EB AF S: Ad To 5

Tackle
t in g m o dule with
coun s
ac strategie
e f fe c t i ve
FS e)
A ul
Bng Mo5**
d
S E nti t o
D(Acc Ro
ou ad
Rex Ng
Rex Ng nal Accoun
tancy),
) (P ro fe s s io
BBA (Hons d CUHK
S c (M a rk eting), DipE
M
Exam expert
•• Currently teaching in a Band 1 school, former
subject panel head of Principles of Accounts and
former tutor of a leading tuition center
•• Former auditor of one of the “Big 4” auditing
firms
•• Invited by secondary schools to share exam
strategies and exam skills
•• Interviewed by the media to share teaching
experience
This book can effectively point out mistakes
that students often make in the DSE BAFS
examination. Notes are smart and teaching
skills are unique. Practice can help students
revise important concepts. I think it is the
best and most comprehensive DSE BAFS
examination revision guide in the market!
Professor R
ita Yip
Associate Pro
D fessor,
The Hang Sen epartment of Accounting
g University o ,
f Hong Kong
Contents
Unique Exam Skills and Analysis
PART 1 Powerful Tools in Solving Accounting Problems 10
PART 2 Exam Analysis in BAFS 19

I. DSE Examination overview
II. DSE Paper 2A past paper questions distribution analysis
PART 3 Exam Traps and Common Mistakes in BAFS22
Tour to Capture Stars
Chapter 1 Books of Original Entry and Ledgers ...................................25
Chapter 2 Cash Accounting and Accrual Accounting...........................43
Chapter 3 Bad Debts and Allowance for Doubtful Debts .....................61
Chapter 4 Depreciation .........................................................................79
Chapter 5 Inventory Valuation .............................................................103

Chapter 6 Bank Reconciliation Statement ..........................................125
Chapter 7 Correction of Errors ...........................................................145
Chapter 8 Partnership – Appropriation and Current Accounts ...........167
Chapter 9 Partnership – Goodwill and Revaluation ............................177
Chapter 10 Partnership – Dissolution ...................................................197
Chapter 11 Limited Company ...............................................................215
Chapter 12 Accounting Ratios ..............................................................233
Chapter 13 Generally Accepted Accounting Principles .......................255
Chapter 14 Incomplete Records ...........................................................271
Chapter 15 Cost Accounting Basic Concepts ......................................291
Chapter 16 Absorption and Marginal Costing ......................................307
Chapter 17 Cost-Volume-Profit Analysis ..............................................321
Chapter 18 Decision-making ................................................................337

te
Chapter 1 La s t M in u
Note
re Exa m
befo
Books of Original Entry

and Ledgers
ing ry and ledgers.
Learn of books of original ent
(i) Identify dif ferent types
Points en try an d po st to
Re co rd tra ns ac tio ns in bo oks of ori gin al
(ii)
ledgers.
DSE n
io
Q est &
u Short questions (5 marks to 8 marks)
Types
Marks
ion •• Remember the names of 6 Books of original entry and 3 Ledgers.

Revisd
an
ation •• Follow the first 3 steps in Accounting Cycle. Enter transactions in
Examinegies books of original entry and post to ledgers.
Strat
Transactions
Books of original entry
Ledgers
Section 1 Common Mistakes
1. Sales transactions are entered in sales journal.
Credit sales transactions are entered in sales journal.
2. Purchases transactions are entered in purchases journal.

Credit purchases transactions are entered in purchases journal.
3. Cash sales transactions are entered in sales journal.

Cash sales transactions are entered in cash book.
4. Cash purchases transactions are entered in purchases journal.

Cash purchases transactions are entered in cash book.
5. Total credit sales got in sales journal is posted to sales ledger.

Total credit sales got in sales journal is posted to general ledger.
6. Total credit purchases got in purchases journal is posted to

purchases ledger.
Total credit purchases got in purchases journal is posted to
general ledger.
7. Returns inwards is recorded in returns inwards journal.

