POA Worksheet

MINISTRY OF EDUCATION
WORKSHEETS
“PRINCIPLES OF ACCOUNTS”
Grade (11)
TERM (11)
Contents
WEEK # 1 – TOPIC: ACCOUNTING ADJUSTMENTS ............................................................. 4
LESSON # 1: Definition of Depreciation, Reasons for Deprecating Fixed assets, .................... 4
Methods of Depreciation............................................................................................................. 4
WEEK # 1 – TOPIC: ACCOUNTING ADJUSTMENTS............................................................. 7
LESSON # 2: Methods of Depreciation ..................................................................................... 7
WEEK #1 – TOPIC: ACCOUNTING ADJUSTMENTS ............................................................ 12
LESSON # 3: Double entry records for depreciation and the disposal of assets ...................... 12
WEEK #2 – TOPIC: ACCOUNTING ADJUSTMENTS ............................................................ 17
LESSON # 1: Double entry records for depreciation and the disposal of assets ...................... 17
WEEK # 2 – TOPIC: ACCOUNTING ADJUSTMENTS ........................................................... 21
LESSON # 2: Definition of Bad debts Account, bad debt recovered ....................................... 21
WEEK # 2 – TOPIC: ACCOUNTING ADJUSTMENTS........................................................... 26
LESSON # 3: Provision for bad debts ...................................................................................... 26
WEEK # 3 – TOPIC: ACCOUNTING ADJUSTMENTS........................................................... 31
LESSON # 1: Provision for bad debts ...................................................................................... 31
WEEK # 3 – TOPIC: CONTROL SYSTEMS ............................................................................. 36
LESSON # 2: Importance and types of errors .......................................................................... 36
WEEK # 3 – TOPIC: Capital and Revenue Expenditure ............................................................. 39
LESSON # 3: Treatment of capital and revenue expenditure................................................... 39
WEEK # 4 – TOPIC: BANK RECONCILIATION ..................................................................... 43
LESSON # 1: Updating of the cash book ................................................................................. 43
WEEK # 4 – TOPIC: CONTROL ACCOUNTS .......................................................................... 49
LESSON # 2: Journal entries .................................................................................................... 49
WEEK # 4 – TOPIC: PURCHASE CONTROL ACCOUNT ...................................................... 54
LESSON # 3: Journal entries .................................................................................................... 54
WEEK # 5 – TOPIC: PREPAYMENTS AND ACCURALS ...................................................... 58
LESSON # 1: Treatment of accruals and prepayments ............................................................ 58
WEEK # 5 – TOPIC: PREPAYMENTS AND ACCURALS ...................................................... 63
LESSON # 2: Definition, treatment in the statement of financial position .............................. 63
WEEK # 5 – TOPIC: SUSPENSE ACCOUNT ........................................................................... 69
LESSON # 3: Definition and errors affecting the trial balance ................................................ 69
WEEK # 6 – TOPIC: PARTNERSHIP ACCOUNTING ............................................................. 78
LESSON # 1: Examples, questions for students ...................................................................... 78
WEEK # 6 – TOPIC: PARTNERSHIP ACCOUNTING continued ............................................ 83
LESSON # 2: Interest on capital, interest on drawings, partners salary ................................... 83
WEEK # 6 – TOPIC: PARTNERSHIP ACCOUNTING continued ............................................ 88
LESSON # 3: Interest on loan, final accounts of a partnership ................................................ 88
WEEK # 7 – TOPIC: FINAL ADJUSTMENTS TO FINANACIAL STATEMENTS ............... 94
LESSON # 1: Final Accounts ................................................................................................... 94
WEEK # 7 – TOPIC: PARTNERSHIP ACCOUNTING continued .......................................... 101
WEEK # 7 – TOPIC: LIMITED LIABILITY COMPANY ....................................................... 105
LESSON # 3: Introduction, types, treatment content: ............................................................ 105
WEEK # 8 – AN INTRODUCTION FOR ACCOUNTING FOR LIMITED COMPANIES... 110
LESSON # 1: Limited Liability company ............................................................................. 110
WEEK # 8 – AN INTRODUCTION FOR ACCOUNTING FOR LIMITED COMPANIES ... 114
LESSON # 2: How is capital raised in a limited liability company and cooperatives ........... 114
WEEK # 8 – AN INTRODUCTION FOR ACCOUNTING FOR LIMITED COMPANIES ... 118
LESSON # 3: Journal entries for issue of Shares and Debentures: Debentures calculations . 118
WEEK # 9 – LIMITED COMPANY FINANCIAL STATEMENTS ........................................ 124
LESSON # 1: Income Statement and Appropriation Account - Limited Company income .. 124
statement ................................................................................................................................. 124
WEEK # 9 – LIMITED COMPANY FINANCIAL STATEMENTS ........................................ 132
LESSON # 2: Balance Sheet - Limited Company Income Statement ....................................... 132
WEEK # 9 – ANALYSING THE PERFORMANCE OF A LIMITED LIABILITY ................ 136
COMPANY................................................................................................................................. 136
LESSON # 3: Ratio Analysis................................................................................................. 136
WEEK # 10 – ACCOUNTING FOR COOPERATIVES ........................................................... 144
LESSON # 1: Types of Cooperative and Income and Expenditure Statement....................... 144
LESSON # 2: Cooperatives Appropriation Account ............................................................. 152
LESSON # 3: Statement of Financial Position (Balance Sheet)............................................ 156
LESSON # 1: Non-profit organizations and Receipts and Payments Account ..................... 158
WEEK # 11 – MANUFACTURING ACCOUNTS ................................................................... 163
LESSON # 2: Preparation of The Cost of Production ........................................................... 163
LESSON # 3: Work in Progress Section of the Manufacturing Account .............................. 169
LESSON # 3: Trading Account and Balance sheet ............................................................... 171
WEEK # 12 – INVENTORY CONTROL .................................................................................. 174
LESSON # 1: Stock Valuation, importance and The First In First Out Method ................... 174
LESSON # 2: Last In First Out (LIFO) and Average Cost Method (AVCO) ....................... 178
LESSON # 3: Calculating Gross Profit Using FIFO, LIFO and AVCO ................................ 182
WEEK # 13 – ACCOUNTING FOR THE ENTREPRENEUR ................................................. 184
LESSON # 1: Payroll .............................................................................................................. 184
WEEK # 13 – PAYROLL........................................................................................................... 190
LESSON # 2: Source documents for pay calculations, Statutory and Non-statutory deductions
................................................................................................................................................. 190
and net pay .............................................................................................................................. 190
WEEK # 13 – PAYROLL........................................................................................................... 195
LESSON # 3: Payroll software and calculating payroll ......................................................... 195
WEEK # 14 – FORECASTING AND BUDGET....................................................................... 198
LESSON # 1: Cash flow, purpose of budgeting, Stages in budget preparation and Types of 198
Budgets ................................................................................................................................... 198
WEEK # 14 – FORECASTING AND BUDGET....................................................................... 201
LESSON # 2: Cash flow projections ...................................................................................... 201
WEEK # 14 – FORECASTING ................................................................................................. 204
LESSON # 3: Sales Budget and Production Budget .............................................................. 204
WEEK # 14 – FORMATS OF FINAL ACCOUNTS OF VARIOUS BUSINESS VENTURES
..................................................................................................................................................... 207
LESSON # Formats Revision ................................................................................................. 207
LESSON # 1
PRINCIPLES OF ACCOUNTS
WORKSHEET
GRADE 11
Name of Student: ______________________ Date: ____________________
WEEK # 1 – TOPIC: ACCOUNTING ADJUSTMENTS

LESSON # 1: Definition of Depreciation, Reasons for Deprecating Fixed assets,
Methods of Depreciation
CONTENT:
Definition of Depreciation
Depreciation is the process of reducing the value of a fixed asset over its useful life;
it is a non-cash expense to the business.
Deprecation is a prime example of a nominal account; this expense is charged to the profit and
loss account, and therefore it reduces net profit. This falls under the accrual (matching) concept.
Students’ activity:
Identify some common non-current (fixed) assets the business owns and give a possible reason
to reduce the cost-value of the asset.
Reasons for Depreciating Non-current Assets
The principal causes of depreciation are:
➢ Physical deterioration – this is the ‘wear and tear’ the asset endures over its useful
life time, from the everyday use. For example, the motor van that does delivery will
have mechanical issues, buildings would rot, metal will rust and decay; and, in the case
of land, erosion would take place.
➢ Economic factors - the two main factors are obsolescence and inadequacy. As the
years pass, the equipment of the business become out dated. For example, a touch
screen computer would be more updated as compared to a manual one.
➢ Time factor - after years have passed, the life span for non-current assets comes to an
end.
➢ Depletion - this refers to most natural resources - the depletion of our rainforest, oil
reserves and gold.
Methods of calculating Depreciation
There are many ways of calculating depreciation, but the two most common methods are:
➢ The straight-line method
➢ The reducing balance method
The straight-line method charges depreciation evenly over the lifetime of the asset. With this
method, every year the same amount is charged as depreciation in the profit and loss account.
In the balance sheet, accumulated depreciation is charged. The consistency concept is applied
when choosing a method of depreciation.
The straight-line method uses:

➢
The cost value – this is the first amount paid for the asset; it does not change.
➢
The useful life - this is the expected years the business will use the assets.
➢
The scrap value - this the expected value of the asset after its useful life.
Formula: -
Cost – scrap value
No. of yrs. of useful life
Useful life = depreciation charge for the year
Example:
Non-current asset Motor Van
Cost $1,200,000
Scrap value $200,000
Useful life 5 years
$1,200,000 - $200,000
5 years
Ans.: $200,000 is the depreciation cost per year for the next five years.
ACTIVITY
1. Identify some common non-current (fixed) assets the business owns and give a possible
reason to reduce the cost value of the asset.
2. Examine the table below, and used the straight-line method of depreciation, calculate the
depreciation charges for the next FIVE years.
Non-current asset Building
Cost value $2,500,000
Scrap value $ 500,000
Useful life 10 years
TASK: Calculate the depreciation cost for per a year, for the next year.
Using the information below, calculate the depreciation charges for the next FOUR years.
The business uses the straight-lime method of depreciation.
3. Non-current asset machinery

Cost value $450,000
Scrap value $50,000
Useful life 4 years
TASK: Calculate the depreciation for the next 4 years.
……………………………………………………………………………………………………..
Reference:
Robinson, S. and Wood, F. Principles of Accounts for the Caribbean, Hodder Education, A
Hachette UK Company Publishers, 2018
Holdip, G. and Lamorell, C. Principles of Accounts for the Caribbean, Macmillan Caribbean
Publishers, 2004
LESSON # 2
WORKSHEET
GRADE 11
Name of Student: ___________________________ Date: ____________________

LESSON # 2: Methods of Depreciation
CONTENT:
The reducing balance method
The Reducing balance method – charges depreciation using a fixed percentage to reduce the
net-book value of the asset.
This method takes the following into consideration:
➢ Cost for the first year;

➢ The net-book value (NBV) every year after that; and,
➢ The percentage that is the depreciation charge.
Formula for reducing balance method
First year deprecation value = cost *% = Net book value
Second year depreciation value = NBV *% = Net book value

ACTIVITY
Identify the difference between the straight-line method and the reducing balance method.
Example:
Non-current asset motor Van

Cost $1,200,000
Depreciation
percentage 10%
Expected useful life 5 years
First year depreciation value = cost * depreciation value $1,200,000 *10%

$120,000 Net book value
= cost – depreciation value
= $1,200,000 - $120,000
Net book value = $1,080,000
Note: the depreciation cost for the first year is $120,000
The net book value is calculated so that the second-year depreciation value can be
calculated using the NBV.
Second year depreciation value = net book value *10%

$1,080,000*10%
= $108,000
Net book value = $1,080,000 - $108,000 = $972,000
Third year depreciation value = net book value *10%

= $972,000 *10%
= $97,200
Net book value = $972,000 - $97,200 = $874,800
Fourth year depreciation value = net book value *10%

= $874,800 *10%
= $87,480
Net book value = $874,800 - $87,480 = $787,320
Fifth year depreciation value = net book value *10%

= $787,320 * 10%
= $78,732
Net book value = $787,320 - $78,732 = $708,588
Alternative
Method
Cost price $1,200,000
First year depreciation (10%) $120,000
Net Book Value $1,080,000
Second year depreciation (10%) $108,000
Net Book value $972,000
Third year depreciation (10%) $97,200
Net Book Value $874,800
Fourth year depreciation (10%) $87,480
Net book value $787,320
Fifth year depreciation (10%) $78,732
Net book value $708,588

Additional notes on the Reducing Balance method:
This method of depreciation accounts for higher reduction in value, while the rate repaid
will be lower. Hence, as the years go by and the cost of repairs increases, the depreciation
cost reduces.
Accumulated Depreciation
Accumulated depreciation is the cumulative (total) depreciation of an asset up to a single

point in its life. Accumulated depreciation is a contra-asset account, meaning its natural
balance is a credit that reduces the overall asset-value.
Extract of the balance sheet to reflect deprecation charges from the example in the handout on
the straight-line method of Depreciation.
Straight line Method
Year 1 Cost $ Depreciation $ Net book Value $

Motor vehicle 1,200,000 200,000 1,000,000
Year 2 Cost $ Depreciation $ Net Book Value $
Motor vehicle 1,200,00 400,000 800,000
Motor Van 1,200,000 600,000 600,000
Year 4 Cost$ Depreciation $ Net Book Value$
Motor Van 1,200,000 800,000 400,000
Motor van 1,200,000 1,000,000 200,000
Key points
The cost of the fixed asset does not change over the lifetime of the asset. In the depreciation
column of the balance sheet, from the second year, it becomes accumulated depreciation. This
is applied for both methods of depreciation.
Depreciation follows the consistency concept, where every year the same method is applied to
a fixed asset. However, a business may use different methods to depreciate the various fixed
assets.
ACTIVITY
1. Prepare a table just like the one above (Straight-line method), from the information
below. Calculate the depreciation charges for FIVE years using the Reducing
Balance method:
- Cost price – motor van, $1 200 000
- Depreciation rate 20%
- Number of years in used – 5 years
2. A machine costs $12,500. It will be kept for four years, and then sold for an estimated
figure of $5,120. Show the calculations of the figures for depreciation for each of the four
years using:
(a) the straight-line method, and
(b) the reducing balance method (for this method, use a depreciation rate of 20%).
3. A concrete mixer is bought for $6,000. It will be used for three years, and then sold
back to the supplier for $3,072. Show the depreciation calculations for each year using
(a) the reducing balance method with a rate of 20%, and
(b) the straight-line method.
4. From the following information, which shows the depreciation for the first two years of
use for two assets, you are required to answer the questions set out below:
Machinery $ Fixtures $
Cost year 1 8 000 3 600
Year 1 Depreciation (1 600) (900)
6 400 2 700
Year 2 Depreciation (1 600) (675)
4 800 2 025
(a) Which type of depreciation method is used for each asset?
(b) What will be the book value of each of the assets after four years of use?
(c) If instead of the method used, the machinery had been depreciated by the
alternative method but using the same percentage rate, what would have been the
book value after four years? (Calculate your answer to the nearest $)
………………………………………………………………………………………………………
Reference:
Holdip, G. and Lamorell, C., Principles of Accounts for the Caribbean, Macmillan Caribbean
Publishers, 2004
LESSON # 3
WORKSHEET
GRADE 11
Name of Student: _______________________ Date: ____________________
WEEK #1 – TOPIC: ACCOUNTING ADJUSTMENTS

LESSON # 3: Double entry records for depreciation and the disposal of assets
CONTENT:
At the purchases of a non-current assets, the cost price is recorded in the respective asset account
and the depreciation charge is shown separately in an ‘Accumulated provision for depreciation
account’. This account shows the depreciation charges accumulating each year.
The following example illustrates the accounting records.
Example:
On January 1, 2015, a business purchases machinery for $2,000 for use in the business’
workshop. The company uses the reducing balance method of depreciation, using a rate of 20%
per annum, and its financial year ends December 31, 2015. The accounting records for the first
three years are illustrated below:
1. The machinery is purchased on January 1, 2015 and paid for by cheque:
• Debit the machinery account

