ALAN RYAN BComm GDE(Bus) HDEA MEd
 Focus student’s attention: Suspense came up  in 2002; 2004; 2006; 2008 & 2010! Recap on double entry Explain required ...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   Underline name of owner and put yourself    into the owner’s shoes(i.e. every time the    owner is mentioned, visualis...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   McCarthy had returned a motor car previously    purchased on credit for €15,600 from a    supplier. McCarthy entered t...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   Cash payments of €450 for repairs to    equipment had been credited to the creditors    account and also credited to t...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   McCarthy sent a cheque for €620 in full    settlement of a business debt of €660 and    this was recorded correctly in...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   McCarthy won a motor vehicle valued at    €30,000 in a draw. McCarthy gave this vehicle    to the business and took an...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   A cheque for €5,250 paid by McCarthy out of    a private bank account for 15 months hire of    diagnostic equipment up...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   Do this for each of the 5 adjustments   Journal and Suspense a/c should be    completed simultaneously   Calculate m...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   Open your blank “Statement of Corrected Net    Profit” and have the Balance Sheet from the    question sheet open in f...
 If it affects Trading & P & L A/c follow simple  rule: Left = Less (i.e. If it’s on Debit side of Journal,  put it unde...
   Repeat for each line in the Journal (suspense    entries have been dealt with in Suspense A/c)   Total the Statement ...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   Deal with the “original balance” suspense    figure that is included/incorporated into an    asset/liability in Balanc...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
i.     Look to see what side the original suspense       balance is onii.    Look to see what side the item that the      ...
   Rewrite the Balance Sheet on page 6,    ensuring that any asset/liability that involves    an addition/subtraction sho...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   Ensure that all previously asked theory bits    are known by students – can be up to 15    marks going for this part. ...
   An overdraft of €400 in the bank account had    been brought down on the incorrect side of    the nominal ledger and c...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   O Shea won a motor vehicle valued at    €20,000 in a grand prize draw. L O’ Shea    gave the vehicle to the business a...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   A private debt for €770, owed by O’ Meara,    had been offset in full against a business    debt of €820 owed to the f...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   Bedside lockers, previously sold on credit for    €340, had been returned to Craddock. These    goods had been incorre...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
   Focus student’s attention: Cash Flow    Statements came up in 2004; 2006; 2008 &    2010!   Recap on double entry    ...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
 Explain required layout: Page One contains working for: Asset T a/cs Dep of Asset T a/cs Disposal of Asset T a/cs   ...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
 Page 2 contains workings for: Taxation T a/c Loan interest T a/c Dividends T a/c                        Alan Ryan BCo...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
 Page 3 & 4 to contain: Reconciliation of operating profit to net cash  flow from operating activities Cash Flow Statem...
 Oh Really Should They Call Every Man Fat Operating activities Return on Investments & Servicing of Finance Taxation...
   Stress to students the importance of knowing    names of “reconciliations” as they may not be    given titles in the “...
 Check to see which Balance Sheet year comes  first when comparing last year to this year For increases/decreases in  st...
 WithDEBTORS, consider what happens when debtors decrease (even if particular question involves debtors increasing). Debt...
 With CREDITORS, consider what happens when creditors decreases (even if particular question involves creditors increasin...
 For non-cash item in the Reconciliation of  operating profit to net cash flow from operating  activities: Instil in stu...
   Deal with any other changes in asset/liability    values in the two Balance Sheets and enter    changes in Cash Flow S...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
 Components of “Net debt on 31/12..” in  “Reconciliation of net cash flow to movement  in net debt” are: Debenture loan ...
   Components of “Net debt on 1/1/..” are the    year end figures for the previous year which    are the opening balances...
