{"id":3597,"date":"2023-10-05T12:07:30","date_gmt":"2023-10-05T12:07:30","guid":{"rendered":"http:\/\/localhost\/ecole9ja\/?p=3597"},"modified":"2023-10-05T12:07:53","modified_gmt":"2023-10-05T12:07:53","slug":"all-weeks-ss2-third-term-book-keeping-notes","status":"publish","type":"post","link":"https:\/\/ecolebooks.com\/nigeria\/posts\/all-weeks-ss2-third-term-book-keeping-notes\/","title":{"rendered":"All Weeks – SS2 Third Term Book Keeping Notes"},"content":{"rendered":"

SS 2 OMEGA TERM
\n BOOK \u2013KEEPING SCHEME OF WORK
\nWEEK
\n1. Revision
\n2-4 Trading profit and loss account
\n5-7 Receipts and Payments Accounts
\n8-10 Income and Expenditure account<\/p>\n

\u00a0 TRADING PROFIT AND LOSS ACCOUNTS
\nTRADING ACCOUNT: This is the account constructed for the purpose of finding the gross profit or loss of a business at a particular period. It is a revenue account and form part of the double entry system.
\n\"\"\/\"\"\/LAYOUT OF TRADING ACCOUNT
\n Trading Account for the year ended 31st<\/sup> dec. 19×9<\/p>\n

\u00a0 # #
\nOpening stock xx sales xx
\nAdd purchases xx less return inward x xx
\nCarriage inwards x ___
\n ____
\n xx
\n less returns outward x
\ngoods withdrawn x
\n ____ xx
\n ____
\n Xx
\nLess closing stock x
\n ___
\n\"\"\/ Cost of goods sold xx
\n Gross profit xx
\n _____ ____
\n Xx xx
\n ___ ____<\/p>\n

\u00a0
\n\u00a0
\n\u00a0
\n\u00a0
\n\u00a0TERMINOLOGIES<\/strong>:
\nSALES: This represents the total cash and credit sales during the period .It is credited to trading account.
\nRETURNS INWARDS<\/strong>: This is the total value of goods returned to the seller by the customers out of goods previously sold to them .This is also known as sales return and must be deducted from the total sales
\nTURNOVER<\/strong> ;This is the total net sales during a period of time .This means sales less return inwards .
\nPURCHASES<\/strong>: This represents the total of the cash and credit purchases of goods for resale .It is debited to the trading account.
\nRETURNS OUTWARDS:<\/strong> This is the total value of goods returned to supplier out of the goods bought .It is also known as purchases returns
\nCARRIAGE INWARDS<\/strong>: Carriage inwards is the cost of transportation charged on goods purchased .Carriage inwards is the cost incurred in order to bring the goods purchased to the present location
\nCARRIAGE OUTWARDS; This<\/strong> is the cost of transportation charged on goods sold to customers .It is a selling expense and is debited to profit and loss account
\nCOST OF GOODS SOLD<\/strong>: This is the total cost of goods actually sold by the organization
\nCOST OF GOODS AVAILABLE FOR SALE:<\/strong> This is the addition of opening stock and purchases
\nSTOCK OF GOODS:
\n1. Opening stock:<\/strong> This represents goods available in a business at the beginning of the trading period
\n\t\t\t<\/strong> 2. Closing stock<\/strong>: This is the stock of goods unsold at the end of the trading period<\/p>\n

\u00a0PROFIT AND LOSS ACCOUNT<\/strong>:This is the account constructed by a business organization to show the net profit or net loss .Expenses incurred by the organization are debited while gross profit from trading and other gains are credited.
\nNote: the profit is carried to the capital account
\nThe main purpose is to arrive at the net profit after charging all the expenses from the gross profit .<\/p>\n

\u00a0\"\"\/\"\"\/ LAYOUT OF PROFIT AND LOSS ACCOUNT
\n # #
\nExpenses Gross profit xx
\nDiscount allowed x discount received x
\nTelephone x
\nLighting x
\nLegal charges x
\nGeneral expenses x
\nCarriage outwards x
\nPostages x
\nInsurance x
\nAdvertising x
\nRent and rates x
\nSalaries & wages x
\n\"\"\/Commission payable x
\nTravelling expenses x
\nSundry expenses x
\n\"\"\/ Net profit x
\n _____ _____
\n Xx xx
\n ____ ______<\/p>\n

