what areas are you studying for FRA

lv9783

In te middle of FRA study
any advice which area to study...what are you studying at the moment or struggling with?

Tinkerbell007

Still struggling with capital/current accounts - any advice on these areas?

Made a hash of some questions this morning - really need to calm down and read the questions properly!! :001_smile:

lv9783

the capital accounts stay unchanged unless it states some has been invested or you create goodwill.

Current account handles all the drawings, share of profit, salaries
etc

sarahwilson

im struggling with the postings for goodwill :-(

lv9783

set up a goodwill account and debit it with amount they give you
credit the amount to the capital acounts (% out the goodwill to the amount of profit %)

then when eliminating goodwill you credit the same amount to goodwill account
and debit the capital accounts with the new %

eg goodwill= 500,000

A 40%
B 60%

DR 500,000 goodwill account
CR A 200,000 capital account
CR B 300,000 capital account

new %

A=40%
B=40%
c=20%

DR 200,000 A cap account
DR 200,000 B cap account
DR 100,000 C cap account
CR 500,000 goodwill acount

this clears the goodwill account

Focus2Focus

Work your formula

I did it recently - best advise is to show your workings. You dont need to get all the figures right, it helps thou. Its the basics making your tb balance eg using suspense if you cant.,Understanding what figures should go where even if they are not correct and setting up your reports correctly. Its not as hard as you think, but you have to be methodical and follow the processes. Good luck guys

lv9783

my confidence was knocked when did simulation as thought i did ok but had failed on some questions:

- stock valuation

- rent payable (is this the rent account or accruals)

lv9783

can anyone explain stock valuation eg if they change the seeling price how to recalculate stock?

Esme

Stock is always valued at the lower of cost or selling price.

If stock is valued at 40,000 which includes something which cost 10,000 but is now being sold for 5,000 you take the 10,000 out and replace with the 5,000

40,000
-10,000
+ 5,000


Stock is now 35,000

lv9783

ok i see...what would the journal entry be for this

Esme

Closing stock is only recorded on profit and loss and balance sheet. It does not appear in the original Trial Balance collumns.

The journal entry would be

Dr Closing Stock Balance sheet 35000
Cr Closing Stock Profit and Loss ac 35000

lv9783

thank you thats a big help

Esme

That's ok.. good luck for tomorrow!

sarahwilson

My heads gone all fuzzy today, its income and expenses to the profit and loss assets and liabilities to the balance sheet isnt it? In the adjustments column cr & cr or dr & dr is a plus and cr & dr and dr & cr is a minus.

Is that right, my brains had enough this week!!

Esme

Profit and loss account is income minus expenses = Net Profit

Balance Sheet is assets minus liabilities = Capital

Financed by Opening Capital + profit - drawings = closing capital

not sure what you meant by the dr's and cr's though sorry!!

sarahwilson

I'll try and explain if i can Esme!! If I have a debit say, wages in the P&L and I need to make an adjustment in the ETB I would credit to decrease it and debit again to increase it. I think......

Esme

Yeah, you've got it right, if it was an accrual (increase) you would debit it, if it was a perpayment (decrease) you should credit it.

If the sales column is being increased you would credit the adjustment column and debit for a reduction.

sarahwilson

Hurrah alls not lost, all assuming I have to do that in the exam!! I am hoping they aren't going to put appropriation in too heavily!!

Esme

I'm sure we'll all be fine.. fingers crossed!! Good luck!

sarahwilson

Good Luck everybody!!!:thumbup:

sazzle01

Yeah good luck everyone and i am sure we will be discussing it tomorow ;-)

acc1077

But not before 8pm lol Good luck everyone:thumbup1:

lv9783

lets hope for the good, not like ecr, it would be nice to keep this thread lol:001_tt2:

Kathy Henderson

Good luck for FRA tomorrow peeps x

alicemaylara

my advice is to take your time!

Tinkerbell007

Good luck tomorrow guys! I hope they are kind to us! :001_smile:

sazzle01

Ah yeah we will keep this tread going tomorow no doubt and yeah we have strict
orders not discussion before 8pm!! Well going back to my books so now if i am not on here in the morning because i have fallen asleep in my books ill be on here at 8pm!! ha ha

Good luck everyone ;- )