Current, Goodwill and Capital Accounts - help needed!

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi there

Just completing past papers for the FRA exam which i will be re sitting next week, struggling remembering what goes were in the current, capital and goodwill accounts, has anyone got any pointers or a breakdown?it would be very much appreciated.

Thanks in advance :)

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Current, Goodwill and Capital Accounts - help needed!

    No replies :cry:

    Please can somebody help?! :)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Current, Goodwill and Capital Accounts - help needed!

    Hi

    The Capital account has the amount of money invested into the company by the partners (as a CR), this account only really changes if more money is introduced, or when goodwill is accounted for, or when a partner retires, (in this case the amount of capital is taken out by means of a Debit and credited to the current account).

    The current accounts have the everyday transactions entered, such as salaries (CR), interest on capital (CR), profit share (CR), drawings (DR)and interest on drawings (DR).

    The goodwill account is written off virtually the moment it is entered onto the account. The amount of goodwill is decided, then split between the partners as per their agreements and the opposite entry entered onto the capital account.

    Hope this is of some use to you, and good luck with the exam.

    Tracy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Current, Goodwill and Capital Accounts - help needed!

    Hi Tracy

    Thank you very much, going to print that off now and have a think through it!

    Thanks again

    Kelly :)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Current, Goodwill and Capital Accounts - help needed!

    CURRENT ACCOUNT IS A LIABILITY, ASSET OR CAPITAL ????

    :oops:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Current, Goodwill and Capital Accounts - help needed!

    Hi,

    I put the Current Accounts, I assumed it was the partners and not the companies, down as Capital as normally it is used to balance off the top half i.e. the Current Account would be under the 'Financed By' section.

    Hope this helps
    Debs x :)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Current, Goodwill and Capital Accounts - help needed!

    Tks a lot !!!!

    I did the same.... I put as capital.... :D

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