POA depreciation straight-line method is one of the most popular concept being examined in both N and O-Level exams. In fact, the requirement to compute depreciation by using the straight-line method in the preparation of financial statements (FS) has appeared every single year since the change of POA syllabus in 2021 all the way to 2024 for both N and O-Level exams! At times, it can also come out as an individual question too, such as in the 2022 O-Level exam (Paper 1 – Question 4). Therefore, it is of utmost important that you know how to compute the depreciation amount by using the straight-line method.

What is Depreciation?

Depreciation is the allocation of the cost (or depreciable amount) of a non-current asset over its useful life. In simple terms, depreciation represents how much value a non-current asset has declined after one year. In N and O-Level POA syllabus, there are two methods of depreciation that you need to know. They are straight-line and reducing-balance methods. In this article, we will look at the POA depreciation straight-line method.

POA Depreciation Straight-Line Method Formulas

Yes, there are more than one formula for computing depreciation by using the straight-line method. The formula you should use will depend on what information the question gives you. The question must provide you with either the useful life or the rate of depreciation before you can apply the POA depreciation straight-line method.

Given Useful Life

If the question provides you with the useful life, you may use the following formula to compute the depreciation.

Depreciation = (Cost – Scrap Value) / Useful Life

Given Rate of Depreciation

However, if the question gives you the rate of depreciation, please use the following formula instead.

Depreciation = Rate of Depreciation x (Cost – Scrap Value)

What is Scrap Value?

Scrap value is the amount that the business can receive when disposing the non-current asset at the end of its useful life.

One common question that students ask during tuition is what should you do if the question does not provide you with the scrap value. The answer is that the scrap value should be zero.

POA Depreciation Double Entry

Once you manage to find out the amount of depreciation by using a straight-line method, do remember to pass a double entry to record the depreciation amount into the relevant ledgers. The double entry to record depreciation is as follows.

Dr Depreciation (Expense)
Cr Accumulated Depreciation (Contra Asset)

Conclusion

POA depreciation straight-line method is a regular examinable concept in both N and O-Level exams. It is crucial that you know how to handle the computation well.

Wishing you all the very best to your POA study! Should you need some motivation in learning POA, do check out our testimonials page. Many have done well and you can do it too!

Mr. Wong – POA Tutor

The knowledge to adjust the allowance for impairment of trade receivables is crucial for both the N-Level and O-Level Principles of Accounts (POA) examinations. Such adjustments can appear either as additional information for the preparation of financial statements (FS) in Paper 2, Question 1 or they can also appear as individual question in either Paper 1 or Paper 2. In this article, Mr. Wong will share with you on how to adjust the allowance for impairment of trade receivables. Let’s go! 🙂

Understanding the accounts involved

There are two accounts that you will need to know when adjusting the allowance for impairment of trade receivables. They are the allowance for impairment of trade receivables account itself and impairment loss on trade receivables account. Let’s call the first one as ‘allowance’ account and the latter as ‘ILOTR’ for ease of reading. The allowance account is a contra-asset account. That means this account has a credit nature. The ILOTR account is an expense account which has a debit nature. The understanding of the nature of each account in POA syllabus is crucial in doing very well in POA exam.

How to adjust the allowance for impairment of trade receivables account?

The question on allowance in POA exams will require you to either adjust the allowance upwards (increase the allowance) or downwards (decrease the allowance). Let’s look at each of them in detail.

Increasing the allowance for impairment of trade receivables

Based on our understanding that the allowance account has a credit nature, that means in order to increase the allowance account, we will need to credit it. Hence, the journal entry to increase the allowance for trade receivables will be as follows.

Dr Impairment loss on trade receivables
Cr Allowance for impairment loss on trade receivables

Please note that the amount should be the difference between the amount of the allowance in the beginning of the year and at the end of the year – not the amount at the end of the year only.

Decreasing the allowance for impairment of trade receivables

Once you understand on how to adjust the allowance account upwards (increasing the allowance), decreasing the allowance simply works the other way. As allowance account has a credit nature, to decrease the allowance, we will need to debit it. Therefore, the journal entry to decrease the allowance will be as follows.

Dr Allowance for impairment of trade receivables
Cr Impairment loss on trade receivables

The decrease in the allowance will cause a negative expense (i.e. impairment loss on trade receivables) account. This is often called ‘reversal’ transaction.

