AP1 - Extended Trial Balance help!

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ykwong1978
ykwong1978 Registered Posts: 48 Regular contributor ⭐
in AAT Level 3 (Level 6 in Scotland)
Hi all,

I am still having trouble with whether the accounts go to the Profit & Loss or the Balance sheet and was (hoping) if anyone has any techniques or advice that could help me me remember.

The accounts that I seem to get mixed up in are:-

1. Depreciation Expense Account
2. Accumulated Depreciation Account

3. Allowance for Doubtful Debt Adjustment
4. Allowance for Doubtful Debt

5. VAT

I have included VAT as it is not mentioned in my study book whether this belongs to P&L or the balance sheet.

Many thanks

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  • crispy
    crispy Registered Posts: 466 Dedicated contributor 🦉
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    Hello,

    Depreciation expense Account - the clue is in the name EXPENSE, so therefore is a P&L Item.
    Accum. Depreciation Account - balance sheet item

    Journal for Depreciation would look like:
    Dr Depreciation Expense A/c (P&L)
    Cr Accum. Depreciation A/c (BS)

    If you had an increase in a Doubtful Debt provison then:
    Dr Bad & Doubtful Debts EXPENSE A/c (P&L)
    Cr Provision for Doubtful Debts (BS)

    If you had a reduction in Doubtful Debts then just reverse the above.

    VAT will always be a Balance Sheet item, it would more normally be a Credit balance (money owed to HMRC) shown as a currently liability - however it could also be a Debit balnce (due a refund from HMRC- current asset)

    This may or may not of helped :)

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