POA Reminders (From beginning of Syllabus to the end)

ALWAYS CALCULATE AT LEAST TWO TIMES

READ THE QUESTIONS CAREFULLY

1. Accounting Cycle
- Source Documents
- Journals
- Ledgers
- Trial Balance
- Income Statement
- Statement of Financial Position

2. Classes of Accounts
- Real accounts are assets
- Nominal accounts are expenses and revenues
- Personal accounts are drawings, debtors, creditors and capital

3. Skills of Accountant or persons working in the field

- Communication skills
- Mathematical skills
- Computer skills etc

4. Jobs in Accounting
- Accountant
- Accounting Clerk
- Financial Advisor
- Accounting Manager
- Teacher

5. Accounting principles/Concepts
- Going concern-the business will continue to operate
- Accrual/Matching - record accruals in teh year it happens and not when money
collected
- Produce - it is better to understate your profits/assets and overstate you
loss/liabilities
- Dual Concept - for every debit there is a credit entry
- Consistency - do not change accounting methods

6. Accounting Software
- Microsoft Excel
- Peachtree
- Xero
- QuickBook
 7. Ethics in Accounting
- Objectivity - accountants should not be biased
- Due care - accountants should be knowledgeable about their job
- Confidentiality - accounts should not share private information.

8. Journals
- Sales Journal: redcords credit sales only.
- Purchases Journal: records credit purchases only.
- Returns Inwards Journal: records goods returned to the business by customers
- Returns Outwards Journals: records goods returned to a supplier by out
business.
- General Journal: record everything that would not be found in the journal bove.
Remember this question we did in class (May 2023)

YOU HAVE THE ANSWERS SO LOOK BACK AT MAY 2023 PAPER. THERE MUST BE A
DEBIT AND A CREDIT FOR EACH TRANSACTION.
.
9. Manufacturing Account
- Direct Cost = Direct Raw Materials + Direct Labour + Direct Expenses such as
Royalties.
- Raw Materials and Work-In-Progress (WIP) are the two stocks in the
Manufacturing Account while Finished Goods are the only stock found in the
Income Statement/
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10. The Business Plan
 - Is useful when an entrepreneur needs to borrow money to start or continue a
business.
- It contains a Marketing Plan (how will the products and services be promoted?),
Financial Plan (how will you get funds), Production Plan (what will be produced,
how will you ensure the quality of goods?) and Executive Summary (a short
version of all information in the business plan).

11. Petty Cash Book

- Always start with the float
- Once you put an amount in the total column, it must also go in an expense
column for example, if you put $50 in the total for stationery it must be placed in
the station column as well
- Add up the total column and subtract from the float.

12. Income Statement and Statement of Financial Position

- Sales less Returns Inwards = Net Sales
- Cost of Sales consist of opening stock, purchases, carriage inwards, returns
outwards and closing stock. Remember to have your net purchases and cost of
goods available for resale
- Put the difference of the provision for bad debts in the P&L Account but the final
amount must be subtracted from debtors in the balance sheet.

13. Three Column Cash Book

- Contra entry means both cash and bank are affected. Enter the money first then
the details. If the bank is increasing, then put the money in the bank column on
the debit side but the details must be cash.Remeber to put the information on the
opposite side as well.

14. Bank Reconciliation Statement

- Compare the bank statement and cashbook. Remember you compare the
opposite sides, for example, you compare the debit cashbook with the credit
bank statement.
- Whichever side the balance b/d is on in the old cash book, you put it back on the
same side of the updated cashbook.
- If after doing the updated cashbook, the balance b/d ends up on the credit side,
this means it is an overdraft. Start the bank reconciliation statement with the
amount in bracket which means a negative.

15. Payroll
- Statutory deductions (NIS, NHT, Income Tax etc) are required by law while
voluntary deductions (Loan payment, Credit Union dues etc) are requested by
employees.
- Software for payroll includes: Quickbook, Xero, Peachtree, Microsoft Excel
- Source documents include: time card, time book, employee's earnings record

(b) Draw up a petty cash book for Michelle Martin for the month of December 2016
16. Capital and revenue Expenditure
- Capital expenditure is the purchasing of a fixed asset or any cost involved in
buying the fixed asset such as purchasing a motor vehicle, carriage paid buying
an equipment. These are recorded in the balance sheet.
- Revenue expenditure is the cost involved in running a business such as salaries,
utilities etc. These are recorded in the P&L Account

17. Control Account

 - For the Debtors Ledger Control Account/Sales Ledger Control Account - the
question is, do they owe us more or less. If they owe us more, we credit but if
they owe us less we debit.
- For the Creditors Control Account/Purchases Ledger Control Account - the
question is, do we owe more or less. If we owe more we credit but if we owe less
we debit.

18. Partnership Appropriation Account & Current Account

- Always start with the Profit then less Interest on Drawings.
- Interest on Capital, Salaries and Share of Profits are subtracted.
- Drawings and Interest on Drawings are always on the debit side of the current
account while salaries, interest on capital and share of profits are always on the
credit side
19. Stock valuation
- FIFO: take from the first batch
- LIFO: take from the last batch

20. Budgets
- Sales budget: multiply budgeted unit sales with budgeted selling price to get total
revenue
- Cash budget: record the balance b/f first, then the inflow and outflows. If inflow is
lesser than the outflow, this means a negative which is represented in a bracket.
- Production Budget: Start with the sales if given the add closing stock and less
opening stock.

21. Limited Liability Companies

- Record reserve and dividends in Appropriation Account
- Record share capital, reserves and surplus in capital section of balance sheet.

22.