Mr. Wong hopes this article would be helpful for your N-Level and O-Level POA revision. However, should you need further support for your POA exam, do feel free to contact us. We offer both online and classroom based lessons to support you in your POA journey. Let’s work hard for the exam and you can do it! 🙂

Written by Mr. Wong – POA Tutor

POA Notes – Source Documents

One of the areas in POA syllabus that students find it more challenging to understand and remember is the topic on source documents. Source documents are legal documents which reflect the underlying business transactions. The reason why students may find source documents is not that easy to understand could be due to the lack of real-life accounting work experience. In this article, Mr. Wong will attempt to explain in simple terms how each of the commonly encountered source documents in ‘O’ and ‘N’ Level POA examinations work. Whenever possible, real-life usage of the source documents will also be provided. Please note that this POA note is not a substitute for comprehensive verbal explanation in POA tuition class.  

Invoice 

One of the most popular source documents which is used in real business world and one which is commonly examined in ‘O’ and ‘N’ Level POA examinations is invoice. First of all, it is important you are aware that they are 2 types of sales invoices. In the real world, we call them sales invoice and purchase invoice.  

Sales invoice is an invoice which the company issues to its customer when customer buys goods on credit. The sales invoice is issued by the company to its customer, providing the details of the sale of goods transaction such as the amount, credit term and description of the goods. Please note that this must be a credit transaction, i.e. no cash has been given by customer to the company. If it is a cash sale of goods, a different source document will be issued to customer which we will elaborate later.  

Purchase invoice is an invoice which the company received from its supplier when the company buys goods on credit. The purchase invoice is issued by the supplier to the company, providing the details of the purchase of goods transaction, such as the amount, credit term and description of the goods. Again, it is important to remember this is only for credit transaction and not cash transaction.  

Debit Note

Do remember that there are also two types of debit notes. Firstly, debit notes can be issue by the company to its customer. Secondly, debit notes can also be issue by the supplier to you (the company.  

Debit note works just like invoice, except debit note is issued for the amount undercharged. For example, you sell goods worth $100. However, you have only issued invoice for $90. For the remaining $10, you have to issue debit note. Please note that debit note is used in quite a different manner in the real world. Mr. Wong will not elaborate on the details so as to keep things simple.  

It works on the supplier side as well, if the supplier has issued invoice to you which is less than the amount it should be, the supplier will have to issue a debit note to you (the company) for the amount undercharged.  

Credit Note

The third source document that you will need to know is credit note. Just like invoice and debit note, there 2 types of credit notes. One of them is a credit note the company issues to customer and another is the credit the supplier issues to the company. Did you notice? There are always these 3 main players in the business, i.e. the company (YOU), the customer and the supplier. Please remember that you are always the company and do not think that you are the customer or supplier!  

When the goods you sold on credit to the customer are damaged, the customer may not be happy and therefore they will return those goods back to you. When you receive the goods back, you will need to issue a credit note to your customer to acknowledge the return of damaged goods. Please note again that the goods must have been sold on credit and not for cash.  

On the other hand, you (the company) can also return damaged goods which you have purchased from your supplier on credit. When you return the goods, the supplier needs to issue you a credit note to acknowledge the return of goods by you to the supplier.  

Receipt

The fourth source document we shall look at is receipt. Again, receipt can go in 2 directions. It can be issued from the company to the customer and the supplier can also issue a receipt to you (the company).  

Understanding receipt is quite easy. Think of Popular Bookshop! When Popular Bookshop sell books to its customer, the customer pays Popular Bookshop in cash. After receiving the cash (ching, ching!), the cashier will issue the customer a receipt. Receipt is for the sale of goods transaction, just like invoice. The different is that invoice will be issued to customer who buy on credit (never pay cash) and receipt will be issued to customer who buy on cash (pay cash).  

Just like invoice, debit note and credit note, receipt can also be issued by the supplier to you (the company). If Popular Bookshop buys its books on cash from its supplier (such as book publishers), the supplier will have to issue receipt to Popular Bookshop upon receiving the cash from Popular Bookshop.  

Bank Statement

The last popular source document which we will look at is bank statement. Unlike the first four source documents that can go both ways, bank statement can only be issued by the bank to the company. Obviously, you (the company) cannot issue a bank statement because the company is not a bank.  

