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AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

A LEVEL ACCOUNTING (LAYOUTS)


S. No.

LIST OF TOPICS

PAGES

Depreciation

Non profit organisations (Club accounts)

3-6

Partnership accounts

7 - 11

Limited Companies

12 - 14

Manufacturing accounts

15 - 17

Statement of cash flows

18 - 20

Budgeting

21 - 24

Standard costing

25 - 28

Job order costing

29

10

Absorption costing

30

11

Marginal costing

KEY FORMULAE

31 - 35

36 - 45

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


DEPRECIATION
Non - Current Asset Account (at cost)
Date

Details

Date
2014
Dec 31

2014
Jan 1

Balance b/d

xxx

July1

Bank (additions)

xxx
xxx

2015
Jan 1

Balance b/d

xxx

Details

Balance c/d

xxx
xxx

2015
Dec 31

Disposal account

xxx

Balance c/d

xxx
xxx

xxx
2016
Jan 1

Balance b/d

xxx
Provision for Depreciation Account

Date
2014
Dec 31

Details
Balance c/d

Date

xxx

2014
Jan 1
Dec 31

Details

Balance b/d

xxx

Income statement

xxx

xxx
2015
Dec 31

Disposal account

xxx

Balance c/d

xxx
xxx

xxx
2015
Jan 1
Dec 31
2016
Jan 1

Balance b/d

xxx

Income statement

xxx
xxx

Balance b/d

xxx

Disposal Account (at cost)


Date
2015
Dec 31

Details
Non current asset account

*Income statement
disposal)

(gain

Date

xxx

2015
Dec 31

on
xxx

Details

Accumulated depreciation

xxx

Bank (disposal price)

xxx

*Income statement (loss on


disposal)

xxx

xxx

xxx

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


NON PROFIT ORGANISATIONS / CLUB ACCOUNTS
CALCULATION OF ACCUMULATED FUND (OPENING)
$

Assets:
Club Premises
Equipment
Inventory of refreshments
Subscription in arrears (owings)
Other receivables
Cash in hand (Cash float)
Cash at Bank
Bank Deposit account
Total assets
(-) Liabilities:
Owing to suppliers for refreshments (trade payables)
Subscription in advance (prepaid)
Other payables
Loan from members
Total liabilities
Accumulated fund at beginning of the year

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
(xxx)
xxx

REFRESHMENT SHOP / SNACK BAR


Income statement for the year ended_______________________
$
Sale of Refreshments / Snack bar Sales
(-) Cost of refreshments sold:
Opening inventory of refreshments
xxx
Purchases (Cost of refreshments + closing owing opening
owing)

$
xxx

xxx

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


(-) Closing inventory for refreshments
Cost of refreshments
Gross Profit
(-) Refreshment shop wages
Rent for shop
Electricity for shop
Depreciation on shop equipment

(xxx)
(xxx)
xxx
xxx
xxx
xxx
xxx
xxx
xxx

Profit on refreshment shop / snack bar sales


SUBSCRIPTION ACCOUNT
2016
1 Jan Owings b/d (2015)
31 Dec Refund of overpaid subscriptions
Income and expenditure account

$
xxx
xxx

(Balancing figure)

xxx
xxx

Prepaid c/d (2017)

xxx
xxx
xxx

Owings b/d

2016
1 Jan Prepaid b/d
31 Dec Subscription received for:

$
xxx
xxx

Bank 2015 (Arrears)


Bank 2016 (Current year)
Bank 2017 (Advance)
Subscription w/off (bad debts)
Owings c/d (2016)

xxx
xxx
xxx
xxx
xxx
xxx
xxx

Prepaid b/d

Income & Expenditure account for the year ended _______________


$

Incomes:
Annual subscriptions
Life subscriptions

xxx

Profit on refreshment shop / Snack bar


Sale of tickets / collection at matches
Fees
Interest on deposit accounts

xxx
xxx
xxx

Donations / Gifts / Grants / legacy (revenue receipt)


Profit on disposal of non current assets

xxx
xxx
xxx

(-) Expenditures:
Wages
Repairs to club equipment
Heating and lighting
Rent
Secretarys expenses
General expenses

xxx
xxx
xxx
xxx
xxx
xxx

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


Subscription written off (bad debts)
Loss on disposal of non current asset
Depreciation on non current assets
Surplus / (Deficit)

xxx
xxx
xxx

xxx
xxx

Statement of Financial Position as at __________________


Non Current Assets:
Club house
Equipment

Cost
$
xxx
xxx
xxx

Current Assets:
Inventory of refreshments
Subscriptions owing
Other receivables
Bank current account
Bank deposit account
Cash
(-) Current Liabilities:
Trade payables
Prepaid Subscriptions
Other payables
Bank overdraft

Depn
$
xxx
xxx
xxx

NBV
$
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
(xxx)

Net Current Assets


(-) Long term liabilities:
Bank loan
Loan from members
Net assets
Financed by:
Accumulated Fund (at 1 January 2016)
(+) /(-) Surplus / (Deficit)

xxx
xxx
xxx
xxx

(xxx)
xxx
xxx
xxx

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


(+) Life subscription fund
(+) Donations / Gifts / Grants / Legacy
Accumulated Fund at 31 December 2016
PARTNERSHIP - CHANGES

xxx
xxx
xxx

Profit & Loss Appropriation account for the year ended ____________________
$

Net Profit

xxx

(+) Interest on drawings:


