GCSE Accounting

312 Pages·1991·33.34 MB·English

by  D. E. Turner

GCSE Accounting
GCSE
Accounting
D. E. Turner
P. H. Turner
M
MACMILLAN
©D. E. Turner and P. H. Turner 1991
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First published 1991
Published by
MACMILLAN EDUCATION LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
British Library Cataloguing in Publication Data
Turner, D. E .. (Daphne E.)
GCSE accounting.
1. Accounting
I. Title II. Turner, P. H.
657
ISBN 978-0-333-52979-9 ISBN 978-1-349-11734-5 (eBook)
DOI 10.1007/978-1-349-11734-5
Contents
( Asterisked (*) units or sections cover the more difficult concepts,
which may be omitted from an initial or basic course.)
About this Book xi
Acknowledgements xi
Part One Unit 1
A BIRD'S EYE VIEW Accountancy: What it.is all about 3
lA. The first questions 3
lB. Structure of the accounting system 4
1C . Accounting conventions 5
lD. Help from machines 6
Part Two Unit 2
SUMMARISING THE NET WORTH Balance sheets: what they try to show 11
2A. Personal worth 11
2B. Clubs and commercial firms: what they are worth 13
Unit 3
Keeping track of the changes: 1 19
3A. The changing pattern 19
3B. Types of records 20
3C. Bank accounts 22
3D. Cash and security 23
Unit 4
Keeping track of the changes: Z 28
4A. The fuller picture 28
4B. The trial balance 32
4C. The accounting cycle 34
Unit 5
Reading meaning into balance sheets 39
SA. Balance sheet subgroups 39
* 5B. Interpretation 41
* 5C. Understanding the ratios 43
* 5D. The ratios and change 44
Part Two
Multiple-choice test 49
v
Contents
Part Three Unit 6
CALCULATING THE PROFIT Earning a living: I. The profit and loss account 55
6A. What is profit? 55
6B. Tracking the profit 56
6C. The nature of ledger accounts 59
Unit 7
Earning a living: Z. The accounts of traders 65
7A . The idea of gross profit 65
7B. Accounting for 'goods' 65
7C. Some more conventions 73
7D. The accounting cycle 74
Unit 8
Complications in traders' accounts 11
SA. Returns and allowances 77
8B. Transportation costs 80
8C. Discounts 81
8D. Wages and salaries 85
Unit 9
A closer look at trading: the use of day books 81
9A. The need for day books 87
9B. Day books of commercial concerns 88
9C. The journal 90
9D. Cycle of operations-updated 92
Part Three
Multiple-choice test 97
Part Four Unit 10
MORE ABOUT PROFIT Calculating profit: some complications 103
lOA. Accrued charges 103
lOB. Pre-payments 106
IOC. Accruals and pre-payments, and examination
questions 107
IOD. The 'matching' convention 107
Unit 11
Calculating profit: further complications 111
llA. Bad debts 111
liB. Bringing home the bacon 114
*Unit 12
Stock and its complications 118
12A. Valuation of closing stock 118
12B. Delayed stock-taking calculations 121
*Unit 13
Understanding profit 1Z 5
13A. Profit and capital 125
13B. Profit and turnover 128
13C. Rate of stock turnover 129
vi
Contents
13D. Turnover of debtors and creditors 130
13E. Use of the ratios 131
13F. The problem of inflation 131
Part Four
Multiple-choice test 135
Part Five Unit 14
BEING REALISTIC Accounting for wear and tear 141
14A. The nature of depreciation 141
14B. Accounting methods 141
14C. Calculating the depreciation 143
* 14D. Sale of a depreciated asset 144
14E. Examination questions 145
Unit 15
Providing for bad debts 150
15A. Potential bad debts 1S O
15B. Bad-debts provision and the trial balance 152
*Unit 16
A further look at business transactions: capital and revenue
transactions · 158
16A. Types of transactions 158
16B. Capital gains and losses 161
16C. Materiality 162
Unit 17
A look back at ledger posting 166
17A. Ledger posting: the background 166
17B. The posting of transactions 167
Part Five
Multiple-choice test 115
Part Si:x: Unit 18
SOME ROUTINE APPLICATIONS Looking after the pounds: another look atcash 119
18A. Specialised cash books 179
* 18B. Cash flows 184
18C. Looking after the pence: petty-cash accounting 185
Unit 19
Reconciling the bank balance 190
19A. Bank statements 190
19B. Further complications 193
*Unit 20
Paying the wages 198
20A. The wages system 198
20B. Ledger postings 201
20C. Wage payment procedures 201
vii
Contents
*Unit 21
Paying tax 205
21A. Tax and the business organisation 205
21 B. VAT : the general idea 206
21C. Book-keeping procedures 207
21D. Complications 208
Part Six
Multiple-choice test 213
Part Seven *Unit 22
ACCOUNTS OF PARTICULAR Accounting for clubs and societies 219
ORGANISATIONS 22A. Receipts and payments accounts 219
22B. Income and expenditure accounts 221
22C. Other final accounts of clubs and societies 223
*Unit 23
Accounting for partnerships 230
23A. General considerations 230
23B. Accounting procedures 231
23C. Goodwill in partnership accounts 234
Unit 24
Accounting for companies: 1. The background 239
24A. General considerations 239
24B. When not to form a company 241
*Unit 25
Accounting for companies: 2. Accounting procedures 244
25A. Ledger procedures 244
25B. Company final accounts 247
*Unit 26
The accounts of manufacturers 256
26A. The problem 256
26B. Form and content of manufacturers' accounts 257
26C. Alternative structure 260
Part Seven
Multiple-choice test 265
Part Eight Unit 27
CHECKING UP, SUMMING UP AND Getting the books right: 1. The correction of errors 211
SELLING UP 27A. Errors and their effect 271
27B. The correction of errors 272
* 27C. Correction through a suspense account 273
* 27D. Errors and examination questions 274
27E. Other uses of suspense accounts 276
viii
Contents
*Unit 28
Getting the books right: 2. Control accounts 219
28A. General principles 279
28B. Complications 283
*Unit 29
Incomplete records: putting the pieces together 288
29A. Statements of affairs 288
29B. Preparation of conventional final accounts 289
29C. Conversion to double entry 292
*Unit 30
Selling up the business 296
30A. Winding up 296
30B. Sale of an existing firm 297
Part Eight
Multiple-choice test 303
General revision: multiple-choice test 301
Appendix A. Coping with percentages 311
Appendix B. Using graphs and charts 316
Appendix C. Balancing accounts-the rules 319
Index 321
ix
About this book
This book gives a wide introduction to modern accounting, and
emphasises the logic and reason behind the procedures involved. We
have designed the book to be used in a number of different ways. It
may be used as an intensive one-year course, or as a 'straight-through'
two-year course-an appropriate aim for the end of the first year would
be unit 17. Alternatively, it is possible to choose some of the units to
form a basic and balanced course, with the possibility of suitable students
proceeding later to a course comprising the more difficult units (those
marked with an asterisk in the Contents).
The book attempts to involve the student as the course proceeds,
and to develop a questioning and intelligent approach to the issues
involved. Students are recommended to keep a record of the activity
work suggested in each unit, together with their answers to other
practical assignments.
Acknowledgements The authors wish to thank Mrs Judith Johnson and Miss Helen Turner
for their considerable help in preparing this book.
xi