AP1 - Extended Trial Balance help!

ykwong1978

Hi all,

I am still having trouble with whether the accounts go to the Profit & Loss or the Balance sheet and was (hoping) if anyone has any techniques or advice that could help me me remember.

The accounts that I seem to get mixed up in are:-

1. Depreciation Expense Account
2. Accumulated Depreciation Account

3. Allowance for Doubtful Debt Adjustment
4. Allowance for Doubtful Debt

5. VAT

I have included VAT as it is not mentioned in my study book whether this belongs to P&L or the balance sheet.

Many thanks

crispy

Hello,

Depreciation expense Account - the clue is in the name EXPENSE, so therefore is a P&L Item.
Accum. Depreciation Account - balance sheet item

Journal for Depreciation would look like:
Dr Depreciation Expense A/c (P&L)
Cr Accum. Depreciation A/c (BS)

If you had an increase in a Doubtful Debt provison then:
Dr Bad & Doubtful Debts EXPENSE A/c (P&L)
Cr Provision for Doubtful Debts (BS)

If you had a reduction in Doubtful Debts then just reverse the above.

VAT will always be a Balance Sheet item, it would more normally be a Credit balance (money owed to HMRC) shown as a currently liability - however it could also be a Debit balnce (due a refund from HMRC- current asset)

This may or may not of helped