Financial Accounting 6th Edition

Accounting Financial Accounting Financial Accounting external reporting financial accounting internal reporting management accounting Financial Accounting Sole trader Partnership Limited liability company Financial Accounting Financial Accounting HM Revenue and Customs Financial Accounting joint and several liabilities Financial Accounting Financial Accounting limited liability Financial Accounting private limited company public limited company shares Financial Accounting Partnership Limited liability company Memorandum association articles of Financial Accounting Partnership Limited liability company Financial Accounting Management Owners as investors Financial Accounting Employees Lenders Suppliers or trade creditors Financial Accounting Customers or trade debtors Governments and their agencies Public interest Financial Accounting Financial Accounting

Accounting is the process of i……………………………….., m……………………………………… and c…………………………………………. financial information about an e………………… to permit informed j…………………………….. and d…………………………………………………… by u…………………… of the information. A conceptual framework for accounting is a ………………………………………… which provides generally accepted guidance for the development of new reporting practices and for challenging and evaluating the existing practices. Who are the u……………. of financial statements? What are

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ANNEX: CRAIGIELAW plc ANNUAL REPORT YEAR 7 (extract) [This document is adapted from the annual report of a leading UK company, with the sole purpose of presenting illustrative extracts appropriate to a first-level study of financial reporting.] Introduction to Craigielaw Craigielaw is an international chemical group. Our core competences are polymer technology, cellulose chemistry and surface science.

Financial Accounting Bank finance Trade payables (creditors) Financial Accounting Taxation: Financial Accounting Matching concept Accruals concept Financial Accounting Date invoice Amount received of invoice Date paid Financial Accounting Spreadsheet analysis of transactions relating to the expense of electricity consumed, Year 1 Asset Year 1 Liability Ownership interest: profit Financial Accounting Totals (810) 340 (1,150) Financial Accounting Financial Accounting Spreadsheet entry for accrual at the end of the month Asset Liability Ownership interest: profit Financial Accounting Particulars P DR CR BAL Financial Accounting Particulars P DR CR BAL Financial Accounting Particulars P Transaction Debit DR CR BAL Credit

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A liability is a ………………… of the entity to transfer ……………. as a result of …………………………... A current liability is a liability that satisfies any of the following criteria: (a) It is expected to be settled in the entity’s …………………………………. (b) It is held primarily for the purpose of being …………………………. (c) It is due

Financial Accounting Financial Accounting Notes Year 7 Year 6 (26) (6) (222) Financial Accounting Financial Accounting Debentures: Bonds Bank borrowing and commercial paper Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Asset Liability Ownership interest Financial Accounting A L OI Financial Accounting A A L L OI OI Financial Accounting Financial Accounting Date Asset Liability Ownership interest Cash Deferred income Revenue Financial Accounting L3 Provision for warranty repairs Date Particulars Page Debit Credit Balance Financial Accounting L3 Deferred income (statement of financial position) (balance sheet) Date Particulars Page Debit Credit Balance

Information provided in the financial statements Structure of a statement of financial position (balance sheet) Non-current (fixed) assets plus Current assets minus Current liabilities minus .......................................................... equals Ownership Interest [...........…........…………....... .....………….........................] Statement of financial position (balance sheet) (Extract) Notes Year 7 Year 6 Financial Accounting A liability is a ………………… of the entity to transfer ……………….as a result of …………………………. A current liability is a liability that satisfies any of

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Financial Accounting Statement of changes in equity Financial Accounting Questions: Financial Accounting A L OI Financial Accounting Capitalisation issue (Bonus issue or Scrip issue) Financial Accounting Financial Accounting Financial Accounting Financial Accounting A L Financial Accounting Office Owner Ltd – Capitalisation issue in January Year 2 Date Transaction or event Cash Office block Share Share Retained Reval’n capital premium earnings reserve Financial Accounting rights issue Financial Accounting Assets L Ownership interest Financial Accounting (a) At the end of the month it is found that the roof