Under your POA syllabus, you will only receive the bank statement after the month ends. There are certain transactions that you will not know until you have received the bank statement, such as interest received by the company (for keeping the money with the bank) and bank charges. Bank statement is therefore the source document used to record those transactions.  

Conclusion

The topic on source documents is regularly examined in POA examinations. It is examined as recent as 2018 POA examination. If you have bought your ten-year series, you may look at P1, Question 1, Part (c) under ‘N’ Level syllabus. It carries as many as 4 marks. As POA is an easy subject, it is crucial that you do not lose too many marks, otherwise getting A1 may be a little challenging.  

Should you have further doubts on source documents, do feel free to drop Mr. Wong an e-mail or reach out via Mr. Wong POA Tuition’s Facebook Page. 

Written by Mr. Wong – Principal POA Tutor of Mr. Wong POA Tuition  

POA Tuition – How To Choose The Right One

POA Tuition in Singapore has been gaining popularity over the years. Just this year alone in 2018, Mr. Wong POA Tuition has seen an increase of more than double the number of students studying Principles of Accounts (POA) with us as compared to the year before. Mr. Wong believes that this is due to a shift in parents’ mindset that being talented in science and math is not the only path to success for their children. In fact, despite holding a Bachelor of Engineering from NTU, Mr. Wong is substantially more successful in the world of accountancy than the tech world. The other possible reason for the increase in popularity of POA Tuition is the raise in awareness that Principles of Accounts (POA) is actually one of the easiest subjects to score in both ‘N’ and ‘O’ Levels, therefore improving the overall L1R4 or L1R5 for the admission into Poly and JC.

In this article, Mr. Wong will elaborate on the factors you should consider in choosing POA Tuition so that it can provide certain level of assurance that you will eventually do well in ‘N’ or ‘O’ Level Principles of Accounts (POA).

Types of POA Tuition in Singapore

First of all, it is important to understand what are the different types of POA Tuition available in Singapore. In general, there are two (2) distinct types of POA Tuition in Singapore. They are one-to-one and group POA Tuition. One-to-one POA Tuition is generally conducted by a private home tutor who will travel to the students’ premises to teach, while group POA Tuition is usually conducted by experienced tutor with larger number of students.

Mr. Wong personally is quite surprised that there are small number of parents who strongly believe that one-to-one POA Tuition will be able to assist their children better as compared to group POA Tuition. Mr. Wong started his career in tuition industry as a private home tutor. However, as the number of students grow, it is no longer possible for Mr. Wong to be travelling from home to home providing tuition. While Mr. Wong has received guidance from good private home tutor during his secondary and JC school days, finding good ones involves significant trial and error. Such incident is usually rare for POA group tuition as the tutor has been assessed by large number of parents and students. POA Tutors who conduct group tuition usually made their testimonial available in their websites for review too. 

Professional Experience of POA Tutor 

Principles of Accounts (POA) is a highly practical subject. Unlike other subjects being offered in secondary schools, Principles of Accounts (POA) cannot simply be taught by POA Tutors will little or no real-life professional statutory reporting experience – regardless the number of teaching years.

Due to the fact that real-life accounting practitioner is a highly financially rewarding career, there are not many who wish to put in additional time to provide POA Tuition. Therefore, finding strong POA Tutors who are also current accounting practitioners can be challenging. Well, Mr. Wong understands that this paragraph may sound like promoting himself who is a POA Tutor and at the same a current accounting practitioner. 😊 However, should you decide that Mr. Wong POA Tuition is not for you – for one reason or another, do seriously consider POA Tutors with substantial professional experience as they can generally provide you with the real-life examples that cannot be possibly shared by POA Tutors with little or no professional experience. 

Educational Achievements of POA Tutor

Success breeds success. Accountancy is one of the four professional qualifications, beside medicine, law and engineering. Principles of Accounts (POA) is the fundamental study of accountancy. The third point to consider when choosing POA Tuition that Mr. Wong will elaborate is probably quite clear to most parents. It is important to choose POA Tuition conducted by POA Tutor with strong academic background. It takes more than technical knowledge to do well in Principles of Accounts (POA). Study methods and exam strategies play a very important role in securing that A1. Effective study methods and exam strategies are probably the single most important factor that help Mr. Wong to emerge as ACCA Top 30 Graduate in Singapore. POA Tutors with strong academic results will be able to share the techniques used that propel him/her to the top. Believe Mr. Wong, you do not need to be a genius to be the top student! In fact, Mr. Wong was from a neighbourhood secondary school. If Mr. Wong can do it, you can do it too!  

