Exam Revision Notes. communicating the economic transactions and events of a business operation.!
|
|
- Moses Barrett
- 5 years ago
- Views:
Transcription
1 Topic 2: Regulation - Accounting is a process of identifying, measuring (can be estimating), recording and communicating the economic transactions and events of a business operation. Conceptual Framework: set of concepts to be followed by preparers of financial statements - defines assets - Four sections: 1. Objective of general purpose financial reports - why? providing information about financial position/performance and cash flows to assist in evaluating and predicting the entity s future. 2. The reporting entity - who? 3. Definition of elements of financial statements (4) Statement of Profit/Loss (IS) - Report on the entity s success of failure over a period of time. - List entity s income (revenue and gains) and expenses - Income/Revenue - Expenses = Profit (or Loss) Statement of Changes in Equity - Reports total comprehensive income for the period and other changes in equity - Retained earnings refers to accumulated profit which has not been distributed to shareholders 1 of 31
2 Statement of Financial Position (BS) - Assets = Liabilities + Equity - Current Assets - cash, accounts receivable, inventory - Non-Current Assets - assets not expected to be converted to cash/sold/consumed within 12 months - equipment, land, vehicles - Current Liabilities - short-term - accounts payable - Non-Current Liabilities - Bank loan due more than 12 months Statement of Cash Flows - Provide info on cash receipts and payments and cash on hand - Operating activities - Investing activities - Financing activities Interrelationships of Statements 1. Profit must be calculated first, so the Statement of Profit or Loss is prepared first. 2. The Statement of Changes in Equity is prepared second as it depends on results of the Statement of Profit or Loss. 2 of 31
3 3. The Statement of Financial Position is prepared third as it takes information from the Statement of Changes in Equity. 4. The Statement of Cash Flows is prepared fourth as the ending cash figure used in the Statement of Cash Flows is drawn from the Statement of Financial Position. 4. Concepts, principles and qualitative characteristics Concepts and Principles Monetary principle: must be expressed in $ Cost principle: revaluation of assets (appreciation/depreciation) Full disclosure principle: all circumstances and events that could effect decision-making processes should be disclosed in financial statements Going concern principle: business will remain in operation for the foreseeable future Accounting period concept: life of a business entity can be divided into artificial periods. Accounting entity concept: every entity can be separately identified and accounted for, owner s transactions are separate Fundamental Qualitative Characteristics of Accounting Information Relevance - accounting information is relevant if it makes a difference in a decision - Predictive or confirmatory value or both Faithful Representation - accounting info must reflect actual events 1. Comparability - information most useful when it is comparable - Comparability results when different entities use the same accounting principlesinvolves using consistent methods of time 2. Verifiability - provide evidence of direct (invoices) or indirect (calculations and assumptions) 3. Timeliness - information must be provided in a timely manner so that its relevance is not lost - but this is sometimes difficult 4. Understandability - assumed users have reasonable knowledge of business and economic activities and accounting - Relevant complex financial information should not be omitted because it is difficult to understand Constraints of Providing Financial Info: Timeliness - info loses relevance if there is delay and Costs of collecting/providing information may exceed the benefits from providing it Workshop - be able to do all accounting statements Topic 3 - Financial Statement Analysis 3 of 31
4 Assets = Liabilities + Equity Horizontal Analysis: evaluates a series of financial data changes over time - analyses increases and decreases Vertical Analysis: evaluates financial items in relation to a base amount - relationship of one thing over another - useful for comparing different companies Ratios - important tools to evaluate financial performance and health of a business - will provide warning signs. 1. Liquidity - measure the short-term ability of an entity to pay its debts and meet unexpected needs for cash - Important to bankers, suppliers and other short-term creditors 2. Solvency - measure the ability on an entity to survive over a long period of time - Important to long-term creditors and shareholders - Businesses funded by: Debt (loans, debentures, mortgages) or Equity (ordinary shareholders equity) 3. Profitability - measure the profit or operating success of an entity for a given period of time. - Ultimate test of management operating effectiveness - Long term survival depends on profit Limitations of Financial Statement Analysis Contains estimates Atypical Data Calculation differences Lack of comparability - some show business in good light and others not Disclosure Diversification Retrospective focus - past data may not reflect the future Not always the whole story - need more review of financial data Economic factors, competitive market influences, global events and trends 4 of 31
5 Liquidity Ratios Description Good/Bad/Increase/ Decrease Example Current Ratio - Evaluate an entity s short term debt paying ability Express the relationship of current assets to current liabilities High Current ratio indicates that the business has sufficient current assets to maintain operations and pay current liabilities. Increase = Good 0.7 ratio Every one dollar of current liability it has 70 cents of current assets in every dollar to cover it. Quick Ratio - Measures an entity s immediate short term debt paying ability Compliments the current ratio Acid test ratio Cash excludes inventory and prepaid assets 0.9:1-1:1 is considered acceptable for most industries. Lower the ratio - entity unable to meet immediate obligations Increase = Good 0.56 ratio Every one dollar of current liability the business has 56 cents of quick assets to cover it Inventory Turnover - reflects the effectiveness of inventory management Measure the number of times a company sells its average level of inventory during the year Higher the better Increase = Good Average Days in Inventory - Converts inventory turnover into a measure of days for inventory to be sold Decrease = Good Less time inventory sitting idle Solvency Ratios Description Good/Bad/Increase/ Decrease Debt to Asset Ratio - Indicates the degree of leverage (% of total assets funded through debt) Times Interest Earned Ratio - Indicates the entity s ability to pay interest on their debt Shows the proportion of the entity s assets financed with debt Indicates entity s ability to sustain debt by measuring its ability to meet interest payments from operating profit Decrease = Good Lower the better - means business is not financed by debt Higher the better Increase = Good Profitability Ratios Description Good/Bad/Increase/ Decrease Return on Ordinary Shareholders Equity Ratio Indicates earnings per dollar invested by the owners Affected by Return on assets, Degree of leverage Increase = Good Higher the better - more return to shareholders Days to sell off/ replenish stock Example 0.65, 65% 65% of business is funded by debt/liabilities - 35% is equity. The more you borrow the more you risk and the less you can borrow 40 Profit is sufficient to pay 40 times their interest payment. Example 0.24, 24% The business is generating 24 cents or 24% return to shareholders. 5 of 31
