The Accounting Equation
Assets = Liabilities + Capital (or Equity) Expanded form
Assets = Capital + (Profit − Drawings) + Liabilities Every transaction must keep the equation in balance.
Pearson Edexcel International A Level Accounting XAC11
📒 Pearson Edexcel International A Level Accounting Formula Sheet 2026
All the rules, formulas, and statement layouts Pearson Edexcel International A Level Accounting students need — double-entry, depreciation, partnership and company accounts, cash flow statements, ratios, and decision-making across Units 1–4 (papers WAC11–WAC14).
Unit 1 Accounting System & Costing Unit 2 Corporate & Management Unit 3 Financial Reporting Unit 4 Decision Making
Our formula sheets are free to download — save this one as PDF for offline revision.
Aligned with the latest 2026 syllabus and board specifications. This sheet is prepared to match your exam board’s official specifications for the 2026 exam series.
Every Core XAC11/YAC11 Rule, Formula and Layout in One Formula Sheet
Pearson Edexcel International A Level Accounting (XAC11/YAC11) demands accurate bookkeeping, correct year-end adjustments, confident preparation of financial statements, and rigorous decision-making analysis. This formula sheet brings together the accounting equation, depreciation methods, partnership and company accounts, IAS 7 cash flow statements, the full ratio suite, and investment appraisal — everything you need across the four units (papers WAC11, WAC12, WAC13, WAC14).
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Accounting equation, double-entry rules, and trial balance
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Depreciation, doubtful debts, and year-end adjustments
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Partnership and company accounts (capital, reserves, dividends)
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Cash flow statement, full ratio suite, and investment appraisal
Unit 1 (WAC11) — The Accounting Equation & Double-Entry
The foundation of every entry and statement across the IAL.
Double-Entry Rules (DEAD CLIC)
Debit increases
Drawings, Expenses, Assets Credit increases
Capital, Liabilities, Income Every transaction has equal debit and credit entries — total debits always equal total credits.
Books of Prime Entry & Ledgers
Books of prime entry
Sales day book, Purchases day book, Returns inwards/outwards day books, Cash book, Petty cash book, General journal Sales (debtors) ledger
Personal accounts of trade receivables Purchases (creditors) ledger
Personal accounts of trade payables General (nominal) ledger
All other accounts (assets, liabilities, capital, income, expenses) Trial Balance & Bank Reconciliation
Trial balance: lists all ledger balances; debit total must equal credit total Bank reconciliation: adjust cash book for bank charges, direct debits, dividends received; reconcile bank statement for unpresented cheques and outstanding lodgements A balanced trial balance does NOT prove correctness — errors of omission, commission, principle, original entry, complete reversal, and compensating errors are not detected.
Control Accounts
Sales ledger control
Opening receivables + Credit sales + Dishonoured cheques − Cash/cheques received − Discounts allowed − Returns inwards − Bad debts written off − Contra entries Purchases ledger control
Opening payables + Credit purchases − Cash/cheques paid − Discounts received − Returns outwards − Contra entries Unit 1 (WAC11) — Costing Foundations
Cost classification, FIFO/AVCO, and break-even analysis.
Cost Classification & Break-Even
Fixed costs (FC) — unchanged in total with output (rent, salaries) Variable costs (VC) — vary directly with output (raw materials, piece rate labour) Contribution per unit
Selling Price − Variable Cost per Unit Break-even output
Fixed Costs ÷ Contribution per Unit Margin of safety
Actual (or Budgeted) Output − Break-even Output Inventory Valuation Methods
FIFO (First-In, First-Out)
Issues are valued at the price of the earliest purchases; closing inventory at the most recent prices AVCO (Average Cost)
Weighted average unit cost = Total Cost of Inventory ÷ Total Units Held; recalculated after each purchase (perpetual) or at period-end (periodic) IAS 2 rule
Inventory is valued at the LOWER of Cost and Net Realisable Value (NRV = Estimated Selling Price − Costs to Complete and Sell) Depreciation
Straight-line
Annual Depreciation = (Cost − Residual Value) ÷ Useful Life Reducing balance
Annual Depreciation = NBV at Start of Year × Depreciation Rate (%); NBV = Cost − Accumulated Depreciation Disposal
Profit/Loss on Disposal = Sale Proceeds − Net Book Value at Disposal Match the method to the asset's usage pattern: straight-line for even use, reducing balance for assets that lose more value early.
Unit 2 (WAC12) — Corporate & Management Accounting
Year-end adjustments, partnership accounts, and cost behaviour.
