FRA Short Test 1 (oh oh falling at first hurdle! ;) )

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:31AM in AAT student discussion
Hi Everyone,

I did my Foundation exam in December which fingers crossed went well. I am 3 chapters into Intermediate and have got stuck on the Short Test 1, part 2...

It lists balances and just asks me to draw up a Trial Balance - not had a problem with this before...but one of the balances is for 'net profit' which I've not done anything on yet!

Has anyone done this test who can shed any light? I called my tutor but he told me to put the net profit figure on the credit side of Trial Balance and that the balancing figure should be £59190. Now I cannot find that figure anywhere!!!!

Cheers chaps, and good luck with the results next month!

Lucy xxx

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FRA Short Test 1 (oh oh falling at first hurdle! ;) )

    NOT SURE IF NET PROFIT MIGHT BE A CARRIED FORWARD OR NOT??
    OR IT MIGHT BE THE PROFIT IT WILL COME OUT AT GIVE IT A TRY WITHOUT IT FIRST...

    LET ME KNOW
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FRA Short Test 1 (oh oh falling at first hurdle! ;) )

    Im afraid with the information you've provided, I dont think youre question can be answered.

    One thing that is very odd, is that you have a trial balance with "nett profit" in it. A trial balance is simply a listing of the accounts at a point in time and that wont include a net profit until youre drawing up the final accounts. There is a "cumulative profit" account where all the previous period profits are stored which is usually called either of the following:

    retained profit
    profit and loss account (confusing-same as statement)

    Perhaps you mean that?

    OR

    You mean youre drawing up an extended trial balance. When you draw up an extended trial balance you are completing the final accounts and entering the profit. The profit is the balance on the P&L accounts - Sales - Cost of Sales - Expenses, assuming a profit has been made this is a debit entry. The credit entry is made to retained profits (as discussed in the first paragraph)

    Sorry to waffle but like i say would need more info..
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FRA Short Test 1 (oh oh falling at first hurdle! ;) )

    Hi, thanks for trying to help.

    Sorry for being so confusing! I should have mentioned that this is a test specific to the Premier Training course. Just to see if I'm going mad or what, I'll type down the whole question and see what you think....

    The following balances remained in the books for N Hughes, a sole trader at 31 Oct 2004.

    Trade Creditors £3153
    Stock, 31 Oct 2004 £3083
    Wages owing £764
    Premises £35300
    Cash £462
    Trade Debtors £5117
    Furniture & Fittings £4135
    Vehicles £10030
    Plant & Machinery £18300
    Bank overdraft £2545
    Insurance paid in advance £95
    5 year loan from Linx Finance Ltd £7500
    Drawings £11600
    Net profit for year ended 31 Oct 2004 £14970
    Capital ?

    a. Explain the meaning of the words 'as at' on a Trial Balance heading
    b. Prepare the Trial Balance for N Hughes using the balances listed above and thus calculate his capital at the balance sheet date. Pay particular attention to layout and presentation.

    Now the confusing thing is that i'm told to do this question after chapters 1-3 of the Osbourne book (which are just refreshers of Foundation) so I'd not even begun to read about Extended Trial Balance at this stage.

    Do you think they do mean to draw out an ETB and instead of calculating the net profit, I have to work backwards to find the capital figure instead??

    Thanks again!
    Lucy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FRA Short Test 1 (oh oh falling at first hurdle! ;) )

    Capital can be worked from what you have there - I think you might have mis read the question, and check the year of the of the accounts and the year the profit was made - i usually do this.. otherwise they are being nice and telling you the profit - hope this helps i am sure lincs will do it for you and e mail it
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FRA Short Test 1 (oh oh falling at first hurdle! ;) )

    Ok try this link:


    tb01.bmp
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FRA Short Test 1 (oh oh falling at first hurdle! ;) )

    Hi Lucy.

    In answer to your question a)

    Your balances are constantly changing, so when you draw up your Trial Balance it is a 'snapshot' of that moment. Hence you say 'as at'.

    Hope this makes sense.

    Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:FRA Short Test 1 (oh oh falling at first hurdle! ;) )

    Thanks so so much for this!

    This is the problem with home study -when you get to a bit that is confusing, there is no quick way to solve it.

    So, firstly the 'net profit' appearing in a Trial Balance threw me as I've never seen that before.

    But the other thing was the 'wages owing' - I had assumed this to be 'wages owed out', ie an expense/debit, when apparently it means 'wages owed in', an income/credit. I am no good at anything ambiguous!!

    Anyway, that test is all sorted and done now. On with the study.

    Thanks again, I really appreciate all your help :D

    Cheers
    Lucy x

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