6 Profitability Ratios Return on Assets Profit Margin - Measures % of each dollar of sales that results in profit Description Measures overall profitability with respect to investment in assets The figure depends on how much we are borrowing. Measures % of each dollar of sales that results in profit Good/Bad/Increase/ Decrease Higher the better Increase = Good Increase = Good Producing more profit High volume firms (supermarkets) - low PM Low volume firms - high PM Example 0.1 ROA every one dollar the business invests in their assets it is returning 10 cents in profit Every one dollar in sales is returning 12 cents of net profit. Earnings Per Share Price-Earnings Ratio - reflects the investors assessment of entity s future growth/earnings Measures profit earned on each ordinary share Measures ratio of market price of each ordinary share to earnings per share Higher = Better Increase = Good Higher the better Increase = Good 0.96 Higher the earnings per share the more profitable 71.5 Investors are willing to pay 71.5 times the earnings per share in order to buy shares in the business - shows confidence in their growth Workshop Comparative analysis is performed to evaluate an entity s short-term liquidity, profitability and long term solvency. Comparisons can detect changes in financial relationships and significant trends, and can provide insight into an entity s competitive position within its industry. Financial statements may be analysed horizontally, vertically and with ratios. Limitations - limited by the use of estimates, the cost basis, the application of alternative accounting methods, atypical data at year-end and the diversification of entities. Topic 5: Accrual Accounting Concepts Accrual-based accounting - Revenue and expenses are provided/consumed/incurred regardless of cash flow/payment Cash-based accounting - Revenue is recognised when cash is received, expenses recognised when cash is paid. Adjusting Entries - necessary each time financial statements are prepared to make sure: Revenues and expenses are recorded in the correct accounting period (accounting period concept) 6 of 31
7 Recognition criteria are followed for A, L, R and E (conceptual framework) Adjusting entries affect both: A Statement of Financial Position account (either an asset or liability) and, A Statement of Profit or Loss account (either a R or E) Adjusting entries never involve cash. Types of Adjusting Entries Prepayments are either: 1. Prepaid expenses - Assets 2. Revenue received in advance - Liabilities Prepayments Prepaid Expenses - amounts paid in cash and recored as assets until used up/consumed Revenue Received in Advance - amounts received in cash from customers and recored as a liability until work/good delivered Asset accounts until expensed when used. Liability accounts until revenue is earned. Example: Prepaid Expenses - 5 October - supplies of $2500 originally recorded as an asset: Advertising Supplies Dr 2,500 Cash Cr 2,500 - Supplies left on hand 31 October - $1000 Journal Entry General Ledger Entry 7 of 31
8 Insurance: - Insurance paid for 1 year in advance of $ October prepaid insurance recorded as an asset: Prepaid Insurance Dr 600 Cash Cr October one month of prepaid insurance consumed. Insurance for October $600 / 12 = $50 Journal Entry General Ledger entry Depreciation: Allocation of the cost of the asset to expense over its useful life (as the benefit is received). Depreciation of office equipment: $480 per annum (per year) or $40 monthly = $480 / 12. Journal entry: General Ledger entry Statement of Financial Position Depreciation: carrying amount/book value or written down value is the difference between the cost of any depreciable asset and its related accumulated depreciation. Accumulated depreciation - negative/contra asset (opposite nature of asset) and different to the asset s market value Example: Revenues Received in Advance Service Revenue (Advertising): - 2 October $1,200 received for advertising services to be completed by 31 December, recorded as a liability: 8 of 31
9 Cash Dr 1,200 Unearned Revenue Cr 1,200 - Services worth $400 were performed in October. Journal entry: General Ledger entry: Accruals are either: Accruals 1. Accrued Revenues - Assets 2. Accrued Expenses - Liabilities Accrued Revenues - amounts not yet received or recored, for good/services been provided Accrued Expenses - amounts not yet paid or recored, for good/services already received Asset accounts until cash received Revenue is recognised at adjusting time. Liability accounts until cash is paid Expense is recognised at adjusting time. Commission Revenue Commission Revenue earned, but not yet received or recorded $200. Journal entry: General Ledger entry: Accrued Expenses Accrued Interest: - Loan of $5,000, Interest rate: 12% per annum. - Interest owing: ($5,000 x 12%) x 1/12 = $50 (for month). Journal entry: General Ledger entry: 9 of 31
10 Accrued Salaries: - Salaries outstanding for October: - 3 days x $400 per day = $1,200 Salaries outstanding for October = $1,200 Journal entry: General Ledger entry: The Adjusted Trial Balance and Financial Statements - The Adjusted Trial Balance is prepared after all adjusting entries have been made. - It is used to prove the equality of total debit balances and total credit balances after the adjusting entries have been made. - The adjusted trial basis is the main basis for preparation of the financial statements Trial Balance and Adjusted Trial Balance Compared Preparing Financial Statements - Statement of Profit or Loss prepared from revenue and expense accounts. - Current period profit (or loss) and dividends paid transferred to Retained Profits account. - Statement of Financial Position prepared from asset, liability, equity and balance of retained earnings account. 10 of 31
11 Preparation of the Statement of Profit or Loss from the Adjusted Trial Balance Closing the Books Temporary accounts - relate to only given accounting period (i.e. rev, exp, dividends) are closed at the end of period - go to 0 Permanent accounts (i.e. A, L, E) are carried forward to future periods: continuing balance Permanent and Temporary Accounts Preparing Closing Entries - Closing entries are used to transfer account balances to the permanent equity account, retained earnings - They produce a zero balance in each temporary account 1. All revenue and expense a/cs are closed to the income summary account 2. The Income summary account is also a temporary a/c, which is closed to retained earnings 3. Any dividends are closed to retained earnings 11 of 31