Non-current (fixed) assets plus Current assets minus Current liabilities minus Non-current (long-term) liabilities equals Ownership Interest [...........…........…………....... .....………….........................] Financial Accounting Safe and Sure plc Notes Year 7 Year 6 £m 12 195 13 55 14 46 16 3,408 3,704 When a company first comes into existence, it issues …………… to the owners who become …………………………. Each share has a ………………………, which is called its …………………………… (...............................). J.A. Smith has paid £25,000 to the company. That is the limit of this

Financial Accounting Financial Accounting Safe and Sure plc Notes 12 13 14 16 Year 2 Year 1 £m 195 55 46 3,408 3,704 Financial Accounting shares shareholders named value, nominal value par value). Financial Accounting Public Company plc Share certificate J A Smith P McDowall J Jones W Brown Financial Accounting L Financial Accounting market value. Financial Accounting Assets L = Ownership interest Financial Accounting Financial Accounting Assets L = Ownership interest Financial Accounting Financial Accounting Financial Accounting Office Owner Ltd – analysis of transactions for Year 1 Date Year 1 Transaction or event Effect on Effect on Assets Ownership interest Financial Accounting Financial Accounting Office Owner Ltd

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This lecture consists of: an overview a ratio analysis an interpretation of the ratio analysis. Formal calculations are only the start. Ratios must be interpreted. Overview Identification of important trends over time ......YEAR PERIOD Sales (revenue) Net assets O..................................................................... P..................................................................... E.................................................................... For example, Craigielaw plc Year 7 Year 6 Year 5 Financial Accounting Purpose of ratio analysis The aim is to build up a picture of the performance of

Overview Financial Accounting Year 7 Year 6 Year 5 Financial Accounting Purpose of ratio analysis Financial Accounting Comparisons that can be made Financial Accounting Financial Accounting 1. Accounting policies 2. Inflation Financial Accounting 3. Other sources of information Financial Accounting 4. Ratio analysis is only a starting point in interpretation of companies’ Financial Accounting Systematic approach to ratio analysis Leverage Financial Accounting Profit and loss account for the year ended 31 December Year

Financial Accounting Return on shareholders’ equity Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Debt/equity ratio Financial Accounting Financial Accounting Statement of cash flows (assume depreciation £50m) (115 (89 82) 61) (10 9) Reduction in cash due to increases in current assets (45 30) (29 25) Financial Accounting Increase in cash due to increases in liabilities Reduction in cash due to working capital changes (42 19 21) Net cash inflow

Financial Accounting Financial Accounting (a) Strategic management (b) Business environment Financial Accounting (c) Business performance Financial Accounting Examples: Financial Accounting Highlights statement Historical summaries and trend analysis Finance director’s review Financial Accounting Financial Accounting Users’ need for information Information provided in the financial statements Parent company Financial Accounting Group Segmental information in Safe and Sure Financial Accounting Financial Accounting Financial Accounting corporate governance Combined Code of corporate governance – Directors’ remuneration: Financial Accounting Financial Accounting

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Strategic Report Purpose and principles (a) To provide insight into the entity’s business model and its main strategy and objectives (the business model is defined as ‘the basis on which the company generates or preserves value over the longer term’) (b) To describe the principal risks, the entity faces and how they might affect its future prospects (c) To provide

Financial Accounting Financial Accounting Year 2 Year 1 Financial Accounting Financial Accounting Financial Accounting Adjusted profit Increase/decrease in cash due to (increases)/decreases in current assets Increase/decrease in cash due to increases/decreases in liabilities Increase/decrease in cash due to working capital changes Net cash inflow from operating activities Financial Accounting Net cash used in investing activities Net cash used in financing activities xx Financial Accounting Line 1: Cash flows from operating activities Line

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Data for illustration £ Statement of financial position (balance sheet) Year 2 Total current assets Total assets Year 1 Financial Accounting Total liabilities £ £ Both are allowed by