Year-End Adjustments
Prepaid expense (asset)
Reduce expense in P&L; show prepayment under current assets in SOFP Accrued expense (liability)
Increase expense in P&L; show accrual under current liabilities in SOFP Bad debts written off
Dr Bad Debts Expense Cr Trade Receivables Provision for doubtful debts
Provision = Trade Receivables × Estimated % Doubtful; only the change is taken to the P&L Apply matching: only the income/expense relating to the period belongs in the P&L.
Partnership Accounts
Appropriation: Net Profit + Interest on Drawings − Salaries to Partners − Interest on Capital = Residual Profit (shared in PSR) Capital account
Permanent investments — only changes for capital introduced/withdrawn or revaluations Current account
Records partner's running entitlements — share of profit, salary, interest on capital, less drawings and interest on drawings Goodwill on admission
Dr Goodwill (using OLD ratio) Cr Old Partners' Capital. Then Dr Capital (using NEW ratio) Cr Goodwill if not retained in books. Marginal vs Absorption Costing
Marginal costing
Only variable costs are charged to units; fixed costs are period costs (written off in full each period) Absorption costing
Variable + a share of fixed production overheads are absorbed into unit cost (using OAR = Budgeted Overheads ÷ Budgeted Activity) Profit differs when inventory levels change: rising inventory → absorption profit > marginal profit (fixed costs deferred in inventory).
Budgeting & Variance Analysis
Budgets
Sales budget → production budget → materials, labour, overhead budgets → cash budget → master budget (budgeted P&L and SOFP) Material price variance
(Standard Price − Actual Price) × Actual Quantity Purchased Material usage variance
(Standard Quantity − Actual Quantity) × Standard Price Labour rate variance
(Standard Rate − Actual Rate) × Actual Hours Labour efficiency variance
(Standard Hours − Actual Hours) × Standard Rate Favourable variances increase profit; adverse variances reduce it.
Unit 3 (WAC13) — Financial Reporting
Limited company accounts, IAS 7 cash flow, and ratio analysis.
Income Statement & SOFP Layouts
Revenue − Sales Returns = Net Revenue Net Revenue − Cost of Sales = Gross Profit Cost of Sales
Opening Inventory + Purchases (less Returns Out) + Carriage Inwards − Closing Inventory Gross Profit + Other Income − Operating Expenses = Operating Profit Operating Profit − Finance Costs − Tax = Profit for the Year Limited Company — Share Capital & Reserves
Authorised vs Issued share capital
Authorised = max value the company may issue; Issued = value actually issued at nominal (par) Capital reserves (non-distributable)
Share Premium, Revaluation Reserve Revenue reserves (distributable)
Retained Earnings, General Reserve Dividends
Final and interim dividends paid are deducted from retained earnings (movement in equity, not an expense). Proposed dividends are a note only. Statement of Cash Flows (IAS 7 — Indirect Method)
Operating activities
Profit before Tax + Depreciation + Loss on Disposal (or − Profit on Disposal) + Finance Costs ± Working Capital changes − Interest Paid − Tax Paid Investing activities
− Purchase of Non-current Assets + Proceeds from Sale of Non-current Assets + Interest/Dividends Received Financing activities
+ Proceeds from Share Issue + New Loans − Loan Repayments − Dividends Paid Net change in cash = Operating + Investing + Financing. Add to opening cash to reach closing cash.
Ratio Analysis
Profitability
Gross margin (GP ÷ Revenue × 100); Net margin (PFY ÷ Revenue × 100); Mark-up (GP ÷ COS × 100); ROCE (PBIT ÷ Capital Employed × 100) Liquidity
Current ratio (CA ÷ CL); Acid test ((CA − Inventory) ÷ CL) Efficiency
Inventory days ((Avg Inventory ÷ COS) × 365); Receivables days ((Trade Recv ÷ Credit Sales) × 365); Payables days ((Trade Pay ÷ Credit Purchases) × 365) Gearing & Investor
Gearing (NCL ÷ Capital Employed × 100); EPS (Profit attributable ÷ Ordinary Shares); Dividend cover (PFY ÷ Ordinary Dividends); P/E ratio (Market Price ÷ EPS) Unit 4 (WAC14) — Decision Making
Investment appraisal, special order/make-or-buy, and limiting factor analysis.
Investment Appraisal
Payback period
Time taken for cumulative net cash flow to equal initial outlay ARR (Accounting Rate of Return)
(Average Annual Profit ÷ Initial Investment) × 100 NPV
Σ (Present Value of net cash flows) − Initial outlay; PV = Cash Flow × Discount Factor IRR
The discount rate at which NPV = 0; accept if IRR > cost of capital Payback ignores time value of money beyond the cut-off; ARR uses profit, not cash. NPV is theoretically superior.
