level 3 - Prepare final accounts for sole traders and partnerships - Help please!

Hello Everyone,

I just wanted to ask I'm still a little un sure about the statement of financial position (task 1.5), What I wanted to ask so far I've been using sample one on task 1.5, the only thing i understand so far Is the non- current asset, but i usually just look for *something* at cost. but the rest I'm struggling a little with. I do know current asset requires - Trade Receivables but I don't know what figure I'm looking at and same for trade payable. It involves the purchases/sales in some way but I'm not sure what else.


Hopefully someone can share there knowledge with me.

Comments

  • 04dbaines
    04dbaines Registered Posts: 1
    Hello Sorry I cannot relate to the questions/tasks you have specified but I can give you some help/hints/tips. The non current asset at the top of the SFP will require you to deduct the accum depreciation on the cost of the asset. For example Motor Vehicle Cost - Accum depreciation = NBV.

    The current asset column will need to be in order of liquidity. Order of liquidity is the presentation of assets in the balance sheet in the order of the amount of time it would usually take to convert them into cash. If you put the inventory at the top and bank cash at the bottom of the current assets the other inbetween you will not have to worry about the order. Other current assets will include prepayments and trade receivables. In the exam you will be given a trial balance which will include the figures required for all of the above.

    For current liabilities you will have to include VAT Payables Accruals. Be careful remember if the bank is a credit balance this will mean it is a liability not an asset.

    Trade payables and trade receivable figures are given in the trial balance. Do not use any of the P&L figures in the SOFP as this will be incorrect. Sales figures will go at the top of the P&L and purchases will be included in the cost of sales at the top of the P&L also.

    Try and label all of the figures that relate to the SOFP and put them all in the correct place on the statement.

    Remember current assets minus current liabilities = Net current assets/liabilities if the liabilities outweigh the assets.

    Please ask any further questions if I can be of anymore help.

    Many Thanks

    Dan
  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
    Non-current assets should appear as Cost (Debit balance) minus Accumulated depreciation (credit balance) = Carrying value.

    Current assets (Debit balances)

    The Order of liquidity is VERY. important - to help you get it right think "Sit Down Pretty Aged Black Cat" where:

    Sit (Stock = inventory)
    Down (Debtor =Trade receivables)
    Pretty (Prepayments)
    Aged (Accrued income)
    Black (Bank)
    Cat (Cash)

    Trade receivables is the Sales ledger control account figure less any allowance for doubtful debt (a credit balance)

    Current liabilities (all credit balances)

    Trade payables (Purchase ledger control account)
    Accrued expense
    Prepaid income
    Bank overdraft
    VAT Liability (VAT owed to HMRC)

    Current assets minus Current liabilities =Net current assets

    Non-current liabilities (Credit balances)
    Bank loans

    Net assets = Non-current assets plus Net-current assets minus Non-current liabilities

    Capital section (Financed by)

    Capital

    Plus
    Profit from Statement of profit or loss
    Or Minus
    Loss from Statement of profit or loss
    Less
    Drawings

    Does this help you?


  • welshwizard
    welshwizard Registered Posts: 465 Dedicated contributor 🦉
    Of course, the Statement of financial position for partnerships changes slightly in the bottom section (the 'Financed by' section)

    Capital Partner A Partner B Partner C Total
    Current Partner A Partner B Partner C Total

    Remember the Current accounts (just bigger t-accounts) hold:

    Debits:
    Drawings
    Interest on drawings
    Share of losses

    Credits:
    Salaries
    Interest on capital
    Interest on loans made by partners
    Share of profits
  • AccountsFury5
    AccountsFury5 Registered Posts: 6
    edited June 2015
    Thanks so much for sharing all this! I did fail my exam on Wednesday but i will try to resit and revise everything i can. I got exceeded in question 1 and 2 then i fell below 3 and 4 and 5 was a met. so I will just try to revise my weak points. :)
  • RosieCarlisle
    RosieCarlisle Registered Posts: 60
    edited June 2015
    Good luck for next time! Well done with exceeding in sections 1 and 2 though - section 2 is where most people struggle. I took my Final Accounts exam on Monday and exceeded in all except section 2 (where I 'met') - it's a tricky one! :)
  • Donna Curling
    Donna Curling Registered Posts: 59 Regular contributor ⭐
    thanks for the details welshwizard had never heard of the Sit Down Pretty Aged Black Cat before
    Donna Curling - AAT Tutor
    www.completebookkeeping.co.uk
  • JakeR
    JakeR Registered Posts: 10

    Non-current assets should appear as Cost (Debit balance) minus Accumulated depreciation (credit balance) = Carrying value.

    Current assets (Debit balances)

    The Order of liquidity is VERY. important - to help you get it right think "Sit Down Pretty Aged Black Cat" where:

    Sit (Stock = inventory)
    Down (Debtor =Trade receivables)
    Pretty (Prepayments)
    Aged (Accrued income)
    Black (Bank)
    Cat (Cash)

    Trade receivables is the Sales ledger control account figure less any allowance for doubtful debt (a credit balance)

    Current liabilities (all credit balances)

    Trade payables (Purchase ledger control account)
    Accrued expense
    Prepaid income
    Bank overdraft
    VAT Liability (VAT owed to HMRC)

    Current assets minus Current liabilities =Net current assets

    Non-current liabilities (Credit balances)
    Bank loans

    Net assets = Non-current assets plus Net-current assets minus Non-current liabilities

    Capital section (Financed by)

    Capital

    Plus
    Profit from Statement of profit or loss
    Or Minus
    Loss from Statement of profit or loss
    Less
    Drawings

    Does this help you?


    That is the best way of remebring that i have heard :+1:
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