Nominal Code Question

Hi all,

I'm doing a mock exam in my Kaplan book for the computerised bookkeeping L2.

The question asks me to post a bank payment for a printer bought, but I am unsure which nominal code would be correct.

In sage the available nominal are:

- 0030 Office Equipment
- 0031 Office Equipment Depreciation, and
- 8004 Office Equipment Depreciation

I do not want to post it to either of the 0030 or 0031 codes as these are balance sheet codes to do with depreciation, and so is the 8004 code.

My first thought would be to create a new nominal code in the overheads area of the chart of accounts, but my tutor says to post it to fixtures and fittings code, however, that doesn't exist either! (I wouldn't have thought it would go into a Fixtures and Fittings code anyway).

Can someone help me out here please? I need to know the way AAT will want it if it comes up in the exam.

Thanks for all your help!

M :)

Comments

  • AGI2015AGI2015 Posts: 45Registered
    edited March 2015
    Hi @markrobertshaw I will use 0030 :)
  • markrobertshawmarkrobertshaw Posts: 3Registered
    Hi @[email protected]

    Thanks for your comment, But wouldn't this just sit in the balance sheet? Shouldn't it be posted to the profit and loss?

    M
  • AGI2015AGI2015 Posts: 45Registered
    edited March 2015
    if so ,your tutor has advised you to create new a nominal code , go for it:)
  • markrobertshawmarkrobertshaw Posts: 3Registered
    My tutor has advised me to put it into fixtures and fittings, but you wouldn't put a printer into fixtures and fittings! Plus the fact that all the fixtures and fittings codes are the same as the office equipment - to do with depreciation.

    Thanks for your help, but I need to know the correct way that AAT want me to do it!
  • CeeJaySixCeeJaySix Well-Known Posts: 645Registered
    They are not all to do with depreciation.

    It is a non-current asset as it has a useful economic life of >1yr, so it should not just be expensed to the P&L. Depreciation is the method by which non-current assets are written off to the P&L over time.

    The correct entry is to dr 0030, cr bank.

    So you understand how this works, you would then:

    1. work out the useful economic life of the asset - ie. how long before it needs replacing. Lets say three years.

    2. work out the depreciation charge for the year - cost of the asset divided by the useful economic life

    3. post this charge by dr 8004, cr 0031

    4. in the accounts, the balances of 0030 and 0031 would net off each other to give the carrying value of office equipment for the SoFP.
    AGI2015
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