← Company financial statement preparation

Journal and closing entries (every paper, Q1 and Q2)

Adjusting entries first, then closing entries. The narrations are usually given — the marks are in the accounts and the amounts.

The adjustments that recur every year

Adjustment	Debit	Credit
Expense owing (accrued)	Expense	Accrued expenses (current liability)
Expense paid in advance	Prepayments (current asset)	Expense
Income earned, not invoiced	Accounts receivable	Income
Income received in advance	Income	Income in advance (current liability)
Depreciation for the year	Depreciation expense	Accumulated depreciation
Land revaluation increase	Land	Revaluation surplus (equity, via OCI)
Interim dividend declared & paid	Interim dividend / Retained earnings	Bank
Share repurchase	Contributed equity (+ retained earnings if paid above issue price)	Bank

GST: adjustments to income and expense accounts are recorded GST-exclusive, with the GST portion going to the GST account.

✕

A dividend paid is never profit; a dividend received always is

A dividend the company PAYS is a distribution to shareholders — straight to retained earnings, profit never involved. A dividend the company RECEIVES from an investment it holds is other income, which DOES flow through profit for the year. The 2024 paper tested both in one question: an interim dividend paid of $30 000 (retained earnings only) beside a dividend received of $2 500 from 20 000 shares held in another company (other income, +profit, +retained earnings via profit). Real paper — 2025 Income tax expense and taxation payable, from the trial balance Income tax expense for the year is $46 800. Provisional tax of $25 300 has already been paid to the IRD. Journal the tax expense and state the current liability. Debit Income tax expense $46 800; credit Taxation payable $46 800 — records the full year's charge. Provisional tax paid $25 300 has already reduced what is owed, so it is debited against Taxation payable. Closing Taxation payable balance = $46 800 − $25 300 = $21 500, reported as a current liability. ✓ Taxation payable at balance date = $21 500 — the expense LESS what has already been paid, not the full expense.

Practise just this