A

xxx

xxx

xxx

xxx

xxx

xxx

(-) Interest on capitals:

(-) Partners salaries:

Distributable profits
(-) Profit shared:
A

xxx

xxx

xxx
xxx
(xxx)
xxx
(xxx)
xxx

(xxx)
-

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


PARTNERSHIP ADMISSION
Example: Lets suppose A and B are existing partners and C has joined the firm.
Revaluation Account
$
xx
xx
xx
xx
xx

Non Current Assets decreases


Inventory decreases
Bad debts
Increase in provision for d/d
Trade payables increases
*Gain on revaluation:

$
xx
xx
xx
xx

Non Current Assets increases


Inventory increases
Decrease in provision for d/d
Trade payables decreases
*Loss on revaluation:

Capital accounts A

xx

Capital accounts A

xx

xx

xx

xx
xxx

xx
xxx

*Note: It will be either gain or loss on revaluation


Partners Current Account
A
*Balance b/d
Interest on Drawings
Drawings - Cash
- Inventory
*Share of Losses
*Balance c/d
Balance b/d

xx
xx
xx
xx
xx
xx
xx
xx

xx
xx
xx
xx
xx
xx
xx
xx

xx
xx
xx
xx
xx
xx
xx
xx

A
*Balance b/d
Interest on Capitals
Interest on Partners Loans
Partners Salaries
*Share of Profits
*Balance c/d
Balance b/d

xx
xx
xx
xx
xx
xx
xx
xx

xx
xx
xx
xx
xx
xx
xx
xx

xx
xx
xx
xx
xx
xx
xx
xx

$
xx

$
xx

$
xx

xx

Note:
* Current account balances may be either credit or debit.
* Distribution would be either profits or losses.
* Partners may have either debit or credit balances.
Partners Capital Account

Goodwill written off


(New Ratios)
*Loss on Revaluation

$
Balance b/d

xx

xx

xx
Bank ( C Investment)

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


(old Ratios)
Revaluation written
off (New Ratios)
Balance c/d

xx

xx

xx
xx
xx

xx
xx
xx

xx
xx
xx

*Gain on Revaluation (old


Ratios)
Goodwill (old Ratios)
Balance b/d

xx
xx
xx
xx

xx
xx
xx
xx

xx
xx

PARTNERSHIP RETIREMENT
Example: Lets suppose A, B and C are existing partners and A has decided to retire from
the Partnership.
Current Accounts

Balance b/d

A
$
xx

B
$
xx

C
$
xx

Balance b/d

A
$
xx

B
$
xx

C
$
xx

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


Interest on Drawings
Drawings - Cash
- Inventory
* Share of Losses
* Transfer to Capital a/c
Balance c/d
Balance b/d

xx
xx
xx
xx
xx
xxx
-

xx
xx
xx
xx
xx
xxx
xx

xx
xx
xx
xx
xx
xxx
xx

Interest on Capitals
Interest on Partners Loans
Salaries
* Share of Profits
* Transfer to Capital a/c
Balance c/d

xx
xx
xx
xx
xx
xxx
xx

xx
xx
xx
xx
xx
xxx
xx

Balance b/d

A
$
xx

B
$
xx

C
$
xx

* Gain on Revaluation (old


Ratios)
Goodwill (old Ratios)

xx
xx

xx
xx

xx
xx

* Current Account balance


* Loan from A (old)
* Cash/ Bank

xx
xx
xx

xxx
-

xxx
xx

xxx
xx

Balance b/d

xx
xx
xx
xx
xx
xxx
-

Note:

Distribution would be of either Profits or Losses.

At the retirement date, A Current Account Balance would be transferred to the Capital
Account.
Capital Accounts

Goodwill written off (New


Ratios)
* Loss on Revaluation (old
Ratios)
Revaluation written off (New
Ratios)
* Current Account balance
* Loan from A (new)
* Cash/ Bank
Balance c/d

A
$

B
$

C
$

xx

xx

xx

xx

xx

xx
xx
xx
xxx

xx
xx
xxx

xx
xx
xxx

Balance b/d
Note:

Retiring partners loan would be transferred to his Capital account.

Retiring partner can also keep his investment in the form of Loan to the partnership.

Note that there would never be a balance remaining in the retiring partners Capital
Account.
PARTNERSHIP
Statement of Financial Position (Balance sheet) as at ________________
Non Current Assets:
Cost
Depn.
NBV
$
$
$
Property
xxx
xxx
xxx
Plant & equipment
xxx
xxx
xxx
Furniture & fittings
xxx
xxx
xxx
Motor Vehicles
xxx
xxx
xxx

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


Total Non Current Assets
Current Assets:
Inventory
Trade receivables
(-) Provision for doubtful debts
Other receivables
Cash
Bank

xxx

xxx

xxx

xxx
xxx
(xxx)

