Financial Reporting I

Bank

Asset. DR. Cash held by the business in its bank account.

Trade receivables

Asset. DR. Amounts owed to the business by customers for credit sales.

Inventory

Asset. DR. Goods held for sale.

Stationery / stationery on hand

Asset. DR. Unused stationery still controlled by the business at reporting date.

Prepaid expense family

Asset. DR. A payment made before the related expense has been fully consumed. The remaining benefit is an asset.

Accrued income family

Asset. DR. Income already earned but not yet received in cash.

Deposit / PPE receivable family

Asset. DR. Cash paid before the business has yet recognised the relevant PPE asset because control/recognition occurs later.

Investments

Asset. DR. The carrying amount of shares held in another entity as an investment.

Staff loans

Asset. DR. Amounts lent by the company to staff and still recoverable.

Property, plant and equipment (PPE) — cost / gross carrying amount accounts

Asset. DR. Long-term tangible assets controlled by the business and used in operations. The exact account name normally identifies the PPE class.

Land

Asset. DR. Land held as PPE.

SARS (Income tax)

Dual A/L. DR or CR. The running balance between the company and SARS for company income tax. A debit balance means SARS owes the company; a credit balance means the company owes SARS.

SARS (VAT)

Dual A/L. DR or CR. The VAT control balance with SARS.

Accumulated depreciation: [PPE class]

Negative asset. CR. The total depreciation recognised to date against a PPE class/item. It reduces gross carrying amount to help produce carrying amount.

Accumulated impairment: [PPE class]

Negative asset. CR. The cumulative impairment recognised against a PPE asset. It reduces the asset’s carrying amount.

Trade payables

Liability. CR. Amounts owed to suppliers, especially for inventory or operating purchases on credit.

Accrued expense family

Liability. CR. Expenses already incurred but not yet paid at reporting date.

Income received in advance family

Liability. CR. Cash received before the business has earned the related income. Until earning occurs, the business owes performance to the customer/other party.

Application & allotment

Liability. CR. Cash received from applicants before the company has completed the share issue. Until allotment, it is an obligation rather than share capital.

Commission payable

Liability. CR. Amount owed to an underwriter for underwriting commission once the obligation exists but before payment.

PPE payable family

Liability. CR. Amount owed to a supplier for PPE acquired on credit or under deferred settlement.

Share issue costs payable

Liability. CR. Share issue costs that have been incurred but not yet paid.

Loans

Liability. CR. Borrowed amounts still owed by the business.

Shareholders for dividends

Liability. CR. The portion of a declared dividend owed directly to shareholders after any amount withheld for dividends tax.

SARS (Dividends tax)

Liability. CR. Dividends tax withheld from dividends and owed by the company to SARS on shareholders’ behalf.

Bank overdraft

Liability. CR. The liability presentation of a credit balance on the bank account.

Share capital: [class]

Equity. CR. The net equity recognised from shares issued in that class after the course treatment of share issue costs.

Retained earnings

Equity. CR. Accumulated profits retained in the company after losses, dividends and permitted equity transfers.

Revaluation surplus

Equity. CR. Cumulative revaluation amounts recognised in other comprehensive income and retained in equity.

Dividends family

Equity. DR. A temporary equity-reduction account used when the company declares dividends to its own shareholders.

Underwriter’s commission

Equity. DR. A share issue cost paid/owed for the underwriting service.

Other share issue costs / Share issue costs

Equity. DR. Other incremental costs relating to issuing shares.

Revaluation gain (OCI)

Equity. CR. A temporary other-comprehensive-income account used to capture a qualifying revaluation gain before it is transferred/closed into Revaluation surplus.

Revaluation loss (OCI)

Equity. DR. An other-comprehensive-income/equity reduction where the course treatment places a revaluation decrease against an existing surplus.

Profit or loss

Other / clearing. No fixed side. The temporary closing account used to collect income and expenses before the net result is transferred to Retained earnings.

Asset disposal

Other / clearing. No fixed side. A temporary P/L clearing account used to assemble the cost/gross carrying amount, accumulated depreciation/impairment and proceeds of a disposed PPE item so the balancing profit/loss can be identified.

Sales income

P/L income. CR. Revenue earned from selling goods/services in the ordinary course of business.

Operating-income family

P/L income. CR. Income earned from operating activities other than the main sales line.

Interest income

P/L income. CR. Income earned from lending money or interest-bearing balances.

Dividend income

P/L income. CR. Income earned by the business from shares it owns in another company.

Investment gain

P/L income. CR. Gain from changes in the value of share investments and/or disposal effects as treated in the investment questions.

Profit on disposal / sale of non-current asset

P/L income. CR. Gain when proceeds exceed the carrying amount of a disposed non-current asset.

Cost of sales expense

P/L expense. DR. The cost of inventory sold during the period.

Operating-expense family

P/L expense. DR. Ordinary operating costs consumed in earning revenue.

Bad debts expense

P/L expense. DR. Expense recognised when a customer receivable is written off as uncollectible.

Depreciation expense

P/L expense. DR. The period’s allocation of depreciable amount of PPE over the pattern in which benefits are consumed.

Impairment loss / impairment expense

P/L expense. DR. Loss recognised when a PPE asset’s carrying amount exceeds its recoverable amount under the course impairment rules.

Interest expense

P/L expense. DR. Finance cost incurred on borrowings or deferred payment arrangements.

Tax expense

P/L expense. DR. The company income-tax charge for the period based on taxable income under the facts given.

Investment loss

P/L loss. DR. Loss arising from a decrease in value and/or disposal of a share investment as treated in the investment questions.

Loss on disposal / sale of non-current asset

P/L loss. DR. Loss when proceeds are below the carrying amount of a disposed non-current asset.