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Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12 th Edition, © Pearson Education Limited 2012 Slide 35.1 Single entry and incomplete records
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S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

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Page 1: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.1

Single entry and incomplete

records

Page 2: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.2

Learning objectives

After you have studied this chapter, youshould be able to:Deduce the figure of profits where only theincrease in capital and details of drawingsare knownDraw up an income statement andstatement of financial position fromrecords not kept on a double entry system

Page 3: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.3

Learning objectives (Continued)

Deduce the figure for cash drawings whenall other cash receipts and cash paymentsare knownDeduce the figures of sales andpurchases from incomplete records

Page 4: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.4

Why double entry is not used

Many small business owners keep theirrecords by using a single entry systemcomprising a cash book and a list ofdebtors and creditors.This may be because they simply do notknow double entry bookkeeping.However, they will have to prepare theirfinancial statements each year.

Page 5: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.5

Profit as an increase in capital

If you know the capital figure at the startand end of a period, you can work out theprofit figure for the year:

Net profit = This year’s capital − Last year’s capital

If there are drawings, this would be workedout as:

Last year’s capital + profits − drawings = This year’scapital

Page 6: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.6

Activity

Page 7: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.7

Activity (Continued)

Stage 1

Draw up a Statement of Affairs on theclosing day of the earlier accountingperiod.

Page 8: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.8

Activity (Continued)

Page 9: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.9

Activity (Continued)

Stage 2

Prepare a cash and bank summary,showing the totals of each separate item,plus opening and closing balances.

Page 10: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.10

Activity (Continued)

Page 11: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.11

Activity (Continued)

Stage 3

Calculate the figures for purchases andsales to be shown in the trading account.Remember that the figures needed are thesame as those which would have beenfound if double entry records had beenkept.

Page 12: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.12

Activity (Continued)

Page 13: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.13

Activity (Continued)

Page 14: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.14

Activity (Continued)

Stage 4

Where there are no accruals orprepayments either at the beginning orend of the period, then the expenses paidwill be the income statement figure.However, where accruals or prepaymentsexist, an expense account should bedrawn up for that particular item.

Page 15: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.15

Activity (Continued)

Page 16: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.16

Activity (Continued)

Stage 5

Now draw up the financial statements.

Page 17: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.17

Activity (Continued)

Page 18: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.18

Activity (Continued)

Page 19: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.19

Dealing with missing figures

Often there is missing information relatingto cash receipts or payments.If the missing information is one type ofpayment, then it is normal to assume thatthe missing figure is the amount requiredto make both totals agree in the cashcolumn of the cash book.

Page 20: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.20

Activity

Page 21: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.21

Activity (Continued)

Page 22: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.22

Activity (Continued)

Page 23: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.23

Activity (Continued)

Page 24: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.24

Learning outcomes

1.

2.

You should have now learnt:

The difference between a single entrysystem and a double entry system.How to calculate net profit for a smalltrader when you know the changes incapital over a period and the amount ofdrawings during the period.

Page 25: S l i d e 3 5 · 2019. 12. 26. · C al c u l ate th e fi g u r e s for p u r c h as e s an d s al e s to b e s h own i n th e tradi n g ac c ou n t. R e me mb e r th at th e fi

Frank Wood and Alan Sangster, Frank Wood’s Business Accounting 1 , 12th Edition, © Pearson Education Limited 2012

Slide 35.25

Learning outcomes (Continued)

3.

4.

How to prepare an income statement andstatement of financial position fromrecords not kept on a double entry system.How to deduce the figures for purchasesand sales from a total accounts payableaccount and a total accounts receivableaccount.