Alan Ryan BComm, GDE(Bus),               HDEA, MEd
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Presentation on suspense and cash flow for bstai conference

  1. 1. ALAN RYAN BComm GDE(Bus) HDEA MEd
  2. 2.  Focus student’s attention: Suspense came up in 2002; 2004; 2006; 2008 & 2010! Recap on double entry Explain required layout: Page 1 & 2 for rough work (3 column system) Page 3 & 4 for Journal One Page 5 for Suspense A/c and Statement of Corrected Net Profit Page 6 for Corrected Balance Sheet Alan Ryan BComm, GDE(Bus), HDEA, MEd
  3. 3. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  4. 4. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  5. 5. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  6. 6. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  7. 7. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  8. 8. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  9. 9. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  10. 10.  Underline name of owner and put yourself into the owner’s shoes(i.e. every time the owner is mentioned, visualise it as “I”) Underline type of business and consider this while completing each adjustment Use 3 column system for each adjustment; enter the completed middle column directly into Journal; check for and enter missing Suspense figure; put in narration starting with word “Being...” and transfer Suspense figure directly into Suspense A/c. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  11. 11. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  12. 12. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  13. 13.  McCarthy had returned a motor car previously purchased on credit for €15,600 from a supplier. McCarthy entered this transaction as €16,500 on the correct sides of the correct accounts in the ledger. A credit note subsequently arrived from the supplier showing a transport charge of €600 to cover the cost of the return. The only entry made in respect of this credit note was a credit of €15,000 in the creditor’s account. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  14. 14. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  15. 15.  Cash payments of €450 for repairs to equipment had been credited to the creditors account and also credited to the motor vehicles account. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  16. 16. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  17. 17.  McCarthy sent a cheque for €620 in full settlement of a business debt of €660 and this was recorded correctly in the books. However, no entry had been made in the books of the subsequent dishonouring of this cheque and the payment on account of €300 cash by McCarthy. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  18. 18. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  19. 19.  McCarthy won a motor vehicle valued at €30,000 in a draw. McCarthy gave this vehicle to the business and took an old vehicle from the business valued at €22,500 which was to be used for private purposes. The only entry made in the firm’s books regarding both vehicles was a debit in the cash book for €22,500. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  20. 20. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  21. 21.  A cheque for €5,250 paid by McCarthy out of a private bank account for 15 months hire of diagnostic equipment up to 31/3/2010 had not been entered in the books. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  22. 22. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  23. 23.  Do this for each of the 5 adjustments Journal and Suspense a/c should be completed simultaneously Calculate missing figure in Suspense a/c and call it “original balance” Now place your completed Journal in front of you(forget about rough work pages now) Alan Ryan BComm, GDE(Bus), HDEA, MEd
  24. 24. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  25. 25. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  26. 26.  Open your blank “Statement of Corrected Net Profit” and have the Balance Sheet from the question sheet open in front of you also Insert the original net profit from the question into the Statement of Corrected Net Profit Go through each line in the Journal Ask yourself if it affects the Trading & Profit & Loss A/c OR the Balance Sheet Alan Ryan BComm, GDE(Bus), HDEA, MEd
  27. 27.  If it affects Trading & P & L A/c follow simple rule: Left = Less (i.e. If it’s on Debit side of Journal, put it under Less in the Statement of Corrected Net Profit – so credit side = Add) If it affects Balance Sheet, decide if it’s an asset or liability. If it’s an asset and on debit side of Journal, you need to add it to the asset in the Balance Sheet Literally, write a plus and the figure beside the asset on the question sheet. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  28. 28.  Repeat for each line in the Journal (suspense entries have been dealt with in Suspense A/c) Total the Statement of Corrected Net Profit and insert corrected net profit figure onto question sheet, replacing the original net profit. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  29. 29. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  30. 30.  Deal with the “original balance” suspense figure that is included/incorporated into an asset/liability in Balance Sheet by following this system: Alan Ryan BComm, GDE(Bus), HDEA, MEd
  31. 31. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  32. 32. i. Look to see what side the original suspense balance is onii. Look to see what side the item that the original suspense balance is included in is on (e.g. if it’s included in Stock, like 2010, this is the debit/left side)iii. If (i) & (ii) are on the same side, we WOULD HAVE added them so now we subtract themiv. If (i) & (ii) are on opposite sides, we WOULD HAVE subtracted them so now we add them Alan Ryan BComm, GDE(Bus), HDEA, MEd