Returns inwards by credit customers is recorded in returns inwards
journal.
Concept Clarification
Returns inwards can be by credit customers or by customers who are paid.
•• Returns inwards by credit customers is recorded in returns inwards journal.
•• Returns inwards by customers who are paid is recorded in cash book as refund
is needed.
26 Chapter 1 Books of Original Entry and Ledgers

8. Returns outwards is recorded in returns outwards journal.

R eturns outwards to credit suppliers is recorded in returns
outwards journal.
Returns outwards can be to credit suppliers or to suppliers who have been paid.
•• Returns outwards to credit suppliers is recorded in returns outwards journal.
•• Returns outwards to suppliers who have been paid is recorded in cash book as
refund is needed.
9. Credit purchases of non-current assets for production are entered

in purchases journal.
Credit purchases of non-current assets for production are entered
in general journal.
•• Purchases journal only records credit purchases of goods that are for resale.
•• Non-current assets for production are not for resale and the credit purchases of
non-current assets are recorded in general journal.
10. Credit sales of non-current assets are entered in sales journal.

Credit sales of non-current assets are entered in general journal.
•• Sales journal only records credit sales of goods.
•• Sales of non-current assets for production are recorded in general journal.
11. Credit notes represent returns inwards.

Issuing credit notes means returns inwards.
Receiving credit notes means returns outwards.
12. Debit notes represent returns outwards.

Issuing debit notes means returns outwards.
Receiving debit notes means returns inwards.
Chapter 1 Books of Original Entry and Ledgers 27

Section 2 Capture Star Notes
1 Books of original entry (also called Journal)
There are 6 different books of original entry. They are used to record
different types of transactions.
Books of original entry
Uses
(Journal)
Sales day book Record credit sales transactions
(Sales journal)
Purchases day book Record credit purchases transactions
(Purchases journal)
Returns inwards day book Record returns inwards by credit customers
(Returns inwards journal) transactions
Returns outwards day book Record returns outwards to credit suppliers
(Returns outwards journal) transactions
Cash book Record all transactions involving the use of
bank or cash
General journal • Record other transactions not listed above
(The journal) • Record period-end adjustments
DSE Tips
No marks will be awarded if names of books of original entry are incorrect.
Sales day book / Sales journal Sales book

Purchases day book / Purchases journal Purchases book
Cash book Cash journal

2 Ledgers
There are 3 different ledgers. Transactions from books of original entry will
be posted to T-accounts in ledgers (or called ledger accounts).
A ledger is like a folder and each folder holds T-accounts of the same type.
Ledgers Uses
Sales ledgers Keep trade receivables accounts
(Trade receivables ledgers)
Purchases ledgers Keep trade payables accounts
(Trade payable ledgers)
General ledgers Keep other accounts not mentioned above
DSE Tips
Cash book can be treated as a ledger if it is defined in the question. It is
logical to do so as cash book keeps cash and bank accounts.
Reference HKDSE 2016 Paper 2A Q2

3 Post transactions from books of original entry
to ledgers
(A) Sales day book (Sales journal)
Transactions in January 2019: Jan 1, Credit sales of $50 to Mr. A
Jan 2, Credit sales of $100 to Mr. B
Jan 3, Credit sales of $150 to Mr. C
Sales Day Book

2019 $
Jan 1 Mr. A 50
Jan 2 Mr. B 100
Jan 3 Mr. C 150
Jan 31 Total credit sales for the month 300
Sales ledger General ledger
Mr. A Sales
$ $ $ $
Jan 1 Sales 50 Jan 31 Trade receivables 300
Mr. B
$ $
Jan 2 Sales 100
Mr. C
$ $
Jan 3 Sales 150

(E) Cash book
There are 2 types of cash book in DSE BAFS exam:
• three-column cash book (with discount columns);
• two-column cash book (without discount columns).
DSE Tips
• Cash book is one of the books of original entry. However, in some cases,
cash book is also treated as a ledger to keep cash and bank account. 　
• Students should follow instructions given in the question（跟題目指示）to

determine（決定）if bank and cash accounts are kept in general ledger or
cash book.
Examples of posting transactions from cash book to ledgers
Example (with discounts columns)
Transactions in January 2019:

Jan 1, Balance of cash and bank account are $5,000 and $8,000
respectively
Jan 2, Cash sales of $2,000
Jan 3, Cash purchases of $800
Jan 10, Paid a creditor of balance $1,000 by cheque with 20% cash
discount
Jan 12, Receipt from a debtor of balance $2,000 in cash with 5% cash
discount
Jan 20, Paid rent of $500 by cheque

Cash book
2019 Discount Cash Bank 2019 Discount Cash Bank
$ $ $ $ $ $
Jan 1 Bal b/f 5,000 8,000 Jan 3 Purchases 800
Jan 2 Sales 2,000 Jan 10 Trade 200 800
Jan 12 Trade 100 1,900 payables
receivables Jan 20 Rent 500
Jan 31 Bal c/f 8,100 6,700
100 8,900 8,000 200 8,900 8,000
Sales ledger General ledger
Trade receivables Sales

$ $ $ $
Jan 12 Cash 1,900 Jan 2 Cash 2,000
Purchases
Purchases ledger $ $
Trade payables Jan 3 Cash 800

$ $
Rent
Jan 10 Bank 800
$ $
Jan 20 Bank 500

Section 3 Past Paper Analysis
2012 2013 2014 2015 2016 2017 2018 2019
Identify Paper 1 Paper 1 Paper 1 Paper 1 Paper 2A Paper 2A

types of MC Q28 MC Q3 SQ Q3a MC Q4 Q2 Q1
books and
ledgers
Paper 1
Enter
transactions SQ Q5
in books
Key to Success
•• Since 2016, this topic has been moved from Paper 1 to Paper 2A.
Before 2016, this topic used to appear in the question types of MC
and SQ. From 2016 onwards, this topic usually appears as SQ but
marks can be up to 8. Thus it is a very important topic in DSE
BAFS exam.
•• Students must know how to identify different types of books and
ledgers.

e
Comprehensivin
Section 4
Tra ing
1. (a) ABC Company is a trading company selling furniture.

What is the book of original entry for recording each of the transactions
below? (3 marks)
Book of
original entry
Bought telephone sets on credit (i)
Sold telephone sets and received cash (ii)
Bought furniture on credit (iii)
Received a credit note from credit supplier for furniture returned (iv)
Accrued for outstanding electricity at year end (v)
Gave full refund to a customer for furniture returned (vi)
(b) Give one example of nominal account mentioned in the above

transactions. (1 mark)
(c) Which ledger should the amount of total credit purchases be
posted to? (1 mark)
Answer
(a) (i) The Journal
(ii) Cash book
(iii) Purchases journal
(iv) Returns outwards journal
(v) The Journal
(vi) Cash book (0.5 marks each)

Exam key points
Accounting cycle
(i) In this question, the company is selling furniture. Telephone sets are non-current
assets. Purchase of telephone sets on credit is entered in the journal.
(ii) Transaction involving cash is entered in cash book.
(iii) Purchases of goods on credit are entered in purchases journal.
(iv) Receiving credit notes means returns outwards.
(v) Period-end adjustment is entered in the journal.
(vi) Transaction involving cash or bank is entered in cash book.
(b) Electricity / returns outwards / sales / purchases (1)

(c) General ledger (1)
Exam key points

Accounting cycle
Follow the accounting cycle, total credit purchases amount is posted to general ledger.
(Refer to p.31)
2. ABC Company keeps six books of original entry: sales journal, purchases
journal, returns inwards journal, returns outwards journal, cash book, the
journal and four ledgers: sales ledger, purchases ledger, general ledger and
cash book. Complete the following table:
Books to be Ledger for Ledger for
Transactions
recorded debit entry credit entry
e.g. Paid rent in cash Cash book General ledger Cash book
(a) Cash purchases
(b) Received debit notes from
credit customers
(c) Goods sold on credit
(d) Electricity expense accrued
(e) Credit purchase of
machine for production
(f) Paid water bill by cheque
(9 marks)