\u00a0
\n\u00a0
\n\u00a0ADJUSTMENT IN THE PROFIT AND LOSS ACCOUNT
\n<\/strong>ACCRUALS AND PREPAYMENTS
\n<\/strong>1. ACCRUALS<\/strong>: Accruals concepts states that revenue and expenditure are recognized as they are earned or incurred and dealt with in the profit and loss account for the period to which they relate and not period they are paid and received.It can be divided into :Accrued income and Accrued expenses.
\na.Accrued income<\/strong>: These are income which are due in respect of the current trading period but such income have not been received at the close of final account preparation.
\nTreatment in final account s
\n<\/strong>Cr: profit and loss account
\n<\/strong>assets in the balance sheet
\n<\/strong>\"\"\/\"\"\/ DR income account CR<\/p>\n

\u00a0 # #
\nLast year accrual x cash x
\nProfit and loss x current year accrual x
\n ____ ___
\n Xx xx
\n ____ ___
\n Bal b\/d x<\/p>\n

\u00a0Illustration<\/strong>: write up the ledger accounts of Mr Johnson as at 31st<\/sup> Dec. 1996 showing the transfer to the final account .He earned commission from sales for the year 31st<\/sup> Dec. 1996 #8500:Owing as at 31st<\/sup> dec. 1995 #800: Owing at 31st<\/sup> Dec. 1996 #1450<\/p>\n

\u00a0\"\"\/\"\"\/ Commission receivable account
\n # #
\nBal b\/f 800 cash 8500
\nProfit and loss 9150 bal b\/d 1450
\n ______ ____
\n 9950 9950
\n ______ ______
\nBal b\/f 1450
\nThe balance of #1450 should be treated as current asset in the balance sheet
\nb. Accrued Expenses: These are expenses ,which accrue but have not been discharged.
\nThese could be called expenses owing or creditor for expenses e.g telephone , rates
\nTreatment in final accounts
\nDebited to profit and loss account
\nCurrent liability in the balance sheet.
\n\"\"\/\"\"\/ Expenses account <\/p>\n

\u00a0 # #
\nCash paid x amount owing from last yr x
\nOwing during the trading yr x profit and loss x
\n ____ ____
\n X x
\n __ ____
\nIllustration:Write up the ledger account of Okondo as at 31st<\/sup> Dec.1998
\nGeneral expenses paid for the year #15000
\nGeneral expenses owing at 31st<\/sup> Dec.1997 #3000
\n\"\"\/ General expenses owing at 31st<\/sup> Dec.1998 #2700
\n\"\"\/ # #
\nCash 15000 BAL b\/f 3000
\nBAL c\/d 2700 profit and loss 14700
\n ____ _____
\n 17700 17700
\n ____ _____
\n Bal b\/d 2700<\/p>\n

\u00a0The balance of #2700 should be treated as current liability in the balance sheet<\/p>\n

\u00a02. PREPAYMENTS:<\/strong> Prepayments represents amount paid in the current period for a subsequent period. Expenses can be paid in advance and income can be received in advance. It can be referred to as prepaid or paid in advance.
\na. Expenses in advance<\/strong>: These are expenses like rent , insurance etc.which are paid in advance for subsequent period .Only the expenses for the must be charged to the profit and loss account
\nTreatment in final accounts
\nReduction in expenses debited to profit and loss account
\nCurrent assets in the balance sheet<\/p>\n

\u00a0\"\"\/\"\"\/ DR Expenses account CR
\n # #
\nPrepaid last year x prepaid next year x
\nCash x profit and loss x
\n __ ___
\n X x
\n ___ ____
\nBal b\/d x
\nIllustration:Write up the ledger accounts of Mr Victor as at 31st<\/sup> Dec. 1998 .He paid insurance of #5000 for the year ended 31st<\/sup> DEC. 1998 ;prepaid as at 31st<\/sup> Dec. 1997 #740 ;prepaid as at 31st<\/sup> Dec. 1998 #1000
\n\"\"\/\"\"\/ DR Insurance account CR<\/p>\n

\u00a0 # #
\nPrepaid last year 740 profit and loss 4740
\n Cash 5000 prepaid for next year 1000
\n ____- _____
\n 5740 5740
\n ______ _____
\nBal b\/d 1000<\/p>\n

\u00a0The balance brought down of #1000 will be treated as current assets in the balance sheet<\/p>\n