  33. 33.  Rewrite the Balance Sheet on page 6, ensuring that any asset/liability that involves an addition/subtraction should have the original figure in brackets after the wording for the asset/liability followed by the additions/subtractions with the resultant answer in the appropriate column. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  34. 34. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  35. 35.  Ensure that all previously asked theory bits are known by students – can be up to 15 marks going for this part. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  36. 36.  An overdraft of €400 in the bank account had been brought down on the incorrect side of the nominal ledger and consequently had been entered on the incorrect side of the trial balance. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  37. 37. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  38. 38.  O Shea won a motor vehicle valued at €20,000 in a grand prize draw. L O’ Shea gave the vehicle to the business and took an old van from the business valued at €8,000, which was to be used for private purposes. The only entry made in the firm’s books regarding both motor vehicles was a debit in the cash book of €8,000. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  39. 39. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  40. 40.  A private debt for €770, owed by O’ Meara, had been offset in full against a business debt of €820 owed to the firm for car repairs previously carried out. No entry had been made in the books in respect of this offset. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  41. 41. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  42. 42.  Bedside lockers, previously sold on credit for €340, had been returned to Craddock. These goods had been incorrectly entered as €34 on the credit of the Fixtures & Fittings account and as €40 on the debit of the Purchases account. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  43. 43. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  44. 44.  Focus student’s attention: Cash Flow Statements came up in 2004; 2006; 2008 & 2010! Recap on double entry Alan Ryan BComm, GDE(Bus), HDEA, MEd
  45. 45. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  46. 46. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  47. 47.  Explain required layout: Page One contains working for: Asset T a/cs Dep of Asset T a/cs Disposal of Asset T a/cs Alan Ryan BComm, GDE(Bus), HDEA, MEd
  48. 48. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  49. 49.  Page 2 contains workings for: Taxation T a/c Loan interest T a/c Dividends T a/c Alan Ryan BComm, GDE(Bus), HDEA, MEd
  50. 50. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  51. 51.  Page 3 & 4 to contain: Reconciliation of operating profit to net cash flow from operating activities Cash Flow Statement Reconciliation of net cash flow to movement in net debt Alan Ryan BComm, GDE(Bus), HDEA, MEd
  52. 52.  Oh Really Should They Call Every Man Fat Operating activities Return on Investments & Servicing of Finance Taxation Capital Expenditure & Financial Investments Equity dividends paid Management of liquid resources Financing Alan Ryan BComm, GDE(Bus), HDEA, MEd
  53. 53.  Stress to students the importance of knowing names of “reconciliations” as they may not be given titles in the “Required to” section of question. Stress importance of learning the layout and order of each heading/section in the Cash Flow Statement and highlight the fact that marks are going for the headings Alan Ryan BComm, GDE(Bus), HDEA, MEd
  54. 54.  Check to see which Balance Sheet year comes first when comparing last year to this year For increases/decreases in stock/debtors/creditors ask yourself what’s happening your money: With STOCK, if it increased, we must have bought more so we have less money so it’s a minus Alan Ryan BComm, GDE(Bus), HDEA, MEd
  55. 55.  WithDEBTORS, consider what happens when debtors decrease (even if particular question involves debtors increasing). Debtors decreasing means debtors must have paid us, so we have more money so it’s a plus. If debtors increases it’s the opposite. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  56. 56.  With CREDITORS, consider what happens when creditors decreases (even if particular question involves creditors increasing). Creditors decreasing means we must have paid some of our creditors, so we have less money so it’s a minus. If creditors increases it’s the opposite. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  57. 57.  For non-cash item in the Reconciliation of operating profit to net cash flow from operating activities: Instil in students the reason why depreciation always needs to be added to operating profit As depreciation is a non-cash expense, then generalise that all non-cash expenses are added to operating profit (e.g. loss on sale of fixed asset). It then follows that all non-cash gains are subtracted from operating profit (e.g. decrease in provision for bad debts) Alan Ryan BComm, GDE(Bus), HDEA, MEd
  58. 58.  Deal with any other changes in asset/liability values in the two Balance Sheets and enter changes in Cash Flow Statement, again answering the question, “What affect does this have on cash?” Changes leading to a decrease in cash should be entered as a minus figure in Cash Flow Statement Alan Ryan BComm, GDE(Bus), HDEA, MEd
  59. 59. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  60. 60. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  61. 61.  Components of “Net debt on 31/12..” in “Reconciliation of net cash flow to movement in net debt” are: Debenture loan (minus) Bank (minus if overdraft/plus if current asset) Cash (plus) Government securities (plus) Note: end of year figures are used, not the difference from one year to the next. Alan Ryan BComm, GDE(Bus), HDEA, MEd
  62. 62.  Components of “Net debt on 1/1/..” are the year end figures for the previous year which are the opening balances for the present year Money used to purchase liquid resources/repay/increase debenture loans must be entered in “Reconciliation of net cash flow to movement in net debt” Alan Ryan BComm, GDE(Bus), HDEA, MEd
  63. 63. Alan Ryan BComm, GDE(Bus), HDEA, MEd

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