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a Systematic approach to financial Question No Location B/R Solution B/R

ASSETS R…………………available to the business. LIABILITIES O……………………. of the business. Statement of financial position Assets minus Liabilities equals A Ownership interest L = OI The ownership interest is the residual claim after liabilities to third parties have been satisfied. A OI L _________________________________________ Assets Equals Liabilities plus Ownership interest A = L + OI Financial Accounting The balance analogy can be represented as: A L+ OI A disturbance on one side of the balance

Remuneration Committee Report (extract from the full report) shareholder value. In establishing the detailed remuneration packages for each Director, the Committee has given full consideration to Section B of the UK Corporate Governance Code annexed to the Listing Rules of the London Stock Exchange, and to the remuneration arrangements in force elsewhere in Craigielaw. The Committee has also

Statement of financial position A L OI Financial Accounting A L OI Financial Accounting Financial Accounting Present economic resource: Controlled by an entity: Past events: Financial Accounting high level of uncertainty Financial Accounting Recognise Not recognise Financial Accounting Present obligation: Transfer of economic resource: Past events: Financial Accounting Financial Accounting Financial Accounting net assets Financial Accounting t t t t t t t Financial Accounting Financial Accounting revenue Providing a service to a customer for which payment is made. expenses Cost of providing a service to a customer Financial Accounting Financial Accounting Decrease Decrease Decrease Financial

Primary financial statements Purpose is to report Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting A L A L Financial Accounting Total non-current assets Total current assets Total assets Financial Accounting Financial Accounting Financial Accounting Increases in ownership interest Decreases in ownership interest Financial Accounting Total expenses Financial Accounting Financial Accounting Financial Accounting Operating activities Investing activities Financing activities Financial Accounting Operating activities Investing activities Financing activities Financial Accounting Cash received Cash paid Financial Accounting Net inflow from operations Net outflow for investing activities Net

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Primary financial statements Purpose is to report TRANSACTIONS AND EVENTS Practice of bookkeeping ACCOUNTING RECORDS Rules of measurement and disclosure FINANCIAL STATEMENTS The statement of financial position (balance sheet) reflects the accounting equation as follows: Assets minus Liabilities equals Ownership interest Financial Accounting The assets are subdivided into non-current (fixed) assets and current assets. Liabilities are subdivided into current liabilities (due

Financial Accounting Profit Cash flow Explanation Financial Accounting Payment for insurance Premium Total expenses/total cash paid Financial Accounting Mason’s legal practice. P. Financial Accounting Financial Accounting Debit entries in a ledger account Left-hand side of the equation Right-hand side of the equation Credit entries in a ledger account Financial Accounting Mason’s legal practice. Transaction Debit number: 1 Credit P. Financial Accounting Transaction Debit number: 2 Credit Financial Accounting Transaction Debit number: 3 Credit Financial Accounting Transaction Debit number: 4 Credit Financial Accounting Transaction Debit number: 5 Credit Financial Accounting Financial Accounting interest of increasing the ownership asset Transaction Debit number: 6 Credit Financial Accounting Transaction Debit number: 7 Credit Financial

Relevance and faithful representation Relevant Faithful representation Materiality Financial Accounting Enhancing qualitative characteristics Measurement principles Financial Accounting Going concern Accruals Consistency Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Conflicting views: Financial Accounting

Predictive value ………………………………………………….. Complete Neutral …………………. Threshold for considering an item: Would a user’s decision change if the information were ………………………………………? Error of £10 million in expense item. Overall profit of £500 million. Error is not material at …….% of profit. Error of £10 million in expense item. Overall profit of £20 million. Error is material at ………..% of profit. Bad

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When one item in the equation increases, an upward arrow will be used . When one item decreases, a downward arrow will be used . For example: Assets Liabilities denotes a decrease in an asset. denotes an increase in a liability. Transaction 1: receive cash from the owner In this transaction, the business acquires an ……………………………………… and must

