The preparation of financial statements

Worked examples (9)

• 1Identify which financial statement each item appears on
• 2Classify each as current or non-current asset/liability
• 3Identify which items belong in Cost of Sales
• 4Calculate Cost of Sales
• 5Calculate Gross Profit and Profit for the year
• 6Calculate closing capital for the SOFP
• 7Prepare a full Income Statement with adjustments
• 8Prepare a full Statement of Financial Position
• 9Apply multiple adjustments to a draft profit figure

Worked examples (9)

• 1Identify partnership-specific features
• 2State whether each item belongs in the Income Statement or Appropriation Account
• 3Identify the correct partner account for each entry
• 4Calculate the appropriation of profit
• 5Calculate interest on partners' drawings
• 6Calculate a partner's closing Current Account balance
• 7Prepare the Profit and Loss Appropriation Account
• 8Prepare both partners' Current Accounts
• 9Prepare the Capital section of the partnership SOFP

Worked examples (9)

• 1Identify the technique needed for each missing figure
• 2Distinguish mark-up from margin
• 3Identify the figures needed to derive profit using the accounting equation
• 4Calculate profit using the accounting equation
• 5Derive credit sales from SLCA
• 6Derive Cost of Sales from sales and margin
• 7Reconstruct the income statement from incomplete records
• 8Find missing figures using both control accounts
• 9Identify missing cash from a customer (likely stolen)

Worked examples (9)

• 1Classify each ratio by family
• 2Match each ratio to its formula
• 3Interpret whether each ratio result is favourable or unfavourable
• 4Calculate the four profitability ratios
• 5Calculate the two liquidity ratios
• 6Calculate the efficiency ratios
• 7Calculate gearing and interpret
• 8Interpret a full set of ratios for a business
• 9Recommend whether to extend credit based on ratios

Worked examples (9)

• 1Classify each cost as prime cost or factory overhead
• 2Identify which inventory each item belongs to
• 3State where each item appears in the financial statements
• 4Calculate Prime Cost
• 5Calculate Cost of Production
• 6Calculate Cost of Sales (Finished Goods)
• 7Prepare a full Manufacturing Account
• 8Prepare the Trading section of the Income Statement (manufacturer)
• 9Calculate the total inventory figure on the SOFP