Current Liabilities:
Trade payables
Other payables
Bank overdraft
Net Current Assets (working capital)
Capital Employed
Non Current Liabilities:
10% Bank loans
Net assets

xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx

(xxx)
xxx
xxx
(xxx)
xxx

Financed by:
Capital accounts - A
B

xxx
xxx

Current accounts - A
xxx
B
xxx
Partnership funds
FINANCIAL STATEMENTS (LIMITED COMPANIES)

xxx
xxx
xxx

Income Statement for the year ended ____________________


$
Revenue (Sales)
(-) Cost of Sales:
Opening inventory
(+) Ordinary goods Purchased
(-) Closing inventory
Cost of sales
Gross Profit
(-) Operating Expenses:
Distribution costs
Administration costs
Profit from operations
(-) Finance costs (debenture interest)
Profit before tax
(-) Tax
Profit for the year

$
xxx

xxx
xxx
(xxx)
(xxx)
xxx
xxx
xxx

(xxx)
xxx
(xxx)
xxx
(xxx)
xxx

Statement of Retained Earnings

10

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


$
xxx
xxx
xxx
(xxx)
(xxx)
xxx

Retained earnings balance at start of year


(+) Profit for the year
(+) Transfer from other reserves
(-) Dividend paid - (Interim + unpaid from previous year)
(-)Transfer to other reserves
Retained earnings balance at end of year

OR
Statement of changes in equity
Share

Share

Revaluation

General

Retained

Details

capital

Premium

Reserve

reserve

earnings

Balances at start of year


Profit for the year
Dividends paid
Share Issue Rights issue
Share Issue Bonus issue
Revaluation of properties
Transfer to reserves
Balances at year end

$
xxx
xxx
xxx
xxx

$
xxx
xxx
(xxx)
xxx

$
xxx
(xxx)
xxx
xxx

$
xxx
(xxx)
xxx
xxx

$
xxx
xxx
(xxx)
(xxx)
(xxx)
xxx

11

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

Statement of Financial Position (Balance sheet) as at ________________


Non Current Assets:
Properties
Plant & equipment
Furniture & fittings
Motor Vehicles
Total Non Current Assets
Current Assets:
Inventory
Trade receivables
(-) Provision for doubtful debts
Other receivables
Cash & cash equivalents
Current Liabilities:
Trade payables
Other payables
Bank overdraft
Net Current Assets (working capital)
Capital Employed
Non Current Liabilities:
8% Bank loan
10% Debentures
Net assets
Equity:
Ordinary shares of $1 each
5% Non redeemable Preference shares of $1 each
Share premium
Revaluation reserve
General reserve
Retained earnings
Shareholders funds

Cost
$
xxx
xxx
xxx
xxx
xxx

Depn.
$
xxx
xxx
xxx
xxx
xxx

NBV
$
xxx
xxx
xxx
xxx
xxx

xxx
xxx
(xxx)

xxx
xxx
xxx

xxx
xxx
xxx
xxx

(xxx)
xxx
xxx
xxx
xxx

(xxx)
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

12

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

MANUFACTURING ACCOUNT
Manufacturing account for the year ended _____________________
Direct Raw Materials:
Opening inventory of raw materials
(+) Purchases of raw materials
(+) Carriage on raw materials

$
xxx
xxx
xxx

(-) Returns of raw materials

(xxx)

(-) Sale of scrap raw material


(-) Closing inventory of raw materials
Raw material consumed (used)
(+) Direct factory wages (Manufacturing wages)
(+) Direct expenses (Royalties/ Licence fee)
Prime cost

(xxx)
(xxx)

xxx
xxx
xxx
xxx

(+) Factory overheads (Indirect costs):


Factory fuel and power

xxx

Factory indirect material


Factory indirect wages
Factory rent
Factory Lighting and heating
Factory general expenses
Depreciation Factory premises
- Plant and equipment

xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
(xxx)
xxx
xxx
xxx

(+) Work-in-progress (opening inventory)


(-) Work-in-progress (closing inventory)
Cost of Production
(+) Factory profit on finished goods
Transfer value

Provision for Unrealised Profit Account


Date

Details

Date

Details

13

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


2015
Dec 31

Balance c/d

xxx

2015
Jan 1
Dec 31

Balance b/d

xxx

Income statement (increase)

xxx

xxx
2016
Dec 31

Income statement (decrease)

xxx

Balance c/d

xxx
xxx

xxx
2016
Jan 1

Balance b/d

xxx
xxx

2017
Jan 1

Balance b/d

xxx

Income Statement for the year ended ____________________


Revenue (Sales of finished goods)
(-) Sales Returns (return inwards)

$
xxx
(xxx)

$
xxx

14

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


(-) Cost of Sales:
Opening inventory of finished goods (at transfer value)
(+) Transfer value of finished goods
(+) Purchases of finished goods
(+) Carriage inwards on finished goods
(-) Purchase returns of finished goods
(-) Inventory drawings of finished goods
(-) Closing inventory of finished goods (at transfer value)
Cost of sales
Gross Profit
(-) Expenses:
Office salaries
Office expenses
Office rent and insurance
Office administration expenses
Depreciation Office machinery
- Motor vehicles
- Office premises
Trading profit
(+) Factory profit on finished goods
(-) Increase in provision for unrealised profit
Net Profit

xxx
xxx
xxx
xxx
(xxx)
(xxx)
(xxx)
(xxx)
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
(xxx)

(xxx)
xxx
xxx
xxx

STATEMENT OF CASH FLOWS


Calculation of Profit from operations (Profit before Interest and Taxation)
Backward Method (Starting up with Retained Profit)

