Term
| What is the accounting policy for Property, plant and equipment? |
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Definition
| Property, plant and equipment are stated at their original price, and except for land, depreciated. |
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Term
| What is the accounting policy for depreciation? |
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Definition
| The cost less residual value of property, plant and equipment (except for land) is depreciated over their estimated useful lives. |
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Term
| What are prepayments and what is the balance day adjustment for it? |
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Definition
Prepayments are items the business has already paid for, part of which relates to the next accounting period. This is a CURRENT ASSET.
Prepayments - Dr
Expense (eg. Insurance, rates) – Cr |
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Term
| What are accrued expenses and what is the balance day adjustment for it? |
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Definition
Accrued expenses are expenses owing on balance day, but have not yet been paid.
This is a CURRENT LIABILITY.
Expense (eg. Wages, interest) - Dr
Accrued Expenses – Cr |
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Term
| What is accrued income and what is the balance day adjustment for it? |
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Definition
Accrued income is income that has been earned but has not yet been received in the current accounting period.
This is a CURRENT ASSET.
Accrued income - Dr
Interest owing/dividends – Cr |
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Term
| What is income received in advance and what is the balance day adjustment for it? |
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Definition
It is income that is belonging/relating to that in the next accounting period.
This is a CURRENT LIABILITY
Rent Received (or any other form of income) - Dr
Income in Advance – Cr |
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Term
| What is plant, property and equipment and what is the balance day adjustment for it when purchased on credit? |
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Definition
Plant, property and equipment is a NON CURRENT ASSET. It was a form of P.P.E. that was purchased BY the business.
Office equipment (or any other P.P.E. that was purchased) - Dr
GST - Dr
Accounts Payable (and name of business) – Cr |
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Term
| What is the balance day adjustment for depreciation? |
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Definition
Depreciation expense - name of asset - Dr
Accumulated Depreciation - name of asset – Cr |
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Term
| What is the equation for depreciation expenses? |
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Definition
Cost Price - Residual/Salvage value
divided by
Estimated useful life
=Depreciation expense |
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Term
| What are the types of assets found in the income statements "Finance Costs"? |
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Definition
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Term
| What are the types of assets found in the income statements "Administrative Costs"? |
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Definition
| Office expenses, rent, telephone, office wages/salaries, depreciation on office equipment/buildings, accountancy fees etc |
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Term
| What are the types of assets found in the income statements "Distrubution Costs/'insert asset name here' costs"? |
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Definition
| Shops, sales wages, advertising, vehicle costs, rent on shop, shop electricity, depreciation on shop fittings/vehicles |
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Term
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Definition
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