Financial Accounting Debit entries in a ledger account Left-hand side of the equation Right-hand side of the equation Credit entries in a ledger account Financial Accounting Analysis of service business transactions to identify two aspects of each Transaction Aspects of the transaction Debit entry Credit entry in in Financial Accounting Financial Accounting Date Transactions Financial Accounting Financial Accounting Financial Accounting Three-column ruling Date Particulars Page Debit Credit Balance Financial Accounting Form of a ‘T’ ledger account Debit Entries Credit Entries Financial Accounting Financial Accounting Date Particulars L1 Cash Page Debit Credit Balance Financial Accounting Date Particulars L2 Ownership interest Page Debit Credit Balance Financial Accounting Financial Accounting Trial

Financial Accounting Financial Accounting Business transactions of the entity A L = OI Financial Accounting Business transactions of the entity A L = OI Financial Accounting Business transactions of the entity A Business transactions of the entity A – L = OI L = OI Financial Accounting Business transactions of the entity A L = OI Financial Accounting Business transactions of the entity A L = OI Financial Accounting Business transactions of the entity A L = OI Financial Accounting Date A Cash Debtors Inventory and Bank L = OI Fixed Creditors Capital Revenue Expenses assets contributed Financial Accounting Date A L = OI Cash Debtors Inventory Fixed Creditors Capital Revenue and assets contributed Bank Expenses Financial Accounting Net outflow from operations Net outflow for investing activities Net inflow

Trading: buying goods for resale; will hold inventories (stocks of goods) Manufacturing: converting raw materials to finished products; will hold inventories (stocks) of R…………………………………………………………………………., W……………………………………………….………………………… and F…………………………………………………………………..……… Transactions of a trading company 200 140 What is the profit on the sale of 70 items? Matching the cost of goods sold against the amount earned by the sale of the

Financial Accounting Transactions of a manufacturing company: debit and credit entries Debit Credit Financial Accounting Analysis of transactions for M. Carter, wholesaler Date Business transactions Amount Aspects Financial Accounting LEDGER ACCOUNTS (Read Supplement for detailed discussion) L1 Cash Date Particulars Page Debit Credit Balance Debit Credit Balance Debit Credit Balance Debit Credit Balance Credit Balance L2 Ownership interest Date Particulars Page L3 Buildings Date Particulars Page L4 Equipment Date Particulars Page L5 Inventory (stock of goods) Date Particulars Page Debit Financial Accounting L6 R. Busby Date Particulars Page Debit Credit Balance Debit Credit Balance Debit Credit Balance Debit Credit Balance L7 Electricity Date Particulars Page L8 Wages Date Particulars Page L9 Cost of goods sold Date Particulars Page L10 Sales Date Particulars Page Debit Credit Balance L11 R. Welsby Date Particulars Page Debit Credit Balance Debit Credit Balance L12 Depreciation Date Particulars Page Financial Accounting Trial balance at

Financial Accounting Financial Accounting Financial Accounting Transactions of the entity A L = OI Financial Accounting Spreadsheet analysing transactions and events into elements of the accounting equation Date Transaction or event Assets Ownership interest Cash Inventory Expense Revenue (stock) Financial Accounting Business transactions of the entity A L = OI Financial Accounting Financial Accounting Financial Accounting Raw materials: RM; Work in progress: WIP; Finished goods: FG. Date Transaction or event Assets Cash Raw WIP Mats OI FG Rev Exp + Financial Accounting Financial Accounting Using the accounting

Financial Accounting Summary of transactions analysed into the elements of the accounting equation Financial Accounting Net outflow from operations Net outflow for investing activities Net inflow from financing activities Financial Accounting Other expenses Financial Accounting Financial Accounting Acc Eqn Non-current (fixed) assets Current assets A A OI L Total current assets Total assets Financial Accounting Left-hand side of the equation Right-hand side of the equation Debit entries in a ledger account Credit entries in a ledger account Financial Accounting Transactions of a