Short-Term Decisions (Marginal Costing)
Special order
Accept if Selling Price > Variable Cost per Unit (and capacity exists with no opportunity cost) Make-or-buy
Compare relevant cost of making (variable + avoidable fixed) with external buy price Limiting factor
Maximise contribution per unit of the scarce resource — rank products by Contribution per Unit ÷ Units of Limiting Factor used Standard Costing & Variances
Standard cost = predetermined cost per unit (price/rate × quantity standards) Total cost variance = Standard Cost of Actual Output − Actual Cost of Actual Output Sub-variances: material (price + usage); labour (rate + efficiency); variable overhead (rate + efficiency); fixed overhead (expenditure + volume) Investigate variances by cause (price changes, supplier issues, training, machine breakdown) before judgment.
Social, Ethical & Non-Financial Factors
Strategic, financial, and operational evaluation must consider: stakeholder impact, environmental footprint, employee welfare, brand reputation WAC14 mark schemes credit candidates who balance quantitative results with qualitative judgement.
Exam Technique — Papers WAC11–WAC14
Pearson Edexcel marks reward neat presentation, correct headings, and clear interpretation.
Presentation
Always include a proper heading: business name, statement title, and 'for the year ended …' / 'as at …' Use the exact line-item names from the syllabus (e.g. 'Profit for the year', 'Trade receivables') Showing Workings
Show all workings clearly — examiners award method marks even when the final figure is wrong Cross-reference each statement figure to a working number (W1, W2 …) to make marking easier.
Interpretation & Evaluation
Calculate ratios first, then INTERPRET — compare year on year and against industry norms; identify causes (price, volume, cost mix) For evaluative questions, reach a clearly supported judgement; quote at least two contrasting points before concluding How to Use This Formula Sheet
Boost your Cambridge exam confidence with these proven study strategies from our tutoring experts.
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Re-Draft Statements From Scratch
Re-prepare income statements, SOFPs, and cash flow statements from raw trial balances repeatedly. Speed and accuracy of layout is half the battle in WAC11–WAC13.
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Memorise Adjustment Postings
Drill the Dr/Cr postings for prepayments, accruals, depreciation, doubtful debts, and disposal until they are automatic — these are the highest-frequency Paper marks.
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Calculate AND Interpret Ratios
For every ratio you calculate, write a one-sentence interpretation comparing the figure to the prior year or industry benchmark. Numbers without analysis won't reach the top band.
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Drill Investment Appraisal & Variances
WAC14 hinges on NPV, IRR, payback, ARR, and material/labour variances. Practise full multi-year cash flow tables and variance reconciliations until automatic.
Formula Sheet FAQ
Quick answers about this free PDF and how to use it for exam revision and active recall.
Is the Pearson Edexcel International A Level Accounting Formula Sheet 2026 free to download as a PDF?
Yes. This Tutopiya formula sheet is free to use and you can download it as a PDF from this page for offline revision. There is no payment or account required for the PDF download.
What Accounting topics and equations does this formula sheet cover?
This page groups key Accounting formulas in one place for revision. Master Pearson Edexcel International A Level Accounting (XAC11/YAC11) with this 2026 formula sheet. Covers Unit 1 The Accounting System and Costing, Unit 2 Corporate and Management Accounting, Unit 3 Financial Reporti… Always cross-check with your official syllabus and past papers for your exam session.
Can I use this instead of the official exam formula booklet in the exam?
No. In the exam you must follow only what your exam board allows in the hall—usually the official formula booklet or data sheet where provided. This page is a revision and teaching aid, not a replacement for board-issued materials.
Who is this formula sheet for (Post-Secondary)?
It is written for students preparing for assessments at Post-Secondary in Accounting, including classroom revision, homework support, and independent study. Teachers and tutors can also share it as a quick reference.
How should I revise with this formula sheet?
Work through past paper questions, quote the correct formula before substituting values, and check units and notation every time. Pair this sheet with timed practice and mark schemes so you see how examiners expect working to be set out.
Where can I get more help with Accounting revision?
Explore Tutopiya’s study tools, past paper finder, and revision checklists linked from our tools hub, or book a trial lesson with a subject specialist for personalised support alongside this formula reference.
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This formula sheet aligns with Pearson Edexcel International A Level Accounting (XAC11/YAC11, papers WAC11, WAC12, WAC13, WAC14) specification content for assessment in 2026.
Always present financial statements with full headings, show all workings, and apply IAS rules (IAS 2 for inventory, IAS 7 for cash flow) where relevant.