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Sir in PPE t-account why PPE amounting to 13 of Fred has not been included?
got my ans in following statement 😛
Hi, thanks for the lectures.
When do we put the bf on the credit and cf on the debit.
When last year’s balancing amount was placed on the debit side (to make last year’s figures in the account balance).
In other words, the credit entries exceeded the debit entries last year
In other words, there was a credit balance in the account last year
So, to make both sides equal last year, we needed to add an amount (the balancing figure) into the debits
You may look at that balancing figure from another view point. If you add up all the credit entries in an account and then add up all the debit entries, you may find that the total of the credits exceeds the total of the debits by, say £120
Now, when extracting a trial balance, we need to check that the sum of all the debits through the year equals the sum of all the credits in that year.
But to list out all those millions of entries would be time consuming, expensive and very likely inaccurate
But if we summarise the figures in each of the accounts that feature in the trial balance, we can then simply list the summary figures from each of the accounts
In the example that I made up above, the summary figure was £120. In Chris’s example, the summaries from last year were two excesses of credits over debits of £190 and £110
So credits were greater and the brought down amounts represents those summary differences from last year
Similarly, this year, the credits have exceeded the debits by £220 and £150 so we need that amount to be shown on the debit side so that both sides of the account add up to £395
That’s how we arrive at the carried forward and brought forward amounts
But when preparing a statement of cash flows, these balancing amounts will be given in the question
In the Chris example, all those four amounts are shown – 2 in each of the two statements of financial position
If those figures are shown in last year’s statement of financial position as included within liabilities, then they represent figures brought forward at the start of this year as liabilities that existed at the end of last year and are thus shown on the credit side of the account as brought forward
If you’re at all uncertain about balancing T accounts, a quick trip down memory lane in John’s lectures for the FA paper (the paper that used to be known as F3 Financial Accounting) would be time well spent
On reflection, I may have misinterpreted your question. Are you asking when the abbreviation should be b/f and not c/f (and vice versa)?
If you imagine that both abbreviations are simply a quicker way of writing “Brought forward from last year” and “Carried forward into next year” does that make it easier?
Hello – Thanks for these video’s
Why do we take off the interest when we’ve added back the finance cost already?
Hi,Sir. May I know the reason why should include the dividend paid to parent within the cash flow? Isn’t neither a cash inflow nor outflow within the group?
The dividend paid by the parent will be paid to the parent’s shareholders who sit outside of the group, and hence the payment is shown in the group SCF as an outflow.
Thank you for your explanation.
I think the impairment of goodwill should be displayed on the SPL, is it?
Thanks for your wonderful lectures?
Technically it would be shown but if we show it as a separate line then it would give away the answer, so we just assume that it is included in the operating expenses line.
the figure for receivables in operating activities is 51 not 56 (typo error on your end).
thank you for the excellent lectures 😉
Thanks for spotting this, I’ll update the video at some point in the future if I get the opportunity. It doesn’t seem worth doing at the moment as it is a lot of work for just a small typo.
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