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  1. Profile photo of fahim231 says

    hello sir, one thing that confuses me is that why is the CF figure carried forward on the credit side in the PPE account? wouldn’t crediting a figure in a asset account decrease the asset account?

      • Profile photo of MikeLittle says

        It’s carried down from ABOVE the line on the credit side to BELOW the line on the debit side.

        Below the line figures are those that appear on the statement of financial position and, because it’s on the debit side, it’s an asset.

        The carry down amount is merely a summary of all the other figures within that account – its telling you that the amounts on the debit side exceed the amounts on the credit side by that carry down figure

        Better?

      • Profile photo of fahim231 says

        oh yeah i dont know why but I keep getting confused regarding these CF figures and when i do i feel like iv’e got to ask just to make sure i know every detail. But I think I understand what you are saying, your basically saying that the carrying down figure is actually the balancing figure which is moved to the debit site below the total lines? is this correct sir?

      • Profile photo of MikeLittle says

        That’s absolutely right!

        Just keep practicing – it’ll come clearer the more you practice

        And listen to John Moffat’s F3 video lectures

      • Profile photo of fahim231 says

        Ok thank you. Just one thing sir, how would you get the 220 cash figure if you didn’t know the CF figure of 1320?
        What I mean is how would you get this 220 cash figure by just using T accounts? and which figure would you put down for this years balance sheet?

        thanks again sir, I really appreciate the help and support.

  2. Profile photo of allenmendonca says

    In example 3 it is said that Total payments to the finance lease creditor in the year were $9,000, of which $1,800 is interest.Agnes has included the full $9,000 in the obligations under finance lease account.

    If Agnes has included the full 9000 as obligations as under finance lease payment means she hasn’t accounted for the 1800 interest in the Income Statement, so why don’t we reduce it from profit before Tax?

    • Profile photo of MikeLittle says

      Because it’s not included in the interest charge for the year. She has credited cash and debited the obligations account

      So, to correct it, she needs to credit the obligations account and debit the finance lease interest account

      And that’s why the interest PAID needs to be increased by that $1,800

      Ok?

      • Profile photo of MikeLittle says

        No! I believe that the question asks for the interest charge to be added back.

        After the adjustment has been put through, the very simplisict answer is that interest of whatever figure + 1,800 should be added back

        But you can’t add it back if it hasn’t been deducted in the first place!

        The question is aimed at determining the interest add back ie just calculate the interest that SHOULD HAVE been charged and then addition back

        It’s an exercise in determining the accruals based interest with the cash based interest.

        Don’t get too heavily involved in what “correct” entries should have been.

        Concentrate purely on determining the interest add back

        There are enough difficulties in completing a cash flow correctly without you picking me up on the detail of “has it been, has it not been?”

        Ok?

  3. avatar says

    In the past paper examinor gave the previous year balances of land and buliding thats opening and closing balancesand there is a alot of information like disposals depreciation etc . But ur in example there is only one year balance i dnt understand how to tackle the property plant adjustment in exam because there is opening and closing balances

  4. Profile photo of manonaseriousmission says

    LEGENDARY MR MOFFAT: “And 4 maarks is how many miuntes scouters?”

    Student answers quietly in the background (“12″)

    LEGENDARY MR MOFFAT: “12?!!! GOOD LORD!!”

    Hahahahaha.. weirdly, i rewound that bit for up to 5 times just for a good laugh.. must be fun being in John’s class :)

  5. Profile photo of Mdots says

    The lecturer is amazing, but I have a problem. The 915 on the cr side of t accounts is still the dividends payable. While I do understand that we have created an obligation by declaring or proposing the dividend, how can I judge and conclude that from the question? The question looked pretty straight forward to me (bf.IS.cf.cash) .. how do we know that we have to classify 915 as I/S obligation? What is the key indicator?

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