• Credit the bank account
2. At the end of the financial year, the asset is depreciated at 20% per annum, using the reducing
balance method. First of all, we need to calculate the amount of depreciation to be charged
each year:
$
Cost of machinery 2,000
First year Depreciation (20%) 400
Net book value - year 1 1,600
Second year Depreciation (20%) 320
Net book value - year 2 1,280
Third year Depreciation (20%) 256
Nat book value - year 3 1,024
NOTE: cost - accumulated depreciation = net book value (at the end of the three years)
$2000 - $976 = $1,024
3. To record the depreciation:
• Debit the profit and loss account with the amount of the depreciation each year.
• Credit the provision for depreciation of machinery account with the amount of the
depreciation each year.
4. Show how the items would appear in the statement of financial position (balance sheet):
• The balance of the machinery account is shown at cost price.
• The balance on the provision for depreciation of machinery account is shown.
• The net book value is shown, that is, the cost price less the balance on the provision for
depreciation account.
Now, the balance on the machinery account is shown on the statement of financial position at
the end of each year, less the balance on the provision for depreciation account.
Another example is now given:
This is an example of a business whose financial year ends June 30. A motor car is bought for
$8,000 on July 1, 2015. Another car is bought on July 1, 2016 for $11,000. Each car is expected
to be in use for five years, and the disposal value of the first and second car is expected to be
$500 and $1,000, respectively. The method of depreciation to be used is the straight-line method.
The first two years’ accounts are shown below:
Depreciation per year – straight line method:
NOTE: The entries in the cash book have not been shown in this example.
ACTIVITY
Calculate the depreciation charges for the business below:
………………………………………………………………………………………………………
Reference:
Robinson, S. and Wood, F., Principles of Accounts for the Caribbean, Hodder Education, A
Publishers, 2004
LESSON # 4
WORKSHEET
GRADE 11
WEEK #2 – TOPIC: ACCOUNTING ADJUSTMENTS

LESSON # 1: Double entry records for depreciation and the disposal of assets
CONTENT:
The disposal (sale) of an asset
When assets are disposed of (sold), there must be corresponding accounting entries.
Reason for accounting entries:
➢ Upon the sale of an asset, we will want to delete it from our records. This means that the
cost of that asset needs to be taken out of the asset account.
➢ the depreciation of the asset that has been sold will have to be taken out of the depreciation
provision.
➢ Finally, the profit or loss on sale, if any, will have to be calculated.
When we charge depreciation on a non-current asset, we have to make estimates. We cannot be

absolutely certain how long we will keep the asset in use, nor can we be certain at the date of
purchase how much the asset will be sold for on disposal (nor will we always estimate correctly).
This means that when the asset is disposed of, the cash received for it is usually different from our
original estimate.
Accounting entries needed on the sale of a non-current asset, for instance machinery, the
following entries are needed:
1. Transfer the cost price of the asset sold to an asset disposal account (in this case, a
machinery disposals account):
• Debit machinery disposals account
• Credit machinery account
2. Transfer the depreciation already charged to the asset disposal account:

• Debit provision for depreciation of machinery account
• Credit machinery disposals account
3. For remittance received on disposal:

• Debit cash book
• Credit machinery disposal account.
4. Transfer the difference (that is, the amount to balance the machinery disposal account) to
the profit and loss account.
(i) If the machinery disposals account shows a difference on the debit side of the
account, it is a profit on sale:
• Debit machinery disposals account
• Credit profit and loss account.
(ii) If the machinery disposals account shows a difference on the credit side of the
account, it is a loss on sale:
• Debit profit and loss account
• Credit machinery disposals account.
These entries can be examined by looking at those needed if the machinery already shown in the
above were sold. The records of December 31, 2017 show that the cost of the machine was $2,000
and a total of $976 had been written as depreciation, leaving a net book value of ($2,000 – $976)
= $1,024.
If, therefore, the machinery is sold on January 2, 2018 for more than $1,024, a profit on sale will
be made. If on the other hand, the machinery is sold for less than $1,024, then a loss on disposal
will be incurred. The machinery sold for $1,070, therefore a profit is made.
The entries if, instead of the machine being sold at a profit, the same asset had been sold for only
$950, which would mean that a loss was incurred on sale is below.
ACTIVITY
……………………………………………………………………………………………………..
Reference:
Publishers, 2004
LESSON # 5
WORKSHEET
GRADE 11

LESSON # 2: Definition of Bad debts Account, bad debt recovered
CONTENT:
Definition, Bad debts account, bad debt recovered
Bad debts are those items of charge on the profits of the company that indicate the
sums of money which may not be recovered from a debtor, during the year. In order
to record the number of bad debts correctly, such sum is charged to the profit and
loss account and deducted from the value of debtors for that year, so that the amount
represents money that is actually expected to accrue from the debtors.
Possible reasons that give rise to bad debts:
➢ Debtors become bankrupt

➢ Death of debtors
➢ Debtors is nowhere to be traced/found
Features of bad debts:
➢ Debts that are uncollectable

➢ An expense
➢ There is a debit balance
An example of debts being written off as bad:
We sold $50 goods to C. Baptiste on January 5, 2017, but that business became bankrupt. On
February 16, 2017, we sold $240 goods to R. Shaw. Shaw managed to pay $200 on May 17,
2017, but it became obvious that he would never be able to pay the final $40. When drawing
up our final accounts to December 31, 2017, we decided to write these off as bad debts. The
accounting entries are shown in the following table:
The accounts would appear as follows:
Compromise:
At times, an agreement may be reached between a debtor and a creditor in which the creditor
agrees to accept an amount less than the original debt. Hence, the debtors pay a part of the actual
amount owed. See example below:
Bad Debts Recovered
Bad debt recovery is a payment received for a debt that was written off and
considered uncollectible. The receivable may come in the form of a loan, credit
line, or any other accounts receivable. Because it generally generates a loss when
it is written off, bad debt recovery usually produces income.
The accounting for a bad debt recovery is a two-step process, as follows:

1. Reverse the original recording of the bad debt. This means creating a debit to the accounts
receivable asset account in the amount of the recovery, with the offsetting credit to the
allowance for doubtful accounts contra-asset account. If the original entry was instead a credit
to accounts receivable and a debit to bad debt expense (the direct write-off method), then
reverse this original entry.
2. Record the cash receipt from the bad debt recovery, which is a debit to the cash
account and a credit to the accounts receivable asset account.
Example:
ABC Ltd. sells goods to DEF Ltd. for $500, on credit. ABC Ltd. subsequently finds out
that DEF Ltd. is being liquidated and therefore the prospects of recovering its dues are
very low. ABC Ltd. therefore writes off the receivable from its books. However, the
administrator appointed to oversee the liquidation of DEF Ltd. instructs the company to
pay $300 to ABC Ltd. in full settlement of its dues.
As $300 of the bad debt has been recovered, it is necessary to cancel the effect of
previously recognized bad debt expense up to this amount. The accounting entry will
therefore be as follows:
Debit Cash/Bank $300
Credit Bad Debt Recovered (Income) $300
ACTIVITY
…………………………………………………………………………………………………….
Reference:
Publishers, 2004
LESSON # 6
WORKSHEET
GRADE 11

LESSON # 3: Provision for bad debts
CONTENT:
Provision for Bad Debts
The provision for doubtful debts, which is also referred to as the provision for bad
debts or the provision for losses on accounts receivable, is an estimation of the
amount of doubtful debt that will need to be written off during a given period.
An example: the accounts of K. Charles, who started in business on January 1, 2017 and
has just completed his first year of trading on December 31, 2017.
Charles sold goods for $50,000 that cost him $36,000, giving him a gross profit of $14,000
($50,000 – $36,000). However, included in the $50,000 sales was a credit sale of $250 to C.
Young who recently died, leaving no money and the amount for the goods still outstanding. The
$250 debt is, therefore, a bad debt and should be written off and charged to Charles’ profit and
loss account as an expense.
Besides that debt, a credit sale of $550 on December 1, 2017 made to Ms. L. Hall, is unlikely to
be paid. Although Charles is not certain of this, he has been informed that Ms. L. Hall has not
paid debts owing to other businesses. As Charles has given three months’ credit to Ms. L. Hall,
the debt is not repayable until February 28, 2018.
Charles has been requested by his bank to provide them with his financial statements for the
year 2017. Unfortunately, Charles cannot wait until after February 28 2018 to see if the debt of
$550 owing by Ms. L. Hall will be paid or not.
If it is not paid, then it will become a bad debt; but in the meantime, it is a doubtful debt.
What therefore can Charles do when he presents the bank with his financial statements; he wants
to achieve the following objectives:
(a) to charge as expenses in the profit and loss account for the year 2017 an amount
representing sales of that year for which he will never be paid.
(b) to show in the statement of financial position as correct a figure as possible of the true
value of accounts receivable at the date of the statement of financial position.
He can carry out (a) above by writing off Young’s debt of $250 and then charging it as an
expense in his profit and loss account.
For (b), he cannot yet write off Ms. L. Hall’s debt of $550 as a bad debt because he is not certain
about it being a bad debt. If he does nothing about it, then the accounts receivable shown on the
statement of financial position will include a debt that is probably of no value. The accounts
receivable on December 31,2017, after deducting Young’s $250 bad debt, amounted to $10,000.
The answer to this is as follows:
Provisions for doubtful debts: estimating provisions
The estimates of provisions for doubtful debts can be made by:
• looking into each debt, and estimating which ones will be bad debts.
• estimating, on the basis of experience, what percentage of the debts will result in bad debts.
It is well known that the longer a debt is owing, the more likely it will become a bad debt. Some
businesses draw up an ageing schedule, showing how long debts have been owing. Older
debtors need higher percentage estimates of bad debts than newer debtors.
Accounting entries for provisions for doubtful debts
When a decision has been taken as to the amount of the provision to be made, then the
accounting entries needed for the provision relate to the year in which provision is first made
and it is as follows:
1. Debit: Profit and loss account with the amount of the provision (as an expense)
2. Credit: Provision for doubtful debts account.
At December 31, 2017, the accounts receivable figure after deducting bad debts amounted to
$10,000. It is estimated that 2% of debts (that is, $200) will eventually prove to be bad debts,
and it is decided to make a provision for these.
The accounts would appear as follows:
NOTE: provision for bad debts is taken from the accounts receivables hence reducing the
current asset accounts receivable.
ACTIVITY
Complete the table above, calculating the provision for doubtful debt.
Aging schedule for doubtful debt
Period debt owing Amount Estimated Provision for

percentage doubtful debts
doubtful (%)
Less than one month 45 000 2
1 month to 2 months 36 500 3
3 months to 5 months 25 000 5
6 months to 9 months 17 500 7
10 months to one year 12 050 10
Over one year to two years 9 850 14
Over two years 6450 18
………………………………………………………………………………………………………
Reference:
Publishers, 2004
LESSON # 7
WORKSHEET
GRADE 11

LESSON # 1: Provision for bad debts
CONTENT:
Increasing the provision
Let us suppose that for the same business used above, at the end of the following year, December
31, 2018, the doubtful debts provision needed to be increased. This was because the provision
was kept at 2%, but the accounts receivable had risen to $12,000. A provision of $200 had been
brought forward from the previous year, but we now want a total provision of $240 (that is, 2%
of $12,000). All that is needed is a provision for an extra $40. The double entry will be:
1. Debit: Profit and loss account with the increase in the provision, that is, $40.
2. Credit: Provision for doubtful debts account.
The relevant accounts are shown below:

Reducing the provision
Outstanding debtors can reduce as well as increase, and if a business finds that the amount
outstanding has decreased, they may decide to reduce the provision for doubtful debts. Reducing
a provision is the opposite of increasing a provision.
In the provision for doubtful debts account, a credit balance is shown; therefore, to reduce it, we
would need a debit entry in the provision account. The credit would be in the profit and loss
account. Let us assume that at December 31, 2019, in the business already examined, the accounts
receivable figure had fallen to $10,500 but the provision remained at 2%, that is, $210 (2% of
$10,500).
As the provision had previously been $240, it now needs a reduction of $30. The double
entry is the following:
• Debit: Provision for doubtful debts account, that is, $30.
• Credit: Profit and loss account.
See below:
Worked Example:
A business owned by J. Gupta starts on January 1, 2017 and its financial year end December 31,
annually. A table of the accounts receivable, the bad debts written off and the estimated doubtful
debts at the rate of 2% of accounts receivable at the end of each year, as well as the double entry
accounts and the extracts from the final accounts follow:
ACTIVITY
………………………………………………………………………………………………….
Reference:
Publishers, 2004
LESSON # 8
WORKSHEET
GRADE 11
WEEK # 3 – TOPIC: CONTROL SYSTEMS

LESSON # 2: Importance and types of errors
CONTENT:
Control system
Internal control accounting systems are the policies and procedures used to
ensure accuracy and reliability across accounting reports. Control systems are put
in place to prevent - deterring fraud and mistakes, or detect - identifying issues
after they have happened.
Main control systems:
➢ Trail Balance
➢ Bank Reconciliation
➢ Control System (sales and purchases ledger account)
Trail Balance
A trial balance is a list of debit and credit balances extracted from the ledgers.
The trial balance is used to:
1. Check the mathematical accuracy of the book keeping.

2. Make it easier to prepare the final accounts and balance sheet.
Errors Revealed by the Trial Balance:
➢ Arithmetic Error - the total on the credit or debit balance is incorrectly calculated.
Example: the total of the credit side is $10,000, and the total of the Debit side is $900.
➢ Posting Error – the accounting rules for double entry was not followed.
Example: $1,000 cash paid the Tom was credited to cash book and was also credited
to Tom’s account.
➢ Incomplete Double Entry - only on entry was made in the ledger, either a debit or credit
entry.
Example: Cash Sale $2,000. The debit entry of $2,000 was entered in the cash book, but
no entry was made in the sales ledger.
➢ Correct entries with different amounts - the correct double entry process was made,
but the incorrect amount was entered on the debit or credit side.
Example: Paid rent $3,000 cash. The rent account was debited with $3,000, but the cash
book was credit with $30,000.
The above-mentioned techniques have a few limitations: not all errors are revealed by the trial
balance.
Errors not revealed by the trial balance:
1. Error of omission - A transaction was left out (not entered) of the double entry system.
Example: Cash Sale $20,000 was not recorded in the sales ledger or the cash book. It was
left out of the books.
2. Error of principles - A transaction was entered in the incorrect category, but the debit and
credit match.
Example: Purchases furniture, $40,000 cash. The cash account was credited with $40,000,
but instead of debiting the furniture account, the purchases account was debited. The trial
balance did not pick up this error because the debit amount matches the credit amount.
3. Error of commission - A transaction is posted in the wrong account, but in the right
category.
Example: Yomi paid us $1800 cash. The cash book was debited with $1,800, but we
credited Yami’s Account with $1800 instead of Yomi’s Account.
4. Compensation Error (offsetting Error) - is an accounting error that offsets another

accounting error. These errors can be difficult to spot when they occur within the same
account and in the same reporting period, since the net effect is zero.
Example: Tom paid us $1,000 cash, but we made a mistake and debited Tom’s account.
We paid Sally $1,000 cash, but we made a mistake and credited Sally’s account. The
two mistakes offset each other.
5. Error of Original Entry - the original amount was incorrectly entered on both debit and
credit sides.
Example: Cash Sales of $10,000 - The amount entered in the cash book and sales
Account was $1000.
6. Error of Reversal of Entries- The entries are made in the correct account but on the
incorrect side.
Example: Cash Sales $4,000 - The Sales was debited and cash book was credited.
ACTIVITY
State the error for each of the following statements:
1. Purchase of stock was entered in the Office Equipment Account. ___________________
2. Paid Mello $10,000 cash was debited to Nello’s Account. ____________________
3. Sammy paid us $20,000 cash. We debited Sammy’s Account and credited the cash book.
______________________
4. Cash purchase $10,000 was entered in the books as $1,000. _________________________
5. Paid rent $40,000 cheque was not entered into the books. _________________________
6. There was an error in the sales and purchases account by $500. _____________________
……………………………………………………………………………………………………
Reference:
Publishers, 2004
LESSON # 9
WORKSHEET
GRADE 11
WEEK # 3 – TOPIC: Capital and Revenue Expenditure

LESSON # 3: Treatment of capital and revenue expenditure
CONTENT:
Revenue and Capital Expenditure
Capital Expenditure
Capital expenditure is incurred when a business spends money to either: buy non-current
assets; or add to the value of an existing non-current asset. Included in such amounts
should be the costs of:
1. acquiring non-current assets