Answer
Books to be Ledger for Ledger for

Transactions
recorded debit entry credit entry
(a) Cash purchases Cash book General ledger Cash book
(b) Received debit notes from Returns inwards General ledger Sales ledger
credit customers journal
(c) Goods sold on credit Sales journal Sales ledger General ledger
(d) Electricity expense accrued The journal General ledger General ledger
(e) Credit purchase of machine for The journal General ledger General ledger
production
(f) Paid water bill by cheque Cash book General ledger Cash book
(0.5 marks each)
Exam key points
Accounting cycle
Transactions would be posted to the following T-accounts in ledgers:
Dr Cr
(a) Purchases Cash
(b) Returns inwards Trade receivables
(c) Trade receivables Sales
(d) Electricity expense Accrued electricity expense
(e) Machinery Other payables
(f) Water expense Bank

te
Chapter 6 La s t M in u
Note
re Exa m
befo
Bank Reconciliation
Statement
ing nk reconciliation statem
ent.
Learn (i) Explain the uses of a ba
Points e it.
g in cash book and updat
(ii) Identify items missin
onciliation statement.
(iii) Prepare a bank rec
DSE n
io
Q est &
u Long questions (6 marks to 14 marks)
Types
Marks
•• Remember the uses of a bank reconciliation statement.

Revisdion
an •• Use 2 Matching approach to tackle “Type 1: Given cash at bank
ation
Examinegies account and bank statement questions”.
Strat
•• Use 3 CB & BS approach to tackle “Type 2: Text questions”.
Section 1 Common Mistakes
1. A bank reconciliation statement is used to correct errors in bank
statement.
A bank reconciliation statement is used to highlight and explain the

difference between cash at bank account balance and the bank
statement balance. It can help detect errors but it is not used to
correct errors.
Bank reconciliation statement is not used to correct errors. It is used to locate and
explain difference.
2. Cash book bank column balance and bank statement balance

match if there are no errors.
The difference between cash at bank account balance and bank

statement balance always occurs even when there are no errors
because of timing gap in recording transactions.
3. Debit balance in bank statement means positive balance.
Debit balance in bank statement means negative balance.
Cash at bank Bank statement

Receipt / Deposit Debit (Dr) Credit (Cr)
Payment / Withdrawal Credit (Cr) Debit (Dr)
126 Chapter 6 Bank Reconciliation Statement

4. Prepare a bank reconciliation statement as at 31 March 2019,
commencing with the cash at bank balance.
XXX Ltd
Bank reconciliation statement as at 31 March 2019
$
Balance as per bank statement
Add: Uncredited cheques

Less: Unpresented cheques
Balance as per updated cash at bank account
XXX Ltd
Bank reconciliation statement as at 31 March 2019
$
Balance as per updated cash at bank account
Add: Unpresented cheques
Less: Uncredited cheques

Balance as per bank statement
DSE Tips
The question has stated that “commencing with the cash at bank balance”. No
marks will be given if students do not follow the requirement.
Chapter 6 Bank Reconciliation Statement 127

Section 2 Capture Star Notes
1 Uses of a bank reconciliation statement

• A bank reconciliation statement is used to highlight and explain the
difference between cash at bank account balance and the bank
statement balance. The difference always occurs even when there are
no errors because of timing gap in recording transactions.
• A bank reconciliation statement can help detect errors but it is not used
to correct errors.
2 Entries in bank statement but not in cash at

bank account
• All the items below have been entered in bank statement but are
missing in cash at bank account:
Treatment
Recorded / update
Items Meanings in bank needed in
statement cash at bank
account
Standing order Auto payment with fixed amount deducted Credit
Direct debit Auto payment with non-fixed deducted Credit
amount
Direct credit Auto receipt with non-fixed added Debit
amount
Bank charge Auto payment charged by bank deducted Credit
Interest expense Auto payment charged by bank deducted Credit
Interest revenue Auto receipt from bank added Debit
Dishonoured Cheque not cleared by bank deducted Credit
cheque (Returned
cheque)
Post-dated Cheque not cleared by bank deducted Credit
cheque as the cheque is dated in the
future
Stale cheque Cheque cancelled by bank added Debit

