Intermediate Financial Accounting

Apply the proforma statement of financial position and balance sheet format, use the accounting equation assets minus liabilities equals capital, and identify current and non-current assets, tangible and intangible, profits.

Learn to prepare an income statement, compute gross profit with cost of goods sold, and see how profit flows into capital while classifying items as assets, liabilities, income, or expenses.

Master the accounting equation by applying assets, liabilities, and capital, using formulas such as assets minus liabilities equals capital and assets equals liabilities plus capital, with drawings impacting capital.

Understand how organizational policies and procedures ensure timely, accurate, and reliable financial reporting for internal and external stakeholders, with controls like authorization, arithmetical checks, and segregation of duties.

Explore ethical principles guiding financial professionals, including integrity, objectivity, professional competence, confidentiality, and professional behavior, and apply these to public interest and accountability in accounting.

Identify threats to the fundamental principles of integrity, objectivity, professional competence, confidentiality, and professional behavior in accounting—self-interest, self-review, advocacy, familiarity, and external pressure—and show how accruals concepts guide ethical decisions.

Practice session on classifying items as assets, liabilities, capital, income, or expenses and placing them in the SFP or SPL; includes ethical principles and fraud controls.

Differentiate capital expenditure from revenue expenditure and study non-current assets. Identify tangible assets such as land and buildings, motor vehicles, and plant and machinery, and learn debit and credit.

Compare capital and revenue expenditure and learn how to capitalize non-current assets, including delivery and installation costs, under a capitalization policy with a minimum level and depreciation implications.

Assess vat on non-current assets, noting the 20 percent rate. Registered businesses reclaim vat and exclude it from capitalization, while unregistered businesses include vat in the asset cost.

Authorize capital expenditures to prevent loss and fraud, apply tiered approval from supervisor to owner based on cost, and use market research and authorization forms to ensure needed, cost-efficient purchases.

learn how to record noncurrent assets with double-entry accounting, including cash and loan purchases, higher purchase, vat treatment, and effects on the statement of financial position.

Examine capital versus revenue expenditures for a new machine, calculate total asset cost (machine, delivery, installation, professional fees), and apply funding, VAT, and journal entries.

Explore the depreciation of non-current assets and how to match cost with income over useful life using straight-line, diminishing balance, and production methods.

Calculate depreciation using the straight-line method by deducting residual value from cost, dividing by useful life, and recording a fixed annual depreciation charge while updating accumulated depreciation and carrying amount.

Apply the diminishing balance method to calculate depreciation charges using a fixed percentage of the carrying amount each year, and track accumulated depreciation toward the net book value.

Depreciate assets using the units of production method based on actual usage. Compute depreciation as units produced over total units times cost, with any residual value considered.

Apply depreciation for assets bought partway through the year either on a pro-rata month-by-month basis or on a full-year basis, using straight-line depreciation and recognizing accumulated depreciation and carrying amount.

Learn to calculate straight-line depreciation from cost, residual value, and useful life, and record depreciation expense and accumulated depreciation on the income statement and balance sheet.

test your understanding of depreciation concepts in chapter four, covering the matching principle, accruals, consistency, and methods like straight-line, diminishing balance, and units of production through practical calculations.

Explore the disposal of non-current assets, including selling at profit or loss, part exchange, and recording disposal in the asset register with cost, depreciation, and carrying amount.

Analyze disposal of non-current assets by calculating carrying amount, comparing sale proceeds to it to determine gain or loss, and recording the double-entry entries including depreciation, disposal, and bank receipts.

Examine part exchange in asset disposal, including removing the old asset and its accumulated depreciation, recording the new asset, determining gain or loss, and noting any bank payments.

Apply full-year depreciation in the purchase year and pro-rata depreciation for disposals. Compute the carrying amount and assess gain or loss on disposal.

Maintain a non-current assets register to record description, serial number, acquisition date, cost, depreciation method (straight line or reducing balance), carrying amount, funding method, and disposal proceeds.

Develop proficiency in recording non-current asset register transactions by applying acquisition, depreciation, disposal, and funding details for office equipment, printer, and motor vehicle, including VAT implications and depreciation methods.

Depreciation is the systematic allocation of a depreciable amount over an asset’s useful life; disposal accounting uses a double-entry to remove cost and accumulated depreciation and record sale proceeds.

Practice asset accounting concepts, including non-current assets and depreciation methods (diminishing balance 40% and pro-rata straight-line), carrying amounts, and gains or losses on disposal.

Learn accruals and prepayments in accounting, showing how accrued expenses create current liabilities and prepaid expenses become assets, with journal entries and matching-concept adjustments.

Learn how to reverse accrued expenses, turning last year’s liability in the SFP into a debit to accrued expenses and a credit to the expense, aligning current-year records.

Learn how prepaid expenses become current assets and reduce current period expenses, using accruals and journal entries to adjust for the next period.

Explore the reversal of prepaid expenses by reversing opening prepaid to expense, adjusting the SPL and SFP with debits and credits.

Accrued income is earned but not yet received and is recorded as a current asset and income on the income statement, reflecting accruals with a debit to accrued income.

Reverse accrued income in the statement of financial position (SFP) by debiting income and crediting accrued income, with a commission income example and its impact on profit and loss.

