ACCT1501 Tutorial Tips

Exam tips:
 In the exam they only check for the correct numbers, the format is not that important e.g. in
the balance sheet you can just use one column
 Recording negative figures - can be bracket, minus, etc.
 Recording expenditure and revenue - only record something when a transaction occurs
 When in doubt, write rent and wages as expense in organisation's income statement
 Companies recognise expenses not when they pay wages or make a product, but when the
work or the product actually contributes to the revenue (when transaction is made, not when
cash is paid)
 Working life is key to depreciation = expenditure (when a company simply "purchases
equipment" it is not a revenue or expenditure because it is not a sale)
 Profit and loss summary - no need to include in general ledger, only closing entry
 Use miscellaneous expenses for charter of accounts too.

Learning points:
 Provision: an amount set aside by a company to cover expected liabilities or a decrease in
value of an asset, so it is regarded as an upcoming liability.
 Prepayments: amounts paid for by a business in advance of the goods or services being
received later on. It is an asset.
 Chart of accounts: listing of the titles all the accounts of an entity. Each account is assigned a
number.
 Purpose of trial balance: a standard bookkeeping procedure to check whether certain errors
have been made in posting the journal entries to the ledger. It is a test to see whether total
debits equal total credits.
 Ledger: table used to track each account (asset, liability and shareholder's equity) - left column
is debit and right column is credit
 Using the ledger - One transaction affects two accounts. When we record the change in one
account in the ledger, we need to use the name of another affected account.
 Did not accrue/did not make an adjustment:
o If you did not accrue one transaction, it means you did not do the journal entry for
"Today"
o If you forgot the adjustment, it means you did not do the journal entry for "Future"

Record-keeping steps:
1. Debit/credit
2. Prepare general ledger
3. Prepare trial balance
4. Prepare new balance sheet

Week 8 tutorial learning points:

 Deposit in transit and outstanding cheque means they are not on the bank statement yet, so
we include them when we adjust bank statement balance.
 Interest revenue and NSF (no sufficient fund) cheque are on the bank statement, so we
include them when we adjust company record balance.
 Adjusting entries are for changes in company's record.
 Prepare an entry if we add or minus numbers from company's record balance.
 Your bank statement has a credit balance as that is the amount the bank owed you
 A company's cash receipts (Cr) will increase the balance on bank statement, while a company's
cash payments (Dr) will decrease the balance on bank statement
Adjust bank statement:
1. Compare bank statement with company record
2. Add missing cash receipts to bank statement balance
3. Deduct missing cash payments from bank statement balance
4. Deduct any missing unpresented cheque from bank statement
 Two tables will be given - extra info will also be given (related to unpresented cheque - should
have paid money to another company but forgot to record in the statement)
 Include missing cash inflows
 Exclude cash outflows

Adjust company's record:

1. Get ending balance (previous period's balance from ledger + cash receipts = cash payments)
2. Compare company record with bank statement
3. Add missing credit items to company's record balance
4. Deduct missing debit items (cash outflows) from company's record balance (if not in ledger)
5. Adjust mispresented numbers (they belong to company's record)

Self-check list:
 Do I know how to prepare a balance sheet and income statement?
 Do I know how to identify the effect of a transaction on asset, liability and shareholder's
equity?
 Identify when a company earns revenue or incurs an expense on an accrual basis
 Identify and prepare transaction analysis
 Prepare a balance sheet
 Recognise source documents and the information they contain
 Recognise journal entries, costs to the General Ledger and trial balance
 Understand the role of T-accounts when recording in the general ledgers
 Timing of revenue and expense recognition
 Journal entries for accrual accounting adjustments
 Impact on the financial statements if no accrual adjustment
 Do I know how to record:
o Prepaid expense
o Accrued expense
o Unearned revenue
o Accrued revenue
 Do I know all different audit reports?
 Do I know relevance and faithful representation?
 Do I know certification, timeliness, understandability and comparability?
 What is a NSF cheque?
 What is a bank reconciliation report?
 How to adjust bank statement balance?
 How to adjust company record balance?