Prepare Final Accounts for Sole Traders and Partnerships
The exam consists of 5 tasks and it's 2 hours long:
- Task 1: Incomplete records and reconstructing general ledger accounts
- Task 2: Missing figures and the process involved in the preparation of financial statements
- Task 3: Financial statements for sole traders
- Task 4: Partnership accounting
- Task 5: Partnership statement of financial position
What to look out for in the exam
In order to be successful in this exam you must ensure that you have a good understanding of double entry bookkeeping.
Incomplete records and reconstructing general ledger accounts
You will be given some information (day books, VAT, bank or cash receipts & payments) but not all and those figures which are missing you will be required to calculate using various:
- Accounting equations
- Control accounts (sales, purchase, cash, bank, VAT)
- Mark-up and margins
So knowledge for all these techniques is required as they could be examined in both task 1 & 2. In task 1 you could be required to calculate the following:
- Opening and/or closing balances on capital, bank, VAT
- Prepare sales and purchases ledger control accounts and possibly calculate a missing balance such as irrecoverable debt, discounts received/allowed, cash paid or received, returns (this is not a comprehensive list)
Please be aware that there will be some irrelevant data included so you will need to identify which information is relevant.
Missing figures and the process involved in the preparation of financial statements
Normally one of the tasks in the exam focuses on using mark-up and margins to calculate the missing figure in the trading accounts, normally it is the cost of sales. From this information you will be require to calculate either the opening or closing inventories or purchases.
Financial statements of sole traders
Normally you will have to prepare either a statement of profit or loss or statement of financial position from a trial balance. An outline proforma will be given to you but you will still have to add headings where appropriate. Discounts and interest received and Profit on Disposal should be treated as sundry income and not as negative expenses.
This task is split into various sub questions so don’t be surprised to find you're being examined on an appropriation account (especially with a change in the partnership agreement), goodwill, capital or current account due to a new partner joining or due to a partner retiring. Therefore it is essential that you understood and know how to calculate the above.
Partnership statement of financial position
This task will require you to complete a statement of financial position for a partnership. Thankfully the assets and liabilities are prepared in exactly the same way as Sole Traders but you must be aware that the capital part differs as we are required to show each partner's capital and current account.
To give you the best chance of passing, we recommend that you join a Kaplan course. There are various options available: Classroom, Live Online, and Distance Learning. Alternatively, you could purchase separate Kaplan Publishing study text and or revision kit.