Explore prepaid income as a current liability and deferred revenue, learn to adjust income for period prepaid amounts, and record journal entries for maintenance service income.

Explore how to reverse prepaid income to cancel prior period balances, adjusting the prepaid income liability and recording the corresponding income adjustment in the current period.

Explain opening and closing prepaid and accrued expenses and revenues, apply reversals, and compute year's rent expense and commission income for the balance sheet and profit and loss statement.

Prepare trial balance extracts, balance debit and credit sides, and apply accruals, prepaid expenses, and accrued income concepts to adjust ledgers and prepare financial statements.

Apply accrual accounting concepts to determine prepaid expenses and prepaid income, and learn to adjust current assets and liabilities within the double-entry framework.

Practice adjusting entries for prepaid and accrued expenses to impact profit and loss and balance sheet, including rent income, insurance, commission income, and year-end cashbook adjustments.

Learn how inventories, as current assets, affect cost of sales and profit through opening and closing stock, the cost of sales formula, and lower of cost or net realizable value.

Identify how quantity and valuation determine inventory cost using the lower of cost and net realizable value. Include cost components, NRV calculation, and prudence in adjustments.

Compute inventory cost from the selling price by subtracting the profit element; selling price minus profit equals cost, including VAT where shown.

Explore the FIFO, AVCO, and LIFO inventory costing methods, including their cost estimation logic, perishable item use, and IAS implications for closing inventory.

Explore reconciliation of physical and computerized inventory counts. Identify discrepancies caused by counting errors, damaged or stolen goods, and items not yet dispatched, and see how these affect inventory records.

Explore inventory valuation through cost versus net realizable value, applying the lower of cost and NRV rule, and practice closing entries under FIFO.

Explore irrecoverable and doubtful debts, learning how to write off irrecoverable debt to profit or loss and adjust trade receivables, with specific and general allowances for insolvency and doubt.

Learn how irrecoverable debt affects the ledger control account and trade receivables, including writing off bad debt to the irrecoverable account and its impact on the PNL.

Discover how the recovery of irrecoverable debt increases income and the bank balance when previously written-off amounts are collected, while cash receipts cannot offset against the sales ledger.

Explore doubtful debt and how to apply specific and general allowances according to organizational policy, using write-offs, trade receivables, and profit and loss impacts.

Adjust the general allowance for doubtful debts by comparing opening and closing balances, applying the percentage, and accounting for irrecoverable and allowances; record increases as expenses or decreases as income.

Test your advanced bookkeeping knowledge with activity seven, exploring irrecoverable debts, the allowance for doubtful debts, and their impact on the SPL and SFP.

Practice journal entries for irrecoverable debts, write-offs, and recovery, and adjust the sales ledger control account with specific and general allowances.

Explore bank reconciliation by comparing cashbook and bank statement balances. Identify timing differences, unrecorded lodgement, unpresented checks, and bank items, then update the cashbook accordingly.

Learn to update the cash book and perform bank reconciliation by matching debits and credits with the bank statement, and adjust for timing differences and outstanding lodgement.

Explore the bank reconciliation process by matching cashbook entries with bank statements, identifying unrecorded lodgement and outstanding checks, and balancing the cashbook with the bank balance.

Tackle assessment style questions in intermediate financial accounting by building cashbook and bank statement reconciliations, identifying timing differences, and applying adjustments for lodgements, interest, and checks.

Explore bank reconciliation and cash book adjustments in BRS question 2, covering unrecorded lodgements, unpresented checks, and correcting errors to align cash and bank balances.

Work through bank reconciliation concepts, distinguishing items for the bank statement versus cash book, and learn monthly adjustments to update records and prevent fraud.

Master the bank reconciliation process with quick questions on standing order payments, faster payments, cashbook versus bank statement entries, and adjustments for unpresented checks and lodgments.

Explore control accounts and reconciliations, including the purchase and sales ledgers, and connect day books, cash book, and the general ledger through double-entry accounting.

Explain how to maintain and reconcile the receivables ledger control account with its subsidiary sales ledger, posting credit sales, returns, discounts (discount allowed), credit notes, and VAT to verify balances.

Explore reconciling payables ledger control accounts (plca) by tracking credit purchases from suppliers j and k through the purchase daybook and returns, and confirming the control total matches individual ledgers.

Learn how to reconcile the purchase ledger with a supplier statement, using invoices, credit notes, discounts, payments, and returns to verify the balance due and align t accounts.

Learn how prompt payment discounts affect accounting for credit sales and purchases, including the journal entries for discount allowed and discount received and their impact on ledgers.

Explore contra entries that offset intercompany receivables and payables when buyer and seller are the same, using the lower amount (70) to settle, leaving 130, and record the journal entry.

practice the sales ledger control account reconciliation form for august, performing contra entries, discount allowed, returns, and balance verification against the ledgers to detect discrepancies.

Reconcile the control account with the subsidiary ledger using assessment-style step-by-step adjustments and identify whether errors affect the control account or the subsidiary balances.

Practice reconciling the purchase ledger control account by recording adjustments for missing entries and errors, and verify balances with the subsidiary ledger.

Review payroll concepts from level two and advanced bookkeeping with a concise reminder recap for intermediate financial accounting.

Practice calculating and balancing sales and purchase ledger control accounts with adjustments, and record payroll entries and liabilities, including HMRC and suspense accounts.