2. bringing them into the business
3. legal costs of buying buildings
4. carriage inwards on machinery bought
5. Any other cost needed to get the non-current asset ready for use.
Revenue Expenditure
Revenue expenditure is expenditure that does not increase the value of non-current assets
but is incurred in the day-to-day running expenses of the business. The difference from
capital expenditure can be seen when considering the cost of running a motor vehicle for
a business.
The expenditure incurred in acquiring the motor vehicle is classed as capital expenditure,
while the cost of the petrol used to run the vehicle is revenue expenditure. This is because
the revenue expenditure is used up in a few days and does not add to the value of the non-
current asset.
Differences between Capital and Revenue Expenditure
Parameters Capital Expenditure Revenue Expenditure
Definition Capital expenditure is the money spent Revenue expenditure is the

by a firm to acquire assets or to improve money spent by business
the quality of existing ones. entities to maintain their
everyday operations.
Time span Capital expenses are incurred for the Revenue expenses are
long-term. incurred for a shorter-
duration, and are mostly
limited to an accounting
year.
Purpose Such expenses are borne by a company Such expenses are borne by a
to boost its earning capacity. company to sustain its
profitability.
Yield The yield of these expenses is not The yield of these expenses
limited to a year and is usually long- is mostly limited to the
term in nature. current accounting period.
Occurrence Typically, CAPEX-(Capital OPEX-(Operating Expense:

Expenditure is money invested by a is the cost that is incurred in
company to acquire or upgrade fixed, the normal course of
physical, non-consumable assets, such business) makes up
as a building, a computer or a new recurrent expenses.
business) is not quite recurrent.
Capitalisation Capital expenses are capitalised. Revenue expenses are not
of expenses capitalised.
Treatment of Depreciation of assets is charged on Depreciation of assets is not

depreciation capital expenses. levied on revenue
expenditure.
Examples Purchase of machinery or patent, Wages, salary, utility bills

copyright, installation of equipment printing and stationery,
and fixture, among others. inventory, postage,
insurance, taxes and
maintenance cost, among
others.
Both capital expenditure and revenue expenditure are vital for the sustainable
profitability of a business venture. Mostly, revenue expenses are a periodic investment
which does not result in immediate or delayed benefit. However, it is used to keep
operations running uninterruptedly.
Alternatively, capital expenditure is considered to be a long-term investment that proves

beneficial for a firm. Business entities must understand that they need to adopt effective
strategies to monitor and regulate these expenses to boost overall profitability significantly.
Joint Expenditure
In certain cases, an item of expenditure will need to be divided between capital and revenue
expenditure.
Suppose a builder was engaged to build an extension and carry out some repairs to your
premises, the total bill being $500,000. If one-fifth of this were for repair work and four-fifths,
the cost of building the extension, then $100,000 should be charged to the profit and loss
account as revenue expenditure, and $400,000 should be identified as capital expenditure and
added to the value of the firm’s premises and shown as such in the statement of financial
position.
Treatment of Loan Interest

If money is borrowed to finance the purchase of a non-current asset, then interest will have to be
paid on the loan. The loan interest however is not a cost of acquiring the asset, but is simply a
cost of financing its acquisition. This means that loan interest is revenue expenditure and not
capital expenditure, and should be charged to the profit and loss account.
Capital and Revenue Receipts

When an item of capital expenditure is sold, the receipt is called a capital receipt.
Suppose a motor van is bought for $5,000, and sold five years later for $750. The $5,000 was
treated as capital expenditure. The $750 received is treated as a capital receipt.
Revenue receipts are sales and other revenue items, such as rent receivable or commissions
receivable.
.
ACTIVITY
SELF-CHECK
Read the following statements carefully and identify if they are capital or revenue
expenditure:
1. Annual depreciation of plant and equipment. __________________

2. Purchase of new production machinery. __________________
3. Cost of equipment repairs. _____________________
4. Customs duty on the purchase of new equipment. ___________________
5. Production wages. ______________________
6. Freight costs for the purchase of inventory. ____________________
7. The installation costs of a new factory machine. ___________________
8. The costs of repairs to equipment. _______________________
9. Purchase of a new computer. __________________________
10. Legal fees relating to the purchase of new head office premises for the business. __________
………………………………………………………………………………………………….
Reference:
Austen, D. and Louisy, E. et al, Principles of Accounts for CSEC, Oxford University Press,
2019
Publishers, 2004
LESSON # 10
WORKSHEET
GRADE 11
WEEK # 4 – TOPIC: BANK RECONCILIATION

LESSON # 1: Updating of the cash book
CONTENT:
Bank Reconciliation
A bank reconciliation is the process of matching the balances in the company’s accounting
records for a cash account to the corresponding information on a bank statement.
The goal of this process is to ascertain the differences between the two and to make changes to
the accounting records, as appropriate. The information on the bank statement is the bank's record
of all transactions impacting the firm's bank account during the past month.
Reason for discrepancy between cash book balance and the bank statement:
➢ Entries in the cash book but NOT in the bank statement
1. Unpresented cheques – cheques that were prepared by the trader, (it was entered on
the credit side of the cash book) but the cheque was never presented to the bank (the
bank has no record of the cheque).
2. Uncredited cheques/ Bank lodgements/ deposits – the cheque was presented to the
bank but was not processed by the bank during that period (some cheques take a few
days to be processed).
➢ Entries in the bank statement but NOT in the cash book
1. Direct Deposit - customers made payments directly into the business’ bank account
(no record was made in the cash book).
2. Direct payments (standing order) - payments made directly by the bank on behalf of
the customer (no record was made in the cash book).
Also:
1. Error in cash book - cheque received by a debtor was recorded on the credit side of
the cash book.
2. Error made by the bank - cheque received by the bank was entered into the wrong
account.
Procedure for Preparing Bank Reconciliation
1. Comparing the entries in the cash book with the entries in the bank statement.
The debit side of the cash book matches the credit side of the bank statement. And
the credit side of the cash book matches the debit side of the bank statement. (Place
a tick to indicate the like entries).
Cash book
Date Details Amount Date Details Amount
March 1 Balance b/d ✓ 800 March 3 Insurance (chq. 303472) ✓ 320
March 16 Sales ✓ 800 March 11 Drawings (chq 303473) ✓ 250
March 27 Sales 750 March 19 P. Joseph (303474) 440
March 27 Water Bill (chq303475) 220
March 31 Balance c/d 1170
2440 2440
April 1 Balance b/d 1170
Bank statement
Date Details Dr. Cr. Balance
March 1 balance ✓ 800 Cr
5 303472 General Assurance Plc ✓ 360 440 Cr
5 DD Regional telecoms Plc 230 210 Cr
14 303473 ✓ 250 40 Dr
18 Sundries ✓ 890 850 Cr
21 SO Landward Properties Plc 280 570 Cr
24 Credit Transfer – Michael Lee 480 1050 Cr
27 CHR (charge) 80 970 Cr
The items without the tick will cause the difference between the cash book and the bank
statement.
Reason for the difference:
Items found in the cash book but not in the bank statement:
1. Unpresented cheques: - P Joseph $440

- Water Bill $220
2. Bank Lodgment - $750
Items found in the bank statement but not in the cash book:
1. Direct debit for $230

2. Standing order for $280
3. Credit transfer $480
4. Bank Charge $80
2. Update the Cash Book

The cash book will be updated with all the information from the bank statement.
Cash Book
Date Details Bank $ Date Details Bank $
April 1 Balance b/d 1170 April 1 Telephone charge (DD) 230
Michael Lee 480 Rent (SO) 280
Bank Charge 80
…
… Balance c/d 1060
1650 1650
April 1 Balance b/d 1060

3. Prepare the Bank Reconciliation Statement
The bank reconciliation statement can be prepared in two (2) different ways:
1. Start with bank statement balance
Bank Reconciliation statement as at April 1

$ $
Balance as per Bank Statement 970
Less: unpresented cheques P Joseph (303474) 440
Water Bill (303475) 220
660
310
Add: Late Lodgment 750
Balance as per Cash Book 1060
2. Starting with updated cash book balance
Bank Reconciliation statement as at April 1
$ $
Balance as per Cash Book 1060
Add: unpresented cheques: P Joseph (303474) 440
Water Bill (303475) 220 660
1720
Less: bank lodgment 750
Balance as per bank statement 970
ACTIVITY
1. The following information was extracted from the book of Kelly for the period
August 2019:
Cash Book
2019 $ 2019 $
August 1 Balance b/d 1740 August 8 A. Dalley 349
7 T. J Masters 88 R. Mason 33
22 J. Ellis 73 G. Small 115
30 K. Wood 249 Balance c/d 1831
30 M. Barrett 178 ____
2328 2328
September 1 Balance b/d 1831
Bank Statement
2019 Dr $ Cr $ Balance $
August 1 Balance b/d 1740
August 7 Cheque 88 1828
August 11 A. Dalley 349 1479
August 20 R. Mason 33 1446
August 22 Cheque: J Ellis 73 1519
August 30 Credit transfer: J Walters 54 1573
August 30 Bank Charges 22 1551
You are required to:
a. Update the cash book.

b. Prepare a bank reconciliation statement starting with the updated cash book balance.
c. Prepare a bank reconciliation statement starting with the bank balance.
2. William Kelly’s cash book on February 28, 2017 showed a balance at bank of $456.48.
On attempting a reconciliation with his bank statement, the following matters were
discovered:
(i) A payment from B. Green to W. Kelly of $40 by direct bank transfer had not been
recorded in the cash book.
(ii) Cheques drawn but not presented to the bank were: A. Roe, $21.62; C. Mills, $36.55.
(iii) A paying-in slip dated February 27 2017 totalling $372.31 was not credited by the bank until
March 1, 2017.
(iv) A standing order for $21.58 payable on February 20 2017 for fire insurance had been paid
by the bank but not entered in the cash book.
(v) Bank charges of $15 had not been entered into the cash book.

(a) Open the cash book and make such additional entries as you consider necessary.
(b) Prepare a statement reconciling your revised cash book balance with the
balance shown by the bank statement.
………………………………………………………………………………………………………
Reference:
2019
Publishers, 2004
LESSON # 11
WORKSHEET
GRADE 11
WEEK # 4 – TOPIC: CONTROL ACCOUNTS

LESSON # 2: Journal entries
CONTENT:
Sales Control Account and Purchases Control Account
The need for control accounts
When a business is small, all the accounts may be contained in one ledger and at the end of the
accounting period, a trial balance could easily be drawn up as a test of the arithmetical accuracy
of the accounts. However, it must be remembered that certain errors may not be revealed by the
trial balance. If the trial balance totals disagree, the books could easily and quickly be checked
to find the errors.
However, as the business grows, the accounting requirements also expand and the work has to
be divided up into various separate ledgers and consequently, errors are not as easily identifiable.
The error (s) could be very difficult to find, and it may be necessary to check every item in every
ledger. Therefore, what is required is a type of trial balance for each ledger, and this requirement
is met by the control account. Thus, it is only the ledgers where the control accounts do not
balance that need detailed checking to locate any errors.
The principle of Control Accounts
The principle on which control accounts are based is simple. If the opening balance of an
account is known, together with the information of the additions and deductions entered in the
account, the closing balance can be calculated.
Sales Control Account
Sales Ledger Control Account is a summary account which checks the arithmetical accuracy of
the Sales Ledger. It enables us to see at a glance whether the general ledger balance for the sales
ledger agrees with the total of all the individual trade receivable accounts held within the sales
ledger.
Sales Ledger Control Accounts typically look like a "T-Account" or a replica of an Individual
Trade Receivable (Debtor) account, but instead of containing transactions related to one trade
receivable (Debtor) it contains transactions related to all the trade receivables (all the debtors)
in the business. As this control account contains the summarized information of all the trade
receivables accounts in the sales ledger, it is also called as "Total Trade Receivables
Account"("Total Debtors Account").
Sales ledger control account is generally prepared at the end of the financial year or "whenever"
it is required to check the arithmetical accuracy of the individual trade receivable accounts.
Sales control account is prepared as an independent check on the arithmetical accuracy of the
sales ledger (Debtors Ledger). So, we should not obtain the information required to prepare this
control account from the Sales ledger (Debtors ledger), instead all the information required
should be obtained from books of original entry or prime entry.
Information for the Sales Control Account
Sales Ledger Control Sources

Opening Account Receivable List of customers’ balances drawn up at the end of the
1
previous period.
Credit Sales Total from sales day-book (journal).
2
Sales Return (Return Total of return inwards day book (journal).
3
Inwards)
Cheques Received Cash book: bank column on received side (debit
4
side). List extracted or total of special column which has
been included in the cash book.
Cash Received Cash book: cash column on received side (debit
5
Discount Allowed Total of discount allowed column in the cash book.
6
Closing Account Receivable List of customers’ balances drawn up at the end of the
7
period.
Bad debts written off The Journal.
8
Dishonored cheque(s) From the bank column on the debit side of the cash
9
book.
Format of sales control Account
Work the following example:

NOTE: Items should not be entered into the Sales Ledger Control Account.
The following items are often seen in the control account questions. As these times are closely
related to the "sales and trade receivables", but these items should not be recorded in the control
accounts.
1. Cash Sales - Cash sales are recorded in the cash book but not in the sales ledger. So, cash
sales should not be entered in the Sales Ledger Control account, which checks the arithmetical
accuracy of the sales ledger.
2. Recovered bad debts - If previously written off bad debts are recovered now, it should not
be recorded in the Sales Ledger Control Account, as bad debts recovered account appears in
the general ledger but not in the sales ledger.
3. Increase or decrease in the provision for doubtful debts - Provision for doubtful debts
account is kept in the general ledger. An increase or decrease in the provision for doubtful
debts affects the general ledger but not the Sales Ledger. So, it should not be recorded in the
Sales Ledger control accounts.
ACTIVITY
1. From the information given, prepare a sales control ledger for T. Tammy for the month of
July 2010.
$
July 1 Debit balance in the sales leger 8,880
31 Total sales include $240 cash sales 14,480
Total cash and cheques received from debtors 15,000
Return inwards 170
Interest charged to debtors 170
Discount allowed 150
Bad debts written off 300
Refund to debtors for over payment 210
2. From the following information taken from the books C King for the month ending August
31, 2018
a) Prepare a debtor Control Account for C King
b) Name the source from which each of the totals are obtained
$
August 1 Debtors balance per sales ledger 7,800
31 Total credit sales 27,700
Total cash and cheques received from debtors 30,200
Sales return 400
Discount allowed 280
Bad debts written off 360
Dishonored cheque 520
Inter charge to debtor on overdue account 220
…………………………………………………………………………………………………..
Reference:
2019
Publishers, 2004
LESSON # 12
WORKSHEET
GRADE 11
WEEK # 4 – TOPIC: PURCHASE CONTROL ACCOUNT

LESSON # 3: Journal entries
CONTENT:
Purchases Control Account
Purchases Ledger Control Account is a summary account which checks the arithmetical accuracy
of the Purchases Ledger. It enables us to see at a glance whether the general ledger balance for
the purchases ledger agrees with the total of all the individual trade payable accounts held within
the purchases ledger.
This Control Account typically looks like a "T-Account" or a replica of an Individual Trade
Payable (Creditor) account, but instead of containing transactions related to one trade payable
(creditor), it contains transactions related to all the trade payables (all the creditors) in the
business. As this control account contains the summarized information of all the trade payables
accounts in the purchases ledger, it is also called as "Total Trade Payables Account" ("Total
Creditors Account").
Purchases ledger control account is generally prepared at the end of the financial year or
"whenever" it is required to check the arithmetical accuracy of the individual trade payable
accounts.
Purchases control account is prepared as an independent check on the arithmetical accuracy

of the purchases ledger (creditors ledger). So, we should not obtain the information required
to prepare this control account from the purchases ledger (creditors ledger), instead all the
information required should be obtained from books of original entry or prime entry.
Information for the Purchases control account
Purchases Ledger Control Sources

1 Opening Account Receivable List of suppliers’ balances drawn up at the end of the
previous period.
2 Credit purchases Total from purchases day-book (journal).
3 Purchases Return (Return Total of return outwards day-book (journal).
Outwards)
4 Cheques Paid Cash book: bank column on payment side (credit
5 Cash Paid Cash book: cash column on payment side (credit
side), list extracted or total of special column which has
been include in the cash book.
6 Discount Received Total of discount received column in the cash book
7 Closing Account received List of suppliers’ balance drawn up at the end of the
period.
8 Refunds from trade payables From cash/bank column on the debit side of the cash
(creditors) book.
9 Set off (Transfer to sales From the Journal.
ledger)
Format of Purchases control Account