Retained Profit (Current year) (as stated in the statement of financial position)
(-) Retained Profit b/d from previous year
(+) Debenture interest /Finance costs (Current year)
(+) Taxation (Current year)
(+) Dividend paid (Ordinary and Preference)
(+) Transfer to other reserves (Current year)
(+) Bonus issue (if charged from retained earnings)
(+) Transfer from other reserves (Current year)
Profit from operations (profit before interest and taxation)

$
xxx
(xxx)
xxx
xxx
xxx
xxx
xxx
xxx
xxx

15

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

Reconciliation of Profit from Operations to Net Cash Inflow/(Outflow) from


Operating Activities
$
Profit from operations (before Interest & Taxation)
(+) Depreciation charges on non current assets
Increase in provision for doubtful debts
Loss on disposal of non current assets
Amortization of intangible non current assets (Goodwill written off)
Impairment of non current assets
Decrease in inventory
Decrease in trade receivables
Increase in trade payables
Increase in other payables

$
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

(-) Decrease in provision for doubtful debts


Gain on disposal of non current assets
Investment income
Increase in inventory
Increase in trade receivables
Increase in other receivables
Decrease in trade payables
Decrease in other payables

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

16

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


(xxx)
xxx
(xxx)
(xxx)
xxx

(-) Interest paid during the year


(-) Taxation paid during the year
Net Cash used in/from operating activities

Statement of Cash Flows for the year ended ____________________________


$
Net cash (used in)/from operating activities (from above)
Cash flows from investing activities:
Purchase of non current assets (both tangible and intangible)
Purchase of long term investments
Proceeds from the sale of non current assets
Proceeds from the sale of long term investments
Interest received
Dividends received
Net cash (used in)/from investing activities
Cash flows from financing activities:
Proceeds from issue of share capital (including share premium amount)
Proceeds from issue of Debentures
Redemption of debentures (including premium amount)
Repayment of long term borrowings
Dividends paid during the year
Net cash (used in)/from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year

$
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

17

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

BUDGETING
Note:
If its stated that monthly production is sufficient (or holds stock) to meet the requirements of
the following month sales then the production budget is prepared in the following way.
PRODUCTION BUDGET (IN UNITS)
Budgeted sales in units
(+) Closing inventory of finished goods
(-) Opening inventory of finished goods
Production units

Jan
xxx
xxx
xxx
xxx

Feb
xxx
xxx
xxx
xxx

Mar
xxx
xxx
xxx
xxx

Note:
If its stated that monthly production is equal to the following month sales plus a certain
percentage of stock then the production budget is prepared in the following way.
PRODUCTION BUDGET (IN UNITS)
Budgeted sales in units
(+) 10% of stock of finished goods
Production units

Jan
xxx
xxx
xxx

Feb
xxx
xxx
xxx

Mar
xxx
xxx
xxx

Feb
xxx
xxx
xxx
xxx

Mar
xxx
xxx
xxx
xxx

Feb
xxx
xxx
xxx
xxx

Mar
xxx
xxx
xxx
xxx

Feb
xxx

Mar
xxx

PURCHASES BUDGET (IN UNITS)


Budgeted production
(+) Closing inventory of raw materials
(-) Opening inventory of raw materials
Purchases in units

Jan
xxx
xxx
xxx
xxx

PURCHASES BUDGET (IN VALUE)


Budgeted production in units
X Kg/ litres per unit
X price per Kg / litres ($)
Purchases of raw materials ($)

Jan
xxx
xxx
xxx
xxx

DIRECT LABOUR COST BUDGET


Budgeted production in units

Jan
xxx

18

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


X hours per unit
X wage rate per hour ($)
Direct labour cost ($)

xxx
xxx
xxx

xxx
xxx
xxx

xxx
xxx
xxx

Feb
xxx
xxx
xxx

Mar
xxx
xxx
xxx

SALES BUDGET
Jan
xxx
xxx
xxx

Budgeted sales in units


X Selling price per unit ($)
Budgeted sales ($)

MANUFACTURING (PRODUCTION) OVERHEAD BUDGET


Budgeted production in units
x Variable production overhead per unit ($)
Variable production overhead ($)
(+) Fixed production overhead ($)
Manufacturing overheads ($)

Jan
xxx
xxx
xxx
xxx
xxx

Feb
xxx
xxx
xxx
xxx
xxx

Mar
xxx
xxx
xxx
xxx
xxx

SALES & ADMINISTRATION OVERHEAD BUDGET


Jan
xxx
xxx
xxx
xxx
xxx

Budgeted sales in units


x Variable sales & administration o/h per unit ($)
Variable sales & administration overhead ($)
(+) Fixed sales & administration overhead ($)
Sales and administration overheads ($)

Feb
xxx
xxx
xxx
xxx
xxx

Mar
xxx
xxx
xxx
xxx
xxx

TRADE RECEIVABLES BUDGET

Opening balance b/d


(+) Credit sales
(-) Receipts from credit customers
Sales returns
Discount allowed
Bad debts
Closing balance c/d

