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Planning 6th Year After Final Accounts After Suspense Before Ratios

Pre-teaching Anticipation Sheet Review Double entry Profit v Cash Debt Items not involving movement of cash Sources of cash inflows and outflows

Questions 100 marks 60 marks Difference Abridged Profit and Loss required

100 Mark Timing 25% marks = 25% time 100 marks = 45 minutes Abridged P&L 18 marks Reconciliation of operating profit 20 marks Cash flow statement 46 marks Reconciliation of net debt 4 marks (40 mins) Theory (5 mins) 12 marks

OVERVIEW OF 2015 Read figures from right to left 2014 2013 Asset cash 34,000 60,000 Decrease (26,000) Liability Bank 18,000 31,000 Increase 13,000 Overall decrease (13,000) Last figure in Cash flow statement must be (13,000)

Net Debt 1/1/2014 130,000 + 31,000 - 60,000=101,000 31/12/2104 180,000 + 18,000 - 34,000 -58,000 (Government Securities) = 108,000

Adjustments 60,000 shares @ 1.25 each = share capital + 60,000 250,000 + 60,000 = 310,000 (Cash flow statement) share premium + 15,000 0 + 15,000 = 15,000

CASH/BANK A/C DR/Rec CR/Paid Disposal of Asset 30,000 Purchase of Asset    Taxation Paid  Dividend Paid

2. Fixed Asset Fixed Asset Cost 50,000 Depreciation 25,000 Sold for 30,000 Disposed (25,000) + P & L charged 145,000 (Reconciliation of operating profit figure) Dep 31/12/14 200,000

Fixed Asset Cost 1/1/14 470,000 - Disposal 50,000 Purchase 220,000 (Cash flow statement) Cost 31/12/14 640,000

Disposal a/c Cost 50,000 Dep (25,000) NBV 25,000 Cash 30,000 (Cash flow statement) Profit 5,000 (Reconciliation of operating profit )

Fixed Assets Balance 1/1/14 470,000 Balance 31/12/14 640,000 690,000 Disposal 50,000 Purchase of Asset 220,000 Depreciation a/c Disposal 25,000 Balance1/1/14 80,000 Balance 31/12/14 200,000 225,000 P & L 145,000 Disposal A/C Fixed Asset 50,000 Depreciation 25,000 Profit 5,000 Bank 30,000 55,000 55,000

3. Debentures 50,000 Debentures issued on 1/1/14 1/1/14 Bal 130,000 (Cash flow statement/ movement in net debt) 31/12/14 Bal 180,000 10% Debenture Interest 18,000

4. Dividends Dividends paid during year amounting to 55,000. Dividends (B/S) - - Dividends Paid 55,000 (abridged P & L/Cash flow statement)

5. Taxation Taxation charge on profits for 2014 amounted to 65,000. 2014 2013 Taxation (B/S) 55,000 47,000 1/1/14 Due 47,000 + P & L 65,000 (abridged P & L) 112,000 31/12/14 Due 55,000 Paid 57,000 (Cash flow statement)

Taxation A/C Balance due 1/1/14 47,000 Balance due 31/12/14 55,000 112,000 Bank 57,000 P & L 65,000

6. Investment 1/1/14 Bal 200,000 Sold (100,000) (Cash flow statement) 31/12/14 Bal 100,000

FORMAT!!

Abridged Profit and Loss account for year ending 31/12/2014 Operating Profit Less Interest Profit before Tax Taxation Profit after Tax Dividends Retained Profit Profit and Loss 1/1/2014 Profit and Loss 31/12/2014

Abridged Profit and Loss account for year ending 31/12/2014 Operating profit ? Less interest Profit before tax Taxation Profit after tax Dividends Retained profit Profit and loss balance 1/1/2014 356,500 Profit and loss balance 31/12/2014 361,500

Abridged Profit and Loss account for year ending 31/12/2014 Operating profit 145,000 Less interest (18,000) Profit before tax 125,000 Taxation (65,000) Profit after tax 60,000 Dividends (55,000) Retained profit 5,000 Profit and loss balance 1/1/2014 356,500 Profit and loss balance 31/12/2014 361,500

Reconciliation of operating profit to net cash flow from operating activities Operating profit Depreciation charge for year Profit on sale of fixed assets Increase in provision (bad debts) Increase/decrease Stock Debtors Creditors =Net cash inflow/outflow from operating activities

O Old R Roy’s T Trafford C Can E Earn M Much F Funds

Cash flow statement of ABD for year ended 31/12/14 O Operating Activities R Return on Investment and Servicing of Finance T Taxation C Capital Expenditure and Financial Investment E Equity Dividends paid (net cash outflow before liquid resources and financing) M Management of Liquid Resources F Financing (Decrease/Increase in Cash)

Reconciliation of net cash to movement in net debt Decrease/Increase in cash Cash used to purchase liquid resources Cash received from issue of debentures Change in net debt Net debt at 1/1/14 (given) Net debt at 31/12/14 (given)

TIPS Students need to have a clear plan for exam Must do at least 4 questions if doing question 1, otherwise must do 5 questions Not all questions carry equal marks Up to 20% of any question can be theory Practice, Practice, Practice Prepare exam style questions using stop watch in class.

P Be Prepared E Be Enthusiastic C Be Confident