Worked Example:
ACTIVITY
1. From the information given, prepare a purchases control ledger for Sam’s
Enterprise for the month of December 2010.
$
December 1 credit balance in the purchase leger 8,880
31 Total purchases 14,480
Total cash and cheques paid from suppliers 15,000
Return Outwards 170
Interest charged from suppliers 170
Discount received 150
2. From the following information taken from the books of Cupper C. for the month
ending May 31, 2018:
a) Prepare a Debtor Control Account for Cupper C.

b) Name the source from which each of the totals are obtained.
$
August 1 credit balance per purchase ledger 7,800
31 Total credit purchases 27,700
Total cash and cheques paid to suppliers 30,200
Purchase return 400
Discount received 280
Inter charge by suppliers on overdue 220
…………………………………………………………………………………………………
Reference:
2019
Publishers, 2004
LESSON # 13
WORKSHEET
GRADE 11
WEEK # 5 – TOPIC: PREPAYMENTS AND ACCURALS

LESSON # 1: Treatment of accruals and prepayments
CONTENT:
Accruals are expenses incurred but not yet paid.
Prepayments are payments for expenses for that are

not yet incurred.
Accruals and prepayments give rise to current liabilities and current assets, respectively in
accordance with the matching principle and accrual accounting.
Matching principle requires accountants to record revenues and expenses in the period in which
they are incurred regardless of when the relevant payments are made. In order to create this 1-
on-1 correspondence between revenue and expenses, expenses are recorded if they are incurred
in a particular period even if they are not yet paid (because they were necessary to earn the
revenue for that period).
On the other hand, prepayments are recorded to represent payments related to goods and
services that are to be consumed in future periods. It is this matching principle that differentiates
accrual accounting from cash-basis accounting, which records revenues and expenses when they
are received and not when they are earned or incurred.
How to record accrued expense?
Examples:
A total rent of $4,000 has been paid for the period from January to
October 2002. Assuming the accounting year ended
December 31, 2002 and the monthly rent of $400 payable at the
end of each month, show the adjusting entries for rent.
When rent is paid, the Rent Expenses Account will be debited as shown below:
Rent expense account

2002 2002
31 Oct Bank 4000
At the end of the accounting year, before any adjustments, the items ‘rent expenses’, will
appear in the trial balance as follows:
Trial balance as at December 31, 2002

Details Debit Credit
Rent expense 4000
Since expenses in the trial balance shows only the amount paid, to determine the ‘correct’
amount for the accounting period under the accrual basis, adjustments must be made to the
figure in the Trial Balance before accounts are prepared.
The rent for two months (November and December) has not been paid, that accrued rent is
$400 x 2 = $800. Taking this into consideration, rent for the accounting period should be
$4,800 and not $4,000 as under the cash basis of accounting.
Journal and Ledger entries for Accrued Adjustments
Date Particular Debit Credit

2002 $ $
Dec 31 Rent Expense 800
Accrued Rent 800
Rent expense Account

2002 2002
31 Oct Bank 4 000 31 Dec Profit and loss account 4 800
31 Dec Accrued balance c/d 800
4 800 4 800
2003
1 Jan Accrued balance b/d 800
NOTE: The rent paid up to October 31, is $4 000.00, and the amount owing for the period is added
as an accrued balance carried down $800. The amount to be charged to the Profit and
Loss Account for the year is ($400 x 12) $4 800.00.
The credit balance takes the place of the Accrual Rent Account and is shown as a current
Liability in the Balance sheet.
Profit and Loss Account for the year ending December 2002
Expense: $ $
Rent Expense 4 000
Add: accrued Rent Expense 800 4 800
Balance Sheet as at December 31, 2002

$ $
Current
Liabilities
Rent Accrued 400
Self- Check
The following payments for rent were made by cheques on the date shown
2002
Jan 1 $1,200 for December 2001
April 3 $3,600 for period January 2002 to March 31, 2002
June 3 $3,600 for the period April 1, 2002 to June 2002
Sep 4 $ 3,600 for the period July 1, 2002 to September 31, 2002
2003 $4,200 for period October 1, 2002 to December 31, 2002
a) The Rent Account for the year 2002. Balance the account and bring down the balance on
January 1, 2003.
b) The entry in the Profit and Loss Account and the Balance Sheet
How to record prepaid expense?

Example:
Insurance premium of $750 has been paid for the period from January 2002
to March 2003. Assuming the accounting year ended on December 31,
2002 and the monthly insurance of $50 payable at the end of each month,
show the adjusting entries for insurance.
Insurance expense account

2002 2002
31 Dec Bank 750
At the end of the accounting period, before any adjustments, ‘insurance’ will be shown in the
Trial Balance as follows:
Trial balance as at December 31, 2002
Details Debit Credit
Insurance 750
Before the final accounts are prepared, adjustments are necessary to determine the insurance
expense related to the current period. The monthly insurance is $50. Since the financial year ends
on the December 31, 2002, it means the insurance for three months, that is, $150 has been paid
in advance. Hence, the insurance incurred for the accounting period is $750 - $150 = $600
Insurance expense Account

2002 2002
31 Dec Bank 750 31 Dec Profit and loss account 600
31 Dec Prepaid balance c/d 150
750 750
2003 2003
1 Jan Prepaid balance c/d 150
The amount paid in advance will also affect the Profit and Loss Account and Balance Sheet
Less: Expenses $ $
Insurance 750
Less prepayments 150 600
Balance Sheet as at December 31, 2002

Current
Assets $ $
Insurance
prepaid 150
ACTIVITY
……………………………………………………………………………………………………
Reference:
2019
Publishers, 2004
LESSON # 14
WORKSHEET
GRADE 11
WEEK # 5 – TOPIC: PREPAYMENTS AND ACCURALS

LESSON # 2: Definition, treatment in the statement of financial position
CONTENT:
Accrued and prepaid Revenue
Revenues are from a source other than the main source of

business revenue that were due to be received by the end of
the period, but which have not been received by that date.
Revenue owing at the end of period (Accrued Revenue)
The revenue owing for sales is already shown in the books. These are the debit balances on our
customers’ accounts, that is, accounts receivable. There may be other kinds of revenue, all of
which have not been received at the end of the period, that is, rent receivable.
Example 1:
A business’ warehouse is larger than it needs to be. The business rents part of it to
another organization for $1,600 per annum. Details for the year ended December 31
were as follows.
The account for 2017 will appear as follows:
Example 2:
The rent received of $400 on January 7, 2018 will be entered in the books in 2018 (not shown).
Any rent paid by the business is charged as a debit to the profit and loss account. Any rent
received, being the opposite, is transferred to the credit of the profit and loss account, since it is
revenue/income.
The amount to be transferred to the profit and loss account for 2017 is the revenue earned for the
twelve months, that is, $1,600. The balance owed to the business - $400, is shown as a debit
balance brought down in January 2018, as it is an asset on December 31, 2017. The rent receivable
account can now be completed.
Expenses and revenue account balances and the statement of financial position
In all the cases listed - dealing with adjustments in the final accounts - there will still be a balance
on each account after the preparation of the trading and profit and loss account (income statement).
All such balances remaining should appear in the statement of financial position. The only
question left is where and how they shall be shown.
The amounts owing for expenses are usually added together and shown as one figure. These could
be called expense creditors, expenses owing, or accrued expenses. The items appear under current
liabilities, as they are expenses that have to be discharged in the near future. The items prepaid
are also added together and are called prepayments, prepaid expenses, or payments in advance.
They are shown next under the accounts receivable. Amounts owing for rents receivable or other
revenue owing are usually added to accounts receivable.
Example 1:
Example 2:
The following accounts for C. Holmes are shown entered up for transactions during the year
ended 31 December 2017, before balancing off as at 31 December 2017.
The items would appear in the profit and loss accounts as follows:
ACTIVITY
……………………………………………………………………………………………………..
Reference:
2019
Publishers, 2004
LESSON # 15
WORKSHEET
GRADE 11
WEEK # 5 – TOPIC: SUSPENSE ACCOUNT

LESSON # 3: Definition and errors affecting the trial balance
CONTENT:
Suspense Account
Suspense Account - An account in which you can enter the amount equal to the
difference in the trial balance while you try to find the cause of the error(s) that resulted
in the failure of the trial balance to balance.
Suspense account - we should try very hard to find errors immediately when the trial balance
totals are not equal. When they cannot be found, the trial balance totals should be made to agree
with each other by inserting the amount of the difference between the two sides in a suspense
account.
Example:
There is a $40 difference in the trial balance of S. James. To make the two totals the same, a
figure of $40 for the suspense account has been shown on the credit side. A suspense account is
opened and the $40 difference is also shown there on the credit side.
Suspense account and the statement of financial position
If the error(s) are not found before the financial statements are prepared, the suspense account
balance will be included in the statement of financial position. Where the balance is a credit
balance, it should be included under current liabilities on the statement of financial position. When
the balance is a debit balance, it should be shown under current assets on the statement of financial
position.
NOTE: Large errors should always be found before the financial statements are drawn up.
When errors are found, they must be corrected using double entry. Each correction must be
described by an entry in the journal.
Example:
A trial balance at December 31, 2017 shows a difference of $77, being a shortage on the debit side.
A suspense account is opened, and the difference of $77 is entered on the debit side of the account.
On February 28, 2018, all the errors from the previous year were found:
(a) A cheque of $150 paid to L. King had been correctly entered in the cash book, but
had not been entered in King’s account.
(b) The purchases account has been under cast by $20.
(c) A cheque of $93 received from K. Saunders has been correctly entered in the cash book,
but has not been entered in K. Saunders’ account. These three errors have resulted in a net
error of $77, shown by a debit of $77 on the debit side of the suspense account.
These are corrected by:
= Making correcting entries in the accounts for (a), (b) and (c).
= Recording the double entry for these items in the suspense account.
NOTE: Only those errors that make the trial balance totals different from each other have to be
corrected via the suspense account.
The effect of errors on profits
Some of the errors will have meant that the calculation of original profits will be wrong.
Example:
Errors that do not affect profit calculations
If an error affects items only in the statement of financial position, then the original calculated
profit will not need to be altered.
Example:
$60 debit balance on the suspense account shown in the statement of financial position was
because on November 1, 2017, we paid $60 to a supplier, T. Monk and it was correctly entered
in the cash book, but it was not entered anywhere else. The error was found on June 1, 2018.
We can see that when this error is corrected, only two items in the final accounts will have to be
altered. These are (F) accounts payable, which will have to be reduced by $60, and (G) suspense
account, which will now be cancelled and not shown in the statement of financial position. This
means that neither the trading account nor the profit and loss account has been affected. The profit
as shown for 2017 is correct, but the statement of financial position is incorrect.
Errors that do affect profit calculations
If the error is in one of the entries labelled (A), (B), (C) or (D) shown in the trading and
profit and loss account, then the original profit will need to be altered.
Example 1:
Assume the $60 debit balance was because the rent account (C) was added up incorrectly: it
should be shown as $260 instead of $200 and the error was found on June 1, 2018. The journal
entries to correct it are:
Example 2:
There had been four errors found in the accounts of K. Black on March 31, 2018, their
correction can now be seen. Assume that the net difference had also been $60, with the four
errors as:
Error (A) affected the profits: both gross and net profit were overstated at $70 because of this
error. It also affected the Suspense account (G).
Error (B) showed purchases too high by ($95 – $59) = $36. This means that gross and net profits
were shown $36 too little. The other item affected is (F) Accounts payable, which is shown as
being $36 too much. This error does not affect (G) Suspense account.
Error (D) needs insurance increasing by $40. This will reduce the net profit by $40. It also
affects the Suspense account (G).
Error (E) does not affect the profits at all. It affects only items in the statement of financial
position, namely: (E) Accounts receivable and (G) Suspense account.
NOTE: Error (B) is known as an error of transposition, as the correct figures have been
shown in the wrong order; that is, they have been ‘transposed’. The entries in the ledger
accounts are as follows:
ACTIVITY
………………………………………………………………………………………………………
Reference:
Austen, D. and Louisy, E. et al, Principles of Accounts for CSEC, Oxford University Press, 2019
Robinson, S. and Wood, F., Principles of Accounts for the Caribbean, Hodder Education, A Hachette
UK Company Publishers, 2018
Holdip, G. and LAMORELL, C., Principles of Accounts for the Caribbean, Macmillan Caribbean
Publishers, 2004
LESSON # 16
WORKSHEET
GRADE 11
WEEK # 6 – TOPIC: PARTNERSHIP ACCOUNTING

LESSON # 1: Examples, questions for students
CONTENT:
Definition
A partnership is a formal arrangement by two (2) to twenty (20) parties to

manage and operate a business and share its profits (loss). In the case of a
bank, the maximum partner allowed is ten (10).
A partnership venture may have all unlimited partners, this is, where everyone is liable to repay
any loss equally or in the ratio of their profit sharing.
In the case of limited partners, there must always be a partner that is unlimited. Should a loss be
incurred, the limited partners are only liable for what they have invested and no more, while the
unlimited partner would have to take unlimited responsibility for any debts.
All of the above would be agreed on in the Partnership Act and the Partnership Agreement.
The Partnership Agreement
This is a legally binding document that is set out by all the partners of the business, for the
partners of the business. It clearly covers the various contingencies and is used to avoid any
misunderstanding in the future. The Partnership Agreement is also referred to as the ‘Deed of
Partnership’. This agreement usually covers the:
➢ The amount of capital contributed by each partner

➢ The ratio in which profit/loss are to be appropriated
➢ The rate of interest, if any, to be paid on capital before the appropriation
of profit
➢ The rate of interest, if any, to be charged on drawings
➢ The rate of interest, if any, on loans given by the partners to the partnership
➢ Remuneration/salary to be allocated to the partners
➢ The maximum amount any partner can withdraw annually
➢ Procedure to be followed for admission of a new partner
➢ Procedure to be followed when a partner retires or dies.
The Partnership Act
In the absence of a partnership Agreement, the Partnership Act 1980 will be activated to
govern the partnership. This act states that, inter alia:
➢ Profits and losses are to be shared equally, irrespective of the amount of capital
contributed by the partners
➢ No interest to be allowed on capital
➢ No salary/remuneration to be allowed
➢ No interest to be charged on drawings
➢ All loans by partners to be paid an interest of 5%per annum.
Students’ Activity
Create a partnership venture and make a Partnership Agreement to govern this venture.
Characteristics of a Partnership
➢ Membership: At least two (2) persons to a maximum of twenty (20) persons are required to
begin a partnership.
➢ Unlimited liability: The members of a partnership have unlimited liability, i.e. they are
collectively and individually liable for the firm’s debts and obligations. So, if in case the
Business’assets are not adequate to repay liabilities, personal assets of all or any partner can
be claimed by the creditors to realise the outstanding amount.
➢ Mutual Agency: The partnership business is undertaken by all the partners or any of the
partner, who acts on behalf of all the partners. So, every partner is a principal as well as an
agent. Further, the acts of partners bind each other as well as the firm.
➢ Contractual Relationship: The relationship existing between/among partners is due to the

contract, which may be oral, written or implied.
➢ Transfer of interest: Mutual consent of all the partners is a must for transferring the interest
in the firm to any external party.
In a partnership, the decision making is done with the mutual consent of all the partners.
They share among themselves the decision-making and control of the regular business
operation.
Students Activity
Compare the Partnership with a sole trader and identify the differences
The Capital Account of a Partnership
Since each partner makes a contribution of a capital, each partner has a separate capital account.
It is usual for the capital to be fixed, i.e., the original amount plus any additional capital brought
in. It is essential to maintain Capital Accounts for each partner in order to show precisely the
financial stake held by each partner.
The Current Account
The current account is the current total of appropriations and the share of residual profit/loss, less
drawings. Separate current accounts are also opened for each partner with the view to record the
day-to-day transactions affecting the partners.
Current Account
Debit Credit
Balance brought down Balance brought down
Drawing Interest on capital
Interest on drawings Partners accrued salary
Interest on loan
Share of profit
The Appropriation Account

For a partnership, the primary purpose of the appropriation account is to show how profits
are distributed among the partners. The Appropriation Account starts just under the
trading profit and loss account, the first item of the appropriation account is the net profit
and it ends with share of profits.
Appropriation Account Format
Net profit xxx