• Treatment / update needed in cash at bank account:
Cash at bank
$ $
Balance b/f (debit balance) X Balance b/f (credit balance) X
XXX – Direct credit X XXX – Standing order X
Interest revenue X XXX – Direct debit X
XXX – Stale cheque X Bank charge X
Balance c/f (credit balance) X Interest expense X
XXX – Dishonoured cheque X
XXX – Post-dated cheque X
Balance c/f (debit balance) X
X X
DSE Tips
Reasons for dishonoured cheque:
•• The drawer does not have enough money in his account.
•• There are mistakes on the cheque, for example:
- wrong drawer’s signature
- wrong drawee’s name
- amount in words does not match amount in number
DSE Tips
•• Cash at bank is a T-account. Entries found in cash at bank are presented in
account names. No marks will be given if corresponding account names
are not given in the entries.
•• Standing order, direct debit, direct credit, dishonoured cheque, post-dated
cheque, stale cheque are not account names.

Section 3 Past Paper Analysis
2012 2013 2014 2015 2016 2017 2018 2019
Uses of
a bank
reconciliation
statement
Paper 2A Paper 2A Paper 2A Paper 2A Paper 2A Paper 2A Paper 2A

Update cash Q5a Q1b Q9a Q1a Q4a Q2a(i) Q2a
at bank
account
Paper 2A Paper 2A Paper 2A Paper 2A Paper 2A Paper 2A

Prepare
a bank Q5b Q9b Q1b Q4b Q2a(ii) Q2a
reconciliation
statement
Key to Success
Bank reconciliation statement is a hot topic in DSE BAFS exam.

Students need to be well prepared for Type 1 and Type 2 questions.
• Type 1 questions appeared in HKDSE 2012, 2015
• Type 2 questions appeared in HKDSE 2013, 2014, 2017, 2018, 2019

Section 4 e
Comprehensivin
Tra ing
1. The following information was extracted from the cash book of Peter Ltd for
the month ended 31 December 2018:
Cash at bank
2018 2018 $
Cheque No. $
Dec 10 Cheung Ltd
Dec 1 Balance b/d 3,0005,000
Dec 12 Chan Ltd
Dec 13 Salaries 201803 8,000
12,000
Dec 19 Lee Ltd
Dec 16 Mary 201804 5,6003,000
Dec 25 Wong Ltd
Dec 21 Ming Ltd 20180516,2306,000
Dec 31 Balance c/d 6,830
32,830 32,830
Peter Company received the following bank statement for the month
December 2018:
Date Description Dr Cr Balance
2018 $ $ $
Dec 1 Balance b/d 3,000 O/D
Dec 11 Cheque deposit 3,000 0
Dec 13 Cheque 201801 1,500 1,500 O/D
Dec 20 Cheque 201804 300 1,800 O/D
Dec 21 Cheque deposit 5,600 3,800
Dec 23 Credit transfer 1,500 5,300
Dec 25 Cheque 201803 12,000 6,700 O/D
Dec 31 Direct debit – Water 1,800 8,500 O/D
Dec 31 Interest charge 150 8,650 O/D
(Note: O/D means overdraft)
Additional information:
(i) Credit transfer on 23 December 2018 was made by a customer Pearl Ltd.
(ii) The difference between cash at bank and bank statement balance
on 1 December 2018 was due to unpresented cheques 201801 and
201802 being still unpresented in November 2018.
(iii) Cheque number 201804 was wrongly recorded in bank statement.
REQUIRED:
(a) Update the cash at bank account of Peter Ltd. (4 marks)
(b) Prepare a bank reconciliation statement as at 31 December 2018,
commencing with bank statement balance. (6 marks)

Answer
Exam strategies
2 Matching approach
Cash at bank
2018 $ 2018 Cheque No. $
Dec 10 Cheung Ltd 3,000 Dec 1 Balance b/d 5,000
Dec 12 Chan Ltd 8,000 Dec 15 Salaries 201803 12,000
Dec 19 Lee Ltd 5,600 Dec 16 Mary 201804 3,000
Dec 25 Wong Ltd 16,230 Dec 28 Ming Ltd 201805 6,000
Uncredited cheques Dec 31 Balance c/d 6,830
32,830 32,830 Unpresented cheque
Error
Date Description Dr Cr Balance