Jan

Feb

Mar

$
xxx
xxx
xxx
xxx
xxx
xxx
xxx

$
xxx
xxx
xxx
xxx
xxx
xxx
xxx

$
xxx
xxx
xxx
xxx
xxx
xxx
xxx

TRADE PAYABLES BUDGET

19

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

Opening balance b/d


(+) Credit purchases
(-) Payments to credit suppliers
Purchase returns
Discount received
Closing balance c/d

Jan

Feb

Mar

$
xxx
xxx
xxx
xxx
xxx
xxx

$
xxx
xxx
xxx
xxx
xxx
xxx

$
xxx
xxx
xxx
xxx
xxx
xxx

CASH BUDGET
For three months ended ____________________________
Jan

Feb

Mar

Cash inflows:
Cash sales
Receipts from customers: 1 month
2 month
Shares issued
Disposal of non current assets
Debentures issued (Loan received)
Rent received
Total receipts (A)

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

Cash outflows:
Cash purchases
Payments to suppliers: 1 month
2 month
Purchase of non current assets

xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx

20

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


Wages and salaries paid
Rent and insurance paid
Repayment of loan
Interest paid
Dividend paid
Total payments (B)
Net cash flow (A B)
Opening bank balance
Closing bank balance

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

Note:
Make sure not to include non cash expenses in the cash budget for example;
provision for depreciation, provision for doubtful debts, bad debts etc.

STANDARD COSTING
Master / Standard Budgeted Manufacturing Account and Income Statement
(Based on standard units)
$
Sales revenue
Cost of Production:
Direct raw material (standard units x quantity x material price)
Direct wages (standard units x hours x wage rate)
*Variable production overheads (standard units x hours x wage rate)
* Fixed production overheads (standard units x hours x wage rate)
Cost of Production
(+) Factory profit
(-) Transfer Value
Gross Profit
(-) Fixed Overheads - Administration
- Selling and Distribution
Variable Overheads - Administration
- Selling and Distribution
Trading Profit
(+) Factory Profit
Budgeted Profit

$
xxx

xxx
xxx
xxx
xxx
xxx
xxx
(xxx)
xxx
xxx
xxx
xxx
xxx

(xxx)
xxx
xxx
xxx

* Note: If based on Direct Labour Hours

21

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

Flexed Budgeted Manufacturing Account and Income Statement


(Based on actual units x standard price)
$
Sales revenue
Cost of Production:
Direct raw material (actual units x standard quantity x standard price)
Direct wages (actual units x standard hours x standard wage rate)
Variable production o/h (actual units x standard hours x standard wage rate)
*Fixed production o/h (standard units x standard hours x standard wage rate)
Cost of Production
(+) Factory profit
(-) Transfer Value
Gross Profit
(-) Fixed Overheads - Administration
- Selling and Distribution
Variable Overheads - Administration
- Selling and Distribution
Trading Profit
(+) Factory Profit
Flexed Profit

$
xxx

xxx
xxx
xxx
xxx
xxx
xxx
(xxx)
xxx
xxx
xxx
xxx
xxx

(xxx)
xxx
xxx
xxx

*Note: Fixed overheads remains constant even if output level changes.

22

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

Actual Manufacturing Account and Income Statement


(Based on actual units)
$
Sales revenue
Cost of Production:
Direct raw material (actual units x quantity x material price)
Direct wages (actual units x hours x wage rate)
*Variable production overheads (actual units x hours x wage rate)
* Fixed production overheads (actual units x hours x wage rate)
Cost of Production
(+) Factory profit
(-) Transfer Value
Gross Profit
(-) Fixed Overheads - Administration
- Selling and Distribution
Variable Overheads - Administration
- Selling and Distribution
Trading Profit
(+) Factory Profit
Actual Profit

$
xxx

xxx
xxx
xxx
xxx
xxx
xxx
(xxx)
xxx
xxx
xxx
xxx
xxx

(xxx)
xxx
xxx
xxx

* Note: If based on Direct Labour Hours

RECONCILIATION STATEMENTS - PROFITS


Reconciliation Statement of Master Budget Profit with the Actual Profit
$
Master Budget Profit
(+) Favourable Variances
(-) Adverse Variances
Actual Profit

xxx
(xxx)

$
xxx
xxx
xxx

Note: If Quantity Profit Variance is given then do not include Sales Volume Variance in the
Reconciliation Statement.

Reconciliation Statement of Flexed Budget Profit with the Actual Profit


$
Flexed Budget Profit
(+) Favourable Variances
(-) Adverse Variances
Actual Profit

xxx
(xxx)

$
xxx
xxx
xxx

23

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

Reconciliation Statement of Master Budget Profit with the Flexed Budget Profit
$
Master Budget Profit
(+) Favourable Variances
(-) Adverse Variances
Flexed Budget Profit

xxx
(xxx)

$
xxx
xxx
xxx

RECONCILIATION STATEMENTS - COSTS


Reconciliation Statement of Master Budget Costs with the Actual Costs
$
Master Budget Costs
(+) Adverse Variances
(-) Favourable Variances
Actual Costs

xxx
(xxx)

$
xxx
xxx
xxx

Reconciliation Statement of Flexed Budget Costs with the Actual Costs


$
Flexed Budget Costs
(+) Adverse Variances
(-) Favourable Variances
Actual Costs

xxx
(xxx)