Add: interest on drawings: Partner 1 xx
Partner 2 xx xx
Adjusted net profit xxxx
Less: Appropriations:
Interest on capital: Partner 1 xx
Partner 2 xx xx
Partners salary: Partner 1 xx
Interest on loan: Partner 2 xx
Total Appropriations ( xx)
Profits to be shared xx
Appropriations of profits: Partner 1 xx
Partner 2 xx xx
……………………………………………………………………………………………………
Reference:
2019
Publishers, 2004
LESSON # 17
WORKSHEET
GRADE 11
WEEK # 6 – TOPIC: PARTNERSHIP ACCOUNTING continued

LESSON # 2: Interest on capital, interest on drawings, partners salary
CONTENT:
Interest on capital
Interest on capital - This interest is treated as a deduction prior to the calculation of profits and
the latter’s distribution, according to the profit-sharing ratio. The rate of interest is a matter of
agreement between/among the partners, but it should equal the return they would have received
if they had invested the capital elsewhere.
Interest on Drawing
It is obviously in the best interest of the business if cash is withdrawn from the business by the
partners in accordance with the two basic principles of:
(a) as little as possible, and
(b) as late as possible.
The more cash that is left in the business, the more expansion can be financed, the greater the
economies of having ample cash to take advantage of bargains and not missing out on cash
discounts, and so on.
To deter the partners from taking out cash unnecessarily, the concept can be used of charging them
interest on each drawing or withdrawal, calculated from the date of withdrawal to the end of the
financial year. The amount charged to the partners helps to swell the profits divisible
between/among them. The rate of interest should be sufficient to achieve this without being too
harsh.
Formula for interest on drawings

Drawings’ amount * time (months) * %
Entering Interest on Drawing in the books
Partners’ Salary
One partner may have more responsibility or tasks than others. As a reward for this and rather
than change the profit and loss-sharing ratio, that partner may have a salary, which is deducted
before sharing the balance of profits.
Entering partners’ salary into the appropriate books:
…………………………………………………………………………………………………..
Reference:
2019
LESSON # 18
WORKSHEET
GRADE 11

LESSON # 3: Interest on loan, final accounts of a partnership
CONTENT:
Interest on Loan
In some instances, a business may opt to take a loan from its partner before approaching a bank
for a loan. This loan cannot be treated as capital investment; thus, it is treated as any other loan
would be. The loan from the partner would also be repaid in a specific time frame while attracting
an interest rate. Interest on loan taken from partners is debited to the (Profit & Loss) A/C and
not the Appropriation A/C.
Worked Example:
Things to make note of from the question:
Out of the 3 partners in the business, Moore has a $30 (debit) and Maraj has a $1,000 DR.
The DR balance is placed on the debit side of the current account. This balance indicates that
Moore and Maraj did not make a gain in the last financial year or period. They basically
withdrew a higher amount and were charged interest on drawings, which was more than the
amount they would have earned in their current account.
Mendez’ balance of $30,000 goes on the credit side of his current account.
Only Mendez is to be paid a salary
ACTIVITY
……………………………………………………………………………………………………..
Reference:
2019
Publishers, 2004
LESSON # 19
WORKSHEET
GRADE 11
WEEK # 7 – TOPIC: FINAL ADJUSTMENTS TO FINANACIAL STATEMENTS

LESSON # 1: Final Accounts
CONTENT:
94
95
96
97
98
99
ACTIVITY
100
LESSON # 20
WORKSHEET
GRADE 11

LESSON # 2: Admission of a new partner and goodwill
CONTENT:
Admission of a new Partner
Reasons for the admission of a new partner
New partners may be admitted to a partnership, usually for one of three reasons:
1. The business has grown or because someone is needed who has different skills from
those of the existing partners.
2. To replace a partner who ceases to be a member of the firm: this might be because of the
retirement or death of a partner.
3. To bring in additional capital.
NOTE: When a new partner is admitted to an existing business, an important factor to

be consider is goodwill.
Goodwill
Goodwill is an intangible asset that is associated with the purchase of one

company by another. Specifically, goodwill is the portion of the purchase
price that is higher than the sum of the net-fair value of all of the assets.
purchased in the acquisition and the liabilities assumed in the process.
Reasons for payment of goodwill
In buying an existing business, which has been established for some time, there may be quite
a few possible advantages. Some of them are listed below.
a. There is a large number of regular customers who will continue to deal with the
business under a new owner.
b. The business has a good reputation.

c. It has experienced, efficient and reliable employees.
d. The business is situated in a good location.
e. It has good contacts with suppliers.
101
f. It may have good brand names that are known and recognised within the industry.
Few of those advantages are available to a completely new business. For this reason, many
people will decide to buy an existing business and pay an extra amount for goodwill.
Methods of calculating goodwill
There is no single way of calculating goodwill on which everyone can agree. The seller will
probably want more for the goodwill than the buyer will want to pay. All that is certain is
that, when an agreement is reached between buyer and seller, the selling price includes the
amount of goodwill.
Various methods are used to help the buyer and seller come to an agreed figure. The
calculations give the buyer and seller a figure with which to begin discussions of the value
of the business. Very often, each industry or occupation has its own customary way of
calculating goodwill.
Method 1
Direct pay off of Goodwill without record (off the book)

When a new partner buys into the business, their capital is recorded into the books while
their premium for goodwill is an additional amount. This amount is paid directly to the
existing partners of the business. No official record of this is made in the books.
Method 2
Premium paid is retained in the business but NO Goodwill account is opened

The extra premium for goodwill brought in by the new partner is debited to the Cash Book
and credited to the Capital Account of the partner, according to the original profit and loss
sharing ratio. The Goodwill Account is not opened, and the original partners’ Capital
Accounts are increased.
Method 3
Opening a Goodwill Account

When the new partner has no extra cash to bring in for goodwill, a Goodwill Account is
created. The double entries are crediting the original partners’ Capital Account to the
original profit and loss sharing ratio and debiting the Goodwill Account.
102
Method 4
Goodwill withdrawn by original partners

When the new partner has no extra cash to bring in as premium, a goodwill Account is
created and the original partners are entitled to withdraw this amount of goodwill.
Goodwill is placed on the Balance Sheet as Non-Current Account.
ACTIVITY
103
LESSON # 21
104
WORKSHEET
GRADE 11
WEEK # 7 – TOPIC: LIMITED LIABILITY COMPANY

LESSON # 3: Introduction, types, treatment content:
CONTENT:
Limited liability Company
There are two types of limited liability companies:
1. Public limited company

2. Private limited
company
Limited liability company- a private company whose owners are legally responsible for its
debts only to the extent of the amount of capital they invested.
Capital structure of a limited liability company
The owners' capital in a limited liability company consists of share capital. When a company is
originally set up, it issues shares. These are paid for by investors, who then become shareholders
of the company.
105
Students’ Activity
Identify the difference between a Partnership and a Limited Liability business.
Limited Company
Advantages Disadvantages
The owners (shareholders) of the company A limited liability company must conform to
have limited liability. government regulations and legislation.
In law, a limited company is a ‘separate legal Shares in a private limited company can only
entity’(see Companies Act). be bought and sold in private.
Capital can be more readily raised to fund The decision-making process can take a
expansion. longer time to achieve than in smaller
organizations, that is, sole traders and
partnerships.
The long-term viability is not affected by the Larger organizations can lose personal contact
death of the owners (shareholders). with their employees who may lose interest as
a result.
Larger companies can offer employees an Since financial reports of limited companies
incentive by giving shares and/or offering are sent to all shareholders, and in the case of
employees the opportunity to purchase shares public limited companies they are published,
at an advantage price. the financial data no longer remains private.
Shares in a public limited company are listed

on the stock exchange and can, therefore, be
easily bought and sold.
Legal Status of a Limited Company
The most important feature of a limited company is its status in law as a separate legal entity.
This means that no matter how many individuals have bought its shares, it is treated in its dealings
with the outside world as if it were a ‘person’ in its own right. When a limited company is formed,
it is required by law to raise two documents known as the Memorandum of Association and the
Articles of Association.
106
The Memorandum of Association sets out the details of the company and its objectives, while
the Articles of Association state the regulations concerning the powers of the directors. These
regulations are of the utmost importance when it is realised that the legal owners of the business,
namely the shareholders, have entrusted the running of the company to the directors.
The capital structures

There are two main types of shares:
• Preference shares – Preference shareholders get an agreed percentage rate of dividend

before the ordinary shareholders receive anything.
• Ordinary shares – Ordinary shareholders receive the remainder of the total profits
available for dividends. There is no upper limit to the amounts of dividends they can
receive.
The key features of ordinary shares:

➢ They have no maturity date.
➢ They give you a claim to the income and assets of the company.
➢ A company can't dilute your ordinary shareholding.
➢ Your losses are strictly limited.
➢ They come with voting rights.
Features of preference shares:
Preference shares have a wide range of features, as corporate emphasizes a set of features
while issuing them. These include:
➢ Dividends for preference shareholders.
➢ Preference shareholders have no right to vote in the annual general meeting
of a company.
➢ These are a long-term source of finance.
➢ Dividend payable is generally higher than debenture
interest.
➢ There is a right on assets when the company is
liquidated.
➢ There is a Par-value of preference shares.
➢ There is a fixed-rate of dividend, irrespective of the volume of profit
gained.
➢ There is a Pre-emptive right of preference shareholders.
➢ There is a Hybrid security of preference shares because it also bears some characteristics
of debentures.
➢ The dividend is not a tax-deductible expenditure.
➢ Shareholders also enjoy preferential right to receive dividend.
107
There are two main types of preference shares:
• Non-cumulative preference shares – These can receive a dividend up to an agreed

percentage each year. If the amount paid is less than the maximum agreed amount,
any shortfall is lost by the shareholders.
• Cumulative preference shares – These also have an agreed maximum percentage

dividend. However, any shortage of dividend paid in a year can be carried forward.
Classification of Capital
Share Capital and Dividends
The term ‘share capital’ refers to:
Authorised share capital – the total of the share capital that the company
would be allowed to issue.
(as stated in the Memorandum of Association); also called ‘nominal
NOTE: In the Companies Act 2006, a company capital’ is no longer required to have authorised share
capital and only the issued/allotted share capital will be included in the financial statements.
(a) Authorized share capital- is the total of the shared capital that the company would be
allowed to issue (as stated in the memorandum of association); also “nominal-
capital”.
(b) Issued share capital – the amount of share capital actually issued to shareholders.
(c) Called-up capital – where only part of the amounts payable on each share has been
asked for; the total amount requested on all the shares is known as the ‘called-up
capital’.
(d) Uncalled capital – the amount that is to be received in future, but which has not yet been
requested.
(e) Calls in arrears – the amount for which payment has been requested (that is, called
for), but has not yet been paid by shareholders.
(f) Paid-up capital – the total of the amount of share capital that has been paid for by
shareholders. If all of the authorized shared capital has been issued then item (a) and (b)
in the above are the same.
The example below illustrates these different meanings.
108
Example:
Better Enterprises Ltd. was formed with the legal right to be able to issue 100,000 shares of $1
each. The company has actually issued 75,000 shares. None of the shares has yet been fully paid
up; so far, the company has made calls of 80 cents ($0.80) per share. All of the calls have been
paid by shareholders except for $200 owing from one particular shareholder. On this basis,
therefore:
(a) Authorised (or nominal) share capital is $100,000.

(b) Issued share capital is $75,000.
(c) Called-up capital is (75,000 × $0.80) = $60,000.

(d) Uncalled capital is issued share capital less called-up capital ($75,000 –$60,000) = $15,000.
(e) Calls in arrears amounted to $200.
(f) Paid-up capital is called-up capital less calls in arrears ($60,000 – $200) = $59,800.
ACTIVITY
1. Identify some limited liability companies in Guyana

2. Explain in your own words the different types of shares
………………………………………………………………………………………………………
Reference:
2019
109
LESSON # 22
WORKSHEET
GRADE 11
Name of Students: ________________________________ Date:
WEEK # 8 – AN INTRODUCTION FOR ACCOUNTING FOR LIMITED COMPANIES

LESSON # 1: Limited Liability company
CONTENT:
DEFINITION:
A Limited liability company is an organization owned by its
shareholders, whose liability is limited to their share capital.
NOTE:
A limited liability company is a business whose owners’ liability for the business’ debts is limited
to the amount of money that they invested in shares in the business, so their personal possessions
cannot be lost.
ACTIVITY
1. WHAT IS THE OWNER OF A
COMPANY CALLED?
2. LIST THE TWO (2) TYPES OF
COMPANIES.
Sources of Finance for a Limited Liability Company

1. Shares
The capital of a limited company is divided into small units of equal amounts called SHARES.
The value of a share in a limited company could be as low as 1 cent, but $1 shares are more
typical, and shares with other ‘face values’ are possible. The face value of shares is called the
nominal value.
2. Bank loan
A Company can source capital by taking a loan from the bank.
110
ADVANTAGES AND DISADVANTAGES OF LIMITED LIABILITY COMPANY
ADVANTAGES DISADVANTAGES
➢ The owners (shareholders) of the ➢ A limited liability company must
company have limited liability. conform to government regulations
and legislation.
➢ In law, a limited company is a
‘separate legal entity’. ➢ Shares in a private limited company
can only be bought and sold in
➢ Capital can be more readily raised private.
to fund expansion.
➢ The decision-making process can
➢ The long-term viability is not take a longer time to achieve than
affected by the death of the owners in smaller organizations, that is,
(shareholders). sole traders and partnerships.
➢ Larger companies can offer ➢ Larger organizations can lose

employees an incentive by giving personal contact with their
shares and/or offering employees the employees who may lose interest as a
opportunity to purchase shares at an result.
advantage price.
ACTIVITY
ON YOUR OWN
1. Identify TWO (2) advantages and two disadvantages of a
COOPERATIVE.
2. List THREE (3) examples of Cooperatives found in
Guyana.
111
Cooperatives
PRINCIPLES OF COOPERATIVE
SOCIETY:
➢ Open Membership - anyone can
join the cooperative.
➢ Democratic Control - each
member has a say in the running of
the cooperative.
➢ Limited return on share capital -
the key objective is to provide a
service for its members, so
dividends as a reward for
membership are likely to be small.
➢ Cooperation among cooperatives.
NON- PROFIT ORGANIZATIONS

➢ Non –profit organizations exist for the benefit of their members.
➢ They are not form with the aim of making a profit.
➢ They are often funded through membership subscriptions.
➢ They are usually run by some members.
112
ACTIVITY
1. Identify THREE (3) examples of Non-profit organizations in Guyana.

__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
2. Choose ONE (1) of the examples in question one and explain the purpose of the
organization.
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
……………………………………………………………………………………………………..
Reference
Austen, D. and Ellis, D. et al., Principles of Accounts for CSEC, A Caribbean Examinations
Council Study Guide, Nelson Thornes, 2012
113
LESSON # 23
WORKSHEET
GRADE 11

LESSON # 2: How is capital raised in a limited liability company and cooperatives
CONTENT:
The capital of a limited company
When a limited company is formed, a decision has to be made as to the maximum amount of
capital that can be raised. The amount is known as the Authorized Share Capital. It is not
necessary to actually raise this amount immediately because initially the company will not require
resources of that value. The total of a company’s shares that are held by shareholders is called
Issued Share Capital. The capital of a company is divided into shares.
There are two main types of shares:
➢ Preference shares – Preference shareholders get an agreed percentage rate of dividend

before the ordinary shareholders receive anything.
➢ Ordinary shares – Ordinary shareholders receive the remainder of the total profits
available for dividends. There is no upper limit to the amounts of dividends they can
receive.
ORDINARY SHARES PREFERENCE SHARES
➢ Have nominal value of $1 and ➢ Have nominal value for example $1.
possible to have a face value of $2. ➢ The amount of dividend paid to a
➢ The owner of the company expects to preference shareholder is a fixed
be rewarded for investing in the percentage on the amount invested.
company by receiving an annual ➢ Preference shareholders are allocated
payment called DIVIDEND. their dividend before allocation of
➢ Have voting rights which can be used ordinary share
at ANNUAL GENERAL MEETING. ➢ Do not have voting rights.
114
ORDINARY SHARES CALCULATIONS
115
PREFERENCE SHARES CALCULATION
The Capital of a Cooperative

The capital is provided by the members who purchase shares in the organization.
A DEBENTURE is one of the most common forms of long-

DEBENTURES term loans. It is a loan that should be repaid on a specific date.
The debenture certificate issued by a company is an
acknowledgement that the company has borrowed an amount
of money, which it promises to repay at a future date.
Debenture holders are creditors of the company. They have a
fixed rate of interest. Debenture is charged to the income
statement.
ACTIVITY
1. What is meant by the term “Authorized Capital”?