2018 $ $ $
Dec 1 Balance b/d 3,000 O/D
Dec 11 Cheque deposit 3,000 0
Dec 13 Cheque 201801 1,500 1,500 O/D
Dec 20 Cheque 201804 300 1,800 O/D
Dec 21 Cheque deposit Unpresented cheque in Nov 5,600 3,800
Dec 23 Credit transfer 1,500 5,300
Dec 25 Cheque 201803 12,000 6,700 O/D
Dec 31 Direct debit – Water 1,800 8,500 O/D
Dec 31 Interest charge 150 8,650 O/D
Autopay items
(a)
Cash at bank
2018 $ 2018 $
(0.5) Dec 31 Balance b/d 6,830 Dec 31 Water 1,800 (1)
(1) Dec 31 Pearl Ltd 1,500 Dec 31 Interest charge 150 (1)
Dec 31 Balance c/d 6,380 (0.5)
8,330 8,330

(b)
Peter Ltd
Bank reconciliation statement as at 31 December 2018
$
Balance as per bank statement (8,650) (0.5)
Add: Uncredited cheque – Wong Ltd 16,230 (1)
Uncredited cheque – Chan Ltd 8,000 (1)
Less: Bank Error – 201804 2,700 (1)
Unpresented cheque – 201802 (5,000 – 3,000 – 1,500) 500 (1)
Unpresented cheque – 201805 6,000 (1)
Balance as per updated cash at bank account 6,380 (0.5)
DSE Tips
•• Write account name in cash at bank account.
•• Check if the balance of bank reconciliation statement is equal to cash at
bank balance ($6,380).
•• Follow the requirement: commencing with bank statement balance.
•• Cheque number must be written for all unpresented cheques.
•• Cheque 201802 remains unpresented. It should be put under bank
reconciliation statement.
2.
The cash at bank account of Peter Ltd showed a debit balance of $10,000
as at 31 December 2018, which did not match the bank statement balance
on the same date. An examination of the cash at bank account and the
bank statement disclosed the following:
(i) The following cheques had not yet been presented for payment:
Cheque number Issue date Amount ($)
2018011 10 March 2018 3,000
2018016 30 April 2018 4,000
2018113 18 December 2018 5,000
(ii) A standing order of rent of $1,000 was processed by the bank on

1 May 2018.
(iii) Bank lodgment of $4,800 on 31 December 2018 was not recorded by
the bank.

奪星易應試系列
Deriving Stars Easily
Speedy Solutions - DSE BAFS (Accounting Module) Road to 5**

Author: Rex Ng
Publishing director: Lau Chi Hang
Publishing coordinator: Tam Lai Sze
Executive editor: Kwan Wai Kwan
Book designer: Chan Hoi Ying
Published by Ming Pao Education Publications Limited
15/F, Block A, Ming Pao Industrial Centre,
18 Ka Yip Street, Chai Wan, Hong Kong
Tel: (852) 2515 5600 Fax: (852) 2595 1115
Email: [email protected]
Website: http://www.mpep.com.hk
Distributed by Global China Circulation & Distribution Limited
Sing Tao News Corporation Building, 7 Chun Cheong Street,
Tseung Kwan O Industrial Estate, N.T., Hong Kong
Printed by C.A. Printing Co., Ltd.
9/F, Cheung Wei Industrial Building, 42 Lee Chung Street, Chai Wan, Hong Kong
First published: July 2019
Price: HKD138
ISBN 978-988-8557-30-1
© Ming Pao Education Publications Limited

ALL RIGHTS RESERVED
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any
form or by any means, electronic or mechanical, including photocopying and recording or otherwise,
without the prior written permission of the publisher.
Cover photo: Kutlayev Dmitry / shutterstock.com
Ways to buy a book of this series:

Buy at online store Online
support
· You can pay by cheque, bank deposit or PayPal.
· You can pick up your orders in person or by delivery.
http://store.mpep.com.hk/dse.htm
Buy at our office

· Please place your orders by phone and pay by cash in person
· Ordering Hotline: 2515 5600
· Address: Ming Pao Education Publications Limited
15/F, Block A, Ming Pao Industrial Centre, 18 Ka Yip Street, Chai Wan, Hong Kong

EB AF S: Ad To 5

Uploaded by

Copyright:

