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Preparing Financial Accounting Information

7 dot points across 7 inquiry questions. Click any dot point for a focused answer with worked past exam questions where available.

Which accounting concepts and conventions govern how financial statements are prepared, and how do they affect the figures reported?

The fundamental accounting concepts and conventions (going concern, accruals, consistency, prudence, materiality, business entity, money measurement, historical cost and matching) and their effect on the preparation of financial accounting information.
A focused answer to the SQA Higher Accounting concepts and conventions content, covering going concern, accruals, consistency, prudence, materiality, business entity, money measurement, historical cost and matching, and how each one shapes the figures in the financial statements.
9 min answer →

How do you prepare departmental accounts that apportion shared costs so the profit of each department can be judged?

Preparation of departmental income statements, including the apportionment of shared expenses between departments on a suitable basis and the calculation of each department's gross and net profit to support decisions about a department.
A focused answer to the SQA Higher Accounting departmental accounts content, covering why a business splits results by department, choosing a fair basis to apportion shared expenses, calculating each department's profit, and using the result to judge a department.
9 min answer →

How is depreciation of non-current assets calculated and recorded, and how is the disposal of an asset accounted for?

Calculation and recording of depreciation using the straight-line and reducing-balance methods, the reasons for depreciating non-current assets, and the accounting treatment for the disposal of a non-current asset including any profit or loss on disposal.
A focused answer to the SQA Higher Accounting depreciation content, covering the straight-line and reducing-balance methods, why assets are depreciated, the accumulated depreciation and carrying value, and the accounting for the disposal of a non-current asset with any profit or loss.
9 min answer →

How do you prepare the income statement and statement of financial position of a limited company, including share capital, reserves and dividends?

Preparation of the income statement and statement of financial position for a limited company, including ordinary and preference share capital, share premium, the general reserve, retained earnings, dividends, debentures and the appropriation of profit.
A focused answer to the SQA Higher Accounting limited company content, covering ordinary and preference share capital, share premium, reserves, retained earnings, dividends, debentures, and how a company appropriates profit and presents its equity.
10 min answer →

How do you prepare a manufacturing account to find the cost of goods manufactured, and how does it link to the income statement?

Preparation of a manufacturing account showing prime cost and the cost of goods manufactured, including direct materials, direct labour, direct expenses, factory overheads and the adjustment for work in progress, and its link to the income statement.
A focused answer to the SQA Higher Accounting manufacturing account content, covering prime cost, factory overheads, the work in progress adjustment, the cost of goods manufactured, and how the manufacturing account feeds the income statement.
9 min answer →

How is the profit of a partnership shared between the partners, and how are the appropriation account and the capital and current accounts prepared?

Preparation of the partnership appropriation account and partners' capital and current accounts, including interest on capital, interest on drawings, partners' salaries and the division of residual profit in the agreed profit-sharing ratio.
A focused answer to the SQA Higher Accounting partnership content, covering the appropriation account, interest on capital and drawings, partners' salaries, sharing residual profit in the agreed ratio, and the difference between fixed capital accounts and fluctuating current accounts.
10 min answer →

How do you prepare an income statement and a statement of financial position for a sole trader, including the year-end adjustments?

Preparation of the income statement (trading and profit and loss) and statement of financial position for a sole trader, including adjustments for closing inventory, accruals, prepayments, depreciation, irrecoverable debts and provision for doubtful debts.
A focused answer to the SQA Higher Accounting sole trader final accounts content, covering the income statement and statement of financial position with year-end adjustments for inventory, accruals, prepayments, depreciation, irrecoverable debts and a provision for doubtful debts.
10 min answer →