O Level Accounting: Foundations (7707)

The business is not the owner

The business entity principle, and what it means for Nadia's own savings once they sit in the shop's bank account.

Preview6m

Assets, liabilities and capital

The three words the whole subject is built from, and the equation that ties them together, proved from opening day.

Every transaction keeps the equation level

Three documents from the first week of January, each one changing exactly two figures by the same amount.

Does a loan make Nadia richer?

The City Bank loan raises assets and liabilities together, so capital does not move at all.

Finding a capital figure nobody gave you

An unknown capital is found by subtracting liabilities from assets, once each list is sorted and totalled.

The equation written three ways

Which form to use depends on which of the three figures a question has left out.

Ten days at Kalam Stationers

Nadia's opening documents, the till, the van, and the first sales and wages, posted end to end.

Exam practice: a new business

Six Paper 1 questions with the trap behind each wrong answer, then a structured Paper 2 question on Sweet Crumb Bakery.

10.

What accounting is for: quick revision

The chapter on one screen, the method to find a missing figure in order, and a spaced flashcard deck to come back to.

2.1 · Double entry: the two sides of every transaction

Post Kalam Stationers' first January from real documents. Debit and credit are derived from the equation, then drilled, then used on compound entries, running balances and balancing off.

0/12

One account can never move alone

Nadia draws $1,000 for the till. Is the shop richer? The equation says two things must always change.

Debit and credit come from the equation

A T-account is a small copy of the equation, which fixes the side every category grows on. Then the four steps to any entry.

Why a list comes before the ledger

Buying and selling on credit

Paper House delivers and Green Leaf School orders, with no money moving. The other half of the entry is a person.

Goods to sell, or an asset to keep

A van and a box of geometry sets: Purchases is for goods bought to sell again, and the reason decides.

Settling a debt is not an expense

Paying Paper House and being paid by Green Leaf School move the bank balance, never the owner’s capital.

Expenses and drawings

Electricity for the shop and groceries for home both reduce capital. Only one of them reduces profit.

The January sprint

Every kind of January entry, shuffled. Keep the streak going and aim for three stars.

Month end: compound entries

Tuhin runs the desk alone. Five documents, two of them changing three accounts at once.

10m

Three-column running-balance accounts

Kalam's bank account line by line, the way a bank statement shows it, with the side of every balance.

10.

Balancing off an account

Close the cash account at 31 January: c/d on the smaller side, equal totals, b/d where the balance really is.

11.

Exam practice: a new business

Six Paper 1 questions with the trap behind each wrong answer, then an 11-mark Paper 2 question on Phone Point.

12.

Double entry: quick revision

The chapter on one screen, one broken entry to fix, and a spaced flashcard deck to come back to.

2.2-2.3 · Books of prime entry: list first, then post

Kalam Stationers in February: the sales, purchases and returns day books, the three-column cash book and contra entries, trade against cash discount, the petty cash book on the imprest system, and the general journal.

0/10

A dozen documents land on Tuhin’s desk in a week. A book of prime entry lists each one before it reaches the ledger.

Preview5m 2.

The sales day book and the purchases day book

Two real January invoices, laid out as a day book would list them, before the total is posted.

Preview6m

Returns inwards and returns outwards

A credit note received and a credit note issued, each listed in its own returns day book and posted from the source document.

The cash book, and a contra entry

Cash and bank in one book, a discount column, and cash drawn from the bank recorded without leaving the book.

Trade discount and cash discount

One discount never reaches the books at all. The other splits a settlement into three lines.

Petty cash and the imprest system

A fixed float, spent against vouchers, and a reimbursement that always equals the spending.

The general journal and its narrative

Opening entries fit no day book. Every general journal entry also carries a one-line narrative.

The February sprint

February’s documents, shuffled. Keep the streak going and aim for three stars.

Exam practice: a new business

Six Paper 1 questions with the trap behind each wrong answer, then a 10-mark Paper 2 question on Rina’s Fashion House.

10.

Books of prime entry: quick revision

The chapter on one screen, one broken discount entry to fix, and a spaced flashcard deck to come back to.

3.1-3.2 · The trial balance

Build a trial balance from Kalam Stationers' January ledger, prove what it does and does not check, meet the ten named errors, and clear a Suspense account with correcting journal entries.

0/7

Building the trial balance

Balance one account, then list every account's closing balance in two columns.

What a balanced trial balance proves, and what it does not

Three of Tuhin's mistakes still leave both columns equal. Meet the six errors a trial balance cannot catch.

Two records, one bank account

When the two columns disagree

Four errors do throw the totals apart, and a difference divisible by nine names a suspect.

The suspense account

Open Suspense for the gap, correct Tuhin's three mistakes, and watch the gap close to nil.

Correcting journal entries

A fresh case file: three more errors, none of them touching Suspense at all.

Exam practice: a new business

Six Paper 1 questions with the trap behind each wrong answer, then a 12-mark Paper 2 question on Deshi Hardware.

The trial balance: quick revision

The chapter on one screen, one broken correction to fix, and a spaced flashcard deck to come back to.

3.3 · Bank reconciliation

Update Kalam Stationers’ cash book for events City Bank knew about first, then reconcile the remaining timing differences to the bank-statement balance without double-counting either.

