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CE/
INCOMPLET
CLUB ACCOUNTS
A Receipts & Payments a/c does not give clear picture of club finances.
Now
SERVICE FIRMS
2.
3.
4.
INCOMPLETE RECORDS
Three types:
1.Control Accounts [ Q7 2009 ]
2.Net Worth [ Q4 2011 - - not asked for P&L]
3.Ratios
Control Account Top-Down
oFind the Opening Capital [ or Goodwill] by doing a list of Assets &
Liabilities at start of year.
oDo Notes/Workings as follows: Find Cash Sales Do a Cash a/c [ NB Cash Drawings]
Find Credit Sales- Do Debtors Control a/c
Find Credit Purchases Do Creditors Control a/c [ NB
Stock Drawings ]
Find Closing Bank figure Do Bank a/c
Find Drawings figure make a list of Drawings
For each expense
Adjust for due/prepaid
- Adjust for Drawings
oPrepare Trading, Profit and loss & Balance Sheet.
INCOMPLETE RECORDS
Net Worth/Mark up-margin/Bottom-Up
Find the Opening Capital [ or Goodwill] by doing a list of
Assets and Liabilities at start of year.
Do Notes/Workings as follows: Find Drawings figure make a list of Drawings
For each expense Adjust for due/prepaid
Adjust for Drawings
Complete the end-of-year Balance Sheet.
[The Financed by section will contain the missing figure
for Net Profit] [Capital Employed Long Term Liability
Capital Capital Introduced + Drawings = Profit]
Prepare a Trading, Profit & Loss a/c in as much detail as
possible [the figures for Gross Profit, Purchases & Sales
are the last to go in] [Margin is profit as a % of sales;
Mark-up is profit as a % of Cost of sales]
INCOMPLETE RECORDS
Watch out for:
1.Dividends (lodged). The business has not got any
Investments the dividends are paid to the owner in
his/her private capacity Capital Introduced Add to
Capital in closing Balance Sheet.
2.Investment Fund Interest 36 add to Gross Profit and
include in Investment Fund In Balance Sheet.
3.Borrowed 120,000... Paid back in 20 equal
instalments ... The first instalment due on 1/2/2009. In
Balance sheet as at 31/12/08 Loan Instalment due
12000 in Current Liabilities and in Financed by Long
Term Loan 108000.
4.College fees attributed to an employee expense in
P&L: ....attributed to a child drawings
INCOMPLETE RECORDS
THEORY