entry: Single entry: each transaction recorded once, often only cash and bank movements. Double entry: each transaction recorded as a debit and a credit, so a trial balance can be taken out.
Statement of affairs: A list of assets and liabilities at one date, built from counted and valued items, with capital (assets − liabilities) as the balancing figure.
Opening capital $5,070; closing capital $3,830; drawings $900; nothing introduced. Profit or loss?: 3,830 − 5,070 + 900 = −340, a loss of $340.
Receivables $1,800 opening, $2,100 closing; cash received $14,200; irrecoverable debts $150. Credit sales?: 14,200 + 150 + 2,100 − 1,800 = $14,650.
Opening bank $1,200; receipts $21,500; payments to suppliers and expenses $16,250; closing bank $1,450. Unrecorded drawings?: 1,200 + 21,500 − 16,250 − 1,450 = $5,000.
Benefits and limitations of single entry: Benefits: cheap, quick and simple; little training; enough for a very small business. Limitations: no trial balance; errors and fraud harder to find; profit needs extra calculations; information is limited.

Topic 5: Interpretation, analysis and communication of financial information

Name the internal and the external stakeholders listed in 9215: Internal (3): employees, management, owners/shareholders. External (5): customers, suppliers, government, lenders, local community.
Interests of employees and management: Employees: job security, pay and conditions. Management: performance against targets, controlling costs, their own job or bonus.
Interests of lenders and suppliers: Lenders: repayment on the agreed dates and interest paid on time (profit before interest, existing loans, assets). Suppliers: prompt payment and continued orders (amounts owed, cash available).
Interests of government, customers and the local community: Government: taxes, law and regulation, jobs. Customers: reliable supply, fair price, quality and service. Local community: jobs, environment, local spending.
Why might shareholders and lenders disagree about a large dividend?: Shareholders receive the dividend, so their return rises. Lenders are owed fixed repayments and prefer cash kept in the business to meet them.
Profit $27,000; dividend $9,000. Retained profit, and percentage paid out?: Retained 27,000 − 9,000 = $18,000. Paid out 9,000 ÷ 27,000 × 100 = 33.3%.
Gross profit margin and markup: Gross profit margin = gross profit ÷ revenue × 100. Markup = gross profit ÷ cost of sales × 100. Markup is the larger figure for the same trading.
Profit in relation to revenue, and return on capital employed: Profit in relation to revenue = profit from operations ÷ revenue × 100. ROCE = profit from operations ÷ capital employed × 100, where capital employed = equity + non-current liabilities. Both use profit from operations, as in the 9215 mark scheme (May/June 2026).
Current ratio and liquid capital ratio: Current ratio = current assets : current liabilities. Liquid capital ratio = (current assets − inventory) : current liabilities. Both written as x : 1.
Rate of inventory turnover, trade receivable days and trade payable days: Inventory turnover = cost of sales ÷ average inventory (times). Receivable days = trade receivables ÷ credit revenue × 365. Payable days = trade payables ÷ credit purchases × 365.
Revenue $96,000; cost of sales $72,000. Gross profit margin and markup?: Gross profit 24,000. Margin 24,000 ÷ 96,000 × 100 = 25.0%. Markup 24,000 ÷ 72,000 × 100 = 33.3%.
Converting margin to markup and back: Markup = margin ÷ (100 − margin) × 100; margin = markup ÷ (100 + markup) × 100. A 40% margin is a 66.7% markup; an 80% markup is a 44.4% margin.
Trade receivables $15,000 on credit revenue of $73,000; trade payables $6,000 on credit purchases of $43,800. Days?: Receivable days 15,000 ÷ 73,000 × 365 = 75 days. Payable days 6,000 ÷ 43,800 × 365 = 50 days. Customers take longer to pay than suppliers are paid, which squeezes cash.
Profit compared with cash and liquidity: Profit: revenue less expenses, recorded when they arise. Cash: money actually received and paid. Liquidity: the ability to pay debts as they fall due.
Why can profit and cash differ?: Credit sales raise profit before cash arrives; depreciation lowers profit with no cash; buying non-current assets, drawings and loan repayments use cash without reducing profit; loans and capital raise cash, not profit.
A business buys inventory on credit. Effect on profit, cash and a current ratio above 1 : 1?: No effect on profit or cash. The current ratio falls, because current assets and current liabilities rise by the same amount.
Current assets $20,000, current liabilities $10,000. $5,000 is paid to trade payables from the bank. New current ratio?: 15,000 : 5,000 = 3 : 1 (up from 2 : 1). Profit does not change.
Is a higher ratio always better?: No. A very high current ratio can mean idle cash or too much inventory; very few receivable days may mean credit terms so tight that sales are lost.
Give reasons a profitable business may have a bank overdraft: Growth in receivables or inventory, buying non-current assets, large drawings, loan repayments.
Financial limitations of financial statements and ratios: They record the past; the statement of financial position is a snapshot at one date; historical cost; estimates and policies change profit; a ratio needs a comparison and gives no reasons; averages hide detail; profit is not cash.
Non-financial factors the statements do not show: Management quality and staff skills, morale, reputation and customer service, competitors and market conditions, the wider economy, changes in law, environmental conduct, location, future plans.
Profit $30,000; capital employed $150,000 at historical cost, $240,000 at today’s values. Effect on the return?: Historical cost: 20.0%. Restated: 12.5%. The business is unchanged; only the basis of the figures differs.
Current assets $60,000, current liabilities $40,000. $20,000 of payables is paid from cash just before the year end. Effect?: The current ratio rises from 1.50 to 2.00 (40,000 ÷ 20,000) although trading is unchanged: the snapshot effect.
Why can two shops in the same trade report different profits from the same machine?: Different policies: for a $40,000 machine, 10% straight line charges $4,000 but 20% reducing balance charges $8,000 in year 1.
Advantages of computerised accounting software over manual methods: Fast posting and totals; automatic arithmetic; one entry updates many records; trial balance and statements on demand; easy storage, search and back-up; several users controlled by passwords.
Disadvantages of computerised accounting software: Cost of hardware, software, updates and training; hacking, viruses and fraud; power failure or system crash; wrong data still posted wrongly; staff resistance; back-ups must be made and kept.
When might manual methods suit a business?: When there are few transactions: they cost little and need no power, though they are slow, error-prone and hard to search.
Does software remove all errors?: No. It removes arithmetic slips, but input errors and errors of principle are still posted.
Software costs $1,500 a year and saves 200 hours at $11 an hour. Net saving?: 200 × 11 = 2,200, less 1,500 = $700 a year.

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Written for OxfordAQA International GCSE Accounting (9215), syllabus 9215 (2024-onwards).

Cards by Marlbridge Academic Team; 7 restate definitions from the 9215 revision notes. This deck was reviewed by Javaid Iqbal Sabri on 2026-11-05. Report an error.

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