Preparation of Financial Statements

Worked examples (6)

• 1Calculate gross profit from net revenue and cost of sales (2 marks)
• 2Carriage inwards vs carriage outwards (2 marks)
• 3Compute cost of sales from inventory and purchases (4 marks)
• 4Prepare the trading section down to gross profit (6 marks)
• 5Full income statement with accrual and prepayment adjustments (12 marks)
• 6Income statement with depreciation and irrecoverable debts (12 marks)

Model answers (6)

• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 analysis style
• ✓Model answer — Paper 2 evaluation (AO3) style

Worked examples (6)

• 1Carrying amount of a non-current asset (2 marks)
• 2Where does each item go in the SoFP? (4 marks)
• 3Current assets with prepayment and provision (5 marks)
• 4Build the capital section and find closing capital (4 marks)
• 5Prepare a full statement of financial position (12 marks)
• 6SoFP figures after year-end adjustments (6 marks)

Model answers (6)

• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 analysis style
• ✓Model answer — Paper 2 evaluation (AO3) style

Worked examples (6)

• 1Calculate interest on capital for each partner (2 marks)
• 2Calculate interest on drawings (2 marks)
• 3Split the residual profit in the agreed ratio (3 marks)
• 4Appropriation account when there is a net loss (6 marks)
• 5Prepare a full partnership appropriation account (10 marks)
• 6Work back to the net profit from the partners' shares (8 marks)

Model answers (6)

• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 evaluation (AO3) style
• ✓Model answer — Paper 2 structured/application style

Worked examples (6)

• 1Which side of the current account? (3 marks)
• 2Calculate a partner's closing current account balance (2 marks)
• 3Prepare partners' current accounts (8 marks)
• 4A current account that closes with a debit balance (6 marks)
• 5Partnership SFP capital section, both credit balances (4 marks)
• 6Prepare both current accounts AND the SFP capital section from full data (10 marks)

Model answers (6)

• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 evaluation (AO3) style
• ✓Model answer — Paper 2 structured/analysis style

Worked examples (6)

• 1Place the three inventory types on the statement of financial position (2 marks)
• 2Calculate cost of sales for a manufacturer (3 marks)
• 3Cost of sales and gross profit in vertical layout (4 marks)
• 4From cost of production to net profit (6 marks)
• 5Prepare a complete manufacturing account (14 marks)
• 6Manufacturing account through to net profit and the SoFP inventory note (12 marks)

Model answers (6)

• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 analysis style
• ✓Model answer — Paper 2 evaluation (AO3) style

Worked examples (6)

• 1Find Opening Capital from a Statement of Affairs (2 marks)
• 2Build a Statement of Affairs from a List of Items (3 marks)
• 3Calculate Profit by Comparing Opening and Closing Capital (4 marks)
• 4Profit When Additional Capital Is Introduced (5 marks)
• 5Full Statements of Affairs and Net Profit (8 marks)
• 6Use the Accounting Equation to Find a Missing Asset (6 marks)

Model answers (6)

• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 evaluation (AO3) style
• ✓Model answer — Paper 2 analysis/interpretation style

Worked examples (6)

• 1Classifying items in the capital and reserves section (3 marks)
• 2Calculating the ordinary share dividend (2 marks)
• 3Preference dividend and debenture interest (4 marks)
• 4Retained earnings after dividends and a reserve transfer (5 marks)
• 5Share capital, dividends and capital/reserves section (8 marks)
• 6Choosing between debentures and ordinary shares (6 marks)

Model answers (6)

• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 evaluation (AO3) style
• ✓Model answer — Paper 2 analysis/interpretation style

Worked examples (6)

• 1Profit for the year after debenture interest (2 marks)
• 2Calculating retained earnings carried forward (3 marks)
• 3Presenting the equity (capital and reserves) section (5 marks)
• 4Dividend treatment — paid vs proposed (4 marks)
• 5Company income statement and SFP capital section (14 marks)
• 6Prove the equity total ties after appropriation (8 marks)

Model answers (6)

• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 evaluation (AO3) style
• ✓Model answer — Paper 2 analysis/interpretation style

Worked examples (6)

• 1Calculate the opening accumulated fund (2 marks)
• 2Profit from a refreshments (trading) activity (3 marks)
• 3Subscriptions account — income for the year (5 marks)
• 4Prepare an Income and Expenditure Account (8 marks)
• 5Restate a receipts and payments figure for the Iu0026E account (6 marks)
• 6Prepare a full Income and Expenditure Account from a Receipts and Payments Account (11 marks)

Model answers (6)

• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 analysis/interpretation style
• ✓Model answer — Paper 2 evaluation (AO3) style

Worked examples (6)

• 1Classify costs as direct or indirect (4 marks)
• 2Calculate the cost of raw materials consumed (3 marks)
• 3Build prime cost from raw materials, labour and expenses (5 marks)
• 4Add factory overheads and the WIP adjustment to reach cost of production (6 marks)
• 5Prepare the full manufacturing account from complete data to cost of production (11 marks)
• 6Work backwards to find a missing closing WIP figure (7 marks)

Model answers (6)

• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 evaluation (AO3) style
• ✓Model answer — Paper 2 structured style

Worked examples (6)

• 1Use mark-up to find cost of sales and gross profit (2 marks)
• 2Use margin to find cost of sales (2 marks)
• 3Find credit sales from the debtors control account (5 marks)
• 4Find credit purchases from the creditors control account (5 marks)
• 5Cash/bank summary to find drawings, then closing inventory by mark-up (6 marks)
• 6Inventory lost in a fire — use margin to find the missing closing inventory (8 marks)

Model answers (6)

• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 1 short-answer style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 structured style
• ✓Model answer — Paper 2 evaluation (AO3) style
• ✓Model answer — Paper 2 analysis style