Testimonials from POA Students

Testimonials are generally written by students who have personally experienced the quality of the POA Tuition classes. They are usually made available in the POA Tuition websites. Reviewing testimonial is one of the most effective way of finding out how the teaching style, level of commitment and strength of the POA Tutor as students do not usually provide testimonials unless they feel strongly that the POA Tuition they have attended have helped them to improve their results and make their study life easier.

Mr. Wong POA Tuition has received high quality testimonials from POA students who have benefitted from the lessons. Do feel free to check out what they have to say about Mr. Wong POA Tuition here. 😊

Social Media Influence of POA Tutor

While testimonials do provide insights into the POA Tuition class that you are considering to join based on what the previous students have experienced, social media presence indicates the level of influence the POA Tutor has on the accounting industry in general. This is because the followers of social media platform, such as Facebook come from all walk of life and many of them are real-life accounting practitioners.

It will be advisable to select POA Tuition classes with at least 1,000 followers and above as it shows that the POA Tutor not only can deliver the quality of teaching in class, but also at the same time well accepted among other accounting practitioners in the industry. For Mr. Wong POA Tuition, we are grateful to have more than 3,000 followers across Facebook and TikTok. 

POA Tuition Trial Lesson

You can google through the internet, search through social media, request for referrals, but there is nothing more effective in ascertaining the strength of the POA Tutor than to attend the classes conducted yourself. At Mr. Wong POA Tuition, we strongly believe in offering trial lesson for prospective students before they join the regular tuition class. 

Yes, we conduct trial lessons regularly and they are personally taught by Mr. Wong. Don’t by shy, give us a call to reserve your place now. 😊

Written by Mr. Wong – Principal POA Tutor of Mr. Wong POA Tuition

How Relevant is ‘O’ Level POA to Real-Life Accounting

When Mr. Wong was still in secondary and JC school days, Mr. Wong was always interested to know how those theoretical concepts being taught in school and tuition could potentially be applied to real life scenarios. Unfortunately, Mr. Wong did not always get absolute answers. Looking back and having completed both Engineering Degree (NTU) and Accounting Degree (ACCA), Mr. Wong finally realises that the level of practicality differs between one ‘O’ Level subject and another. With at least 95% of the concepts covered in ‘O’ Level POA having direct application to real life accounting, there is no doubt that POA emerges as the most relevant and practical subject in a series of ‘O’ Level subjects.

There is a clear trend that students in Singapore are increasingly more interested in learning subjects and solving problems that they can relate to real life as compared to those which are only theoretical in nature. Our students at Mr. Wong POA Tuition are perfectly clear on how each concept they learn can be applied in real life. However, we do not want this to be exclusive. We strive to provide as much assistance as possible to all students who are pursuing ‘O’ Level POA through our edublog. Let us look at some examples on how the concepts you have learnt in POA relate to real life scenarios.

Preparation of Ledger Accounts

Preparation of ledger accounts is a sure-come-out question in ‘O’ Level POA Paper 1. The question will require you to prepare the ledger in columnar format. When the POA syllabus was revamped drastically in Year 2015 Exam, there was so much ‘hu-ha’ among ‘O’ Level POA educators. At Mr. Wong POA Tuition, we believe that it is a long-overdue update.

The biggest change in the new syllabus is moving from T-account to columnar format. Hey! There is no company, even the smallest Small and Medium Enterprises (SMEs) who is still using T-account ledger format. At least, Mr. Wong has never seen any of them in the real world anymore.

We fully support the change and it has definitely brought ‘O’ Level POA syllabus to be even more align to the real world.

Bank Reconciliation

Mr. Wong can still vividly remember the first time Mr. Wong performed bank reconciliation. It was in one of the American Multi National Corporation (US MNCs). It was many years back when Mr. Wong has just started his career in the accounting industry.

So, how does bank reconciliation carried out the real life? We compare the cash at bank ledger account to the bank statement that we received from the bank. Then, we update the cash at bank ledger account with transactions appearing in the bank statement, but not recorded in the ledger before eventually preparing bank reconciliation statement.

Is there any difference from what you have previously learnt in Chapter 7 of your textbook (All About Principles of Accounts)? Absolutely not! As long as you understand the concepts taught in POA, you can always take up a real accounting job that requires you to perform bank reconciliation after completing your much-awaited ‘O’ Level.

