July 2018

Cambrige Notes: Principles of Accounting: Introduction to Liquidity Ratios

By |2018-07-25T09:57:29+02:00July 25th, 2018|Cambridge O Level/ IGSCE Accounts Notes, Notes, Ordinary Level Notes|

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Introduction to Liquidity Ratios

  • Liquidity is a measure of how well a business can meet its short term obligations as and when they fall due
  • It is usually expressed in terms of how well the entity/business in question can convert its assets into cash
  • Short term obligations include amounts owed to […]

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Cambrige Notes: Principles of Accounting: Introduction to Departmental Accounts

By |2018-07-25T09:57:29+02:00July 25th, 2018|Cambridge O Level/ IGSCE Accounts Notes, Notes, Ordinary Level Notes|

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Introduction to Departmental Accounts

  • It is customary to split a large business into various departments
  • For example large retail shops like Pick n’ Pay and OK
  • A shop might have:
    • A furniture department e.g. kitchen tables and chairs
    • Home electrical e.g. irons and fridges
    • Refrigerated foods
    • Fruit and Veggies
    • Liquor
    • Cleaning
    • […]


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Cambrige Notes: Principles of Accounting: Acid Test Ratio / Quick Asset Ratio

By |2018-07-25T09:57:29+02:00July 25th, 2018|Cambridge O Level/ IGSCE Accounts Notes, Notes, Ordinary Level Notes|

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Introduction to Liquidity Ratios: Acid Test Ratio / Quick Asset Ratio

  • As pointed out in our discussion of the Current Asset Ratio
  • Including stock when calculating stock might not be desirable
  • This is because it might not always be easy to turn the asset of stock/inventory into liquid cash so […]

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Cambrige Notes: Principles of Accounting: Departmental Accounting Example

By |2018-07-25T09:57:29+02:00July 25th, 2018|Cambridge O Level/ IGSCE Accounts Notes, Notes, Ordinary Level Notes|

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Introduction to Departmental Accounts Example

Example Question

From the following list of balances you are required to prepare a departmental Income Statement in columnar form for the year ended 31 March 20X5, in […]


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Cambrige Notes: Principles of Accounting: Rate of inventory turnover

By |2018-07-25T09:57:29+02:00July 25th, 2018|Cambridge O Level/ IGSCE Accounts Notes, Notes, Ordinary Level Notes|

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Introduction to Liquidity Ratios: Rate of inventory turnover

  • Proprietors often want to know how “well” their business is doing
  • Besides such measures as profitability
  • one way of estimating liquidity is through the rate of inventory turnover ratio
  • The ratio estimates the number of times inventory is sold or used in a given […]

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Cambrige Notes: Principles of Accounting: Example to Departmental Accounting Solution

By |2018-07-25T09:57:29+02:00July 25th, 2018|Cambridge O Level/ IGSCE Accounts Notes, Notes, Ordinary Level Notes|

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Introduction to Departmental Accounts Example

OK Mart Hillside

Income Statement for the year ended 31 March 20×5

NB We are not asked to prepare the combined accounts but this should be straightforward enough. Please see […]


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Cambrige Notes: Principles of Accounting: Single entry and Incomplete records

By |2018-07-25T09:57:29+02:00July 25th, 2018|Cambridge O Level/ IGSCE Accounts Notes, Notes, Ordinary Level Notes|

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Single entry and Incomplete records: Introduction

  • It is not at all uncommon for business owners to have incomplete accounting records
  • A lot of SMEs (small and medium enterprises) often do not keep double entry accounting systems
  • Consider the example of a banana vendor it would be ridiculous for him to keep […]

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Cambrige Notes: Principles of Accounting: Introduction to Manufacturing Accounts

By |2018-07-25T09:57:29+02:00July 25th, 2018|Cambridge O Level/ IGSCE Accounts Notes, Notes, Ordinary Level Notes|

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Introduction to Manufacturing Accounts

  • Thus far we have taken it for granted that businesses purchase everything they sell
  • While it is true that a lot of business purchase inventory and sell it at a profit
  • There are some businesses that manufacture products
  • These manufacturing businesses typically:
    • Acquire Raw materials
    • Process this […]

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Cambrige Notes: Principles of Accounting: Statement of Affairs

By |2018-07-25T09:57:29+02:00July 25th, 2018|Cambridge O Level/ IGSCE Accounts Notes, Notes, Ordinary Level Notes|

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: Single entry and Incomplete records: Statement of Affairs

  • As already covered in the introduction to single entry and incomplete records
  • One of the first required steps in order to prepare financial statements
  • Is to prepare a Statement of Affairs
  • A Statement of Affairs is a summary of an entity’s asset […]

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Cambrige Notes: Principles of Accounting: The format of Manufacturing Accounts

By |2018-07-25T09:57:29+02:00July 25th, 2018|Cambridge O Level/ IGSCE Accounts Notes, Notes, Ordinary Level Notes|

Cambridge IGCSE Accounting(0452)/O Level Principles of Accounts(7110) Notes: The structure of Manufacturing Accounts

  • In the other post we introduced you to manufacturing accounts
  • In this post we will look at typical formats of manufacturing accounts
  • This is not to say there are different formats, no
  • We are merely going to present a simple manufacturing account
  • Followed by one […]

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