Question on FRA

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Can anyone please tell me, is a trading and profit and loss appropriation account just an appropriation account :? And a trading and profit and loss account just a P & L Account. Sounds like silly question but its thrown me a bit!

Any help is greatly appreciated! Cheers

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Question on FRA

    Hi

    WE must be mad I have just done 6 hours revision!
    Yeah an appropriation act is just that it follows on from the trading and P/L act in the acts of partnerships.

    Hope that helps.

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Question on FRA

    Basically you're correct :)

    The trading account is the Sales - Cost of Sales = Gross Profit bit. Manufacturing companies will have a manufacturing account instead but that's not really covered in the syllabus.

    The P&L is this plus expenses/revenues giving the net profit. Calling it a trading and profit and loss account is technically more accurate but a bit long winded. When you come to do DFS and work with the IASs it'll be called an income statement.

    The appropriation account is for divvying up the profits when you're dealing with a partnership. A trading and profit and loss appropriation account would be the whole lot - unless a question gave you figures for profit and asked you to do an appropriation account you'd have to do the rest to work out the profit or loss to be appropriated anyway.

    Does that help?

    Chris

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Question on FRA

    Thanks, I have been through my books and couldn't find out for sure so thought best ask. I have a weekend of study as I didn't get any done during the week and the exams are so close :? oh well never mind, hopefully it will pay off in December. Thanks again!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Question on FRA

    Thanks Chris, I have struggled with the last couple of chapters on partnerships and incomplete records. Your explanation makes it sound so simple! The help is really appreciated.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Question on FRA

    Sorry another question. I have to prepare journals for a partner retiring and an admission of another partner on the same day, would it be best to deal with the retirement then the admission or would you do it all together - ie. remove the goodwill after dealing with the retirement and the re-admitting the goodwill and removing it again for the admission of the new partner)- hopefully this makes sense!

    Thanks again for any assistance, it is really appreciated.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Question on FRA

    It's been a while since I did partnership accounts but my feeling is that it would be best to do these separately. You've less chance of making a mistake doing two relatively straightforward tasks than one complicated one.

    You don't need to apologise for asking questions, it's what this place is for. Just don't ask me about incomplete records, I was pretty useless at those.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Question on FRA

    I was stuck on exactly the same thing, so just wanted to say thanks for explaining about the "Trading" part. This forum is brilliant! :)

Categories

Privacy Policy