$
xxx
xxx
xxx

Reconciliation Statement of Master Budget Costs with the Flexed Budget Costs
$
Master budget costs
(+) Adverse Variances
(-) Favourable Variances
Flexed Costs

xxx
(xxx)

$
xxx
xxx
xxx

JOB ORDER COSTING


Total Cost of a Particular Order / Job
$
Direct Material Dept A (Kgs x per Kg) / (Litres x per Litre)

xx

Dept B (Kgs x per Kg) / (Litres x per Litre)

xx

xxx
Direct Labour Dept A (Hours x rate per hour)

xx

Dept B (Hours x rate per hour)

xx
xxx

24

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


Variable Overheads (Production)

xxx

Prime Cost

xxx

Fixed Overheads (Production) - Dept A (OAR x Actual Labour Hours)*

xx

- Dept B (OAR x Actual Labour Hours)*

xx
xxx

Total Production Costs

xxx

(+) Administration Overheads

xxx

Selling & Distribution Overheads

xxx

Total Cost of Sales

xxx

(+) Profit mark up

xxx

Selling / Quotation / Order or Tender Price

xxx

* Note: If Overhead is based on Direct Labour hours.

ABSORPTION COSTING
OVERHEAD ANALYSIS SHEET
Budgeted

Basis

Production Departments

Service Departments

Overheads

Machine repairs
Premises repairs
Factory rent
Factory insurance
Machine insurance
Indirect wages
Heating and lighting
Depreciation

Machining

Assembly

Maintenance

Canteen

Direct machine hours


Area
Area
Area
Machine cost
No. of employees
Area
Net book value

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx
xxx
(xxx)

No. of employees
Percentage

xxx
xxx
xxx

xxx
xxx
xxx

xxx
(xxx)

Reapportionment:
Canteen
Maintenance
Total

25

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

MARGINAL COSTING PROFIT STATEMENT


$
Sales
(-) Variable/ Marginal Cost of Sales
Opening inventory (Valued @ variable cost)
(+) Production Cost (Valued @ variable cost)
Total Production Cost
(-) Closing inventory (Valued @ variable cost)
Variable/ Marginal Cost of Production
(+) Variable Selling & Distribution Overheads
Variable Administration Overheads
Variable/ Marginal Cost of Sales
Contribution
(-) Fixed Costs:
Fixed overhead (Production)
Fixed overhead (Selling & distribution)
Fixed overhead (Administration)
Marginal Profit

$
xxx

xxx
xxx
xxx
(xxx)
xxx
xxx
xxx
(xxx)
xxx
xxx
xxx
xxx
xxx
xxx

26

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

ABSORPTION COSTING PROFIT STATEMENT


$
Sales
(-)Cost of Sales:
Opening inventory (Valued @ Total cost)
(+) Production Cost (Valued @ Total cost)
Total Production Cost
(-) Closing inventory (Valued @ Total cost)
Cost of Production
(+) / (-) Under / (Over) Overhead absorbed
Cost of Sales
Gross profit
(-) Fixed overhead (Selling & distribution)
Fixed overhead (Administration)
Variable Selling & Distribution Overhead
Variable Administration Overhead

$
xxx

xxx
xxx
xxx
(xxx)
xxx
xxx
(xxx)
xxx
xxx
xxx
xxx
xxx
xxx
xxx

Absorption Profit

Reconciliation Statement for Marginal Costing and Absorption Costing Profit

Marginal Profit
(+) Difference in Closing inventory of finished goods (Absorption Marginal)
(-) Difference in Opening inventory of finished goods (Absorption Marginal)
Absorption Profit

$
xxx
xxx
(xxx)
xxx

MARGINAL COSTING PROFIT STATEMENT


(Different Products)

27

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


Product A

Product B

Product C

Total

28

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


Sales
(-) Variable costs:
Direct material
Direct labour
Direct expense
Production overhead (variable)
Administration overhead (variable)
Sales overhead (variable)
Contribution
(-) Fixed Costs:
Production overhead (fixed)
Administration overhead (fixed)
Sales overhead (fixed)
Profit

xxx

xxx

xxx

xxx

xxx
xxx
xxx
xxx
xxx
xxx
(xxx)
xxx

xxx
xxx
xxx
xxx
xxx
xxx
(xxx)
xxx

xxx
xxx
xxx
xxx
xxx
xxx
(xxx)
xxx

xxx
xxx
xxx
xxx
xxx
xxx
(xxx)
xxx

xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx

MARGINAL COSTING - LIMITING FACTOR


(Calculation of Contribution per Limiting Factor)

Selling price per unit


(-) Variable costs per unit:
Direct material per unit
Direct labour per unit
Direct expense per unit
Variable overhead per unit (production)
Variable overhead per unit (administration)
Variable overhead per unit (selling)
Variable costs per unit

Product A

Product B

Product C

$
xxx

$
xxx

$
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx
xxx
xxx

29

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


Contribution per unit
*Material per kg /litre
*Contribution per material per kg /litre
Rank order

xxx
xxx
xxx
-

xxx
xxx
xxx
-

xxx
xxx
xxx
-

*Note: In case if material quantity is the limiting factor. Also it could be:

Material quantity

Labour hours

Variable overheads

Sales demand
Revised Production Budget (based on Limiting Factor)

