CXC CSEC Principles of Accounts (POA) exam guide: Section 5: The preparation and analysis of financial statements of the sole-trader



CXC CSEC Principles of Accounts Exam guide: Section 5: THE PREPARATION AND ANALYSIS OF FINANCIAL<br /> STATEMENTS OF THE SOLE-TRADER<br />

CXC CSEC Principles of Accounts Exam Guide

Section 5: THE PREPARATION AND ANALYSIS OF FINANCIAL STATEMENTS OF                     THE SOLE-TRADER

 

SPECIFIC OBJECTIVES

The students should be able to:

CONTENT
1. Explain the purpose of preparing financial statements;

The purpose of preparing Financial Statements to satisfy the needs of user.

2. List methods of inventory (stock) valuation;

Methods of inventory (stock) valuation:

First in, First out (FIFO),

Last in, First out (LIFO),

Average Cost (AVCO)

3. Calculate the values of closing inventory (stock);

Calculation of closing inventory (stock) using: FIFO, LIFO, AVCO.

 

4. Assess the effect of different method of inventory (stock) valuation on profit;

The effect on profit of different methods of (inventory) stock valuation.
5. Prepare closing journal entries;

(a)  journal entries to close off accounts in the ledger

(b) linkage with Trading and Profit and Loss accounts

6. Identify the components of the Financial Statements;
Trading and profit and Loss Account and Balance Sheet.


7. Draw up the Trading and the Profit and Loss account to determine gross profit or loss and net profit or loss;

Trading and Profit and Loss Account for sole-traders including:

adjustments for return inwards and outwards;

closing stock.

8. Show the effect of net profit or loss on capital;

Treatment of net profit or loss on the Balance Sheet.
9. Use ratios to determine the performance (profitability) of the business;

Trading results:

simple ratios such as stock turn,

average stock,

gross profit percentage,

net profit percentage.


10.

Prepare classified balance sheet in vertical style;

Definition of working capital,

Calculation of working capital;

Preparation of classified Balance Sheet showing working capital.

11.

Explain the significance of the working capital for the operation of a business;

Working capital as a basic tool for solvency;

Working capital formula.

12. Calculate ratios to demonstrate the financial position of a business;

Analysis and interpretation of the financial position of a business using ratio:

current ratio;

acid test ratio;

return on investment.

13. Make recommendations about a business based on ratio analysis.

Preparation of simple reports evaluating a business based on ratios and making recommendations.

 

 


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person's picture
person (not verified)
principles of accounts

i have no idea what i am going to do for cxc tomorrow

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guest (not verified)
poa

life saver "sigh"

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keke (not verified)
helpful

this is very helpful and i want to say thanks! :)

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Zishan (not verified)
My Test is in 11 hours... and

My Test is in 11 hours... and I'm cramming 2 years of work in one night xD. Thank God for this site!

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guest (not verified)
thanks muchas gracias

thanks muchas gracias

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