\u00a0b. Income in advance: <\/strong>These are income received by the organization during the current period which relates to the next trading period e.g. rent received in advance
\nTreatment in final account:
\n<\/strong>Decrease in income credited to the profit and loss
\n<\/strong>Current liability in the balance sheet
\n<\/strong>DR INCOM ACCOUNT CR
\n<\/strong>\"\"\/\"\"\/ # #
\nProfit and loss x last year advance x
\nAdvance for next year x cash x
\n ____ ___
\n X x
\n ____ ____
\n Bal b\/d x
\nIllustration: Write up the ledger account of Mr. James as at 31st<\/sup> Dec. 1999. He earned commission of #30000 for the year 31st<\/sup> Dec. 1999.Prepaid at 31st<\/sup> Dec.1998 #7700; paid in advance at 31st<\/sup> Dec. 1999 was #6830
\n\"\"\/\"\"\/ DR Commission account CR<\/p>\n

\u00a0 # #
\nProfit and loss 30870 last year advance 7700
\nAdvance for next year 6830 cash 30000
\n _____ _____
\n 37700 37700
\n ______ ____<\/p>\n

\u00a0 Bal b\/d 6830<\/p>\n

\u00a0
\n\u00a0EVALUATION:Show the journal entries and the appropriate accounts to make the following adjustments that were brought to your attention on 31st<\/sup> march this year after you have completed the trial balance for Sunshine Bakeries .Show how items will appear on the balance sheet this date
\na. Motor vehicle ,#11000000 have been revalued at #8600000
\nb. commission owed to sales representative stands at #400000.The balance on this account is currently #1800000
\nASSIGNMENT:State five differences between trading account and profit and loss account<\/p>\n

\u00a0RECEIPTS AND PAYMENTS,INCOME AND EXPENDITURE ACCOUNT
\n<\/strong>Receipts and payments account:
\nThis is a statement of cash actually received and paid during a given period , Receipts being debited and payments credited .The receipts and payments account is a summary of the cash book
\nFEATURES OF RECEIPTS AND PAYMENTS ACCOUNT
\n1.It is a real account
\n2. Balance represent cash in hand
\n3. Only actual receipts and payments are recorded
\n4 Include capital and revenue items<\/p>\n

\u00a0\"\"\/ DR receipts and payments account<\/strong> CR
\n\"\"\/ # #
\nBal b\/f x rent x
\nDonation x wages x
\nSubscription x postage x
\nDance receipt x stationery x
\nRefreshment x honorarium x
\nAnnual dinner x meeting expenses x
\n ___ ___
\n Xx xx
\n ___ ____<\/p>\n

\u00a0
\n\u00a0
\n\u00a0
\n\u00a0
\n\u00a0 INCOME AND EXPENDITURE ACCOUNT
\nThis is the account which shows the summary of revenue and running cost of a non- profit making organization.It follows the same principles as the profit and loss account of a trading concern. It is part of the double entry and income is shown on the credit side and expenditure on the debit side .
\nThe balance represents surplus of income over expenditure and vice versa<\/p>\n

\u00a0FEATURES OF INCOME AND EXPENDITURE ACCOUNT
\n<\/strong>1. Equivalent of profit and loss in a trading concern
\n2. Balance represents surplus or deficiency
\n3. Expenditure are debited and income credited i.e it is a nominal account.
\n4. Adjustment for accruals and prepayments are made
\n5. capital receipts and expenditure are not posted but only revenue items
\nLAYOUT OF INCOME AND EXPENDITURE ACCOUNT<\/p>\n

\u00a0
\n\u00a0 INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31ST<\/sup> DEC.19X9
\n\"\"\/\"\"\/
\n\t # #
\n Expenditure income
\n Rent x subscription x
\n Printing x interest on investment x
\n Postage x entrance fees x
\n Depreciation x donation x
\n Honorarium x annual dinner x
\n Wages x letting of halls x
\n Stationery x rent received x
\n Meeting expenses x profit on bar x
\n Surplus of income over expenditure x interest on deposit x
\n Sales of ticket x
\n ___ ____
\n Xx xx
\n ____ ____<\/p>\n

\u00a0
\n\u00a0SIMILARITIES BETWEEN RECEIPTS AND PAYMENTS AND INCOME AND EXPENDITURE
\n<\/strong>1. Both accounts follow the principles of double entry
\n2. They are summaries of financial statements
\n3. Both are prepared by non-profit making concern
\n4. They are prepared to cover the same period<\/p>\n