Products

A
B
C

Units

xxx
xxx
xxx

Material per unit

Total available

(kg / litres)

material quantity

xxx
xxx
xxx

(kg / litres)
xxx
xxx
xxx
xxx

Profit Statement Limiting Factor

Revised production units


x Contribution per unit ($)
Total contribution ($)
(-) Fixed costs ($)
Profit ($)

Product A

Product B

Product C

Total

xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx
xxx
xxx

xxx
xxx
xxx

30

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

PROFITABILITY RATIOS:
(i)

(ii)

Gross profit margin

Gross profit mark up

Gross profit
_________________
Net Sales/revenue

x 100

Gross profit
_________________
Cost of sales

x 100

(iii)

Net profit ratio

Net profit before interest


______________________________ x 100
Net Sales/revenue

(iv)

Return on capital employed

Net profit before interest


______________________________ x 100
Capital employed

(v)

Where, capital employed can be calculated by using either one of the formulae given
below:
Capital employed = Total Assets Current Liabilities.
Capital employed = Non current Assets + Working Capital.
Capital employed = Share Capital + All Reserves + Debentures
Return on Equity
=
Net profit after preference dividend
______________________________ x 100

31

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


Equity
Where,
Equity = Ordinary share capital + all reserves
(vi)

Return on total assets

Net profit before interest


___________________________ x 100
Total assets

(vii)

Operating expenses to revenue ratio

Operating expenses
___________________________ x 100
Revenue

(viii)

Non current assets turnover

Net sales / revenue


______________________________ x 100
Net book value of non current assets
Or
Net book value of non current assets = times
Net sales / revenue

LIQUIDITY RATIOS:
(i)

Current ratio

Current assets
_________________
Current liabilities

(ii)

Liquid ratio

Current assets inventory


________________________
Current liabilities

Also known as Quick ratio and Acid test ratio


(iii)

(iv)

(iv)

Trade receivables turnover

Trade payables turnover

Inventory turnover

Trade receivables
_________________
Credit sales

x 365

Trade payables
_________________
Credit purchases

x 365

Average inventory
_________________
Cost of sales

x 365

Can be shown in times


Inventory turnover

Cost of sales

32

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


_________________ = times
Average inventory
(v)

Working capital cycle in days

Trade receivables turnover + Inventory turnover


Trade payables turnover

(vi)

Net working assets ratio

Net working assets


____________________ x 100
Net sales / revenue

Where,
Net working assets = Inventories + Trade receivables Trade payables

INVESTMENT RATIOS:
(i)

Interest cover

Or

(ii)

Income gearing

Gearing ratio

Interest expense
_______________________ x 100
Profit before interest & tax
Or
Profit before interest & tax
_______________________ = times
Interest expense
Fixed cost capital
_________________________ x100
Equity + Non current liabilities

Where,
Fixed cost capital = Non current liabilities + Preference share capital
(iii)

Earnings per share (EPS)

(iv)

Price earnings ratio (PER)

Profit after tax Preference share dividend


___________________________________
Number of Ordinary shares issued
Market price per share
Earnings per share

(v)

Dividend yield (DY)

Dividend per share


______________________ x 100
Market price per share

33

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

(vi)

Dividend cover

Profit after tax Preference share dividend


__________________________________ = times
Ordinary dividend paid

(vii)

Dividend per share

Ordinary dividend paid


___________________________________
Number of Ordinary shares issued

BREAK EVEN ANALYSIS (AS / A LEVEL)


(i)

Total Cost

Fixed Cost + Variable Cost

(ii)

Total Sales Revenue

Output sold x Selling price per unit

(iii)

Profit

Total Sales revenue Total cost


OR
Margin of safety (units) X Contribution per unit
OR
Total Contribution - Total Fixed cost

(iv)

Contribution per unit

Selling price Variable cost per unit

(v)

Contribution to Sales ratio

Contribution
____________ x 100
Sales

(vi)

Break-even point (in units)

Fixed Costs
_________________
Contribution per unit

(vii)

Break-even point (in sales


revenue)

Break-even point (in units) x Selling price

(viii)

Break-even point in value (for a


multi product firm)

Fixed Cost
______________________
Contribution to Sales ratio

34

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

(ix)

Margin of safety

Current output Break-even output

(x)

Margin of safety (as percentage)

Margin of safety ( in units)


______________________ x 100
Sales (in units)

(xi)

Level of Output / Sales (in units)


required to achieve target profit

(xii)

Level of Sales (in value) required


to achieve target profit

Fixed cost + Target Profit


_____________________
Contribution per unit

Fixed cost + Target Profit


______________________
Contribution to Sales Ratio

(xiii)

Level of Production (in units) at


which two options show the same
net profit

Difference in Fixed Costs


______________________________
Difference in Contribution per unit

(xiv)

Level of Production (in units) at


which total cost equals total
purchase price

Fixed Costs
______________________________
Purchase price - Variable costs per unit

(xv)

Minimum level of production (in


units) required to manufacture

Fixed Costs (highest value)


________________________________________
Contribution per unit (highest value) buying profit

SENSITIVITY ANALYSIS
(i)

(ii)

(iii)

(iv)

Sensitivity of expected profit to


change in sales / sales price

Sensitivity of expected profit to


change in sales volume

Sensitivity of expected profit to


change in variable costs

Sensitivity of expected profit to


change in fixed costs

Expected profit
_________________ x 100
Revenue

Margin of safety ( in units)


