AP2

SamadM95
SamadM95 Just JoinedRegistered Posts: 1
I need some help on AP2 especially incomplete errors and mark up/margins, I am generally ok wit the AAT practice exams but very bad with green light, the layout on green light is very different. Does anyone know any revision guides for AP2 to simplify it.

Comments

  • welshwizard
    welshwizard Trusted Regular South WalesRegistered Posts: 465
    You say you're generally OK with the practice exams - yet almost half of it is incomplete records (which is what I assume you mean when you say 'incomplete errors').

    For me the most worrying thing is that you're assuming that because you're OK with the practice assessments, you understand it all and are happy that you can apply the 'knowledge' and skills. remember, assessment questions may not appear as you expect them to and, therefore, you need to understand the topics completely rather than just learn to the assessment format. This is a common error and I am always telling my students not to rely on assessment 'formats' as you will fail if you're confronted with something totally unlike anything you're expecting.

    Incomplete records require you to do a number of things in the assessment:
    1. Reconstruct control accounts from given information
    2. Establish opening figures using the accounting equation
    3. Establish closing figures using the accounting equation and information from control accounts.
    4. Establish sales, cost of sales, purchases, opening & closing inventory using mark-up and margin.
    1, 2 and 3 are all Basic Accounting 1 & 2 and AP1 skills that, by now, you should be able to do standing on your head whilst 4 needs a very simple approach using a basic model:


    Mark-up Model
    £
    %

    Margin Model
    £
    %


    Sales
    120
    120

    Sales
    120
    100


    Cost of sales
    100
    100

    Cost of sales
    100
    83.33


    Profit
    20
    20

    Profit
    20
    16.67



    Note that here, whilst the £'s stay the same, the % figure changes as the 100% moves position.This is the key to understanding the mark-up and margin problems. Once you understand that the cost of sales can be a % of the sales figures (margin) then you can work out the required figure. Let's look at an example:

    We are told that Opening inventory is £100, Purchases is £200 and Sales were £500. We are also told that there is a 50% Profit Margin. Now, from this we can calculate the closing inventory


    Opening inventory
    100 (given)


    Purchases
    200 (given)


    Closing inventory
    -50


    Cost of sales
    250
    (from Margin Model)




    Margin
    £
    %


    Sales
    500 (given)
    100


    Cost of sales
    250
    50


    Profit
    250
    50 (given)


  • j1994
    j1994 Registered Posts: 106
    How to calculate share of profit for distrubution for one person?
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