BGCSE Accounting 1442 study guide
BGCSE Accounting 1442 · Work through your exam, one topic at a time.
BGCSE Accounting (1442) is a secondary-school accounting qualification offered in the Bahamas. It is intended for candidates who have studied accounting at school and want a recognised certificate showing that they can record, organise and interpret financial information. The BGCSE Accounting 1442 study guide has 8 sections and about 2,428 words.
01Accounting principles, concepts and conventions
Financial statements rest on assumptions that answer the question 'when and how much do we record?' The business entity concept separates the owner's private money from the firm's, so drawings are not an expense. Going concern assumes the business will continue, which justifies carrying assets at cost rather than at break-up value.
336 words, about 2 min02Double-entry bookkeeping and books of original entry
Every transaction begins with a source document and is first recorded in a book of original entry : sales day book (credit sales), purchases day book, sales returns day book, purchases returns day book, cash book including petty cash, and the general journal for everything else. Amounts are then posted to the ledger - the sales and purchases ledgers hold personal accounts, while the nominal (general) ledger holds expenses, income, assets and liabilities.
308 words, about 2 min03Trial balance, correction of errors and suspense accounts
A trial balance lists every ledger balance to check that total debits equal total credits. It does not prove the books are correct: errors of omission, commission, principle, original entry, compensating errors and complete reversal of entries all leave the totals in agreement.
320 words, about 2 min04Control accounts and bank reconciliation
The sales ledger control account summarises all debtors; the purchase ledger control account summarises all creditors. Debits in the debtors control are opening balance, credit sales, interest charged, dishonoured cheques and bad debts recovered.
316 words, about 2 min05Final accounts of sole traders
A sole trader prepares a trading account (gross profit) and a profit and loss account (net profit), often as a combined trading and profit and loss account, then a statement of financial position . Gross profit = sales − returns inwards − cost of sales, where cost of sales = opening stock + purchases − returns outwards + carriage inwards − closing stock.
301 words, about 2 min06Accounting for partnerships
Partners share profits under a partnership agreement. The appropriation account starts with net profit, deducts partners' salaries and interest on capital, adds interest charged on drawings, and divides the residual profit in the agreed ratio.
275 words, about 1 min07Accounting for non-profit organisations
A club keeps a receipts and payments account , which is a cash summary and not a profit statement. To measure performance it prepares an income and expenditure account on the accruals basis, showing a surplus or deficit.
282 words, about 1 min08Interpretation of financial statements and accounting ratios
Ratios turn financial statements into comparisons: over time, against other firms and against budgets. The key measures are gross profit margin (gross profit ÷ sales × 100), net profit margin (net profit ÷ sales × 100), return on capital employed (operating profit ÷ capital employed × 100), current ratio (current assets : current liabilities), acid test (current assets − stock : current liabilities), stock turnover (cost of sales ÷ average stock, in times), debtor collection period (debtors ÷ credit sales × 365) and creditor payment period (creditors ÷ credit purchases × 365).
290 words, about 1 min