A-level Accounting₇₁₂₇

The use of concepts in the preparation of financial statements.

The use of concepts will result in recording:

• accruals and prepayments
• depreciation (using straight line and reducing balance methods)
• disposal of non-current assets
• provision for doubtful debts
• irrecoverable debts
• recovery of irrecoverable debts
• income due
• income received in advance
• goods taken for own use
• goods on sale or return
• inventory.

Note: first in, first out (FIFO), average cost (AVCO) and last in, first out (LIFO) methods of inventory valuation will not be examined.

How to prepare financial statements of sole traders from ledger accounts including adjustments from the application of accounting concepts.

Sole traders’ financial statements could be for:

• service businesses
• trading businesses.

Preparation of financial statements could include the recording of adjustments and items listed above in ledger accounts.

How to prepare income statements and statements of financial position from a trial balance including adjustments from the application of accounting concepts.