{"id":2585,"date":"2023-10-03T10:06:03","date_gmt":"2023-10-03T10:06:03","guid":{"rendered":"http:\/\/localhost\/ecole9ja\/?p=2585"},"modified":"2023-10-03T10:14:38","modified_gmt":"2023-10-03T10:14:38","slug":"week-7-and-8-ss1-third-term-financial-accounting-notes","status":"publish","type":"post","link":"https:\/\/ecolebooks.com\/nigeria\/posts\/week-7-and-8-ss1-third-term-financial-accounting-notes\/","title":{"rendered":"Week 7 and 8 – SS1 Third Term Financial Accounting Notes"},"content":{"rendered":"

WEEK 7 \u2013 8 <\/strong><\/p>\n

TOPIC : FINAL ACCOUNTS OF A SOLE TRADER
\n<\/h2>\n

CONTENT :
\n<\/strong><\/p>\n

    \n
  1. The Trading,Profit and Loss Account\n<\/li>\n
  2. The Balance Sheet\n<\/li>\n<\/ol>\n

    The Trading Account and the Profit and Loss Account are usually combined to form a continuous statement.
    \nBoth the Trading,Profit and Loss Account and the Balance Sheet are referred to as Financial Statements. Financial Statements are usually prepared from a Trial Balance. Every item in a trial balance appears once in a set of financial statement. As each item is used,it is useful to place a tick ( )against the item. This ensures that no items are overlooked.
    \nIt is also common to find notes (or additional information ) accompanying a trial balance about various adjustments which are to be made in preparing the financial statements. Any note to a trial balance are used twice in a set of financial statements. To ensure that this is done, it is useful to place a tick ( ) against the notes each time they are used.
    \nIt must be emphasized that the Trading Account and the Profit and Loss Account are both part of the double entry system. Therefore any item that is debited or credited either in the Trading Account or the Profit and Loss Account must have a corresponding double entry in another ledger account.
    \nThe items appearing in the Trading, Profit and Loss Account are the ledger account balances which are transferred by means of Journal entries. The student is not usually required to prepare the Journal entries in examination questions.
    \n Illustration:
    \n The following trial balance was extracted from the books of Ade Molayo as at 31st December, 2015.
    \n Ade Molayo
    \n Trial Balance as at 31st December, 2015
    \n Dr Cr
    \n N N
    \n Sales 126,000
    \nReturns Inwards 2,000
    \n Purchases 55,200
    \n Returns Outwards 2,200
    \n Discounts Received 2,340
    \n Discounts Allowed 3,260
    \n Wages 28,000
    \n Rent 16,000
    \n Heating and Lighting 3,400
    \n Postage and Stationery 1,070
    \n Motor Van Expenses 4,830
    \n Interest on loan 800
    \n Sundry Expenses 920
    \n Land and Buildings 40,000
    \n Motor Vehicles 14,000
    \n Office Furniture 5,000
    \n Sundry Debtors 7,400
    \n Sundry Creditors 3,420
    \n Bank 2,160
    \n Carriage Inwards 5,000
    \n Stock (01\/01\/2015) 4,000
    \n Loan from T. Lawal (repayable in 2019) 10,000
    \n Capital 60,000
    \n Drawings 10,920
    \n203,960 203,960
    \n Additional Information :<\/p>\n

      \n
    1. \n
      Stock at 31st December, 2015 was N 2,700\n<\/div>\n

      Required: Prepare Ade Molayo’s Trading, Profit and Loss Account for the year ended 31st December 2015.<\/p>\n

      \u00a0Ade Molayo
      \n Trading, Profit and Loss Account for the year ended 31st December, 2015
      \n N NN N
      \nOpening Stock 4,000 Sales 126,000
      \nPurchases 55,200 less: Returns Inwards 2,000
      \nadd: Carriage Inwards 5,000 124,000
      \n 60,200
      \nless: Returns Outwards 2,200
      \n 58,000
      \nCost of goods available for sale 62,000
      \nless: Closing Stock 2,700
      \nCost of goods sold 59,300
      \nGross Profit c\/d 64,700
      \n 124,000 124,000
      \nDiscounts Allowed 3,260 Gross Profit b\/d 64,700
      \nWages 28,000 Discounts Received 2,340
      \nRent 16,000
      \nHeating and Lighting 3,400
      \nPostage and Stationery 1,070
      \nMotor Van Expenses 4,830
      \nInterest on Loan 800
      \nSundry Expenses 920
      \nNet Profit 8,760
      \n 67,040 67,040<\/p>\n

      \u00a0NB. It should be noticed that not all the items in the Trial Balance have been used in preparing the Trading, Profit and Loss Account. The remaining balances (i.e. the items that are yet to be ticked in the Trial Balance) are assets, liabilities or capital. These will be used later when a Balance Sheet is drawn up.
      \nEVALUATION<\/p>\n

        \n
      1. Explain the following: (a) cost of goods available for sale (b) cost of goods sold (c) financial statements\n<\/li>\n
      2. \n
        Describe three features of each of the following financial statements:\n<\/div>\n
          \n
        1. Trading Account (b) Profit and Loss Account\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n

          \u00a0 READING ASSIGNMENT
          \n<\/strong><\/p>\n

            \n
          1. Simplified and Amplified Financial Accounting Page 180 \u2013 187\n<\/li>\n
          2. \n
            Business Accounting 1 Page 49 \u2013 57\n<\/div>\n

            \u00a0
            \n\u00a0GENERAL EVALUATION QUESTIONS
            \n<\/strong><\/p>\n

              \n
            1. \n
              Business Accounting 1\n<\/div>\n
                \n
              1. Exercise 6.1, 6.2, 6.3A, 6.4A\n<\/li>\n<\/ol>\n<\/li>\n
              2. \n
                Simplified and Amplified Financial Accounting Question 4 Page 187\n<\/div>\n

                WEEKEND ASSIGNMENT<\/p>\n

                  \n
                1. When the cost of goods sold is added to closing stock, the resulting figure is (a) carriage inwards (b) cost of sales (c) gross profit (d) cost of goods available for sale\n<\/li>\n
                2. Which of the following is not found in a trial balance (a) opening stock (b) closing stock (c) capital (d) rent paid\n<\/li>\n
                3. A statement that measures the performance of a business over a period of time is the (a) Balance Sheet (b) Bank Statement (c) Profit and Loss Account (d) Bank Reconciliation Statement\n<\/li>\n
                4. The effect on profit when closing stock is understated is (a) increase in profit (b) decrease in profit (c) no change in profit (d) a doubling of profit\n<\/li>\n
                5. \n
                  Carriage outwards expenses of a business are treated in the (a) Balance Sheet (b) Income Surplus Account (c) Profit and Loss Account (d) Trading Account\n<\/div>\n

                  THEORY<\/p>\n

                    \n
                  1. List three uses of the Profit and Loss Account\n<\/li>\n
                  2. \n
                    State four differences between the Trading Account and the Profit and Loss Account.\n<\/div>\n

                    \u00a0<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

                    WEEK 7 \u2013 8 TOPIC : FINAL ACCOUNTS OF A SOLE TRADER CONTENT : The…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,215],"tags":[],"class_list":["post-2585","post","type-post","status-publish","format-standard","hentry","category-posts","category-third-term-ss1-financial-accounting"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2585","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/comments?post=2585"}],"version-history":[{"count":1,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2585\/revisions"}],"predecessor-version":[{"id":2586,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/2585\/revisions\/2586"}],"wp:attachment":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/media?parent=2585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/categories?post=2585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/tags?post=2585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}