12 Close Revenue and Expense Accounts to Income Summary Close Income Summary to Retained Earnings Close Dividends Paid To Retained Earnings Preparing a Post-closing Trial Balance - a list of all permanent accounts and their balances after closing entries are journalised and posted. Do this to prove the equality of the permanent accounts that are carried forward to the next accounting period. Ethical Issues in Accrual Accounting Accrual accounting provides opportunities for unethical behaviour: - dishonestly could omit depreciation expense at the end of the year - failing to record depreciation would overstate profit and show a more favourable picture of the business financial position than actually existed - some accruals are based on estimates, e.g. revenues and depreciation and these can be manipulated Topic 6: Inventories - Merchandising operations: - Sales Revenue - Cost of Sales = Gross Profit - Operating expenses = Profit (loss) Inventory Systems - 2 common used to record purchase/sales of inventory and manage inventory Periodic System: used by small businesses - large volume of sales, not detailed records of inventory, cost of sales is determined only at the end of the accounting period through stocktake. Use purchases account to recored cost of inventory Example: Sauk Stereo purchase of inventory on Cr from PW audio supply May 5 Purchases of Oct 2016 Service Revenue 10,400 Total Commissions Revenue 200 Revenue Income Summary 10, Oct 2016 Total Expenses Income Summary 7,740 Salaries Expense 5,200 Advertising Supplies Expense 1,500 Rent Expense 900 Insurance Expense 50 Interest Expense 50 Dereciation Expense Oct 2016 Income Summary 2,860 Retained Earnings Profit goes to Retained Earnings : Rev - Exp 2, Oct 2016 Retained Earnings 500 Dividends 500 Dividends reduce Retained Earnings
13 Accounts Payable (To record goods purchased on account, terms 2/7, n/30) Sauk Stereo returns goods costing $300 to PW audio supply ltd May 8 Accounts Payable 300 Purchase Returns and Allowances 300 (To record return of incorrect goods purchased from PW Audio Supply) Example: Sale of inventory on credit to Sauk Stereo by PW Audio Supply Ltd. Record sale only, no record of inventory movement or cost of sale as this is done at the end of period May 5 Accounts Receivable Sales (To record credit sales per invoice no. 731 to Sauk Stereo) Calculating Cost of Sales in the periodic system - COS indirectly determined only at end of accounting period by a calculation as there is not a separate cost of sales account Calculation of net purchases; - Then determine inventory by physical stocktake Calculation of cost of sales; Perpetual System: detailed inventory system, running recorded every time sold inventory adjusted e.g. car dealerships, furniture stores, use barcodes/optical scanners e.g. supermarkets/department stores Example: Sauk Stereo purchase of inventory on credit from audio supply 13 of 31
14 A purchase return is a return of goods by the customer - they receive a refund (credit or cash) A purchase allowance occurs where the customer keeps the goods and a price reduction is granted Sauk Stereo returns goods costing $300 to audio supply Purchase Two entries are required: 1. to record the sale of goods 2. to record the cost of sales. Returns Two entries are required: 1. To record sales return at selling price. 2. To record return to inventory at cost price. Example 1: PW Audio Supply Ltd records credit for goods returned by customer. Goods can be resold and are not faulty. - Sales return at selling price of $300 (original sale was on credit). - Return (increase) to inventory at cost price of $140. Example 1: PW Audio Supply Ltd made cash sales of $2,200, Cost of sales was $1,400. If goods returned by customer are faulty - same transaction but instead of Inventory it would be Inventory write down Inventory Cost flow assumptions - for determining COS and ending inventory balance: EXAMPLES 1. First-in, first out (FIFO) - oldest stock bought is first sold, first item bought is first sold 14 of 31
15 2. Last-in, first out (LIFO) - newest stock bought is first sold 3. Average cost - COGS is calculated on weighted average unit cost incurred Statement of Profit/Loss In inflation period (rising prices) FIFO reports highest profit - CEO would prefer, makes more profit thus bonus LIFO the lowest - favourable to business owner - means pay less tax Average costs - falls in the middle In deflation period (decreasing prices) FIFO reports lowest profit LIFO reports highest profit Average costs - falls in the middle Inventory Cost Method Inflation Period Statement P/L Deflation Period Statement P/L Statement of Financial Position - inflation FIFO Highest Profit Lowest Profit Will approx. current costs LIFO Lowest Profit Highest Profit Will understate - show lower profit - lower taxes *illegal Average Cost Middle Middle Statement of Financial Position In inflation periods (increasing prices) costs allocated to ending inventory using: - FIFO will approximate current costs, LIFO will be understated In times on inflation - LIFO will give lower profit and therefore lower taxes - but this is illegal in AUS and NZ Must use consistent inventory cash flow methods otherwise seems sketchy and is hard for comparability - if you change methods must disclose in financial statements (the change and effects if the change in profit) Valuing inventory at lower cost and net realisable value - value changes overtime - must be updated Statement of Profit/Loss: Periodic system 15 of 31 More detail is required in the periodic system.
16 Statement of Profit/Loss: Perpetual system Statement of profit or loss presentation Perpetual system Sales Revenue: Gross Profit: Other Revenue: GST - always follows it s partner (R,E, or A) - purchases of assets are Dr so GST is Dr, same for expenses - but revenues are credit Purchasing inventory: Example: Retailer purchases 10 tables on credit from manufacturer for $440 GST inclusive Selling inventory: Example: Retailer sells five tables for $550 each including GST. Remitting GST to the taxation authority: Where GST collected is less than GST paid, the difference is to be refunded by the ATO. 16 of 31
17 Remitting GST to the taxation authority: Where GST amount collected greater than GST paid difference to be remitted to ATO. Topic 8: Cash PI Deposits in transit = business recored money received in cash receipts journal (SRJ) but bank has not yet Unpresented cheque = a cheque issued/written by the business and recorded but person hasn't banked it - decrease bank account Dishonoured cheque - bounced cheque NSF Outstanding deposits = lag between receipts recorded by the business and when recored by the bank - increase bank account Bank/our errors Bank Charges Interest charged/earned Debit balance on bank statement - negative bank balance for us, Credit balance - positive bank balance 1. Compare the current bank statement to: Previous month s bank rec and current month s cash receipts and payments - tick items that match, correct cash book errors, bank statement errors added to bank rec 2. Identify unticked items on bank statement - adjust cash book for dishonoured cheques, direct deposits and own errors 3. Examine cash journal and unticked items - outstanding deposits and unpresented cheques - list in bank rec 4. Unticked items from opening reconciliation are carried forward to current bank rec. 5. Total cash journals and post to Cash at Bank ledger 6. Complete bank rec Adjusted bank balance should the balance of Cash at Bank account Workshop Example Accounting for Receivables Direct write off method Allowance method for uncollected accounts a. estimated uncollectables recorded in Bad Debts Expense (DR) and Allowance for Doubtful Debts - Neg Asset (CR) - Est. % of net sales, ageing of a/c rece. 17 of 31