Allowance for Impairment of Trade Receivables

This topic is covered under Chapter 14 of the textbook. Occasionally, a small number of schools run faster than our tuition schedule – for reason that we never understand. Nevertheless, when we ask the students to share with us why they learn that particular accounting concept and how they apply it to real life scenarios, we usually get no further than basic ‘mechanical’ answer. Obviously, we have to eventually go through the concepts all over again.

One area that has been covered in a mechanical way in school is the topic on allowance for impairment of trade receivables topic. Providing an allowance is not simply a theoretical concept. This is something that must be done each year before the statutory audit commences.

Conclusion

Almost each concept, i.e. up to 95% of what you learn from ‘O’ Level POA has real life applications. If happen that your POA teacher or tutor has little or no real life experience in accounting industry, we strongly advise that you speak to uncles or aunties who are real life accounting practitioners. Mr. Wong is certain that they will be happy to share their experience with you. Of course, Mr. Wong is always ready to share the accounting insights with you as well.

As ‘pure science’ student in secondary school back then, Mr. Wong strongly believes that you have an edge over your other schoolmates who do not take POA in school as the real world revolves around business and accounting is the language of business.

Written by Mr. Wong – Principal POA Tutor of Mr. Wong POA Tuition

3 Exam Strategies Every Student Must Know

In the previous article, we have explained that there are 3 key success factors that will determine how well a student do in POA and ‘O’ Level. One of the 3 key success factors is to have effective study methods and exam strategies. Effective exam strategies help in minimizing the amount of time you need to spend studying, maximizing the amount of marks you score in the examination and detaching you from the negative emotions, such as exam anxiety during the actual exam.

There are many study methods and exam strategies, ranging from the basic to advanced strategies. In this article, we will go through 3 of them. Applied correctly, you should see your exam results begin trending up.

1. Understanding vs Memorizing

Over-reliance on memory work is the most common problem we notice in students. Let’s be very clear, you get nowhere by relying on memory work. We believe that the reason why students resort to memorizing is because they have difficulty understanding the concepts taught in school.

The solution to this is to ensure that you clarify any concept that you are not clear with your teacher. Of course, if you are too shy, you may choose to engage a tutor, whether it is a private 1-to-1 or group tuition. We recommend group tuition so that you can benchmark yourself against students from other schools. Disclaimer: Our opinion may be biased on this as we conduct group tuition. 🙂

The rule is that you should NEVER memorize anything that you do not understand!

2. Practise, Practise and Practise

You can have the best understanding of the concepts, however if you do not practise what you have learnt, there is very little chance you can surpass other students. Look at yourself as a professional athlete. Although they have the best understanding of the concepts to perform best in their chosen sport, they continuously practising their movements so that they can perfect them by the Olympic Games. You too, should do the same!

It is important that you spend more time practising questions that are more likely to appear in the exam rather than those that have remote chance of appearing.

This paragraph is going to be an advertisement about our service. You may skip this paragraph if you wish to. 🙂 See, advertisement does not need to be boring! In Mr. Wong POA Tuition, we carefully select the types of questions that our students should practise in class and at home. This is to ensure that students can derive the maximum benefits out of the time they spend practising.

3. Exam Forecasting

There are too many expected learning outcomes in the syllabus. This does not only apply to ‘O’ Level POA, but also for other subjects in any levels of study. It is very unlikely that you can acquire the same depth of understanding on all the learning outcomes in the syllabus. Even if you can, you may need to spend unnecessarily significant amount of time which you can devote to learning other subjects. It is therefore very important that you learn to forecast what the exam questions which are more likely to appear in the exams, say ‘O’ Level exams. However, it is important to note that by no means you should ignore other concepts which are less likely to appear. You MUST learn all the concepts in the syllabus, so that you will still have a chance to answer any question that comes out despite having the most remote likelihood of appearing.

Forecasting also allows you to be focused in your study. Obviously, if you think the questions are going to come out, it must be irrational if you still choose not to study them! The ability to forecast the exam questions accurately is probably one of the most important factors that propel Mr. Wong to be Top 30 Graduate in Singapore.

We hope what we share in this article will be helpful to you. Do remember to share this with your friends who may also benefit from the exam strategies we shared in this article.

Written by Mr. Wong – Principal POA Tutor of Mr. Wong POA Tuition