AAT Level 3

Accounts Preparation

AAT Level 3

Accounts Preparation - Summary

ACPR is the first of the two Level 3 financial accounting units. Covering accounting principles and concepts, accounting for non-current assets and advanced bookkeeping, it takes the student from Level 2 foundation knowledge and skills and prepares them for further development in FSTP wherethey will be preparing financial statements for sole traders and partnerships.

Session 1 - Objectives

Learning objectives:At the end of this sesson you will be able to:• Understand the basic principles of accounting

including the accounting equation.• Account for transactions in ledger accounts as

part of the general ledger.• Balance off ledger accounts in order to

prepare an initial trial balance.

The Ledger Accounts

Question 2 – Vera

Entering transactions into the ledgers

Balancing off the accounts

(You will need to draw 10 ‘T’ accounts!)

Complete Question 5

Post to the ledgersBalance off accountsPrepare a Trial Balance

The Trial Balance & the Journal

Dealing with Errors

Errors!

Which errors would affect the trial balance?

Error of Commission

Correct type of account has been usedBUT

the wrong account in that ledger

Example

A sales invoice for customer A is debited to customer B account in the Sales Ledger

Omission?

Error of Omission

The transactions has been omitted from the accounts completely

Example

A payment for cash purchases has not been entered in the Cash book OR the Purchases account

Error of Principle

The transactions has been posted to the wrong TYPE of account

Example

A payment for a new computer has been posted to the computer maintenance account rather than the Computer asset account.

Reversal?

Error of Reversal

Debits and Credits are the wrong way round

Example

A payment for telephone costs has been credited to the Telephone account.

Error of Original Entry

Transaction amount is entered incorrectly

Example

A payment for the telephone costs of £750 have been posted as £570

Compensating Error

The errors cancel each other out

Six Types of ErrorError of Commission

Error of Omission

Error of Principle

Compensating Error

Error of Original Entry

Complete Reversal of Entries

Error Correction

Opening Balances

PayrollBad Debt Write Off

The Journal

The Journal - LayoutDate Ref Details Dr

£

Cr

£

Question 6 – Kelly 1

Account names Dr£

Cr£

Question 7

Now your turn

Question 7 Answer

Account names Dr£

Cr£

Irrecoverable debts 548.60  VAT 109.72  Receivables a/c   658.32     Drawings 659  Motor Expenses   659     Discount allowed 84  Sales ledger control / receivables   84

Question 8

Errors and the Suspense Account

Question 9

Errors and the Suspense Account

Question 10

Destination of the Trial Balance