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Financial Accounting Trial balance at 31 May for M. Carter, wholesaler Leger account title Totals £ £ 56,000 56,000 Financial Accounting Financial Accounting Financial Accounting Financial Accounting L L L L Financial Accounting Ref Financial Accounting Financial Accounting Ref Financial Accounting Financial Accounting Financial Accounting

Financial Accounting Financial Accounting Financial Accounting What do you want to know about a company? Where do you find information about a company? Financial Accounting Financial Accounting L OI Financial Accounting L Financial Accounting Net assets of P plc Net assets of S plc Financial Accounting (a) Bringing together all assets and liabilities (b) Group’s consolidated statement of financial position (balance sheet) Financial Accounting Net assets of P plc Net assets of S plc Financial Accounting Group net assets Difference on consolidation Financial Accounting

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Impact of the European Union The IAS Regulation Harmonisation through Directives International Accounting Standards Board Primary financial statements Notes to financial statements Accompanying information Primary financial statements Statement of financial position (balance sheet) Income statement (profit and loss account) Statement of changes in equity Statement of cash flows Notes to financial statements Required by the Companies Act 2006 and accounting standards Accounting policies Detailed analysis

Present economic resource ………………………………………… Held for use in …………………………………… On a ……………………………………………… Not for sale in …………………………………… Classification of non-current (fixed) assets T……………. non-current (fixed) assets I………………………. non-current (fixed) assets Investments held long term Intangible No …………………………… substance. P………………………..… T………………………….. D…………………………. G………………………….. Valuation of non-current (fixed) assets initially at cost Subsequently choose either at C………. less A………….……D…..………….…. Also called N…….. B……………. V…………….. (NBV) or depreciated cost Financial Accounting Asset is recorded

Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting depreciation. straight-line Financial Accounting Accounting policy Depreciation is charged on a straight-line basis at a rate of 20% of cost per annum. Financial Accounting End of year Depn of the year Total depn (b) (c) Net book value of the asset (£1,000 c) Financial Accounting Fixed percentage the net book value at the start of the year n R C n R C Financial Accounting n C R Financial Accounting Year Net book Annual Net book value

Financial Accounting Financial Accounting Transaction or event ASSETS OI Van at Acc Cash OI at 1 Profit = cost depn of Jan. Yr 3 R E van Financial Accounting Financial Accounting Year 2 OI Year 3 Financial Accounting Financial Accounting Land and Plant and Vehicles buildings equipment £m £m £m Total £m Financial Accounting Land and Plant and Vehicles buildings equipment £m £m £m Total £m Financial Accounting Financial Accounting Financial Accounting Date Transaction Amount or event Dr Cr Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting

Financial Accounting Financial Accounting Financial Accounting Ledger account title Totals £ £ Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Financial Accounting Date Particulars Page Debit Credit Balance Financial Accounting

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asset current asset Financial Accounting Financial Accounting The working capital cycle for a manufacturing or service business assets minus current liabilities current Financial Accounting Working capital Financial Accounting Inventories (stocks) Finished goods prudence cost Financial Accounting Work in progress: Financial Accounting Raw materials: Financial Accounting Debtors Trade debtors are Other debtors trade receivables Prepayments Financial Accounting Financial Accounting marking to market) Financial Accounting Notes Year 7 Year 6 £m 243 1,347 905 2,495 Financial Accounting £m 54 10 179 243 Note 6 Year 7 Year 6 £m 1,218 (48) 1,170 98 79 1,347 Financial Accounting L OI Financial Accounting L Financial Accounting Meaning of cost Financial Accounting Financial

An asset is a present economic resource …………………. as a result of past events. Definition A current asset is an asset that satisfies any of the following criteria: (a) it is expected to be realised in, or is intended for sale or consumption in, the entity’s ……………………………….; (b) it is held primarily for the purpose

