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many thanks for your prompt reply John. I have taken & passed F2 and will take F3 in June.
With the $30,000 you have acquired an asset (i.e. the land). it is not an expense. It will not affect your gross profit. It will not appear in the income statement. It will appear in your Balance Sheet under Non-Current Assets. Your assets will increase. Your Profit & Loss will not be affected until you depreciate the asset and then only by the amount of the depreciation.
Is it a new thing to open a separate Prepayment T account and a separate Accruals T Account? I did accountancy before (AAT) and we always brought down the prepayment or the accrual (whatever the case may be) in the same account where it arose, e.g. insurance account, telephone account, etc. as a “Balance b/d”. Would I lose marks if I did it the way I learned previously?
Also is the title Statement of Profit or Loss and the title Statement of Financial Position new? I would have called them, not so long ago, Income Statement and Balance Sheet respectively. (Before that, years ago, it was Trading, Profit & Loss A/c and Balance Sheet). Again, will I lose marks if I stick to the way I had learned previously?
