ACCOUNTING PINOTES 2024
Asia Yarlett
,G AAP (to prepare consistent and reliable Financial Statements)
-
HISTORICAL COST A
Assets must be recorded at
original cost
BUSINESS EN separate entities
transactions recorded
-
separately
MATCHING CONCEPT
Income and Expenses recorded when
they take place (incurred) ,
not when paid for
Income and Expenses need to be matched
MATERIALITY
All significant information must be clearly shown In financial statements
CONCEPT"FUTURE
"
GOING CONCERN
Assumption that business does not expect to close down in the future
PRUDENCE CONCEPT My "CONSERVATIVE
Be conservative when
recording financial information of business
incomes
3 should not be overstated
>
-
assets
>
-
expenses3 liabilities should not be understated
INTERNAL CONTROL
·
DOCUMENTATION - source documents
·
AUTHORISATION -
for certain transactions by manager
·
INTERNAL CHECKS -
regular checks of procedures error ,
fraud
,
·
PHYSICAL SAFEKEEPING -
of documents 3 assets
·
DIVISION OF DUTIES -
Steps to complete a task done by different employees
RESPONSIBILITY person responsible for specific steps (held accountable)
-
One
·
, Accounting/P1 DBE/November 2023
NSC
GRADE 12 ACCOUNTING FINANCIAL INDICATOR FORMULA SHEET
Gross profit x 100 Gross profit x 100
Sales 1 &&
Cost of sales 1
04
Net profit before tax x 100 Net profit after tax x 100
Sales 1 Sales 1
84 84
Operating expenses x 100 Operating profit x 100
Sales 1 Sales 1
&d 84
ratio current ratio
solvency
Total assets : Total liabilities Current assets : Current liabilities
↑ min 1 : 1
(normally 2 :
1) -2 : /
Acid test ratio debt :
equity (borrowed Capital)
(Current assets – Inventories) : Current liabilities Non-current liabilities : Shareholders' equity
1 10 , 5 : 1
1
geared
:
O low
↳ (Trade & other receivables + Cash & cash equivalents) : Current liabilities
stock holding period stock turnover Rate
Average trading stock x 365 A Cost of sales
D
- R
.
= =
T
Cost of sales 1 Average trading stock
Ot (See Note 1 below) 04
Debtors Collection Period Creditors Payment Period
Average debtors x 365 Average creditors x 365
A =
D A = D
Credit sales 1 &Cost of sales 1
CREDIT PURCHASES
& 30 days 860-90 days (See Note 2 below)
On Shareholder's Earnings Per Share (EPS)
Return Equity (ROSHE)
Net income after tax x 100
Net income after tax x 100 Number of issued shares 1
Average shareholders' equity 1
> Int on FD om (See Note 3 below)
Return On Total Capital Employed (ROTCE) profit before tax before int. exp
& Net income before tax + Interest on loansje x 100
&Average shareholders' equity + Average non-current liabilities& 1
& > Int on loan
(positively geared) =
capital employed
Net Asset Value (NAV) Dividends Per Share (DPS)
Shareholders' equity x 100 Dividends for the year x 100
Number of issued shares 1 Number of issued shares 1
8 &> market value 0xIsh holders
. happy) of (Bus ·
keeping $ for expansion)
Interim DPS Final DPS
Interim dividends x 100 Final dividends x 100
Number of issued shares 1 Number of issued shares 1
Dividends Payout Policy/ Rate Payout rate ( % NP payout per div)
Dividends per share x 100 Dividends for the year x 100
Earnings per share 1 Net income after tax 1
Incr :
kept sh holders
.
happy /decr ..: kept money for expansion
(costing P2)
:
BREAK EVEN Total fixed costs .
Selling price per unit – Variable costs per unit
NOTE: 1. Trading stock at the end of a financial year may be used if required in a question.
2. Credit purchases may be used instead of cost of sales (figures will be the same if stock is constant).
3. If there is a change in the number of issued shares during a financial year, the weighted-average
number of shares is used in practice.
