Eeeeeek exam alot sooner than planned

Clarekaye
Clarekaye Trusted RegularRegistered Posts: 307
I was hoping to do my AP1 exam close to Christmas so if i passed I could just chill out for the week, called the centre and the only definite space they have is next saturday......I am totally freeeeeking out.

I did some of the questions in the Osbourne books and there are two things I keep forgetting/getting the wrong way round.

They teach you DEAD CLIC so I am thinking right is an expense account....so I check the answers and no the bank goes on the debit (as you credit the bank) so why do they teach you Debit Expenses to increase the account, even on the Balance sheet its a debit?

Comments

  • Clarekaye
    Clarekaye Trusted Regular Registered Posts: 307
    Also sorry where do you get your mock exams for AP1 from? I have a few through Eagle that I have done, I looked at the FRA unit 5 on AAT as thats what they said to look at but I am not sure if thats AP 2 or 1?
  • uknitty
    uknitty Experienced Mentor Registered Posts: 591
    Hi there, I'm not quite sure I understand your quesiton properly ! I prefer to use PEARLS for my debits and credits, never really used DEAD CLIC

    To remember your debits and credits

    DEBITS

    Purchases
    Expenses
    Assets

    CREDITS

    Revenue
    Liabilities
    Sales

    You debit the expense acount when you buy something because you are increasing the total amount that you have spent on expenses.

    You credit your bank when you buy something because you are decreasing the bank balance.

    If you put money in your bank you would debit it because you have increased the money in your bank,

    If you sell something you credit the sales account because you have decrased your stock.

    To be honest I am not a fan of the "increasing/decreasing" analogy because it always confused the heck out of me. I find PEARLS much much easier to remember.

    Whichever you chose to use I would suggest the first thing that you do when you go in to your exam is write out on a piece of paper which are your debits and which are your credits, and keep cross referencing back to it as a check each time you post everything in your exam. Should only take out a minute or 2 to write either PEARLS or DEAD CLIC on a piece of paper, but having something in writing to refer back to helped stop me from making silly mistakes under the pressure of an exam situation.

    Hope that helps :)
  • Jo Clark
    Jo Clark Font Of All Knowledge Registered Posts: 2,525
    Hello

    Hope uknitty does not mind me amending her post...
    uknitty wrote: »
    I prefer to use PEARLS for my debits and credits, never really used DEAD CLIC

    To remember your debits and credits

    DEBITS

    Purchases
    Expenses
    Assets

    CREDITS

    Revenue
    Liabilities
    Expenses

    I think the Expenses under Credit should read Sales.

    I also use PEARLS as well as DEAD CLIC.

    Hope you find this useful in preparation for your CBA.

    Good luck.


    JC
    ~ An investment in knowledge always pays the best interest ~
    Benjamin Franklin
  • uknitty
    uknitty Experienced Mentor Registered Posts: 591
    Yup it should be Sales . Sorry - I'm so distracted this evening ! I'll edit the original post :D
  • anisurrahman
    anisurrahman Well-Known Registered Posts: 130
    Hi Clare

    I have attached a T-account poster (i.e. Debit, Credit reference etc..) for your quick reference - hope this will help.

    Good Luck for your exam :)

    Ronnie
  • Clarekaye
    Clarekaye Trusted Regular Registered Posts: 307
    Thank you guys,

    So..... The bank being on the debit side of the expense account is because you have spent that money on expenses, you dont need an invoice on the debit side and the payment on the credit side?
  • uknitty
    uknitty Experienced Mentor Registered Posts: 591
    The double entry for payment of an expenses is

    DR Expenses
    CR Bank

    I think maybe where you are getting consfused is due to the way the text book is presenting it. Are you looking at the expense account and it reads "Bank" on the Debit side of the expense account?

    If so, what this is telling you is an instruction as to where to find the corresponding credit entry (i.e. look in the bank account for the opposite transaction)

    If you look on the bank account it will say "Expenses" for the same reason. - it is just a way of noting the double entry accounts so they reference each other.
  • Clarekaye
    Clarekaye Trusted Regular Registered Posts: 307
    Its a mock question, about preparing the expense account for the year end.
    I put the bank on credit side.
    I think its just me being thick sorry.
  • uknitty
    uknitty Experienced Mentor Registered Posts: 591
    That is right. The bank is on the credit side when you are making purchase.
  • Clarekaye
    Clarekaye Trusted Regular Registered Posts: 307
    The answers in the back say bank on the debit.
    Oh my I am even more confused.
  • uknitty
    uknitty Experienced Mentor Registered Posts: 591
    The double entry for payment of an expense is Debit the expenses account and Credit the bank account

    I'm a little bit miffed as to what you mean about the book has the "bank on the debit side of the expense account?"

    Do you mean when you look at the T account the entry in the Expense Account is on the debit side, but it reads "Bank"?
  • Clarekaye
    Clarekaye Trusted Regular Registered Posts: 307
    correct.
    The balance b/d (as its a accrual) and the transfer to the P&L and the Balance c/d are on the credit side and the only thing on the debit is the bank.
  • uknitty
    uknitty Experienced Mentor Registered Posts: 591
    I still think what is happening here is that the memos in the expense account are just telling you were the opposite side of the transaction is.

    When it reads "bank" on the debit side of the expense account, it doesn't mean that the bank has been debited, it is telling you that the opposite credit to the expense can be found in the bank account.

    Confusing I know.
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