4. Wherever the examiner uses the following words, then consider
trading account.
4
Trading Accounts
(i) Opening stock (if first year of trading, this will not be given)
(ii) Closing stock
9. Whenever the examiners use the following words or
terminology, always consider opening a DLCA to
calculate the sales figure.
9
Debtor Ledger Control Accounts
(i) Opening debtors
(ii) Closing debtors
(iii) Amount received from debtors
10. Example 6.1: Zeeshan knows that his receivables at 1 January 20X1
were $27,000, and during the year he received $140,000 in cheques
from customers, after allowing $2,000 in cash discounts for prompt
payment. He wrote off a bad debt of $5,000 during the year, and his
closing receivables at 31 December 20X1 amount to $24,500.
Calculate the value of his sales for the year (Note: Sales ledger
control account is actually receivable control account)
Solution:
10
$144,500
11. Whenever the examiner uses the following words or
terminology, always consider opening a CLCA to
calculate the purchase figure.
11
(i) Opening creditors
(ii) Closing creditors
(iii) Cash/cheque paid to creditors
12. Example 6.2: Mr. Walied knows that his payable at 1 January 20X1 were $50,000,
and during the year he paid through bank and cash to supplier $10,000, receiving
$1,000 in cash discounts for prompt payment to vendor and his closing payables at
31 December 20X1 amount to $75,500. Calculate the value of his purchase for the
year (Note: Purchase ledger control account is actually payable control account)
Solution:
12
13. •An organization is not a business.
•Different set of words used to ‘flag’ this difference.
•Cash Book Receipts & Payments a/c
•P & L Income & Expenditure a/c
•Profit Excess of Income or Surplus
•Loss Deficit
•Capital Accumulated Fund
13
Accounting for Non-Profit Organizations
16. This type of scheme requires members to pay a fee
annually in order to retain membership
16
Annual Subscription Account
Care must be taken to adjust appropriately for
subscriptions in advance (a liability) and for subscriptions
in arrears (an asset)
If a member has outstanding subscriptions it is unlikely
that legal action will be taken to recover them (because of
the legal costs involved and the difficulty of proving the
debt)
So it is common for them to be written off as a bad debt.
However, each organisation will have its own policy
17. These are fees payable in addition to the annual
subscription when a person first joins the organisation as a
member (they may also be referred to as joining fees)
17
Annual Subscription Account
18. 18
MCQs 5
A receipts and payments account is similar to
(a) An income and expenditure account
(b) A profit and loss account
(c) A trading account
(d) A cash book summary
(d) A cash book summary