AS Level Accounting 9706 important things to remember

These are all the small things which you should remember in AS Level Accounting 9706, in order to avoid mistakes in your exam. It is divided into two categories Financial Accounting and Cost Accounting.

Financial Accounting

• You don’t need to confuse yourself with written down value or net book value, it simply comes after depreciation
• Assets, expenses and drawings have a debit balance, whereas all the other things will have a credit balance
• Sales invoice means that the goods are sold on CREDIT
• If bad debts are inside the trial balance then it means that the amount has already been deducted from trade receivables
• Also to note that provision for depreciation is contra asset account, it is NOT an expense, since it has a B/d balance.





• All the carried down balances would go to balance sheet
• All the expenses and incomes would go to profit and loss statement
• Remember, every asset has an opening debit balance and closing credit balance
• Remember, every liability has an opening credit balance and closing debit balance
• The amount of loan interest owing and not paid comes in current liabilities
• List prices is without subtracting trade discount
• Set-off always reduces control account
• Credit note received means purchase returns
• Credit note sent means sales returns
• Bad debts recovered comes on the debit side of the sales ledger control account and on the credit side





• The amount of stationary used, goes in the income statement as an expense.
• Sundry expense means miscellaneous
• Whatever goes in Income statement is considered as revenue expenditure
• Whatever goes in Balance Sheet is considered as capital expenditure
• Capital employed means= Capital Owned + Long term Loan
• Capital owned means= Assets minus liabilities
• Drawings are neither assets nor liabilities
• Closing inventory has a direct relation with profit, if closing inventory is overstated, profit will be understated
• Opening inventory has an inverse relation with profit, if opening inventory is overstated, profit will be understated 
• Unpresented cheques are payment made by us
• Uncredited cheques are receipts by us they are also called lodgments
• Provision for bad debt is a separate account, we have to record the provision in debtors account, net debtors means after deducting provision.
• If profit is given in the trial balance, the inventory should be closing inventory. Closing inventory is not required.





• Similarly if depreciation for the year is also inside the trial balance, the provision for depreciation would already include the year’s depreciation.
• Loan is as long term liability unless payable within one year. if nothing is mentioned, assume long term.
• NRV= current selling price minus any expenses
• We always ignore replacement cost in inventory valuation
• Markup is on Cost
• Margin is on sales

Cost/Managerial Accounting

• We use only overhead absorption rate (OAR) to calculate the overheads for a unit/job/batch
• Absorbed overheads= OAR x Actual Activity
• If the actual activity is above budgeted activity, we will over absorb
• If the actual activity is below budgeted activity, we will under absorb
• Decisions are based on contribution, not profits. assuming fixed costs have already been occurred
• Marginal costing is about decision making
• Contribution/unit x # of units) – Fixed Cost= Profits
• Lower breakeven is better
• Higher MOS is better
• OAR can be calculated on any basis like machine hours, labour hours, unit, labour cost and material cost.
• Whenever you get positive contribution product should be accepted under idle capacity
• If the firm, makes a single product, profit volume chart will always be profit against units
• If the firm, makes multiple products, PVC will always be profit against sales revenue

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Good Luck!