18 Recording the write-off of an uncollectable account by the allowance method: Journal entry: Statement of Financial Position: 18 of 31 Recovery of an uncollectable account: Two journal entries: Ageing of accounts receivable:
19 Bad Debt write off effects GST liability - when account was recorded GST liability was recognised, as the account is unpaid the GST Liability is reduced b. actual uncollectables recorded in Allowance for Doubtful Debts (DR) and Accounts Receivable (CR) accounts Credit Risk Ratio = Allowance for doubtful debts/accounts Receivable Receivables turnover = Net Credit Sales/Average Net Receivables (average of net rece.- allowance for doubtful debts) Topic 9 - Cash PII Average Collection Period = 365/Receivables turnover Statement of Cash flows determines - where cash comes from, what cash is used, what is the change in the cash balance - Preparation of Statement of Cash Flows - statement of financial position (comparative this period and last), statement of p/l, additional info - Impact of the product life cycle on an entity s cash flows - new business has a lot of initial expenses (significant outflow) - Helps investors and creditors evaluate the entity - are there sufficient cash flows to meet cash requirements - Explains difference between profit and net cash provided (used) operating activities Operating Activities - cash expenditures for operating (e. rent), day-to-day business transactions Entity s principle revenue-generating activities and other activities not regarded as investing or financing Reported using direct and in-direct methods - differ in the way that net cash provided (used) by operating activities is calculated. Direct method - cash payments presented as deductions from cash receipts to determine net cash provided (used) by operating activities Investing Activities - non-current assets e.g. sold/bought land Revenue selling/purchasing non-current/long term assets 19 of 31
20 Financing Activities - how is the entity financed through debt or equity, dividend to share holders/investors, long term debt debentures, loans etc Affect the size and composition of contributed equity and borrowing Significant Non-Cash Activities - financing and investing activities that do not affect cash are not reported in the body of the cash flow statement but are in the notes These include: - Issue of shares to purchase assets - Conversion of debt into ordinary shares - Issue of debt to purchase assets - Exchanges of property, plant and equipment Format of the Cash Flow Statement Four Steps in Preparation 1. Determine the net increase (decrease) in cash - the difference between the beginning and end cash balances can be calculated from comparative date from the statement of financial position 2. Determine net cash provided (used) by operating activities 20 of 31
21 - involves current years statement of P/L and also comparative data from statement of financial position and selected additional data - aims to adjust activities reported in Statement P/L from accrual to cash basis - some activities are non-cash and are not included e.g. depreciation, loss or gain on sale of asset, bad debts expense Cash receipts from sales, interest, dividends, investments Cash Payments to suppliers, employees, for operating expenses, interest, taxes CASH RECEIPTS FOR CUSTOMERS = Revenues from sales ( + Decrease in accounts receivable OR - Increase in accounts receivable) - bad debts written off Example: Pacific Ltd calculation of Cash Receipts From Customers: Revenue from Sales from PL $975,000. Accounts Receivable from FP $15,000 in 2015, reduced to $12,000 in 2016 = $3,000 decrease. 21 of 31
22 3. Determine the net cash provided (used) by investing activities - involves current years statement of P/L and also comparative data from statement of financial position and selected additional data for the effects on cash - PPE, Investments, Loans to other entities - non-cash transactions not included - *Purchase of non-current assets such as new equipment may be completely or partly funded through debt does not represent the cash outflow - Calculating the increase and decrease in property, plant and equipment and associated cash flows: - Use depreciation expense, loss or gain on sale, and comparative property, plant and equipment and accumulated depreciation accounts, plus additional information. - Check comparative balances from Statement of Financial Position for amounts not accounted for. 4. Determine net cash provided (used) by financing activities - comparative data from statement of financial position and selected additional info for the effects on cash - Use net profit and notes payable, issued shares and retained earnings accounts: - cash inflows: issue shares or notes, take out bank loan e. cash received from issue of shares, cash received from issue of notes - cash outflows: pay dividends, repay notes, pay back bank loan e. cash paid upon redemption of shares/for dividends on shares, cash paid upon redemption of notes - assume any increase/decrease represents cash received/paid. - Cash inflow = cash received when the bank loan is first taken out. - Cash outflow = periodic cash payments to the bank for the loan. Free Cash Flow - describes operations available for expansion or payment of dividends Free Cash Flow = Net cash provided by operating activities - Capital expenditures (investment in non-current asset base - purchasing assets or maintaining them) 22 of 31
23 Capital Expenditure Ratio - indicates an entity s ability to generate sufficient cash to finance the purchase of new PPE Liquidity Ratio - ability to meet its immediate obligations Solvency Ratio - ability to survive over the long term Profitability Ratio - ability to generate a reasonable return Topic 10: Non-Current Assets Property, Plant and Equipment: are physical assets used to provide future economic benefits (5-10yrs) - Property: land and buildings - Plant and Equipment: computers, furniture, factory machinery, motor vehicle The cost principle - fair value of all expenditure necessary to acquire the asset and make it ready for use e.g. purchase price, freight costs, installation costs (new engine to extend life - capital expenditure) - excludes insurance, training costs - Carrying amount/written down value/book value = costs - accumulated depreciation - Residual Value - estimated value at end of useful life Depreciation Methods 1. Straight Line - spread cost of asset evenly over life COST OF ASSET - RESIDUAL VALUE USEFUL LIFE 23 of 31
