Practical Accounting Training for Effective Financial Management
Learn practical accounting techniques with real-world examples for effective financial management. Explore topics such as double-entry format, trial balance, debits, credits, assets, liabilities, and more. Enhance your accounting skills with interactive exercises and expert guidance from PDST Ireland.
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Presentation Transcript
Forbairt Foghlaim www.pdst.ie F s
Suspense By Maura Fehily www.pdst.ie p d s t 2 0 1 4
Pre-teaching KWL Revise double entry Format of Trial Balance (reference simple Trial Balance) www.pdst.ie p d s t 2 0 1 4
Anticipation Exercise Name Date Topic Score DOUBLE ENTRY Before After Forbairt Agree Disagree Statement Agree Disagree 1 Debit is the same as Credit Foghlaim 2 Every business has debtors and creditors Name Date Topic Score 3 Kanye West Income $28 million expenditure $43 million = overdraft Anticipation Exercise DOUBLE ENTRY Before After 4 Cash received is put on the Dr side of the Cash Account www.pdst.ie 5 All transactions should be recorded in the accounts 6 Instructions: Guess answers, read passage, answer again, compare results before & after F s The PDST is funded by the Teacher Education Section (TES) of the Department of Education and Skills (DES) and is managed by Dublin West Education Centre
2 PEOPLE INVOLVED RECEIVER GIVER www.pdst.ie p d s t 2 0 1 4
Debit RECEIVER Credit GIVER www.pdst.ie p d s t 2 0 1 4
QUESTIONS Adjustment in question 1 60 mark JOURNALISE, PROFIT & LOSS AND SUSPENSE 100 mark JOURNALISE, PROFIT & LOSS AND SUSPENSE BALANCE SHEET AND THEORY www.pdst.ie p d s t 2 0 1 4
Time Management Adjustment in question 1 60 - 100 mark question 26 - 42 minutes Start with theory part of question Worth up to 6 - 10 marks = 1.5 - 2.5 % www.pdst.ie p d s t 2 0 1 4
Debits and Credits Dr Cr Assets Liabilities Expenses Gains Purchases Sales www.pdst.ie p d s t 2 0 1 4
FIXED ASSETS Machinery 100,000 Furniture 50,000 Equipment 30,000 CURRENT ASSETS Closing Stock 20,000 Debtors 10,000 Suspense 1,000 CREDITORS AMOUNTS FALLING DUE WITHIN ONE YEAR Creditors 20,000 Bank 20,000 TOTAL NET ASSETS FINANCED BY Ordinary Share Capital 200,000 Share Premium Net Profit www.pdst.ie Capital Employed p d s t 2 0 1 4
Journal Entries Step 1 T accounts Step 2 Do the correct entry Step 3 Look at what was incorrect and correct www.pdst.ie Step 4 Dr in T account Dr column in journal Narration Note must explain entry p d s t 2 0 1 4
ALL JOURNAL ENTRIES WILL GO TO EITHER PROFIT AND LOSS OR BALANCE SHEET www.pdst.ie p d s t 2 0 1 4
Profit & Loss Pick out entries for profit and loss DR - CR + Dr Journal = Minus Profit Cr Journal = Plus Profit www.pdst.ie p d s t 2 0 1 4
Balance Sheet Entry in Dr Column = + Asset Entry in Cr Column = - Asset Entry in Cr Column = + Liability Entry in Dr Column = - Liability www.pdst.ie p d s t 2 0 1 4
SUSPENSE You sell on credit to Debtors You buy on credit from Creditors If an entry is on the Dr side of the Ledger then it is posted to the Dr side of the Journal If an entry is on the Cr side of the Ledger then it is posted to the Cr side of the Journal www.pdst.ie p d s t 2 0 1 4
A question on this topic has two types of adjustments, those errors that affect the balancing of the trial balance and those errors that are not revealed by the trial balance. In the former a Suspense account is used temporarily to balance the trial balance. www.pdst.ie p d s t 2 0 1 4
Error not effecting Suspense Insurance due 340 and rent prepaid to Sexton 460 were not recorded in the books. No entry therefore no Suspense So double entry is Dr Profit & Loss a/c Cr Insurance Company Cr Rent Prepaid Narration Note 800 340 460 www.pdst.ie p d s t 2 0 1 4
Corrected Net Profit Profit & Loss entry on DR column of Journal It is a If on the CR Column of Journal It is a - Minus + Plus www.pdst.ie p d s t 2 0 1 4
Balance Sheet The Insurance was due by Sexton so it is a Liability in Balance Sheet The Rent was prepaid to Sexton so it is also a Liability in Balance Sheet www.pdst.ie p d s t 2 0 1 4
Error effecting Suspense Sexton returned furniture previously purchased on credit for 27,000. This was entered in the accounts as 37,000. //However, a credit note subsequently arrived from the supplier showing a transport charge of 500.// The only entry made in respect of this credit note is a credit entry of 26,500 in the creditor s account. www.pdst.ie p d s t 2 0 1 4
Correct entry DR CR CREDITORS A/C Purchase Returns 26,500 DR CR www.pdst.ie PURCHASE RETURNS A/C Creditors 26,500 p d s t 2 0 1 4
Correcting Error Dr Creditors a/c Cr Purchase Returns 500 Suspense 26,500 Purchase Returns 10,000 Purchase Returns a/c Creditors 500 Creditors 10,000 www.pdst.ie Suspense a/c Creditors 26,500 p d s t 2 0 1 4
Journal Entry DR CR Purchase Returns 500 Creditors 500 Purchase Returns 10,000 Creditors 10,000 www.pdst.ie Creditors 26,500 Suspense 26,500 p d s t 2 0 1 4
Alternative Journal DR CR Purchase returns 10,500 Creditors 16,000 www.pdst.ie Suspense 26,500 p d s t 2 0 1 4
Corrected Net Profit Purchase Returns (Dr Column) Therefore - + - minus www.pdst.ie p d s t 2 0 1 4
Balance Sheet Creditors are a Liability Therefore Dr ENTRY is a minus for Creditors in Creditors: amounts falling due within 1 Year. www.pdst.ie p d s t 2 0 1 4
