Costs can be classified in 4 ways – by function, by element, by nature and by behaviour. Classification of costs by function: Production costs- this is also known as “cost of sales”. This category would include production labour costs, materials, factory supervisor salaries, factory rent. These are any costs which are directly linked with organisations … Read More

A crucial part of nailing any payroll journal question is being able to calculate the wages expense, gross wages and the net wages due to the employees.  Use the chart below to help – and remember to play close attention to and differentiate between employee and employer contributions!

EOQ is the most economic re-order quantity of inventory which helps the business both ensure that the business is not holding too much inventory (which ties down working capital) and that they don’t keep so little inventory, which can interrupt the production process. These two situations can prove to be costly to the business and … Read More

Last week we received the saddening news that Her Majesty The Queen had passed away peacefully at Balmoral Castle in Scotland. The Queen ascended to the throne in 1952 after the death of her father, King George VI. 2022 marked her Platinum Jubilee – 70 years on the throne. This makes her the longest reigning … Read More

  A basic test on prepaid income: You are working on the accounting records of a business for the year ended 31 March 20X7. You are looking at the rent income for the year and this includes receipts for the following periods: Apr 20X6 – Mar 20X7 £5,040 Apr 20X6 – Jun 20X7 £5,625  Identify … Read More

  A basic test on accrued income: You are working on the accounting records of a business for the year ended 31 March 20X7. You are looking at the rent income for the year and this includes receipts for the following periods:  Apr 20X6 – Jan 20X7 £5,900 Apr 20X6 – May 20X7 £6,720  Identify … Read More

A basic test on prepayments: You are working on the accounting records of a business for the year ended 31 March 20X7. You are looking at the rent expense for the year and this includes payments for the following periods:  Apr 20X6 – May 20X7- Office 1 £5,040 Apr 20X6 – Jan 20X7- Office 2 … Read More

A basic test on accruals:  You are working on the accounting records of a business for the year ended 31 March 20X7. You are looking at the rent expense for the year and this includes payments for the following periods: Apr 20X6 – May 20X7- Office 1 £5,040 Apr 20X6 – Jan 20X7- Office 2 … Read More

  Prepaid income is an amount received in advance for a sundry income which relates to an accounting period after the year end. In accounting for prepaid income, the effect that needs to occur will be to reduce the overpayment in income in an attempt to account for only the income earned in that accounting … Read More

Accrued income is a sundry income amount outstanding and yet to be received by the end of an accounting period, so has not been entered into the ledger accounts. In accounting for accrued income, the effect that needs to occur will be to increase the relevant income in an attempt to account for the total … Read More