What tips do you have for Level 3: FSTP?

Registered Posts: 197 Epic contributor 🐘
edited November 2014
We're creating a Level 3 guide full of tips, revision tools and assessment techniques for each unit of Level 3, similar to our Level 4 guide Making the Grade.

What makes these guides different from others is that you help us to make them. All the advice is sourced from our online community and AAT members, so students know it's practical advice that has been used successfully before.

We'd like to know, what tips do you have for Level 3: Prepare final accounts for sole traders and partnerships?
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• Registered Posts: 218
I found and used this old thread for my study recently http://forums.aat.org.uk/discussion/34494/accounts-preparation-2-tip-sheet

Aside from that I found this a very short module which overlaps a lot with the extended trial balance content of AP1. Again use everything off MyAAT, practice test, questions, exam feedback document and the webinar.

Make sure you know which side the balance comes down on for control accounts, as well as the other transactions and bank payments. A VAT account may be included for completion so brush up on this, my text book didn't cover this. I noticed questions which tried to trip you up by saying that general expenses for example, were paid for with a VAT amount but the whole amount was entered into the General Expenses account rather than the VAT free amount. This meant there was no entry to the VAT account (I don't know why).

Brushing up on general maths is helpful, both percentages for Mark ups and margins and for the equations - costs of goods and increase in capital. Make sure you know how to change the equation (or is it a formula?) to calculate the other figures, eg there may be a question to work out the purchases made when usually you need to work out costs of goods sold -

COGS = opening inventory + purchases - closing inventory

Purchases = closing inventory + COGS - opening inventory

The Statement of Financial position question is good as the final assets minus liabilities figure is the same as the total of the capital and current accounts of the partners. Remember that assets are debits for the assets section and liabilities are credits. Also look out for allowance for doubtful debts. This may need to be adjusted for in the receivables box. This may also be an inclusion in the income statement if the adjustment is a reduction in the allowance. On the income statement question if there is an Add after gross profit this will be something in the Credits column of the TB.

The partnership questions aren't too bad even they seem more complex at first. Practice really helps simplify the goodwill and appropriation questions. Again percentages are important. When asked how the goodwill change(in profit share or new/retiring partner) affects a partner write out the account fully.

And as all the exams, read carefully, take your time and check over all the answers before you hit finish.
• Registered Posts: 30
The best tip to remember what side the balance brought down (B/D) goes down is on is
Purchase Ledger Control Account are your creditors, they also have a credit balance in the extended trial balance so they will always have a balance brought down (B/D) on the credit side.

The Sales Ledger Control Account is a debit on the extended trial balance and it is also known as your debtors, so that will always have a balance brought down on the debit side.

Another common mistake is the Goodwill account remembering what side the old and new goes on
I remember it this way
"ON" (Old on the left side New on the right side) for Goodwill and "NO" (New on the left side and Old on the right side) for the Capital account.

Also remember on the final question (5) remember to take off the allowance for doubtful debts from the sales receivables this is a common mistake and can easily lose you marks as it won't balance.

On question 3 ALWAYS remember to put a minus sign by the closing inventory NEVER add it.

Kind Regards