Available Formats

EB AF S: Ad To 5

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

EB AF S: Ad To 5

Uploaded by

Copyright:

Available Formats

Tackle

Unique Exam Skills and Analysis

PART 1 Powerful Tools in Solving Accounting Problems 10

PART 2 Exam Analysis in BAFS 19

PART 3 Exam Traps and Common Mistakes in BAFS22

Tour to Capture Stars

Chapter 1 Books of Original Entry and Ledgers ...................................25

Chapter 2 Cash Accounting and Accrual Accounting...........................43

Chapter 3 Bad Debts and Allowance for Doubtful Debts .....................61

Chapter 4 Depreciation .........................................................................79

Chapter 5 Inventory Valuation .............................................................103

Chapter 7 Correction of Errors ...........................................................145

Chapter 8 Partnership – Appropriation and Current Accounts ...........167

Chapter 9 Partnership – Goodwill and Revaluation ............................177

Chapter 10 Partnership – Dissolution ...................................................197

Chapter 11 Limited Company ...............................................................215

Chapter 12 Accounting Ratios ..............................................................233

Chapter 13 Generally Accepted Accounting Principles .......................255

Chapter 14 Incomplete Records ...........................................................271

Chapter 15 Cost Accounting Basic Concepts ......................................291

Chapter 16 Absorption and Marginal Costing ......................................307

Chapter 17 Cost-Volume-Profit Analysis ..............................................321

Chapter 18 Decision-making ................................................................337

Books of Original Entry

ion •• Remember the names of 6 Books of original entry and 3 Ledgers.

Books of original entry

2. Purchases transactions are entered in purchases journal.

3. Cash sales transactions are entered in sales journal.

4. Cash purchases transactions are entered in purchases journal.

5. Total credit sales got in sales journal is posted to sales ledger.

6. Total credit purchases got in purchases journal is posted to

7. Returns inwards is recorded in returns inwards journal.

26 Chapter 1 Books of Original Entry and Ledgers

9. Credit purchases of non-current assets for production are entered

10. Credit sales of non-current assets are entered in sales journal.

11. Credit notes represent returns inwards.

12. Debit notes represent returns outwards.

Chapter 1 Books of Original Entry and Ledgers 27

1 Books of original entry (also called Journal)

Sales day book / Sales journal Sales book

28 Chapter 1 Books of Original Entry and Ledgers

Chapter 1 Books of Original Entry and Ledgers 29

Sales Day Book

Sales ledger General ledger

30 Chapter 1 Books of Original Entry and Ledgers

• Students should follow instructions given in the question（跟題目指示）to

Examples of posting transactions from cash book to ledgers

Example (with discounts columns)

Transactions in January 2019:

34 Chapter 1 Books of Original Entry and Ledgers

Sales ledger General ledger

Trade receivables Sales

Trade payables Jan 3 Cash 800

Chapter 1 Books of Original Entry and Ledgers 35

2012 2013 2014 2015 2016 2017 2018 2019

Identify Paper 1 Paper 1 Paper 1 Paper 1 Paper 2A Paper 2A

38 Chapter 1 Books of Original Entry and Ledgers

1. (a) ABC Company is a trading company selling furniture.

(b) Give one example of nominal account mentioned in the above

PART 1 Powerful Tools in Solving Accounting Problems 10

PART 2 Exam Analysis in BAFS 19

PART 3 Exam Traps and Common Mistakes in BAFS22

3. Cash sales transactions are entered in sales journal.

4. Cash purchases transactions are entered in purchases journal.

6. Total credit purchases got in purchases journal is posted to

9. Credit purchases of non-current assets for production are entered

1 Books of original entry (also called Journal)

Trade payables Jan 3 Cash 800

(b) Give one example of nominal account mentioned in the above

A bank reconciliation statement is used to highlight and explain the

2. Cash book bank column balance and bank statement balance

The difference between cash at bank account balance and bank

3. Debit balance in bank statement means positive balance.

Debit balance in bank statement means negative balance.

1 Uses of a bank reconciliation statement

2 Entries in bank statement but not in cash at

(ii) A standing order of rent of $1,000 was processed by the bank on