24 2. Units of Production - applies cost to how much asset is used each year Calculate depreciation cost per unit: COST OF ASSET - RESIDUAL VALUE USEFUL LIFE (total number of units) Depreciation per unit: = 12,000 / 100,000 units (kilometres) = $0.12 per unit (kilometres) Yearly depreciation expense calculation: DEPRECIATION COST PER UNIT X YEARLY UNITS OF PRODUCTION Depreciation Expense: = 0.12 x 15,000 units (kilometres) = $ Diminishing Balance - an accelerated depreciation method - used more in earlier years more depreciation allocated *ignore residual value till last year Depreciation Y1: Cost x Diminishing balance depreciation rate Depreciation Y2: Carrying amount (cost - accumulated dep) x Diminishing balance depreciation rate Depreciation Final Y: Carrying amount - Residual Value Issues with intangible assets (non-monetary asset) - Identifiable - can be separated and non-identifiable can t separate from the company and sell e. good will (NI), brand logos and trademarks (I) Amortisation is the term used to describe the allocation of the cost of an intangible asset to expense. e. same as depreciation but for intangible assets - Statement of Financial Position Amortisation applies to intangible assets like depreciation applies to tangible and is calculated over asset s useful life E.g. Patent costs $60000 has estimated life of 8 year Annual amortisation expense: = /8 = $7 500 per year If pay more than market value for asset/business that difference is paying for goodwill. Journalising acquisition of PPE 24 of 31 Date Account Title Post Ref Debit Delivery truck Motor Vehicle Registration Expense 350 Prepaid Insurance Credit Cash (To record purchase of delivery truck and related expenditures)
25 Topic 11: Equity, Partnership, Companies Corporations: separate legal entity (taxed 30%), shareholders have limited liability, continuous life, transferable ownership rights, ability to acquire capital, board of directors, subject to government regulations Ordinary Shareholders: can vote on board, share in profits, share in assets on liquidation. Preference Shareholders: have priority over ordinary shares in respect to dividends and liquidation Accounting for the Private Issue of Shares - Shares are issued to private shareholders (by invitation) who pay cash on issue Journal Entry on Issue: Accounting for the Public Issue of Shares (prospectus - reports on financial performance plans) - Prospectus investors return application form with application money for the number of shares - Company called for application for shoes at 70c each, payable 50c per share on application and the remaining 20c per share on allotment - Application is Liability don t fully own that money yet, over 2 months usually Journal Entry on application - Application money is held in trust until the allotment (or issue) of shares - D Application account to close the account Journal Entries on allotment: 25 of 31
26 - Company can now transfer money received on application from trust into own bank account - close trust Credit it - Receipt of allotment money by the company can be recored into its bank account Journal Entry to record receipt of allotment money: Cash Dividends Journal Entry when dividend is declared: Journal entry when dividend is paid to shareholders: Share Dividends - Total equity does not change because: - Retained earnings decreases, and - Share Capital increases Account Dr Cr Assets XXX Liabilities XXX Partner s Capital XXX Initial investment by partners 26 of 31
27 - A share dividend signals that this amount of retained earnings is not available to shareholders as cash dividends Journal Entry when dividend is declared: Journal entry when dividend is paid to shareholders: Partnerships - formation of partnership P/L Allocation - Fraction or % method - Agreed to split 60/ *60% = to David and *40% = to Krysta Date Details Dr Cr 30 June Profit and Loss Summary 180, David, Capital 108,000 Krysta, Capital 72,000 To allocate net profit to partners P/L Allocation - Capital Contributions method - % of contribution Capital Contributed: Krysta 410,000, David 330,000, Total $740,000 The partnership earned a profit of $120,000 for the year, thus: Krysta: $410,000 $740,000 $120,000 = $66,486 (Krysta s profit share) P/L Allocation - Capital and Service method - Net profit for the year is $120,000 - According to the Partnership Agreement, the first $40,000 is allocated based on capital contribution. - The next $60,000 is allocated $40,000 to David and $20,000 to Krysta based on service. 27 of 31
28 - Any remaining amount is to be allocated equally. P/L Allocation - Salaries and Interest method - Salaries are paid in the amount of $40,000 to David and $30,000 to Krysta. - Interest of 10% is paid on the beginning capital balances. - Any remainder is split evenly. Withdrawal of a Partner E.g.? Workshop Topic 12: Intro to Management Accounting - Management accounting - internal reporting for business - assists with planning, controlling and decision making - Financial accounting - external reporting Benefits of Budgeting Plan ahead and creates warning system for problems Definite financial objectives for all levels of responsibility, facilitates coordination of activities Greater management awareness operations and external facts Contributes to positive behaviour patterns - bonuses, performance base, KPI Budget - formal written statement of management s plan for specified future time period, expressed in financial terms - controls operations, evaluates performance, promotes efficiency Master Budget - overall budget - is a set of inter-related budgets representing a comprehensive plan of action for a specific time period 1. Operating Budget - sales/revenues, purchases, COGS, operating exp, budgeting P/L 2. Capital Expenditures Budget - PPE 3. Financial Budget - cash budget, budget statement of financial position and cash flow statement 28 of 31 David Krysta Total Total Net Profit $120,000 First $40,000 allocation $40, $40,000 Net profit remaining Next $60,000 allocation Net profit remaining Next $20,000 allocation: Net profit remaining Total profit allocated $17,838 40,000 $22,162 20,000 10,000 10,000 40,000 80,000 60,000 20,000 20, $67,838 $52,162 $120,000
29 Cash Budget - projection of future cash receipts and payments (no accrual accounting effects i.e. depreciation, accrued expenses) Cash inflows and outflows - important aspect of control over cash Purposes of a Cash Budget 1. Business s credit rating/reputation depends on meeting commitments as they fall due. A cash budget warns of future cash shortage or surplus 2. Allows businesses to make decisions to avoid cash problems, such as: - Postpone or reduce some future expenditure - Change prices - Improve credit controls - Organise financing 3. Businesses may analyse where cash is needed and may; - Be able to minimise interest expense - Avoid having idle funds in the bank, allows fro surplus cash to be invested 4. Motivational advantages 5. Measure of Performance Items not included in a Cash Budget: anything that is not cash Depreciation expense not a cash transaction a book entry Cost of Goods Sold not a cash transaction an expense (covered in Inventory topic) = the cost price of the goods sold The cash transactions are the receipts from customers for the sales and the payments to suppliers for the purchases Find the Total Estimated Payments BEGINNING BALANCE (594) ESTIMATED RECEIPTS Cash Sales 4,764 Accounts Receivable 4,920 TOTAL ESTIMATED CASH AVAILABLE 9,090 ESTIMATED PAYMENTS Cash Purchases 2,100 Accounts Payable 3,200 Wages 800 Other Expenses 620 Buildings 9,600 Dividends 1,000 TOTAL ESTIMATED PAYMENTS 17,320 ENDING CASH BALANCE (8,230) When the cash budget is completed, decisions can be made as to the best (most efficient) use of the cash resources - note the bank overdraft situation - try to avoid this interest expense is costly - can not defer the dividend payments - Suggest deferring the payment to the builder and postpone the building extensions until cash resources are available 29 of 31