__________________________________________________________________
2. Identify TWO (2) differences between “Preference Share” and “Ordinary Share”.
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
116
3. A company has issued 400,000 6% preference shares of $1 each and $1.6 million
ordinary shares of 50 cents each. How much cash should this share issue raise?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
For further Reading
Websites
This reference is from CSEC Principles of Accounts: Limited Liability Company
INSTRUCTION: right click on the document and go to hyperlink to OPEN.

Chris, Adapt tuition. Limited liability company, CSEC Principles of Accounts [YouTube
channel]. retrieved January,30,2022, from https://www.youtube.com/watch?v=U5DGi547P00
……………………………………………………………………………………………………
Reference
Austen, D. and Louisy, E. et al, Principles of Accounts for CSEC, Second edition with online
support, Oxford University Press, 2019
Austen, D. and Ellis, D. et al. Principles of Accounts for CSEC, A Caribbean Examinations
117
LESSON # 24
WORKSHEET
GRADE 11

LESSON # 3: Journal entries for issue of Shares and Debentures: Debentures calculations
CONTENT:
Recording the issue of shares
When a company issues shares, the amount of money received will depend upon the following
factors:
➢ The number of shares issued
➢ The face value of shares (sometimes called the ‘nominal’ or ‘par value’)
➢ Whether the company is able to issue the shares at a value above the face value.
If the company issues the shares for a price above the face value, the additional amount received
is call “Share Premium.”
NOTE
In accounting records, it is essential to keep a separate record of the face value of shares and the
share premium.
118
HOW TO PREPARE JOURNAL ENTRIES TO RECORD ISSUE OF SHARES?
119
JOURNAL TO RECORD ISSUES OF SHARES
Completing the shareholders’ equity section in the statement of financial position (balance sheet)
EXAMPLE 2:
Calculating Interest on Debentures
A limited company has $400,000 7% debentures (2024 - 2026). These debentures have a 7% rate
of interest, so the total interest to be paid is; $400,000 * 0.07 = $2, 000. The debentures must be
redeemed between 2024 and 2026. Debentures are issued for cash.
120
Creating the journal entry to record the issue of debentures
A LIMITED COMPANY ISSUED $300 000 8% DEBENTURES. The journal to record this is:
Preference shareholder must be paid their fixed dividend: then the remaining dividend will be
distributed or paid to ordinary shareholders. The decisions will be influenced by:
➢ The desire to reward the owners of the company.
➢ The amount of profit available for dividend
➢ The amount of liquid funds the company will have available when the time comes to pay
the dividend.
EXAMPLES OF CALCULATING DIVIDENDS
Company A has 200,000 8% preference shares of $1 each.

Solution:
➢ The preference share dividend will amount to 8% of (200,000 * $1. That is 8% * $200,
000 = $16,000.
Company B has 400,000 ordinary shares of $1 each and the directors have announced a
25% dividend.
Solution:
➢ The ordinary share dividend will amount to 25% of (400,000 * $1 that is 25% * $400,
000 = $100,000.
Company C has 1000 000 ordinary shares of 50 cents each and the directors have
announced a 15 % dividend.
Solution:
➢ The ordinary share dividend will amount to 15% of (1,000,000 * 50 cents) that is $500,
000 = $75,000.
121
PRACTICE THESE QUESTIONS
1. Preparing the journal to record the issue of ordinary shares
Khan’s limited has authorized share capital of 200,000 ordinary shares of $1 each. The
company decided to issue 100,000 ordinary shares at $1.30. These shares were fully
subscribed and paid.
TASK: Prepare the journal to record the issue of ordinary shares.
2. Preparing the journal to record the issue of Preference Shares and Debentures
Khan’s limited also has Authorized Share Capital of 500,000 Preference Shares of 20
cents each.
The company decided to issue all of the preference shares at 45 cents each, as well as to
issue debentures to the value of $200,000. The issues were fully subscribed.
TASK: Prepared the journal to record the issue of preference shares and the debentures.
3. Preparing the journal entries to record the issue of debentures and the payment of a
dividend
Petal Ltd issued $200,000 6% debentures on January 1, 2020. Interest was paid for the year
on December 31, 2021.
TASK: Prepare the journal entries to record the issue of debentures and the payment of
interest.
4. Damian Ltd has the following statement of financial position (balance sheet) at December
31, 2017.
122
Additional information:
➢ There had been a share issue of a further 200,000 Ordinary Shares at $1.80 each.
These shares had been fully subscribed and paid up by December 31, 2017. The share
issue had been omitted from the statement of financial position (balance sheet) above.
➢ Also omitted from the statement of financial position (balance sheet) was an issue of
$100,000 debentures.
TASK: Prepare the statement of financial position (balance sheet) after recording the additional
information.
For better understanding watch the video below
Websites
This reference is from CSEC Principles of Accounts: JOURNAL ENTRIES FOR ISSUE
OF SHARE
INSTRUCTION: right click on the document and go to hyperlink to OPEN
Chris, Adapt tuition. Limited liability company, journal entries, shares and debentures. CSEC
Principles of Accounts [YouTube channel]. retrieved January,30,2022, from
https://www.youtube.com/watch?v=KFh543bRnGY
……………………………………………………………………………………………………..
Reference
123
LESSON # 25
WORKSHEET
GRADE 11
WEEK # 9 – LIMITED COMPANY FINANCIAL STATEMENTS

LESSON # 1: Income Statement and Appropriation Account - Limited Company income
statement
CONTENT:
The Income Statement
The income statement of a limited company is similar to that of the sole trader. However, some
expenses are only relevant to a limited company and the profit is either shared out to the
shareholders in the form of dividends or retained by the company for future use as Reserves.
EXAMPLES OF LIMITED COMPANY EXPENSES:
1. AUDITORS’ FEES
AUDITORS are appointed by the directors to verify the accuracy of the records and
financial statements. They are independent and are appointed to report back to the
shareholders at the AGM on whether the accounts are ‘true and fair’. Their fees are
recorded as an expense in the income statement and if unpaid and owing for that financial
period, they are shown as current liability in the balance sheet.
2. DIRECTORS’ RENUMERATION
Directors are appointed by the shareholders to manage the business on their behalf. They
have a stewardship role. All monies paid to directors are referred to as their remuneration
and are recorded as an expense in the income statement. If any remuneration is outstanding
and unpaid at the end of the year, it is recorded in the current liabilities of the balance sheet.
124
3. DEBENTURE INTEREST
Debentures are loans that bear a fixed rate of interest. This interest is an expense and should
be recorded in the income statement. If all or part of the interest remains unpaid, it should
be recorded as an accrual in the current liabilities section of the statement of financial
position (balance sheet). The debentures are recorded as a non- current liability.
CAN YOU SAY WHAT IS

STEWARDSHIP?
PREPARING AN INCOME STATEMENT FOR A LIMITED LIABILITY COMPANY
Nearly There Ltd. has been trading for several years, selling maps for tourists.
Nearly There Ltd. has an authorized share capital of 100,000 ordinary shares of $1 each and
50,000 8% preference shares of $2 each. The company has issued 5000 preference shares at par
and 50,000 ordinary shares have been issued at a premium of 28 cents.
An audit has been carried out by the external independent auditors and a trial balance at December
31, 2018 has been carried out by the external independent auditors which produced the following:
125
126
Additional information (in $000):
➢ At December 31, 2018, debenture interest accrued was $1900.
➢ Inventory at January 1, 2018 was $11,500.
➢ The directors proposed to pay a dividend of $3000 to the ordinary shareholders and to
pay the preference shareholders their outstanding dividend. The directors also proposed
to transfer $5000 to the general reserve.
The Income Statement
127
THE APPROPIATION ACCOUNT
The financial statements of a limited company include an appropriation account that
shows the decisions made by the directors about the profits of the company.
The account includes:
➢ The profit (loss) for the year, transferred from the income statement.
➢ Any profits made in the past that were not distributed (known as opening balance
or retained profits brought forward)
➢ Proposed dividends
➢ The transfer of some of the profits to a general reserve or any other reserve
➢ The closing balance of profits that have not been distributed (sometimes called
retained profits carried forward).
What is General Reserve?

What is Proposed Dividends?
128
EXAMPLE OF A COMPANY’S APPROPIATION ACCOUNT
129
ACTIVITY
PREPARE AN INCOME STATEMENT AND APPROPRIATION ACCOUNT FOR A

LIMITED COMPANY
The following is an extract from the trial balance of Dante Ltd. December 31, 2018:
130
Additional information ($000):
➢ Premises should be depreciated by $540 and vehicles by $200.
➢ A dividend was proposed on ordinary shares of $2 200 and on preference shares of
$800.
➢ The directors proposed to transfer $2000 to a general reserve.
TASK: Prepare an income statement and appropriation account for Dante Ltd for the year ended
31st December, 2018.
For better understanding watch the video below
Websites
This reference is from CSEC Principles of Accounts: INCOME STATEMENT AND
APPROPIATION ACCOUNT

Chris, Adapt tuition. Limited liability company, appropriation account. CSEC Principles of
Accounts [YouTube channel]. retrieved January 30, 2022, from
https://www.youtube.com/watch?v=U5DGi547P00
……………………………………………………………………………………………………..
Reference
131
LESSON # 26
WORKSHEET
GRADE 11
WEEK # 9 – LIMITED COMPANY FINANCIAL STATEMENTS
LESSON # 2: Balance Sheet - Limited Company Income Statement

CONTENT:
The statement of financial position (Balance sheet) of a limited company is very similar to
that of a sole trade in layout, except the capital section (opening capital + profit – drawings)
is replaced with an equity section that includes details of shares and reserves.
The Statement of Financial Position (Balance sheet)
The Balance Sheet of a limited liability company - the emphasis is on the capital structure of
the firm. It consists of three sections: capital, loans, and reserves. Authorized and issued share
capital is represented in the capital section, while long term liabilities are represented in the
loan section. Any transfer to the reserves and undistributed profits are represented in the
reserves section. Proposed dividends have not been paid; therefore, it is a current liability in the
balance sheet.
Example of the statement of financial position (balance sheet)
The Statement of financial position (balance sheet) for Nearly There Ltd at December 31, 2018.
The extract is showing how the balance sheet is prepared using the necessary information for the
Limited Liability Company.
In this lesson, you will observe and understand the format which is similar to the sole traders’
balance sheet.
The Extract is
on the next
page
132
133
Revenue and Capital Reserves
Reserves are profits made by the company that have not been distributed to shareholders. There
are TWO kinds of Reserves.
1. Capital reserves, which are created as a result of non-trading activities. Revaluation
reserves, which arise when non-current assets are revalued at a higher value than their
current net book value. Capital reserves may not be used to finance a dividend payment to
shareholders.
2. Revenue reserve arise from the ordinary trading activities of the company. Revenue
reserves can be used to finance dividend payments to shareholders. Revenues are normally
deliberately created by the directors of a company to strengthen the position of the
company by withholding dividend payments.
WORK THIS QUESTION
The following is an extract from the trial balance of Ramteet Ltd. at December 31, 2018 after the
preparation of the income statement and appropriation account for the year ended on that date.
134
Prepare the statement of financial position (Balance sheet) for Ramteet Ltd for December 31,
2018.
For better understanding watch and past paper question the video below
Websites
This reference is from CSEC Principles of Accounts: BALANCE SHEET- LIMITED
LIABILITY COMPANY

Chris, Adapt tuition. Limited liability company, balance sheet. CSEC Principles of Accounts
[YouTube channel]. retrieved January 30, 2022, from
https://www.youtube.com/watch?v=vZV9YQdyLi4
……………………………………………………………………………………………………
Reference
135
LESSON # 27
WORKSHEET
GRADE 11
WEEK # 9 – ANALYSING THE PERFORMANCE OF A LIMITED LIABILITY
COMPANY
LESSON # 3: Ratio Analysis
CONTENT:
RATIO ANALYSIS is used to interpret the information contained within financial statements in
order to assess the strengths and the weaknesses of a business.
Importance of Analysis and Interpretation of Financial Statements
➢ Items in the financial statements can be related to one another.

➢ Performance of the business can be compared between years and between
firms.
➢ Helps to identify the weakness of the management.
➢ Helps investors to assess their investments.
CAN YOU THINK OF THE

DIFFERENT TYPES OF
RATIOS USED BY LIMITED
LIABILITY COMPANIES?
TYPES OF RATIOS
136
THERE ARE THREE CATEGORIES OF RATIOS:
1. PROFITABILITY RATIOS: assessing how much profit is made by the business during
the current year.
Interpretation of Ratios using the example from the previous lesson with Nearly There Ltd.
137
2. LIQUIDITY RATIOS: assessing the availability of liquid funds in the short term. The three
(3) examples of liquidity ratios and the formula for calculating each are:
Interpretation of using liquidity ratios
138
3. EFFICIENCY RATIOS: assessing how efficiently the business has used its available
resources.
Interpretation using efficiency ratios formula.
139
PRACTICE QUESTIONS
The financial statement for Over and Out Ltd. for the year ended December 31, 2018 were as
follows:
140
141
Use the financial statement for Over and Out Ltd. to calculate the following profitability and
financial ratios:
1. Gross profit percentage
2. Net profit percentage
3. Return on investment
4. Current ratio
5. Acid test ratio
6. Inventory turnover (using the closing inventory as the average inventory).
7. Explain briefly what each of the ratios tells you about the financial results of Over and Out
Ltd. for the year ended December 31, 2018.
EXAMPLE 2
Grand Gardening Ltd. is a successful gardening design company that has been operating for many
years. The ratios for Grand Gardening Ltd. and the averages for the industry for the year ended
January 31, 2020 were as follows:
TASK: Comment on the results of Grand Gardening Ltd. by comparing their ratios with the
industry averages.
142
Websites
This reference is from CSEC Principles of Accounts: RATIOS ANALYSIS

➢ https://www.youtube.com/watch?v=yGXjtmO_s6s
➢ https://www.youtube.com/watch?v=cY9CRG_8p7w
➢ profitability ratios
https://www.youtube.com/watch?v=yGXjtmO_s6s
➢ liquidity ratios
https://www.youtube.com/watch?v=-x2kv-3RLoA
➢ efficiency ratios
https://www.youtube.com/watch?v=gWcEyExGHwc
……………………………………………………………………………………………………..
Reference
143
LESSON # 28
WORKSHEET
GRADE 11
WEEK # 10 – ACCOUNTING FOR COOPERATIVES

LESSON # 1: Types of Cooperative and Income and Expenditure Statement
CONTENT:
FOR A RECAP OF THE DEFINITION, PRINCIPLES AND

EXAMPLES OF COOPERATIVES,
PLEASE REVIEW WEEK 8: LESSON 1 OF THIS
WORKSHEET
TYPES OF COOPERATIVES
Service cooperatives - Members can trade with cooperative societies, that is, they buy from them
and sell to them. Generally, service cooperatives provide marketing opportunities, credit facilities,
supplies, equipment and other such services to their members. The success of this type of
cooperative depends largely on the extent to which members use it.
Production or worker cooperatives - These cooperatives are also known as industrial

cooperatives or workshop cooperatives. The members of these cooperatives not only provide
goods and services to the public, but also employment for themselves.
RAISING FINANCE FOR A COOPERATIVE SOCIETY

The primary source of capital for a cooperative is from its members purchasing goods and
services from the society.
Other ways of raising finance include:
➢ the sale of shares to members
➢ grants
➢ donations
➢ membership fees
➢ interest on members’ deposits
144
JOURNAL ENTRIES TO RECORDING CAPITAL
EXERCISE
A large community of farmers decided to form a marketing cooperative called North
Enterprise Cooperative to provide marketing advice and services to its members. There
were to be 16000 members and each member was to pay $100 per share.
SOLUTION
WORK THIS EXAMPLE
1. A group of Farmers decided to form a cooperative called Southern Farming Markets

Cooperative to provide marketing advice and services to its members. There were to be
8000 members and each member was to pay $50 per share.
a) What kind of cooperative is this?
b) Prepare the opening journal entry to record the above transaction.
145
FINAL ACCOUNTS
Accounts of Cooperative Societies