Financial Accounting LIFO Total 2,700 400 3,100 Financial Accounting Average Total * Weighted average [(100 2,687 20) + (50 413 22)] /150 = £20.67 3,100 Financial Accounting Financial Accounting provision removed Financial Accounting Example Financial Accounting Spreadsheet to analyse the effect of provision for doubtful debts at the end of Year 1, using the accounting equation Assets Year 1 Transaction or event Ownership interest Receivables Provision Other Ownership Profit (debtors) for assets interest at of the doubtful start period debts Financial Accounting Financial Accounting Financial Accounting Spreadsheet to analyse the effect

Self-test (Text book contains questions A1.1 to A1.8) Financial Accounting Financial Accounting Financial Accounting Conceptual Framework Financial Accounting Application (Text book contains questions B1.1 to B1.3) Financial Accounting Problem solving and evaluation (Text book contains questions C1.1 and C1.2) Craigielaw plc Making use of the Report and Accounts of Craigielaw plc, answer the following questions. (Page numbers refer to the Report and Accounts of

Self-test (Text book contains questions A10.1 to A10.11) Financial Accounting Application (Text book contains questions B10.1 to B10.3) Supplier group: Purchasing director: Financial Accounting Problem solving and evaluation (Text book contains question C10.1) Financial Accounting Craigielaw plc Making use of the Report and Accounts of Craigielaw plc and the accounting information regarding Safe and Sure plc in the text book, answer the following

Self-test (Text book contains questions A11.1 to A11.9) Financial Accounting Application (Text book contains questions B11.1 and B11.2) Financial Accounting Individual exercises Year Year of warranty work Amount of revenue Amount with respect to Year 1 revenue Amount with respect to Year 2 revenue Financial Accounting Group exercise Problem solving and evaluation (Text book contains questions C11.1 and C11.2) Financial Accounting Year 2 Year 1 £m Unsecured: 1,231.3 4.1 1,235.4 Secured: 11.4 1,246.8 Year 2 Year 1 Financial Accounting Craigielaw plc Making use of the Report and

Self-test (Text book contains questions A12.1 to A12.12) Financial Accounting Financial Accounting Financial Accounting Application (Text book contains questions B12.1 to B12.5) Group exercise Financial Accounting Problem solving and evaluation (Text book contains question C12.1) Statement of financial position (balance sheet) at 1 January Year 4 Total current assets Total assets Financial Accounting Financial Accounting Accounting equation spreadsheet Plant and machinery Changes in equity Saltire Engineering Ltd Assets Inventory Receivables (stock) (debtors) Cash Payables (creditors) Liabilities Taxation Debentures Share capital Ownership Interest Changes in Income equity statement Financial

Self-test (Text book contains questions A13.1 to A13.8) Financial Accounting A Ltd £ A Ltd £ B Ltd £ B Ltd £ Financial Accounting A Ltd B Ltd £ £ A Ltd B Ltd £000s £000s Financial Accounting Application (Text book contains questions B13.1 and B13.2) Income statement (profit and loss account) for the year ended 31 December Year 2 Financial Accounting Statement of financial position (balance sheet) as at 31 December Year 2 Total non-current assets Total current

Self-test (Text book contains questions A14.1 to A14.27) Financial Accounting Application (Text book contains question B14.1) Financial Accounting Problem solving and evaluation (Text book contains question C14.1) Self-test A14.28 (b) A14.29 (b) A14.30 (d) A14.31 (c) A14.32 (b) A14.33 (a) A14.34 (c) Application B14.1 to B14.8 All these questions require short essay-type answers that require you to show some knowledge of the subject and to apply that knowledge in solving a problem or discussing benefits and limitations.