30 - or go ahead and obtain a long-term loan specifically for the building extensions and then add interest and repayments into the cash budget Cost-Volume-Profit Analysis - analyse relationships between costs, volume, revenue and profit - for planning, setting prices, determining best product mix, making the maximum use of production facilities Fixed Costs - remain the same regardless of volume activity - expressed as total amount e.g. rates, rent, insurance, salaries Variable Costs - vary with volume activity - they are expressed as an amount per unit e.g. direct materials and labour, COGS, freight costs, fuel Relevant Range - consists of the activity levels over which the business expects to operate during the period - assumed linear relationship to exist between costs and activity levels - Variable costs per unit and total fixed costs may change outside relevant range Mixed Costs - semi-variable costs (include fixed cost component + variable cost according to activity level) - often separated into fixed and variable components at end of period - important to identify F and VC, effects: - profitability of reduction in sales price - activity level when expenses increase per unit to keep current profitability - minimum level of sales to cover costs - costs of maintaining level of production for different manufacturing methods Five Basic Break-even point can be defined in terms of sales units by the formula: Fixed costs Contribution margin per unit = Break-even point in units Break-even point can be defined in terms of sales dollars by the formula: Fixed costs Contribution margin ratio = Break-even point in dollars Assumptions of CVP 1. Costs and revenues are linear within the relevant range 2. All costs are identifiable as variable or fixed 3. Costs are affected only by changes in activity level 4. All units produced are sold 5. Sales mix is constant if there is more than one product Contribution Margin (CM) = Sales Price/ Revenue (SR) - Variable Costs (VC) - CM is amount from each unit sold which contributes to fixed costs and profits 30 of 31
31 - Once sales volume has covered FC (at break even point) then each unit sold earns its CM as profit - Calculated to ways: - Per Unit: how much of each sales $ is left to contribute to FC and Profit - As a Ratio: What % of each sales $ is left to contribute to FC and Profit Break Even Point Analysis = sales level at which net profit is 0 - BE point expressed in sales units or dollars - Math Equation Break Even Sales = VC + FC - Contribution margin technique Fixed Costs + 0 Net Profit Contribution Margin per unit = Break Even Point in Units Fixed Costs + 0 Net Profit = Break Even Point in Dollars ($) Contribution Margin ratio Margin of Safety - The difference between expected sales and break-even sales - expressed in $ or as a ratio - The adequacy of margin of safety depends on the characteristics of the business e.g. competitive position, general economic conditions Target Net Profit - is the profit objective for the product line - Break-even analysis is expanded by adding target net profit to total costs - It can be determined using either math equation, the contribution margin tech or graphic presentation - Math Equation Required Sales = VC + FC + Target Net Profit - Contribution Margin Method Fixed Costs + Target Net Profit Contribution Margin ratio = Required Sales Can use CVP to Profit Plan and predict effects of events, e.g.: - Changes in sales rev and costs - Matching competitor s discount on sales price per unit. - Investing in equipment (fixed costs) in order to reduce labour (variable costs). - Changes in profitability with changes in variable or fixed costs. CM (per unit)= Selling Price (per unit) LESS Variable Cost (per unit) Contribution margin (CM) per unit = $30 - $12 = $18 per book Break Even Point (BEP) in units = Fixed Costs/ CM per unit BEP = $180,000/$18 = 10,000 books BEP in $ = BEP in units X selling price 10,000 X $30 = $300, of 31
CHAPTER 1 Accounting The information system that communicates the economic events of an entity to interested users (p. 7).
CHAPTER 1 Accounting The information system that communicates the economic events of an entity to interested users (p. 7). Accounting entity assumption An assumption that economic events can be identified
More informationFin621 Online Quizzes & Papers GURU
1.If the inventory shrinkage at the end of the year is overstated by $7,500, the error will cause an: A.. understatement of net income for the year by $7,500 B.. understatement of cost of merchandise sold
More informationQuestion No: 17 ( Marks: 1 ) - Please choose one Which financial statement show what a business owes at a particular point in time?
Paper No:1 Solved by Chanda Rehman& Kamran Haider 2010 Final Paper Question No: 7 ( Marks: 1 ) - Please choose one Which of the following business publishes the Financial Statements? Sole-Proprietorship
More informationGLOSSARY. Chapter 1 Introduction to financial statements
GLOSSARY Chapter 1 Introduction to financial statements Accounting The information system that communicates the economic events of an entity to interested users (p. 10). Accounting entity assumption An
More informationICAN MID DIET LIVE CLASS FOR MAY DIET 2015 FINANCIAL ACCOUNTING Introduction to financial accounting Recording non-current assets and depreciation
ICAN MID DIET LIVE CLASS FOR MAY DIET 2015 FINANCIAL ACCOUNTING Introduction to financial accounting Recording non-current assets and depreciation Compiling financial statement Compiling financial statement
More informationLITTLE NOTABLES EXCLUSIVE JOSH HAWKEY
Accounting 102: Financial Reporting Enviroment FRA Financial Reporting Act (The old way) FRB Financial Reporting Bill (The new way) IASB International Accounts Standard Board (The overseas people that
More informationSome deferred items for which adjusting entries would be made include: Prepaid insurance Prepaid rent Office supplies Depreciation Unearned revenue
WWW.VUTUBE.EDU.PK Paper 1 MIDTERM EXAMINATION Spring 2009 FIN621- Financial Statement Analysis (Session - 1) Question No: 1 ( Marks: 1 ) - Please choose one Which of the following is the acronym for GAAP?
More informationExecutive Level. Financial Accounting & Reporting Fundamentals. (3) Section 1(a): 10 multiple choice questions (MCQs) all questions are compulsory.
Copyright Reserved No. of pages: 14 Executive Level Financial Accounting & Reporting Fundamentals Instructions to candidates (1) Time allowed: Reading and planning 15 minutes Writing 3 hours (2) Total:
More informationCS101 Introduction of computing
FINAL TERM EXAMINATION MGT101- Financial Accounting (PAPER 1). Question No: 1 (Marks: 1 ) basic accounting principle/concept according to which Business is independent from its owner(s) is known as: Separate
More informationPrepare the necessary journal entries to correct the above. Narrations are not required.
