2. Focus student’s attention: Suspense came up
in 2002; 2004; 2006; 2008 & 2010!
Recap on double entry
Explain required layout:
Page 1 & 2 for rough work (3 column system)
Page 3 & 4 for Journal One
Page 5 for Suspense A/c and Statement of
Corrected Net Profit
Page 6 for Corrected Balance Sheet
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
10. Underline name of owner and put yourself
into the owner’s shoes(i.e. every time the
owner is mentioned, visualise it as “I”)
Underline type of business and consider this
while completing each adjustment
Use 3 column system for each adjustment;
enter the completed middle column directly
into Journal; check for and enter missing
Suspense figure; put in narration starting with
word “Being...” and transfer Suspense figure
directly into Suspense A/c.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
13. McCarthy had returned a motor car previously
purchased on credit for €15,600 from a
supplier. McCarthy entered this transaction as
€16,500 on the correct sides of the correct
accounts in the ledger. A credit note
subsequently arrived from the supplier
showing a transport charge of €600 to cover
the cost of the return. The only entry made in
respect of this credit note was a credit of
€15,000 in the creditor’s account.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
15. Cash payments of €450 for repairs to
equipment had been credited to the creditors
account and also credited to the motor
vehicles account.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
17. McCarthy sent a cheque for €620 in full
settlement of a business debt of €660 and
this was recorded correctly in the books.
However, no entry had been made in the
books of the subsequent dishonouring of this
cheque and the payment on account of €300
cash by McCarthy.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
19. McCarthy won a motor vehicle valued at
€30,000 in a draw. McCarthy gave this vehicle
to the business and took an old vehicle from
the business valued at €22,500 which was to
be used for private purposes. The only entry
made in the firm’s books regarding both
vehicles was a debit in the cash book for
€22,500.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
21. A cheque for €5,250 paid by McCarthy out of
a private bank account for 15 months hire of
diagnostic equipment up to 31/3/2010 had
not been entered in the books.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
23. Do this for each of the 5 adjustments
Journal and Suspense a/c should be
completed simultaneously
Calculate missing figure in Suspense a/c and
call it “original balance”
Now place your completed Journal in front of
you(forget about rough work pages now)
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
26. Open your blank “Statement of Corrected Net
Profit” and have the Balance Sheet from the
question sheet open in front of you also
Insert the original net profit from the
question into the Statement of Corrected Net
Profit
Go through each line in the Journal
Ask yourself if it affects the Trading & Profit &
Loss A/c OR the Balance Sheet
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
27. If it affects Trading & P & L A/c follow simple
rule:
Left = Less (i.e. If it’s on Debit side of Journal,
put it under Less in the Statement of
Corrected Net Profit – so credit side = Add)
If it affects Balance Sheet, decide if it’s an
asset or liability. If it’s an asset and on debit
side of Journal, you need to add it to the
asset in the Balance Sheet
Literally, write a plus and the figure beside
the asset on the question sheet.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
28. Repeat for each line in the Journal (suspense
entries have been dealt with in Suspense A/c)
Total the Statement of Corrected Net Profit
and insert corrected net profit figure onto
question sheet, replacing the original net
profit.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
30. Deal with the “original balance” suspense
figure that is included/incorporated into an
asset/liability in Balance Sheet by following
this system:
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
32. i. Look to see what side the original suspense
balance is on
ii. Look to see what side the item that the
original suspense balance is included in is
on (e.g. if it’s included in Stock, like 2010,
this is the debit/left side)
iii. If (i) & (ii) are on the same side, we WOULD
HAVE added them so now we subtract them
iv. If (i) & (ii) are on opposite sides, we WOULD
HAVE subtracted them so now we add them
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
33. Rewrite the Balance Sheet on page 6,
ensuring that any asset/liability that involves
an addition/subtraction should have the
original figure in brackets after the wording
for the asset/liability followed by the
additions/subtractions with the resultant
answer in the appropriate column.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
35. Ensure that all previously asked theory bits
are known by students – can be up to 15
marks going for this part.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
36. An overdraft of €400 in the bank account had
been brought down on the incorrect side of
the nominal ledger and consequently had
been entered on the incorrect side of the trial
balance.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
38. O Shea won a motor vehicle valued at
€20,000 in a grand prize draw. L O’ Shea
gave the vehicle to the business and took an
old van from the business valued at €8,000,
which was to be used for private purposes.
The only entry made in the firm’s books
regarding both motor vehicles was a debit in
the cash book of €8,000.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
40. A private debt for €770, owed by O’ Meara,
had been offset in full against a business
debt of €820 owed to the firm for car repairs
previously carried out. No entry had been
made in the books in respect of this offset.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
42. Bedside lockers, previously sold on credit for
€340, had been returned to Craddock. These
goods had been incorrectly entered as €34 on
the credit of the Fixtures & Fittings account
and as €40 on the debit of the Purchases
account.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
47. Explain required layout:
Page One contains working for:
Asset T a/cs
Dep of Asset T a/cs
Disposal of Asset T a/cs
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
51. Page 3 & 4 to contain:
Reconciliation of operating profit to net cash
flow from operating activities
Cash Flow Statement
Reconciliation of net cash flow to movement
in net debt
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
52. Oh Really Should They Call Every Man Fat
Operating activities
Return on Investments &
Servicing of Finance
Taxation
Capital Expenditure & Financial Investments
Equity dividends paid
Management of liquid resources
Financing
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
53. Stress to students the importance of knowing
names of “reconciliations” as they may not be
given titles in the “Required to” section of
question.
Stress importance of learning the layout and
order of each heading/section in the Cash
Flow Statement and highlight the fact that
marks are going for the headings
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
54. Check to see which Balance Sheet year comes
first when comparing last year to this year
For increases/decreases in
stock/debtors/creditors ask yourself what’s
happening your money:
With STOCK, if it increased, we must have
bought more so we have less money so it’s a
minus
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
55. WithDEBTORS, consider what happens when
debtors decrease (even if particular question
involves debtors increasing). Debtors
decreasing means debtors must have paid us,
so we have more money so it’s a plus. If
debtors increases it’s the opposite.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
56. With CREDITORS, consider what happens
when creditors decreases (even if particular
question involves creditors increasing).
Creditors decreasing means we must have
paid some of our creditors, so we have less
money so it’s a minus. If creditors increases
it’s the opposite.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
57. For non-cash item in the Reconciliation of
operating profit to net cash flow from operating
activities:
Instil in students the reason why depreciation
always needs to be added to operating profit
As depreciation is a non-cash expense, then
generalise that all non-cash expenses are added
to operating profit (e.g. loss on sale of fixed
asset).
It then follows that all non-cash gains are
subtracted from operating profit (e.g. decrease in
provision for bad debts)
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
58. Deal with any other changes in asset/liability
values in the two Balance Sheets and enter
changes in Cash Flow Statement, again
answering the question, “What affect does
this have on cash?”
Changes leading to a decrease in cash should
be entered as a minus figure in Cash Flow
Statement
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
61. Components of “Net debt on 31/12..” in
“Reconciliation of net cash flow to movement
in net debt” are:
Debenture loan (minus)
Bank (minus if overdraft/plus if current asset)
Cash (plus)
Government securities (plus)
Note: end of year figures are used, not the
difference from one year to the next.
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
62. Components of “Net debt on 1/1/..” are the
year end figures for the previous year which
are the opening balances for the present year
Money used to purchase liquid
resources/repay/increase debenture loans
must be entered in “Reconciliation of net cash
flow to movement in net debt”
Alan Ryan BComm, GDE(Bus),
HDEA, MEd
