FRA Question!

If in section 2 of FRA you have to do a P&L and then an appropriation account - but no balance sheet. Does anyone out there do a balance sheet just to check that they have the figure for net profit correct? In the past, I have done some test papers, got the net profit figure incorrect and therefore the figures in the appropriation account would be incorrect.
By doing a balance sheet, I suppose I would know whether the profit figure is correct or is this a very long winded way of doing things!
Would appreciate your comments!!

Comments

  • DaveIOW
    DaveIOW Registered Posts: 85 ? ? ?
    NickyW wrote: »
    If in section 2 of FRA you have to do a P&L and then an appropriation account - but no balance sheet. Does anyone out there do a balance sheet just to check that they have the figure for net profit correct? In the past, I have done some test papers, got the net profit figure incorrect and therefore the figures in the appropriation account would be incorrect.
    By doing a balance sheet, I suppose I would know whether the profit figure is correct or is this a very long winded way of doing things!
    Would appreciate your comments!!

    It would be a way of checking. However If your profit figure comes out incorrect and you then use that on the appropriation then I think you will get marks for the way or method used to work it out rather than the answer.

    This is why they insist on you showing workings, so they can see that you have followed the correct route
  • Esme
    Esme Registered Posts: 711
    As long as the process is correct for the appropriation account you should be ok even if your profit figure in incorrect.

    Also, you need the profit figure for the balance sheet anyway so you couldn't check if your balance figure was correct?
  • DaveIOW
    DaveIOW Registered Posts: 85 ? ? ?
    Esme wrote: »
    As long as the process is correct for the appropriation account you should be ok even if your profit figure in incorrect.

    Also, you need the profit figure for the balance sheet anyway so you couldn't check if your balance figure was correct?

    I think she means that the net assets wouldn't balance with the financed by bit (Capital + net profit - drawings)
  • Esme
    Esme Registered Posts: 711
    DaveIOW wrote: »
    I think she means that the net assets wouldn't balance with the financed by bit (Capital + net profit - drawings)

    Oh I see, that seems a bit long winded! I personally would use any spare time checking back that I have done everything right as you'll need to do this anyway if you find the balance sheet incorrect but will have less time left.

    But if you think doing a balance sheet would help you the go for it!
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