\u00a0
\n\u00a0
\n\u00a0
\n\u00a0DIFFERENCES BETWEEN RECEIPTS AND PAYMENTS AND INCOME AND EXPENDITURE
\n<\/strong>
\n\u00a0\"\"\/\"\"\/RECEIPTS AND PAYMENTS INCOME AND EXPENDITURE
\n1. Real account Nominal
\n2. Only actual cash receipt and payments cash accruals and prepayments are
\nAre recorded included
\n3. No record of depreciate give effect to depreciation
\n4. Balance represent cash or bank overdraft balance represent surplus of income or expenditure
\n5. Another name for cash book adopted another name for profit and loss adopted by clubs
\nAdopted by clubs
\n6. Included capital and revenue items Only revenue items are recorded
\n7. receipts is debited and payments expenditure is debited and income is credited
\nCredited.<\/p>\n

\u00a0
\n\u00a0
\n\u00a0Illustration:From the following prepare:
\na.An income and expenditure for the Western club for the year ended 31st<\/sup> Dec. 1999
\nb. A receipts and payments account
\n #
\nSubscription received for previous year 2000
\n” ” current year 18000
\nPaid for:
\nRent 5000
\nTransport 4000
\nWages 6800
\nSupplies for refreshment 8500
\nPrinting and stationery 3000
\nRepairs 1200
\nSalaries 10000
\nReceipts from:
\n<\/strong>Donations 6000
\n<\/strong>Refreshment 12500
\n<\/strong>Ticket 1000
\n<\/strong>Cash in hand:
\n<\/strong>1st<\/sup> JAN 1800
\n<\/strong>31ST<\/sup> Dec. 2800
\n<\/strong>Subscription for current year due and unpaid 3000
\n<\/strong>Accounts due but unpaid:Repair 800
\n<\/strong> Salaries 2200
\n<\/strong>
\n\u00a0
\n\u00a0 DR Western club CR
\n\"\"\/\"\"\/\u00a0\u00a0\u00a0\u00a0INCOM AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED 31ST<\/sup> DEC.1999
\n # #
\n
\n\t\t<\/strong>EXPENDITURE INCOME
\nRent 5000 subscription(18000+2000-2000+3000) 12000
\nTransport 4000 donation 6000
\nWages 6800 refreshment 12500
\nSupplies of refreshment 8500 tickets 1000
\nPrinting and stationery 3000 excess of expenditure over income 1000
\nRepairs (1200+800) 2000
\nSalaries (10000+2200) 12200
\n ___ ____
\n 41500 41500
\n _____ _____<\/p>\n

\u00a0\"\"\/ receipts and payments account for the year ended 31st<\/sup> 1999
\n\"\"\/
\n\t # #
\nBal b\/f 1800 rent 5000
\nSubscription (1998) 2000 transport 4000
\n” (1999) 18000 wages 6800
\nDonations 6000 supplies of refreshment 8500
\nRefreshment 12500 printing and stationery 3000
\nTickets 1000 repairs 1200
\n Salaries 10000
\n Bal c\/d 2800
\n _____ ______
\n 41300 41300
\n _____ ____
\n EVALUATION: Give 5 differences between receipts and payments and income and expenditure account
\nASSIGNMEN<\/strong>T: From the following given below, make up the receipts and payments account for the Tiny Tots swimming club(TTSC) for the end of Dec this year:
\nCash in hand: 1 January #245000
\nReceipts: subscriptions, #512000, donation, #822200 sale of swimming aids #235200 sales of refreshment #417200
\nPayments: Purchase of swimming aid #235200; purchase of refreshment; #280000, printing and stationery #19120 cleaning charges, #110000 cost of visits to other clubs #139600<\/p>\n

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

SS 2 OMEGA TERM BOOK \u2013KEEPING SCHEME OF WORK WEEK 1. Revision 2-4 Trading profit…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,282],"tags":[],"class_list":["post-3597","post","type-post","status-publish","format-standard","hentry","category-posts","category-third-term-ss2-book-keeping"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/3597","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=3597"}],"version-history":[{"count":1,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/3597\/revisions"}],"predecessor-version":[{"id":3598,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/posts\/3597\/revisions\/3598"}],"wp:attachment":[{"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/media?parent=3597"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/categories?post=3597"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ecolebooks.com\/nigeria\/wp-json\/wp\/v2\/tags?post=3597"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}