Correction of errors HKDSE (2017, 5) (Correction of errors) ABC Limited drafted a trial balance as at 31 December 2016, before the preparation of the closing entries. As the trial balance did not agree,
More informationFinancial Accounting. (Exam)
Financial Accounting (Exam) Your AccountingCoach PRO membership includes lifetime access to all of our materials. Take a quick tour by visiting www.accountingcoach.com/quicktour. Table of Contents (click
More informationBOOKS OF ORIGINAL ENTRIES
BOOKS OF ORIGINAL ENTRIES These are the books of first entry. The transactions are first recorded in these books before being entered in the ledger books. These books are also called as books of Prime
More informationPaper N0:15. Solved by Chanda Rehman, Nomi chakwal ABr FINALTERM EXAMINATION. Fall MGT101- Financial Accounting (Session - 4)
Paper N0:15 Solved by Chanda Rehman, Nomi chakwal ABr FINALTERM EXAMINATION Fall 2009 MGT101- Financial Accounting (Session - 4) Time: 120 min Marks: 87 Question No: 1 ( Marks: 1 ) - Please choose one
More informationCOMPOSED BY SADIA ALI SADI (MBA)
Mega File MGT101 Fall 2011 Question No: 7 ( Marks: 1 ) - Please choose one Which of the following business publishes the Financial Statements? Sole-Proprietorship Partnership Trust Public Limited Company
More informationAccounting Technician Examinations. Pilot Examination Paper. Level I. Paper 1 Financial Accounting. Questions Suggested Answers and Marking Scheme
香港專業會計員 會 THE HONG KONG ASSOCIATION OF ACCOUNTING TECHNICIANS (Incorporated with Limited Liability) Unit A, 17/F, Fortis Bank Tower, 77-79 Gloucester Road, Wanchai, Hong Kong. Accounting Technician Examinations
More informationCambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level
*5783442697* Cambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level ACCOUNTING 9706/11 Paper 1 Multiple Choice May/June 2017 Additional Materials: Multiple
More informationINTRODUCTION PARTNERSHIPS
NCEA LEVEL 3 ACCOUNTING By Elizabeth Pitu 2013 BOOK 1 INTRODUCTION and PARTNERSHIPS Teacher Manual NCEA LEVEL 3 ACCOUNTING By Elizabeth Pitu 2013 BOOK 1 INTRODUCTION and PARTNERSHIPS Student Workbook STUDENT
More informationIn this module we look at how financial records are balanced and how financial reports are produced, incorporating Balance Day adjustments.
Introduction In this module we look at how financial records are balanced and how financial reports are produced, incorporating Balance Day adjustments. At the end of each accounting period an organisation
More informationAccounting Basics, Part 1
Accounting Basics, Part 1 Accrual, Double-Entry Accounting, Debits & Credits, Chart of Accounts, Journals and, Ledger Part 1 What s Here Introduction Business Types Business Organization Professional Advice
More informationPractice Multiple Choice Questions
FINAL EXAM REVIEW The comprehensive final exam consists of 50 questions, approximately 2/3 of which are from chapters 10 through 12. The remaining questions are from chapters 1 through 9. The questions
More informationACCTG102 notes. Chapter 1 Theory and concepts
ACCTG102 notes Disclaimer These notes are not intended for stand-alone study they are a summary of what is useful to me and are not ENTIRELY comprehensive (but pretty close to it). They are mostly theory-based.
More informationTalking Accounting Definitions
Talking Accounting Definitions Introduction to Accounting week 1 Accounting The information system that measures business activities, processes that information into reports, and communicates the result
More informationPRINCIPLES OF ACCOUNTS
PRINCIPLES OF ACCOUNTS GCE ORDINARY LEVEL (SYLLABUS 7092) INTRODUCTION The syllabus aims to develop an understanding of the principles and concepts of accounting and their applications in a variety of
More informationDisclaimer: This resource package is for studying purposes only EDUCATON
Disclaimer: This resource package is for studying purposes only EDUCATON Chapter 1 Objective of Accounting: 1. To identify and measure activities of a business entity in order to evaluate its performance
More informationAccounting Definitions. Definitions
Accounting Definitions Definitions What s Here Introduction Definitions Introduction This training contains definitions of common accounting terms. If you come across accounting or financial terms with
More information2016 ACCOUNTING ATTACH SACE REGISTRATION NUMBER LABEL TO THIS BOX
External Examination 2016 2016 ACCOUNTING FOR OFFICE USE ONLY SUPERVISOR CHECK ATTACH SACE REGISTRATION NUMBER LABEL TO THIS BOX RE-MARKED Tuesday 15 November: 1.30 pm Time: 2 hours Pages: 33 Questions:
More informationFOUNDATION EXAMINATION
FOUNDATION EXAMINATION (SYLLABUS 2008) SUGGESTED ANSWERS TO QUESTIONS JUNE 2012 Paper-2 : ACCOUNTING Time Allowed : 3 Hours Full Marks : 100 The figures in the margin on the right side indicate full marks.
More information2/2/2009. Financial statement EARNING POWER AND IRREGULAR ITEMS. EARNING POWER AND IRREGULAR ITEMS continued. Chapter 14
Chapter 14 Financial statement analysis PowerPoint presentation by Anne Abraham University of Wollongong 2009 John Wiley & Sons Australia, Ltd EARNING POWER AND IRREGULAR ITEMS Earning power refers to
More informationPaper No:34 Solved by Chanda Rehman & ABr
Paper No:34 Solved by Chanda Rehman & ABr FINALTERM EXAMINATION Fall 2009 MGT101- Financial Accounting (Session - 2) Time: 120 min Marks: 87 Question No: 1 ( Marks: 1 ) - Please choose one We can say that
More informationWeek 3. Topic 3 Chapter 3. ACT102 Introduction to Accounting. Accounting for end of financial period adjustments 21/02/2018
ACT102 Introduction to Accounting Week 3 Accounting for end of financial period adjustments Topic 3 Chapter 3 2 RECAP Topic 2: Recording Business Transactions The accounting equation must always balance
More informationQuestion No: 1 ( Marks: 1 ) - Please choose one Wages outstanding given in the trial balance will be treated as a (an):
Question No: 1 ( Marks: 1 ) - Please choose one Wages outstanding given in the trial balance will be treated as a (an): Asset Liability Revenue Deferred expense Question No: 2 ( Marks: 1 ) - Please choose
More informationCOUNCIL FOR THE INDIAN SCHOOL CERTIFICATE EXAMINATIONS P-35,36, Sector VI, Pushp Vihar, New Delhi NEW DELHI ISC ACCOUNTS
COUNCIL FOR THE INDIAN SCHOOL CERTIFICATE EXAMINATIONS P-35,36, Sector VI, Pushp Vihar, New Delhi-110017 NEW DELHI ISC ACCOUNTS Guidelines pertaining to Revised Schedule VI of Part I & II of Companies