Cooperative societies prepare income and expenditure accounts, cash flow statements and
statements of financial position, accompanied by the appropriate notes to these financial
statements.
The accounts of the societies must be audited and distributed to their members. There are no
requirements for these accounts to be made available to the public at large, which is the case for
public companies. The excess of income over expenditure is called a surplus, while the excess of
expenditure over income is referred to as a deficit.
146
PREPARE AN INCOME AND EXPENDITURE
ACCOUNT
The following information is available for North Enterprise Cooperative for the year ended
December 31, 2018.
147
Additional Information:
➢ Membership fees due at December 31, 2018 were $14,000.
➢ Office expenses paid in advance at December 31, 2018 were $ 26,000.
➢ Motor vehicle cost owing at December 31, 2018 were $18,000
➢ Depreciation is to be charged as follows:
• Equipment at 10% per annum using straight line method.
• Motor vehicle at 20% per annum using straight line method.
• The board of management has decided to transfer 20% of the surplus for the year
to the statutory reserve.
• An honorarium of $10,000 is to be paid to the board of management.
FIND OUT:
1. What is Statutory Reserve?
2. What is Honorarium?
148
149
150
ACTIVITY: WORK THIS EXERCISE
The following information is available for the Teachers’ Credit Union cooperative for the year
ended December 31, 2018:
Additional Information:
➢ Depreciation is charged on furniture and fittings at 25% using the reducing balance
method and 24% on computer equipment using straight line method.
➢ There are accrued office expenses of $400 at December 31, 2018.
➢ There are outstanding membership fees of $2000 at December 31, 2018
TASK: Prepare an income and expenditure account for the year ended December 31, 2018.
……………………………………………………………………………………………………
Reference
Austen, D. and Louisy, E. et al, Principles of Accounts for CSEC second edition with online
support Oxford University Press, 2019
151
LESSON # 29
WORKSHEET
GRADE 11

LESSON # 2: Cooperatives Appropriation Account
CONTENT:
AN APPROPIATION ACCOUNT
An appropriation account is used within the final accounts of a cooperative to share the profits out
to its members.
There is a section under the profit and loss account called the profit and loss appropriation
account. The appropriation account shows how the net profits are to be appropriated, that is, how
the profits are to be used.
We may find any of the following in the appropriation account:
Credit side:
➢ Net profit for the year – This is the net profit brought down from the main profit and loss
account.
➢ Balance brought forward from last year – As you will see, all the profit may not be
appropriated during a period. This then will be the balance on the appropriation account,
as brought forward from the previous year. They are usually called retained profits.
152
Debit side:
➢ Transfers to reserves – The directors may decide that some of the profits should not
be included in the calculation of how much should be paid out as dividends. These
profits are transferred to reserve accounts.
➢ Amounts written off as goodwill – Any amounts written off as goodwill should be shown
in the appropriation account and not in the main profit and loss account.
➢ Amounts written off as preliminary expenses – When a company is formed, there are
many kinds of expenses concerned with its formation. These include, for example, legal
expenses and various government taxes. The amount of preliminary expenses can be
written off and charged in the appropriation account.
➢ Taxation payable on profits – Although this is not on your syllabus, taxation, in fact, is
an appropriation of profits and would be shown as a debit in the appropriation account.
➢ Dividends – Out of the remainder of the profits, the directors propose the amount of
dividends to be paid.
➢ Balance carried forward to next year – After the dividends have been proposed, there
will probably be some profits that have not been appropriated. These retained profits will
be carried forward to the following year.
EXAMPLE:
The appropriation account of North Enterprise Cooperative is:
153
READ AND
UNDERSTAND
THE NOTES TO
PREPARE THE
APPROPIATION
ACCOUNT
154
COMPLETE THE EXERCISE BELOW
…………………………………………………………………………………………………….
Reference
155
LESSON # 30
WORKSHEET
GRADE 11

LESSON # 3: Statement of Financial Position (Balance Sheet)
CONTENT:
Preparation of the Balance Sheet
The Statement of financial position (balance sheet) of North Enterprise Cooperative is:
156
ACTIVITY
The following information is available for the Pathways Environmental Cooperative for the year
ended March 31, 2018:
Additional information:
➢ 20% of the surplus for the year is to be transferred to the statutory reserve.
➢ An honorarium of $5000 is to be paid at the end of the year.
Prepare the statement of financial position (balance sheet) at March 1, 2018.
Websites
This reference is from CSEC Principles of Accounts: STATEMENT OF FINANCIAL
POSITION (BALANCE SHEET)
https://www.youtube.com/watch?v=tNxufNqMQbo
……………………………………………………………………………………………………
Reference
157
LESSON # 31
WORKSHEET
GRADE 11
Name of Student: _______________________ Date: _________________________

WEEK # 11 – NON-PROFIT ORGANIZATIONS
LESSON # 1: Non-profit organizations and Receipts and Payments Account

CONTENT:
Non-Profit Organizations are other organizations whose objective is not to make a profit,
but instead provide facilities for their members to pursue a hobby, sporting activity or
provide voluntary services. These clubs and associations do not have to prepare a trading
and profit and loss account since they are not formed to carry on trading or make profits.
Instead, the financial statements prepared by them are either receipts and payments
accounts or income and expenditure accounts.
ACTIVITY
List Three (3) examples of Profit Making and Non-Profit Making Organization
PUT YOUR
ANSWER
HERE
PROFIT MAKING ORGANIZATIONS NON-PROFIT MAKING

ORGANIZATIONS
158
RECEIPTS AND PAYMENTS ACCOUNT
Receipts and payments accounts are usually prepared by the treasurer of the club or association.
This account is a summary of the cash book, for the period and if the organization has no assets
(other than cash) and no liabilities, a summary of the cash book tells the members all they need
to know about the financial activities during a period.
➢ Debit all receipts
➢ Credit all payments
Typical receipts for a non –profit organization include:
➢ Subscription received from members (usually the main source of finance).

➢ Amounts received in connection with events designed to provide some extra finance for
the organization; for example, sales of refreshments, tickets sales for an event.
➢ Donations from members.
➢ Amounts received from the disposal of unwanted non-current assets; for example, the
sale of tennis equipment in a sports club.
➢ Loans from members.
Typical payments for a non- profit

organization include:
➢ Expenses
➢ Purchases of inventory for sale in club’s
café
➢ Additional non-current assets
➢ Repayment of members’ loans
159
SAMPLE OF A RECEIPTS AND PAYMENTS ACCOUNTS
On December 31, 2018, the receipts and payments account of the Runners Up Sports Club is:
160
COMPLETE
THIS
EXERCISE
For better understanding and past paper question watch the video below
Websites
This reference is from CSEC Principles of Accounts: RECEIPTS AND PAYMENTS
ACCOUNT- COOPERATIVES

Chris, Adapttuition. Receipts and payments accounts, csec Principles of Accounts [YouTube
channel]. retrieved January,30,2022, from https://www.youtube.com/watch?v=9_bHIbp964I
161
……………………………………………………………………………………………………
Reference
162
LESSON # 32
WORKSHEET
GRADE 11
Name of Students: ____________________ Date: ________________________
WEEK # 11 – MANUFACTURING ACCOUNTS

LESSON # 2: Preparation of The Cost of Production
CONTENT:
Manufacturing Accounts - an account prepared at the end of the financial period in order to
calculate the production cost of goods manufactured.
WHAT ARE
MANUFACTURING
ACCOUNTS?
The above TWO (2) accounts are combined to find COST OF PRODUCTION
Cost of production = Prime cost + Factory overheads
All other non-production costs, such as administration costs, are recorded within the income
statement as they would be for a non- manufacturing business.
163
164
ACTIVITY
Complete the questions below:
165
TASK: Complete a Manufacturing account from a trial balance.
On December 31, 2018, an extract of the trial balance of Mahabeer Manufacturing Ltd. was as
follows: (M/I indicates whether the figure should be included in the Manufacturing Account or
the Income Statement).
The business’ inventory of raw materials at December 31, 2018 was valued at $19,500 (M). The
machinery was to be depreciated by $11,100 (M).
166
SOLUTION TO MANUFACTURING
ACCOUNT
167
ACTIVITY
Prepare a Manufacturing Account to Calculate the Cost of Production.
Websites
This reference is from CSEC Principles of Accounts: MANUFACUTRING ACCOUNT

Chris, Adapt tuition. Manufacturing accounts, CSEC Principles of Accounts [YouTube
channel]. retrieved January 30, 2022, from
https://www.youtube.com/watch?v=EADFMMTus1Y&t=341s
…………………………………………………………………………………………………….
Reference
168
LESSON # 32
WORKSHEET
GRADE 11
Name of Students: __________________________ Date:

LESSON # 3: Work in Progress Section of the Manufacturing Account
CONTENT:
Work in Progress
A work in progress (WIP) account is an inventory account that includes goods that are in the
process of being produced, but are not yet finished.
Working in Progress (WIP) can be classified into:
➢ WIP at the start WIP at the close

The work in progress at close (particularly completed goods on hand at year end) form the
manufacturer’s inventory or stock.
➢ The stock is determined by a physical count

The cost of these partially finished units is determined by estimating the cost of the raw materials,
direct labour and overhead associated with these units.
TOTAL COST
PRIME COST + FACTORY OVERHEADS + OPENING WORK IN PROGRESS – CLOSING
WORK IN PROGESSS.
UNIT COST
The production cost per unit can be calculated from:
169
ACTIVITY
Prepare the manufacturing account with work in progress and calculate the cost of production
unit.
Persaud PLC is a manufacturing business. The following figures have been extracted from the
company’s ledgers as at May 31, 2018:
………………………………………………………………………………………………………
Reference
Council Study Guide Nelson Thornes, 2012
170
LESSON # 34
WORKSHEET
GRADE 11
Name of Students: _______________________ Date: _______________________

LESSON # 3: Trading Account and Balance sheet
CONTENT:
The Trading Account
At the end of the production process, the cost of production is transferred from the manufacturing
account to the trading account. The cost of production figure replaces the purchases of goods for
re-sale within the calculation of cost of goods sold. The completed goods are referred to as
finished goods. The trading account is concerned with comparing the revenue from selling
finished goods with the cost of finished goods sold.
SAMPLE OF THE TRADING SECTION OF AN INCOME STATEMENT FOR THE

MANUFACTURING ACCOUNT.
171
BALANCE
Inventory in the Statement of Financial Position (Balance Sheet)

There are THREE (3) types of inventories within manufacturing business:
1. Inventory of raw materials
2. Inventory of work in progress
3. Inventory of finished goods
All THREE (3) types of inventories are recorded in the current assets section.
172
ACTIVITY
TASK: Prepare the final accounts and the statement of financial position (balance sheet).
……………………………………………………………………………………………………
Reference
Stephens-James, L. and Burrows, L. et al., Principles of Accounts for Caribbean Examinations,

Ian Randle Publishers, 2011
Wood, F. and Robinson, S., Principles of Accounts for the Caribbean, 5th Edition, Pearson
Education Limited, 2007
173
LESSON # 35
WORKSHEET
GRADE 11
WEEK # 12 – INVENTORY CONTROL

LESSON # 1: Stock Valuation, importance and The First In First Out Method
CONTENT:
Definition
Stock Valuation - Stock valuation is the process of determining the current (or projected) worth of
a stock at a given time period. It is used to determine the value of closing stock at the end of the
period. The sales department would use stock valuation to keep track of the stock-on-hand; it also
indicates when as well as how much stocks should be bought.
Importance of Stock Valuation
➢ Determine the value of current assets (stock)
➢ Determine the cost of goods sold, gross profit and net profit (the trading account)
➢ Incorrect value of stock affects the value of current assets, current year’s profit as well as the
profit of the subsequent year.
NOTE: Historical convention governs inventory of a business. Stock valuation follows the
principles of conservation. Stock is valued at the cost price or the market value, whichever one is
lower.
ADVANTAGES OF FIFO METHOD DISADVANTAGES OF FIFO METHOD

➢ This method is easy to understand and ➢ When prices rise, the issue price does
simple to operate. not reflect the market price, as materials
are issued from the earliest
➢ The value of closing stock will reflect consignments.
current market. ➢ During the period of falling prices, cost
of production tends to be high. This
➢ This method is useful when prices are
may lead to cancellation of prospective
falling. sales because of high quotation.
174
Methods of Stock valuation
FIFO- FIRST IN FIRST OUT
LIFO- LAST IN FIRST OUT
AVCO- AVERAGE COST
First in, first out

method
This is usually known as FIFO, the first letters of each word. The method says that, as far as the
accounts are concerned, the first goods to be received are the first to be issued (first stock on the
shelf would be sold first).
175
ACTIVITY: FIRST IN FIRST OUT
176
EXERCISE ONE
EXERCISE TWO
……………………………………………………………………………………………………….
Reference
Council Study Guide Nelson Thornes, 2012

177
LESSON # 36
WORKSHEET
GRADE 11
Name of Students: ______________________________ Date: ___________________

LESSON # 2: Last In First Out (LIFO) and Average Cost Method (AVCO)
CONTENT:
Definition
LIFO- Last in First out - is a method used to account for inventory that records the most recently
produced items as sold first (the last set of items purchased will be the first to be sold).
178
ACTIVITY: CALCULATE THE
LIFO FOR THE FOLLOWING:
ADVANTAGES AND DISADVANTAGES OF LIFO METHOD
179
The AVCO method of stock valuation
AVCO - average cost - calculates the cost of ending inventory and cost of goods sold for a period on the
basis of weighted average cost per unit of inventory.
Using the AVCO method, with each receipt of goods, the average cost for each item of inventory is
recalculated. Further, issues of goods are then at that figure, until another receipt of goods; this means that
another recalculation is needed.
180
Using the AVCO to find a value for closing inventory
ACTIVITY: CALCULATE THE AVCO
………………………………………………………………………………………………..
Reference
Austen, D. and Louisy, E. et al, Principles of Accounts for CSEC, Second edition with online support
Oxford University Press, 2019
Austen, D. and Ellis, D. et al., Principles of Accounts for CSEC, A Caribbean Examinations Council Study
Guide, Nelson Thornes, 2012
Stephens-James, L. and Burrows, L. et al., Principles of Accounts for Caribbean Examinations, Ian
Randle Publishers, 2011
181
LESSON # 37
WORKSHEET
GRADE 11
Name of Students: _____________________________ Date: _______________

LESSON # 3: Calculating Gross Profit Using FIFO, LIFO and AVCO
CONTENT:
In the sample below, use the answers from last lesson to calculate the gross profit.
ACTIVITY
Doreen Watson sells accessories for bicycles. The following information relates to a gadget (model
BBUL) which measures and records speed, distance travelled.
On May 1, Doreen had two of model BBUL in her business’ storeroom, valued at $120 each. The
following information is available about purchases and sales of this item in May.
ACTIVITY: Which method of

stock valuation produces the
highest gross profit?
182
Calculate the value of unsold inventory at May 31 using the following methods of valuation:
a) FIFO
b) LIFO
c) AVCO
NOTE: In each case, set out a table to show movement in inventory.
………………………………………………………………………………………………………
Reference

183
LESSON # 38
WORKSHEET
GRADE 11
Name of Students: ____________________ Date:
WEEK # 13 – ACCOUNTING FOR THE ENTREPRENEUR