_________________________ x 100
Expected Sales (in units)

Expected profit
_________________ x 100
Variable costs

Expected profit
_________________ x 100
Fixed costs

35

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


(v)

(vi)

Sensitivity of the project


changes in initial costs

to

Sensitivity of the project


changes in the selling price

to

NPV
_________________ x 100
Initial cost

NPV per unit


_________________ x 100
Selling price per unit
OR
Annual NPV
_______________ x 100
Annual Sales

ABSORPTION COSTING (AS / A LEVEL)


(i)

Overhead absorption rate (OAR)

Budgeted Overheads
_____________________
Budgeted base / method*

(ii)

Overhead absorbed

OAR x Actual base / method*

(iii)

Over / Under absorption

Overhead absorbed Actual Overheads

*Note:
There are six bases (methods) for calculating OAR. A base (methods) varies from one
question to another; for example; it could be mentioned in a question to calculate OAR
using direct labour cost. However, most common methods are direct labour hours and
direct machine hours.

Direct labour hours

Direct machine hours

Production units

Direct wages (direct labour cost)

Direct material cost

Prime cost

36

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

INVESTMENT APPRAISAL (CAPITAL BUDGETING)


(i)

Net cash flow

Receipts Payments + Depreciation (if included in expenditures)

(ii)

Incremental cash flow

Net cash flows (with leasing) - Net cash flows (without leasing)

(iii)

Net profit

Net cash flows Depreciation


OR
Revenue - Expenses

(iv)

Net profit per annum

Net profit
________________
Number of years

(v)

Average investment

Non current asset / Project (initial cost) + scrap value


__________________________________________
2
(+) Working capital

(vi)

Accounting rate of return


=

(vii)

Payback period

Cash
=

(viii)

Payback period (in months)

Net profit per annum


__________________ x 100
Average investment
Net cash flow x Number of years (till it covers the initial cost)
Non current asset at cost Total cash flows (less than cost)
________________________________________________ x 12
Net cash flow (current year)

Where, payback period can be calculated in days also


(ix)

Present value (discounted


payback period)

Net cash flow x interest rate (discount factor) x number of years

37

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)


(x)

Net Present Value (NPV)

Present value (discounted cash flow) Non current asset at cost

Interest rate

1
______________
(1 + r/100)

Where;
r
represents the interest rate or discount factor;
n represents the number of years

(xi)

Internal rate of return (IRR)

X + [ (p q) x ac ]
ad

Where ;
X

represents the interest rate giving positive NPV

pq

represents the distance / difference between two interest rates

ac

represents the value of positive NPV

ad

represents the addition of positive + the negative NPV; (if both NPV are positive then
deduct, however if both are negative then IRR cannot be calculated).

38

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

STANDARD COSTING
(i)

Quantity cost variance

Master budget costs Flexed budget costs

(ii)

Quantity profit variance

Flexed budget profit Master budget profit

(iii)

Total cost variance

Master budget costs Actual costs

(iv)

Total sales variance

Actual sales revenue Budgeted sales revenue

(v)

Total material variance

Flexed material cost Actual material cost

(vi)

Total labour variance

Flexed labour cost Actual labour cost

(vii)

Variable overhead (production)

Flexed budget VOH Actual VOH

(viii)

Variable overhead (administration)

Flexed budget VOH Actual VOH

(ix)

Variable overhead (selling)

Flexed budget VOH Actual VOH

(x)

Total Fixed Overhead Variance

Actual Fixed Overheads - Absorbed Fixed Overheads


(Actual ouput x OAR)

In case of absorption costing the total fixed overhead variance is made up of the following sub variances:
(i)

Fixed
Overhead
(Spending) Variance

Expenditure

(ii)

Fixed Overhead Volume Variance:

Actual fixed production OH Budgeted fixed production OH

Absorbed fixed Production OH - Budgeted fixed production


OH

Fixed Overhead Volume Variance can be analyzed further into two sub-variances. Fixed overhead volume
variance (and its sub-variances) are to be calculated only when absorption costing is applied.
(i)

Fixed Overhead Efficiency Variance

(Standard production hours - Actual production hours) x OAR

(ii)

Fixed Overhead Capacity Variance

(Budgeted production hours - Actual production hours) x OAR

39

AL WADI INTERNATIONAL SCHOOL ACCOUNTING AL LEVEL (LAYOUTS)

Other Sub Variances:


(i)

Sales price variance

(Actual selling price Standard selling price) x Actual sales (in units)

(ii)

Sales volume variance

(Actual sales units Standard sales units) x Standard selling price

(iii)

Material price variance

(Standard material price Actual material price) x Actual material Qty

(iv)

*Material usage variance

(Standard material Qty. Actual material Qty.) x Standard material price

(v)

Labour rate variance

(Standard wage rate Actual wage rate) x Actual labour hours

(vi)

*Labour efficiency variance

(Standard labour hours Actual labour hours) x Standard wage rate

*Note: Material usage & Labour efficiency variances would be flexed if the number of units
produced and sold differs.
(Flexed standard material quantity = Actual units x standard material quantity per unit)
(Flexed standard labour hours = Actual units x standard labour hours per unit)

40