Learning Objectives

You will be introduced to recording and accounting for fixed assets. You will be able to record both purchase and disposal of a fixed asset, identifying any gains or losses made on disposal and be able to calculate and apply depreciation by a given method.

You must already have an understanding of double-entry bookkeeping including using ledger accounts and the journal. These skills will be developed into more advanced and complex areas, including adjustments for closing stock, accrued and prepaid expenses and income, and how these are incorporated into an extended trial balance. Provisions for depreciation on fixed assets, irrecoverable debts and allowances for doubtful debts are also to be calculated and accounted for.

You will also need to demonstrate an appropriate understanding of the principles that lie behind these accounting procedures, including an awareness of the accounting systems that must be in place in order to produce meaningful information at the end of an accounting period. Candidates should also develop an understanding of the environment and principles within which the business operates.

Learning Outcomes

Accounting for fixed assets (skills)

• Account for the purchase of fixed assets.
• Account accurately for depreciation.
• Account for the disposal of fixed assets.
• Take appropriate action when dealing with issues arising from fixed asset records.

Extending the trial balance using accounting adjustments (skills)

• Account for adjustments.
• Prepare a trial balance.
• Complete the trial balance.

Principles of accounts preparation (knowledge)

• Understand generally accepted accounting principles and concepts.
• Understand the principles of double-entry bookkeeping.
• Understand the accounting methods used to record assets, liabilities, income, expenses and capital.