0/9

City Bank and Kalam keep two records of the same account, and a gap between them is not automatically an error.

Timing differences settle themselves

An unpresented cheque and an uncredited deposit are already in the cash book, so they belong on the reconciliation statement only.

Preview7m

When the bank knows first

Bank charges, a standing order and a credit transfer reach Kalam only through the statement, so the cash book must catch up first.

Updating the cash book

A worked, dual-column update of Kalam’s cash book for the three items the bank recorded first.

Preparing the reconciliation statement

From the updated cash book to the bank-statement balance, and back again when the question starts from the statement.

A cheque that bounces

Green Leaf School’s cheque is dishonoured: Kalam’s cash book falls again, and the debt is restored on Green Leaf’s own account.

The May statement, all at once

Six items on one statement, sorted at speed: cash-book items first, then the timing differences.

Exam practice: a new business

Six Paper 1 questions with the trap behind each wrong answer, then a 13-mark Paper 2 reconciliation on Rupali Hardware Store.

Bank reconciliation: quick revision

The chapter on one screen, one broken reconciliation line to fix, and a spaced flashcard deck to come back to.

3.4 · Sales and purchases ledger control accounts

Build the sales and purchases ledger control accounts from June and July at Kalam Stationers, then reconcile each to its list of individual balances, including a credit balance and a contra entry.

0/9

Why a control account exists

Kalam now has 40 credit customers. A control account checks the total without listing every one.

The sales ledger control account

Build June's control account line by line: opening balance, credit sales, receipts, discounts, returns, write-offs, a dishonoured cheque and a contra.

Why the income statement has two stages

The purchases ledger control account

Derive the purchases ledger control account from the sales ledger control account: what stays the same, and what flips.

Reconciling to the list of balances

The control account and the list of 40 balances disagree. Sort a casting error from a listing error before correcting either.

A credit balance in the sales ledger

Delwar Store overpays by mistake. What a credit balance in a receivables ledger means, and how it is shown.

Contra entries between the two ledgers

Paper House Ltd is both Kalam's supplier and, this month, its customer. Setting the two balances off without moving cash.

The control account sprint

Every kind of control-account posting, sales and purchases ledgers mixed, shuffled. Aim for three stars.

Sales and purchases ledger control accounts: exam question

Six Paper 1 questions with the trap behind each wrong answer, then a 17-mark Paper 2 question on Provash Hardware.

Control accounts: quick revision

The chapter on one screen, one broken entry to fix, and a spaced flashcard deck to come back to.

5.1 · The income statement: working out profit

Build Kalam Stationers' first income statement from an already-adjusted trial balance: cost of sales, gross profit, other income, expenses and profit for the year.

0/9

Trading section, then profit and loss section: two questions, one statement.

Cost of sales, line by line

Opening inventory plus purchases and carriage inwards, less returns outwards and closing inventory.

Nadia asks for a year of profit and a day of balances in the same breath. Only one page answers each.

Gross profit and the trading section

Sales less returns inwards gives net sales; net sales less cost of sales gives gross profit.

Carriage and discounts in the right place

Carriage inwards and outwards sound alike but sit in different sections, and so do the two discounts.

The full income statement

Kalam's income statement for the year, laid out in full, from sales to profit for the year.

Reading the margins

Gross margin checks pricing; net margin checks the whole business. Both divide by net sales.

Build it against the clock

Rebuild Kalam's income statement from a blank start, checking gross profit before touching expenses.

One exam question, end to end

Six Paper 1 questions with the trap behind each wrong answer, then a 13-mark Paper 2 question on Riverside Fabrics.

The income statement: quick revision

The chapter on one screen, one broken statement to fix, and a spaced flashcard deck to come back to.

5.1 · The statement of financial position

What Kalam Stationers owns and owes on 31 December, in the order and layout Cambridge expects. Non-current and current assets, current and non-current liabilities, and capital updated for a year of profit and drawings.

0/9

A snapshot, not a story

Non-current assets, and why order matters

The van is kept for years. Inventory, a debt and the bank balance are each a different number of steps from cash.

Preview7m

Current assets, in full

Inventory, two schools' debts, Mr Hossain's prepaid rent, bank and cash: five lines, one reason each.

Current and non-current liabilities

Paper House Ltd is due in 30 days. City Bank is due over five years. The same twelve-month test sorts both.

The capital section

Opening capital, the cash Nadia added in June, profit, and what she took out: four terms, one running total.

The full statement, and the equation check

Every section on one page, in order, finishing with the check that proves it: assets equal liabilities plus capital.

The year-end sprint

Kalam's sixteen year-end balances again, shuffled. Sort, close, and beat your own time.

Exam practice: a new business

Six Paper 1 questions with the trap behind each wrong answer, then a structured question on Anika's Bookshop.

Statement of financial position: quick revision

The chapter on one screen, one broken capital line to fix, and a spaced flashcard deck to come back to.

4.1-4.5 · Year-end adjustments

Turn Kalam Stationers' unadjusted trial balance into the true year: depreciate and dispose of the van, accrue and prepay expenses and income, write off a bad debt, hold an allowance, and value inventory at the lower of cost and net realisable value.

0/15

Capital or revenue: what did the payment create?

The $8,000 van against a $150 windscreen repair: one creates a lasting asset, the other keeps one working.