Self-test (Text book contains questions A15.1 to A15.19) Financial Accounting Financial Accounting Financial Accounting Financial Accounting Application (Text book contains questions B15.1 to B15.8) Problem solving and evaluation (Text book contains questions C15.1 and C15.2) Income statement (profit and loss account) extract for the year to 31 December Year 2 Financial Accounting Statement of financial position (balance sheet) at 31 December Year 2 Year

Self-test (Text book contains questions A2.1 to A2.22) Financial Accounting The following is a list of items that may appear in the annual financial statements of a manufacturing company: Cost of sales Inventory (stock) of raw materials Trade payables (creditors) Preference share capital Plant and equipment Wages paid Electricity charges unpaid at the date of the financial statements Cash Motor vehicles Bank overdraft Financial Accounting The

Self-test (Text book contains questions A3.1 to A3.7) Financial Accounting Application (Text book contains questions B3.1 and B3.2) Financial Accounting Craigielaw plc Making use of the Report and Accounts of Craigielaw plc, answer the following questions. (Page numbers refer to the Report and Accounts of Craigielaw.) Self-test A3.8 (d) If there are no long-term liabilities, then non-current (fixed) assets + current assets current

Self-test (Text book contains questions A4.1 to A4.6) Financial Accounting Financial Accounting Financial Accounting Application (Text book contains questions B4.1 to B4.3) Financial Accounting Problem solving and evaluation (Text book contains questions C4.1 and C4.2) Financial Accounting Craigielaw plc Making use of the Report and Accounts of Craigielaw plc, answer the following questions. (Page numbers refer to the Report and Accounts of Craigielaw.) Self-test A4.7 (c) Partnerships

Self-test (Text book contains questions A5.1 to A5.5) Financial Accounting T Harding and Co has commenced business as a domestic appliance repair engineering company with a start-up cash balance of £15,000, contributed by the owner, T Harding. On Day 1, T Harding and Co purchased a van costing £5,000, for cash. On the same day,

Self-test (Text book contains questions A6.1 to A6.5) Financial Accounting Transaction or event Asset Ownership interest Financial Accounting A manufacturing company has carried out the following business transactions: Financial Accounting Stage Transaction or event Assets Cash at bank Receivables Raw material. Inventory (stock) Ownership interest Work in progress Finished goods Revenue + Expenses Financial Accounting Financial Accounting Financial Accounting Applications (Text book contains questions B6.1 to B6.4) May £000’s Financial Accounting Date Transaction or event Cash at bank Trade receivables (debtors) Assets Raw materials inventory (stock) Work in progress Finished goods Liabilities Trade payables (creditors) Ownership interest Revenue Expenses Financial Accounting Date Business transactions and events (wholesale trader) Amount Financial Accounting Assets Date Business transactions

Financial Accounting Self-test (Text book contains questions A7.1 to A7.19) Financial Accounting Financial Accounting Application (Text book contains questions B7.1 to B7.4) Group exercise Communicator of the year Financial Accounting Problem solving and evaluation (Text book contains question C7.1) Craigielaw plc Making use of the Report and Accounts of Craigielaw plc, answer the following questions. (Page numbers refer to the Report and Accounts of

Self-test (Text book contains questions A8.1 to A8.17) JK Builders Co purchases a new excavator costing £40,000. Its expected useful life is 10 years, at which point it is anticipated that the excavator will have a residual value of £6,000. Financial Accounting A major electronics company has acquired a green field site to build a

Self-test (Text book contains questions A9.1 to A9.13) Financial Accounting Month DVD players purchased Unit price Financial Accounting Description Purchase cost Selling price Distribution costs of selling items of inventory (stock) Financial Accounting Financial Accounting Applications (Text book contains questions B9.1 to B9.5) Individual exercises Date Number of units purchased Unit cost Number of units sold Financial Accounting Group of items Cost Selling price Cost of selling Financial Accounting Group exercise Problem solving and evaluation (Text book contains questions C9.1 and C9.2) Financial Accounting Year Year end Reported