ICAM Technician cheat sheet

Accounting equation: Assets = Liabilities + Capital (owner's equity); every transaction preserves this equality, so debits must always equal credits.

Double-entry rule: debit entries increase assets and expenses, decrease liabilities, capital and income; credit entries do the reverse.

Trial balance totals must agree; if they do not, the difference is divisible by 2 (single-sided/transposition) or by 9 (digit transposition).

Profit = Revenue − Expenses for a period; it increases capital, while drawings and losses decrease capital.

Accrual basis: revenue is recognised when earned and expenses when incurred, regardless of cash movement; the matching principle links costs to the same period's income.

Depreciation (straight-line) = (Cost − Residual value) ÷ Useful life; reducing-balance = Carrying amount × rate.

Gross profit = Sales − Cost of sales; net profit = Gross profit + Other income − Operating expenses.

Inventory: cost of sales = Opening inventory + Purchases − Closing inventory; closing inventory is a current asset in the statement of financial position.

Books of prime entry: sales day book, purchases day book, sales returns, purchases returns, cash book, petty cash book and general journal.

Bank reconciliation: adjusted cash book balance = balance per cash book + credits in bank statement not in cash book − debits not in cash book; then reconcile to the bank statement using timing differences.

Control account: receivables control balance should equal the sum of the individual sales ledger balances; differences arise from omissions, mispostings, or one-sided entries.

Suspense account is opened only for a trial balance difference and is cleared once errors are found; errors of principle and compensating errors do not affect the trial balance.

Statement of financial position: non-current assets + current assets = capital + non-current liabilities + current liabilities, with net current assets shown separately.

Statement of cash flows (indirect method): start with profit before tax, add back non-cash items (depreciation), adjust for working capital changes, then show investing and financing flows.

Ratios: current ratio = current assets ÷ current liabilities; quick ratio excludes inventory; gross margin = gross profit ÷ sales × 100.

Partnership: in the absence of an agreement, profits and losses are shared equally, no interest on capital is allowed, and no salary is paid to partners.