LESSON # 1: Payroll
CONTENT:
PONDER ON THESE
QUESTIONS
- How much did Cynthia earn for
the month?
- What is her total deductions?
- What is her Net Pay?
Payroll
The payroll is the list of all a business’ employees that shows details of the wages or salaries paid
to each individual and how these amounts were calculated.
Gross Pay - Is the amount due to be paid by an employer in wages or salaries in return for work
done, before making any deductions. Wages are often paid weekly and can be paid in cash; salaries
are usually paid monthly, either by cheque or directly into the employee’s bank account.
184
Ways in which Gross pay can be calculated:
Fixed rate Salaries or wages are usually an agreed amount for a year; they may be
reviewed with the possibility of a pay rise.
Time rate Often, wages are based on the hours worked, with an hourly rate agreed
with the employer. Usually, an employee is expected to work an agreed
number of hours per week.
However, sometimes employees may work ‘overtime’ (more than the
agreed hours) and be paid at a higher rate for these extra hours.
Piece rates Wages can be based on the amount of work done, that is, the number of
products made or operations carried out, with an agreed rate per
product/operation. Employees who work faster therefore earn more than
those who work more slowly.
Commission Some individuals are paid at a basic rate plus an additional amount that
is dependent on the number of sales they have achieved.
How to calculate fixed salary:
ACTIVITY
Kris and Rishi work at Best Price Hotels Ltd. During Year 1, Kris’s salary was $112,000 per annum
and Rishi’s wage was $56,000 per annum. Both employees received a pay increase of 4% for year
2.
Calculate Kris’s monthly salary and Rishi’s weekly wages for Years 1 and 2.
185
Time Rates
Rhonda works part-time in a local restaurant. Rhonda is paid $24 per hour. During the week ended
May 7, 2018, Rhonda was employed for 17 hours.
Rhonda will be paid a wage of 17 hours * $24 = $408.
ACTIVITY: CALCULATE GROSS PAY
186
Piece rate
Payment is based on the number of units produced or operations completed. The employee is paid
only for work completed, although most employers agree a minimum wage regardless of work
completed. Piece rate payment is an incentive to encourage workers to work faster – although it is
important to ensure that quality does not suffer as a result of faster production.
Example: Lowe Production Co. manufactures parts for the motor-car industry. It pays its workers
piecework rates as follows:
• Part PCD 27 = $2.10
• Part JB 103 = $7.45
The company also has a minimum wage agreement of $175 per week. During the first week of
January, one of the workers, John Moss, produces 60 Part PCD 27s and 12 Part JB 103s. His wage
for the week would be:
$
126.0
60 x $2.10 0
89.
12 x $7.45 40
215.4
0
Another worker, Philip Hanson, produces 50 Part PCD 27s and 8 Part JB 103s; his wage is calculated
by the piece rates as follows:
$
50 x $2.10 105.00
8 x $ 7.45 59. 60
164.60
Commission
Commission is a percentage based on the number of sales made by an employee. Commission may
be paid in addition to a basic salary or instead of a salary.
Example: Carol Chapman and Diane Dawson work for a computer software company. Their
salaries are $12,000 and $10,800, respectively, plus a commission of 1% of total sales made each
187
month. During July, Carol’s sales totaled $30,000 and Diane’s $17,000. Their July salaries would
be as follows:
Carol
$12,000 = $1,000 per month
12
Plus 1% $30,000 = $3,00
$ 1,300
Diane
$10,800 = $900 per month
12
Plus 1% $17,000 = $170
$ 1070
COMPLETE THIS ACTIVITY
Yvonne and Zamran are employed by Horrad’s Department Store. Yvonne works in the shoe
department and Zamran works in the technology department. Both employees earn a basic salary of
$3400 per month. In addition, they are paid a commission of 1% of the amount by which the sales
of their department exceed $40,000 per month.
Sales for each department for two recent months were as follows:
SHOE TECHNOLOGY
DEPARTMENT DEPARTMENT
$ $
August 2018 44 000 38 700
September 2018 39 500 49 200
TASK: Calculate Yvonne’s and Zamran’s gross pay for the months August and September 2018.
Websites
This reference is from CSEC Principles of Accounts: PAYROLL
https://www.youtube.com/watch?v=ppeJkERYRnI
188
………………………………………………………………………………………………………..
Reference

189
LESSON # 39
WORKSHEET
GRADE 11
Name of Students: ____________________________ Date:
WEEK # 13 – PAYROLL
LESSON # 2: Source documents for pay calculations, Statutory and Non-statutory deductions
and net pay
CONTENT:
Examples of Source Documents are:
➢ Clock Card - is a document that gives details of the number of hours an employee has
worked, which is obtained from the use of a special item of equipment, a clock card
machine or time recorder.
Example of an Employees Clock Card
190
➢ Time Sheet - is a document that records the hours worked by an employee who works off
site.
➢ Piecework Ticket - is a document that records the number of items that quality control has
passed for payment, using piece rates.
ACTIVITY
1. Calculate Gross pay using a clock card as a source document

Latoya is employed by Southland Shores Ltd. She is paid $32 per hour for an 8-hour day. Weekday
overtime is paid at time and a quarter; weekend overtime is paid at time and half. Weekday lunch
time is treated as time on the job.
REQUIRED:
2. Calculate Latoya’s Gross pay for week 33.
3. An extract of Latoya’s clock card for week 33 is shown below
191
LATOYA’S CLOCK CARD
Statutory and non-statutory deductions
Deduction that an employer has to make by law from the employees’

gross pay are known as statutory deductions.
Statutory Deductions
The most common Statutory deductions are:
➢ Income tax
➢ National Insurance Scheme (NIS)
Non-statutory deductions are deductions made from pay at an

employee’s request.
Statutory Deductions
Non-statutory deductions include payments to:
➢ Trade unions
➢ Social clubs
➢ Pension/superannuation schemes
Calculation of Net pay

NET PAY = Gross Pay minus the total deduction
192
Example 1:
$ $
G. Jones Gross earnings for the week 2,400
Income tax 300
National Insurance 100
Total Deduction 400
Net Pay 2,000
Example 2:
H. Russell Gross earing for the week 20,000

Income tax 3000
National Insurance 2000
Club Dues 500
Total Deduction 5,500
Net Pay 14,500
ACTIVITY
Omare works for Victory Finance Ltd. In year 1, his annual salary was $62,000. In year 2, he was
awarded a pay rise and his annual salary was $65,000. The following information is available about
the income tax regulations that applied to Omare:
Personal allowance Tax rate

Year 1 $18 000 22%
Year 2 $19 500 20%
193
TASK: Calculate Omare’s net pay for years 1 and 2.
………………………………………………………………………………………………………
Reference

Ian Randle Publishers, 2011.
194
LESSON # 40
WORKSHEET
GRADE 11
WEEK # 13 – PAYROLL
LESSON # 3: Payroll software and calculating payroll
CONTENT:
PAYROLL REGISTER
For each payment date, the organization will prepare a payroll register. This will show the earnings
for all the employees. It consists of:
➢ the name of the employee
➢ the total hours worked by the employee during the period
➢ the number of hours worked at the regular rate of pay × pay per hour
➢ the hours worked at overtime rates × pay per hour
➢ the gross pay – that is, before deductions – earned during the period
➢ the gross earnings of the employee from the start of the accounting year until the end of this
payroll period; that is, if 15 weeks’ earnings have been paid, then this column shows the
total of all the 15 weeks before any deductions have been made.
➢ statutory deductions
➢ voluntary deductions
➢ the total amount of all the deductions
➢ Net pay: The gross pay column less the total deductions column
195
EXAMPLE OF THE PAYROLL REGISTER
A WORKED EXAMPLE OF THE PAYROLL REGISTER
ACTIVITY
Xavier works a 40–hour week and is paid $36 per hour. Overtime is paid at time and quarter.
He pays income tax at the rate of 20% on any earnings above $650 per week. In addition, national
insurance contributions are 3% of gross pay. Xavier pays $25 per week in contributions to health
scheme and $15 per week to a credit union.
Last week, Xavier worked for 46 hours.
TASK: Prepare Xavier’s pay slip for the week.
TASK:
196
……………………………………………………………………………………………………….
Reference
197
LESSON # 40
WORKSHEET
GRADE 11
Name of Students: _________________________ Date:
WEEK # 14 – FORECASTING AND BUDGET

LESSON # 1: Cash flow, purpose of budgeting, Stages in budget preparation and Types of
Budgets
CONTENT:
Forward planning
Forward planning is an important part of managing a business because it helps ensure that:
➢ The business’ goals can be achieved
➢ The right resources are available at the right time
➢ Resources are used efficiently
Cash Flow
A budget is a cost plan, expressed mainly in financial terms, which covers all the activities of a
business enterprise. It is usually for a specific period of time, that is:
➢ monthly budget
➢ yearly budget
➢ three - or five-year budget
Purpose of Budgeting
Planning enables the owner (s) of a business to look ahead, set targets, anticipate
problems and provide objectives.
Communicate ideas and plans to both management and employees.
Co-ordinate the activities of different parts of the organization so that all sections work
towards the same goal.
Responsibility for managers to manage their own budgets and obtain authorization for
expenditure.
It is important to distinguish between a forecast and a budget:

➢ Budget – a planned result that a business aims to achieve.
➢ Forecast – a prediction (rather like the weather forecast) of what will happen as a result of a
given set of circumstances.
198
PREPARATION OF A BUDGET
The preparation of a budget usually consists of five stages:
1. Initial forecast to ascertain preliminary forecasts relative to the external
environment, economic climate, changes in the market and
technology.
2. Development considering the above and making decisions on what products or
of policy services to offer.
3. Operations ascertaining operational requirements for quantities of raw materials,
planning the labour force, and plant and equipment required.
4. Formalization ensuring there is a coordinated plan for smooth operation, which
of budgets reflects the aims and policies of the management.
5. Approval usually authorized by senior management/directors, after which they
become formal documents. Specific responsibility is then given to
the individual managers.
Types of budgets
An organization may be involved in the preparation of various types of budgets depending upon
their specific requirements, for example:
➢ cash budget (cash flow projection)
➢ production budget
➢ sales budget
➢ marketing budget
➢ income and expenditure budget.
ACTIVITY
1. Define the term ‘Cash Flow’.
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
199
2. What is the difference between budget and forecast?
Budget:
_____________________________________________________________________________
______________________________________________________________________________
Forecast:
_______________________________________________________________________________
_____________________________________________________________________________
3. List THREE (3) types of Budgets.

a) ___________________________________
b) ___________________________________
c) ___________________________________
4. How many stages are there in the preparation of a budget?
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
___________________________________________________________________________
5. Explain TWO (2) purposes of a budget.

a) _______________________________________________________________________
___________________________________________________________________
b) _______________________________________________________________________
___________________________________________________________________
……………………………………………………………………………………………………..
Reference

200
LESSON # 42
WORKSHEET
GRADE 11
Name of Students: ______________________________ Date:
WEEK # 14 – FORECASTING AND BUDGET

LESSON # 2: Cash flow projections
CONTENT:
CASH FLOW PROJECTION Cash flow projection is a forecast showing how cash
will be generated and disposed of by an organization.
To prepare cash flow projection it is necessary to forecast future receipts of cash (inflows) and future
payments (outflows).
INFLOWS OUTFLOWS
➢ Cash sales ➢ Cash purchases
➢ Receipts from credit customers ➢ Payments to suppliers
➢ Capital introduced by the owner ➢ Expenses payments
➢ Grants ➢ Owner’s drawings
➢ Proceeds from sales of non-current ➢ Purchases of non-current assets and
assets, loans and other revenue. repayment of loans.
201
Example of format for Cash flow projections:
Worked example of cash flow projections:

Katherine owns a furniture store called, ‘Home choice’. She prepares six- monthly cash projections.
She has provided the following forecasts for each of the six months leading up to June 30, 2019.
SOLUTION: CASH FLOW PROJECTION -

On January 1, 2019 the business is forecast to have a bank balance of $1400.
202
The cash flow projection will help Katherine identify that she will probably need to arrange a bank
overdraft facility for April and May 2019.
The cash flow projection might prompt Katherine to re-plan certain payments so that she can avoid
the need for an overdraft.
ACTIVITY
Prepare the Cash Flow Projection.
……………………………………………………………………………………………………..
Reference

203
LESSON # 43
WORKSHEET
GRADE 11
Name of Students: _____________________________ Date:
WEEK # 14 – FORECASTING
LESSON # 3: Sales Budget and Production Budget
CONTENT:
Sales Budget
A sales budget is a prediction of the number of units that a business will sell and their value for the
future period. Normally, the budget is prepared on a month-by-month basis.
The sales budget is often the single most important key to future planning because from it derive so
many aspects of a business’ future cash inflow, purchasing or production requirements.
Example:
Dylan manufactures a single product. He forecasts that sales for each of the three months ended May
31, 2019 will be:
2019 Units
March 420
April 440
May 400
NOTE: The selling of the product is $60 each.

Solution:
Sales budget for Dylan for the three months ending May 2019.
March April May
Sales Units 420 440 400
Sales Value $25,200 $26,400 $24,000
204
ACTIVITY
TASK: Prepare the Sales Budget
Production Budget
Manufacturing organizations prepare production budgets to calculate the number of units that the
factory can produce in a specific period to meet expected sales.
Format of the Production Budget
205
ACTIVITY
TASK: Prepare the Production Budget.
………………………………………………………………………………………………………
Reference

206
LESSON # 44
WORKSHEET
GRADE 11
Name of Students: _____________________________ Date: ____________________
WEEK # 14 – FORMATS OF FINAL ACCOUNTS OF VARIOUS BUSINESS VENTURES

LESSON # Formats Revision
CONTENT:
Formats of the Final Accounts of various business ventures
Trading and Profit and Loss Account
207
STATEMENT OF FINANCIAL POSITION (BALANCE SHEET)
208
PARTNERSHIP APPROPRIATION ACCOUNT
PARTNERSHIP STATEMENT OF FINANCIAL POSITION
209
LIMITED LIABILITY COMPANY
TRADING AND PROFIT AND LOST OF LIMITED COMPANY
210
STATEMENT OF FINANCIAL POSITION-LIMITED COMPANY
211
212
ACCOUNTING RATIO
213
MANUFACTURING ACCOUNT
………………………………………………………………………………………………………..
Reference

214

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MINISTRY OF EDUCATION

Name of Student: ______________________ Date: ____________________

WEEK # 1 – TOPIC: ACCOUNTING ADJUSTMENTS

Reasons for Depreciating Non-current Assets

The principal causes of depreciation are:

The straight-line method uses:

Useful life = depreciation charge for the year

Non-current asset Building

Cost value $2,500,000

Scrap value $ 500,000

Useful life 10 years

3. Non-current asset machinery

TASK: Calculate the depreciation for the next 4 years.

Name of Student: ___________________________ Date: ____________________

WEEK # 1 – TOPIC: ACCOUNTING ADJUSTMENTS

This method takes the following into consideration:

➢ Cost for the first year;

Formula for reducing balance method

First year deprecation value = cost *% = Net book value

Second year depreciation value = NBV *% = Net book value

Non-current asset motor Van

First year depreciation value = cost * depreciation value $1,200,000 *10%

Note: the depreciation cost for the first year is $120,000

Second year depreciation value = net book value *10%

Third year depreciation value = net book value *10%

Fourth year depreciation value = net book value *10%

Fifth year depreciation value = net book value *10%

Cost price $1,200,000

First year depreciation (10%) $120,000

Net Book Value $1,080,000

Second year depreciation (10%) $108,000

Net Book value $972,000

Third year depreciation (10%) $97,200

Net Book Value $874,800

Fourth year depreciation (10%) $87,480

Net book value $787,320

Fifth year depreciation (10%) $78,732

Net book value $708,588

Accumulated depreciation is the cumulative (total) depreciation of an asset up to a single

Straight line Method

Year 1 Cost $ Depreciation $ Net book Value $

Name of Student: _______________________ Date: ____________________

WEEK #1 – TOPIC: ACCOUNTING ADJUSTMENTS

The following example illustrates the accounting records.

1. The machinery is purchased on January 1, 2015 and paid for by cheque:

• Debit the machinery account

• The balance of the machinery account is shown at cost price.

• The balance on the provision for depreciation of machinery account is shown.

Another example is now given:

Depreciation per year – straight line method:

Calculate the depreciation charges for the business below:

Name of Student: _______________________ Date: ____________________

WEEK #2 – TOPIC: ACCOUNTING ADJUSTMENTS

Reason for accounting entries:

When we charge depreciation on a non-current asset, we have to make estimates. We cannot be

2. Transfer the depreciation already charged to the asset disposal account:

3. For remittance received on disposal:

Name of Student: _______________________ Date: ____________________

WEEK # 2 – TOPIC: ACCOUNTING ADJUSTMENTS

Definition, Bad debts account, bad debt recovered

Possible reasons that give rise to bad debts:

➢ Debtors become bankrupt

Features of bad debts:

➢ Debts that are uncollectable

Name of Student: __ Date:

Name of Student: _______ Date:

Name of Student: ___ Date:

Name of Student: ___ Date:

Name of Student: ___ Date:

Name of Student: ___ Date:

Name of Student: ___ Date:

Name of Student: ___ Date:

Name of Student: ___ Date:

Name of Student: ___ Date:

Name of Student: ___ Date:

Name of Student: ___ Date:

Name of Student: ___ Date: