Accounting classification

Advertising

G1 / distribution cost

Accounts payable

Current liability

Accounts receivable

Current asset

Bank

Current asset

Building

PPE note

Capital

Owners equity

Cash on hand

Current asset

Computer

PPE note

Cartage inwards

cogs

Commissions paid

G1 / distribution costs

Delivery expenses

G1 / distribution costs

Drawings

Owners equity

Dividends

Other income

Donations paid

Administrative expense

Discount received

Other income

Depreciation on equipment

Administrative expense

Depreciation on vehicles

G1 / distribution costs

Electricity

Administrative expense

Equipment

PPE note

Fittings

PPE note

Furniture

PPE note

Fee’s received

Revenue

General expenses

Administrative expense

Goodwill

Inua

GST payable

Current liability

GST receivable

Current receivable

Inventory

Current asset

Interest on loan

Finance cost

Interest on mortgage

Finance cost

Interest on term deposit

Finance cost

Internet

Administrative expense

Lighting

Administrative expense

Land

PPE note

Loan

Non-current liability

Loss for the year

Owners equity

Maintenance

Administrative expense

Machinery

PPE note

Mortgage

Non-current liability

Office expense

Administrative expense

Office salary

Administrative expense

Petrol

G1 / distribution cost

Postage

Administrative expense

Power

Administrative expense

Petty cash

Current asset

Plant

PPE note

Profit for the year

Owners equity

Rates

Administrative expense

Rent

Administrative expense

Rent received

Other income

Repairs

Administrative expense

Sales

Revenue

Sales wages

G1 / distribution cost

Stationary

Administrative expense

Supplies

G1 / distribution cost

Shares

Inua

Term deposit

Inua

Vehicles

PPE note

Vehicle expenses

G1 / distribution cost

Warehouse

G1 / distribution cost

Opening inventory

cogs 1

Purchases

cogs 2

Less purchase returns

cogs 3

Cartage/freight inwards

cogs 4

Customs duty

cogs 5

Goods available for sale

end of cogs

Method 2 of depreciation

historical cost - residual value divided by estimated useful life HC - RV

EUL

How to do accrued expenses

1. Add the amount owing to the trial balance figure and table the total amount to the total amount to the relevant expense on the income statement. 

2. Create a new account called “accrued expenses” on the right-hand side of the trial balance and take this to SOFP under current liabilities.

What is an accrued expense

Current liability

How to do prepayments

1. Subtract the amount paid in advance from the trial balance figure and take the difference to the relevant expense on the income statement. 

2. Create a new account called prepayments on the left hand side of the trial balance and take this the SOFP under current assets. 

What is a prepayment

Current assets

How do you do accrued income

1. Add the amount owing to the trial balance figure and table the total amount to the total amount to the relevant income on the income statement. 

2. Create a new account called “accrued income” on the left hand side of the trial balance and take this to SOFP under current assets.

What is accrued income

These are income that you have earned but not yet received the money (no GST). This is current asset, for year 11 it will be limited to dividends received (owing) and interest received (owing)/interest on term deposit. 

Income received in advance

1. Subtract the amount received in advance from the trial balance figure and take the difference to the relevant income onto the income statement. 

2. Create a new account called income received in advance on the right side of the trial balance. Take this to the SOFP under the current liability. 

What is income received

This is money that you have received in advance from your customer(s) but you have not yet provided the goods or services. This is a current liabilities (No GST). Any income received in advance is for next year if it carries on into the next accounting period. This is next year's income, not this year’s so it must be subtracted.

Invoices

Invoices are issued when you sell goods/services on credit. Invoices are received when you buy goods/services on credit.

what is Account receivable (debtors)

These are customers to whom the business has sold goods/services on credit (credit is buy now pay later). E.g invoices issued, invoice on hand for sales, sent an account

How to do accounts receivable

1. Increase accounts receivable (CA) by the total amount. 

2. Increase the sales or fees received by the amount excluding GST. (Total divided by 1.15)

3. Increase GST payable (CL) or decrease GST receivable (CA)

What is accounts payable

These are our suppliers from whom we have bought goods on credit. Current liability and has GST. Invoice received, received an account, invoice on hand for purchase, invoice on hand for purchase for non- current asset e.g equipment

How to do account payable

1. Increases accounts payable with the whole amount. 

2. Increase accounts payable or non current asset of equipment with amount excluding GST (total divided by 1.15). 

3. Decrease GST payable or increase GST receivable

Office wages owing $4000

Accrued expenses

Insurance prepaid $300

Prepayment

Dividend not yet received $400

Accrued income

Rent received in advance 2000

Income received in advanced

Issues invoice for sales $4600 including GST

Accounts receivable

Brought goods for $46,000 including GST

Accounts payable

Accrued income Add or Sub?

Add

Accrued expense Add or Sub?

Add

Prepayments Add or Sub?

Subtract

Income received in advanced

Subtract

This year add and next year subtract?

(if it’s for this year you add but if its for next year you subtract it, Accrued is added, advanced payments are subtracted)

Accrued expenses are limited to

loan/mortgage and wages/salaries

Accrued income are limited to

Dividends received (owing) and interest received (owing)/interest on term deposit. 

Which have GST that need to look at?

Accounts receivable and Accounts Payable.

What does it mean if bank is on the right side of TB?

Bank overdraft.

What does it mean if GSt is on the right side of TB?

GST receivable (CA)