Accounting procedures

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Sample objectives

What this unit covers

• Capital and revenue expenditure and receipts: Identify and record the differences between capital and revenue expenditure, as well as capital and revenue receipts. Assess the impact on profit from incorrect classifications and evaluate how misclassifications affect asset valuations.
• Accounting for depreciation and disposal of non-current assets: Understand and account for the depreciation and disposal of non-current assets. This includes defining depreciation, explaining its significance, identifying and describing the straight-line, reducing balance, and revaluation methods of depreciation, as well as preparing ledger accounts and journal entries for recording depreciation provisions and the sale of non-current assets, including the use of disposal accounts.
• Other payables and other receivables: Understand the significance of aligning expenses with revenues. Create ledger accounts and journal entries for accrued and prepaid expenses. Create ledger accounts and journal entries for accrued and prepaid incomes.
• Irrecoverable debts and provision for doubtful debts: Comprehend the concept of irrecoverable debts and the process of recovering debts that have been previously written off. Create ledger accounts and journal entries to document irrecoverable debts. Create ledger accounts and journal entries to document the recovery of previously written off debts. Clarify the importance of having a provision for doubtful debts. Create ledger accounts and journal entries to record the establishment of, and changes to, a provision for doubtful debts.
• Valuation of inventory: Understand how to value inventory using the lower of cost or net realizable value method. Be able to create basic inventory valuation statements. Acknowledge the significance of inventory valuation and how an inaccurate valuation can impact gross profit, annual profit, equity, and asset valuation.