Advanced Bookkeeping

Hi,

i'm hoping someone can help me, i'm really struggling to get my head around this exam and in need of some help.

Task 3 which I've attached along with the answers i'm unsure how they got to any of these would someone please be able to explain?

Thanks
Sophie

Comments

  • dumutrobadumutroba AAT Student, AATQB Posts: 226
    Hi

    The prepayment was made at end of last year by Dr rental income (reducing capital) and Cr prepaid income (increasing liability)
    At the start of the new accounting period we need to reverse the entry, ie we are doing the opposite entries, Cr income acc (increase capital), Dr prepaid income (reduce liability)
    The accounting equation is as follows
    Assets =liabilities + capital
    None = decrease prepaid Income+increase revenue
    0 = - 2340+2340
    AAT Level 2. 2018
    AAT Level 3. 2018
    AAT Level 4.
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  • sophie_612sophie_612 LondonRegistered Posts: 43
    thank you for answering and explaining :)
  • dumutrobadumutroba AAT Student, AATQB Posts: 226
    edited October 2018
    The second task is purely knowledge of booking entries
    Accrued expenses are accounted for when they fall due not when payments are made and received and since only 1/3 of the expense bill is relevant to the accounting period ending 31march 20x7 we need to accrue for that. The rest goes in the next accounting year as normal
    See attachment for the bookkeeping
    AAT Level 2. 2018
    AAT Level 3. 2018
    AAT Level 4.
    Xero Certified Advisor
  • sophie_612sophie_612 LondonRegistered Posts: 43
    Thank you, that's so helpful i seem to be really struggling wit this one for some reason especially when it comes to writing up the ledgers with the prepaid and accrued etc and also the extended trial balance knowing what goes where.

    Do you have any tips?
  • dumutrobadumutroba AAT Student, AATQB Posts: 226
    edited October 2018
    It took me ages to understand the whole concept! It will come to you as well, just keep practicing and repeat the accruals and prepayments definitions, what they are, assets or liability, etc
    AAT Level 2. 2018
    AAT Level 3. 2018
    AAT Level 4.
    Xero Certified Advisor
  • sophie_612sophie_612 LondonRegistered Posts: 43
    I really appreciate your help.
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