Div Yield :
Earnings Yield : >
- compare to divs , received last ur
Copyright reserved
DPS EPS
X100 X100
Share Price Share Price
(price paid)
Asia Yarlett
,G AAP (to prepare consistent and reliable Financial Statements)
-
HISTORICAL COST A
Assets must be recorded at
original cost
BUSINESS EN separate entities
transactions recorded
-
separately
MATCHING CONCEPT
Income and Expenses recorded when
they take place (incurred) ,
not when paid for
Income and Expenses need to be matched
MATERIALITY
All significant information must be clearly shown In financial statements
CONCEPT"FUTURE
"
GOING CONCERN
Assumption that business does not expect to close down in the future
PRUDENCE CONCEPT My "CONSERVATIVE
Be conservative when
recording financial information of business
incomes
3 should not be overstated
>
-
assets
>
-
expenses3 liabilities should not be understated
INTERNAL CONTROL
·
DOCUMENTATION - source documents
·
AUTHORISATION -
for certain transactions by manager
·
INTERNAL CHECKS -
regular checks of procedures error ,
fraud
,
·
PHYSICAL SAFEKEEPING -
of documents 3 assets
·
DIVISION OF DUTIES -
Steps to complete a task done by different employees
RESPONSIBILITY person responsible for specific steps (held accountable)
-
One
·
, Accounting/P1 DBE/November 2023
NSC
GRADE 12 ACCOUNTING FINANCIAL INDICATOR FORMULA SHEET
Gross profit x 100 Gross profit x 100
Sales 1 &&
Cost of sales 1
04
Net profit before tax x 100 Net profit after tax x 100
Sales 1 Sales 1
84 84
Operating expenses x 100 Operating profit x 100
Sales 1 Sales 1
&d 84
ratio current ratio
solvency
Total assets : Total liabilities Current assets : Current liabilities
↑ min 1 : 1
(normally 2 :
1) -2 : /
Acid test ratio debt :
equity (borrowed Capital)
(Current assets – Inventories) : Current liabilities Non-current liabilities : Shareholders' equity
1 10 , 5 : 1
1
geared
:
O low
↳ (Trade & other receivables + Cash & cash equivalents) : Current liabilities
stock holding period stock turnover Rate
Average trading stock x 365 A Cost of sales
D
- R
.
= =
T
Cost of sales 1 Average trading stock
Ot (See Note 1 below) 04
Debtors Collection Period Creditors Payment Period
Average debtors x 365 Average creditors x 365
A =
D A = D
Credit sales 1 &Cost of sales 1
CREDIT PURCHASES
& 30 days 860-90 days (See Note 2 below)
On Shareholder's Earnings Per Share (EPS)
Return Equity (ROSHE)
Net income after tax x 100
Net income after tax x 100 Number of issued shares 1
Average shareholders' equity 1
> Int on FD om (See Note 3 below)
Return On Total Capital Employed (ROTCE) profit before tax before int. exp
& Net income before tax + Interest on loansje x 100
&Average shareholders' equity + Average non-current liabilities& 1
& > Int on loan
(positively geared) =
capital employed
Net Asset Value (NAV) Dividends Per Share (DPS)
Shareholders' equity x 100 Dividends for the year x 100
Number of issued shares 1 Number of issued shares 1
8 &> market value 0xIsh holders
. happy) of (Bus ·
keeping $ for expansion)
Interim DPS Final DPS
Interim dividends x 100 Final dividends x 100
Number of issued shares 1 Number of issued shares 1
Dividends Payout Policy/ Rate Payout rate ( % NP payout per div)
Dividends per share x 100 Dividends for the year x 100
Earnings per share 1 Net income after tax 1
Incr :
kept sh holders
.
happy /decr ..: kept money for expansion
(costing P2)
:
BREAK EVEN Total fixed costs .
Selling price per unit – Variable costs per unit
NOTE: 1. Trading stock at the end of a financial year may be used if required in a question.
2. Credit purchases may be used instead of cost of sales (figures will be the same if stock is constant).
3. If there is a change in the number of issued shares during a financial year, the weighted-average
number of shares is used in practice.
Div Yield :
Earnings Yield : >
- compare to divs , received last ur
Copyright reserved
DPS EPS
X100 X100
Share Price Share Price
(price paid)