More informationCoimisiún na Scrúduithe Stáit State Examinations Commission
2014. M55 Coimisiún na Scrúduithe Stáit State Examinations Commission LEAVING CERTIFICATE EXAMINATION 2014 A C C O U N T I N G - H I G H E R L E V E L (400 marks) This paper is divided into 3 Sections:
More informationACCT1006 Notes TYPES OF FINANCIAL STATEMENTS
ACCT1006 Notes TYPES OF FINANCIAL STATEMENTS - 4 financial statements o Statement of changes in equity Changes in OE s capital, reserves, and earnings How aspects in OE change over the period o Statement
More informationFin-621 Final term Solved Papers by Fahad Yusha Cell: and
FINALTERM EXAMINATION Spring 2010 FIN621 - Financial Statement Analysis Student Info StudentID: Time: 90 min Marks: 69 Center: ExamDate: Tue, Aug 10, 2010 Question No: 1 After recording the transactions
More informationCBA Model Question Paper CO2. The difference between an income statement and an income and expenditure account is that
CBA Model Question Paper CO2 Question 1 The difference between an income statement and an income and expenditure account is that A an income and expenditure account is an international term for a Income
More informationDigging Into The Balance Sheet and Income Statement. The Balance Sheet
Digging Into The Balance Sheet and Income Statement Jim Menard, CCE email: jsmenard62@gmail.com The Balance Sheet Also called the statement of condition or statement of financial position Financial Condition
More informationCHAPTER 1 Introduction to financial statements
CHAPTER 1 Introduction to financial statements CHAPTER OVERVIEW Chapter 1 introduces you to a variety of financial accounting topics. You will learn about the main forms of business organisation, and the
More informationACCOUNTING 3.1 AS Unit 1 The conceptual framework. Demonstrate understanding of accounting concepts for a New Zealand reporting entity
ACCOUNTING 3. Externally assessed 4 credits Demonstrate understanding of accounting concepts for a New Zealand reporting entity AS 9404 This Achievement Standard is related to: relevant parts of New Zealand
More informationWHITE PAPER UNDERSTANDING FINANCIAL STATEMENTS
WHITE PAPER UNDERSTANDING FINANCIAL STATEMENTS Contents 1.0 Understanding Financial Statements... 3 2.0 Types of Financial Statements... 3 3.0 Balance Sheets... 3 4.0 Profit & Loss Statement (also known
More informationFANLING LUTHERAN SECONDARY SCHOOL
FANLING LUTHERAN SECONDARY SCHOOL 2012 2013 2 nd Term Examination S.5 BUSINESS, ACCOUNTING AND FINANCIAL STUDIES Accounting Module Date : 20th June, 2013 Time allowed: 8:30 am - 11:00 am (2 hour 30 minutes)
More informationRate = 1 n RV / C Where: RV = Residual Value C = Cost n = Life of Asset Calculate the rate if: Cost = 100,000
Solved by ABr & Chanda Rehman Final MCQs It is supposed that on 31st December, 2007, the sundry debtors are amounted to Rs. 40,000. On the basis of past experience, it is estimated that 10% of the sundry
More informationNOVEMBER 2016 PROFESSIONAL EXAMINATION FINANCIAL ACCOUNTING (PAPER 1.1) CHIEF EXAMINER S REPORT, QUESTIONS AND MARKING SCHEME
NOVEMBER 2016 PROFESSIONAL EXAMINATION FINANCIAL ACCOUNTING (PAPER 1.1) CHIEF EXAMINER S REPORT, QUESTIONS AND MARKING SCHEME GENERAL COMMENTS The standard of the question paper was good and candidates
More informationSection A: Multiple-Choice Questions (2 marks each; Total 30 marks)
Name: Student ID: Section A: Multiple-Choice Questions (2 marks each; Total 30 marks) Choose the one best answer. 1. The accounting process involves all of the following except ( d ) a. identifying economic
More informationACCOUNTING INTERVIEW QUESTIONS
www.globalcma.in Learning Platform for Cost Accountants (CMA) 1) Why did you select accounting as your profession? Well, I was quite good in accounting throughout but in my masters, when I got distinction
More informationGAAP AND REVISION. DEFINITION OF ELEMENTS OF FINANCIAL STATEMENTS Revision concepts
GAAP AND REVISION INTRODUCE THE GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) Accounting standards The Conceptual Framework Accounting concepts & principles CONCEPTUAL FRAMEWORK Describes objective of
More information2012 Accounting GA1: Written examination 1
Accounting GA1: Written examination 1 GENERAL COMMENTS The June examination was the first for the revised study design. The examination was significantly different to past June examinations as it consisted
More informationACCOUNTING Accounting June 2003
www.xtremepapers.com ACCOUNTING... 2 Paper 0452/01 Multiple Choice... 2 Paper 0452/02 Paper 2... 3 Paper 0452/03 Paper 3... 8 1 Paper 0452/01 Multiple Choice Question Number Key Question Number 1 D 21
More informationAnnual Qualification Review
LCCI International Qualifications Level 2 Certificate in Book-Keeping and Accounts Annual Qualification Review 2008 For further information contact us: Tel. +44 (0) 8707 202909 Email. enquiries@ediplc.com
More informationCPT June 2017 Crash Course FUNDAMENTALS OF ACCOUNTING
CPT June 2017 Crash Course FUNDAMENTALS OF ACCOUNTING (SECTION A - 60 Marks) The dictionary is the only place where success comes before work. Hard work is the key to success, and hard work can help you
More information2010 Accounting GA 1: Written examination 1
Accounting GA 1: Written examination 1 GENERAL COMMENTS The June examination comprised of two 45-mark questions, with multiple parts to each question. Each question presented a business scenario which
More informationCoimisiún na Scrúduithe Stáit State Examinations Commission LEAVING CERTIFICATE 2008 MARKING SCHEME ACCOUNTING HIGHER LEVEL
Coimisiún na Scrúduithe Stáit State Examinations Commission LEAVING CERTIFICATE 2008 MARKING SCHEME ACCOUNTING HIGHER LEVEL LEAVING CERTIFICATE 2008 MARKING SCHEME ACCOUNTING HIGHER LEVEL LEAVING CERTIFICATE
More informationPrepared by Cyberian
; and Which of the following is/are the component(s) of equity? Share Capital Reserves Share Premium In which of the following activities, a business should capitalize its incurred expenditures according
More informationCoimisiún na Scrúduithe Stáit State Examinations Commission. Leaving Certificate Marking Scheme. Accounting. Higher Level
Coimisiún na Scrúduithe Stáit State Examinations Commission Leaving Certificate 2018 Marking Scheme Accounting Higher Level Note to teachers and students on the use of published marking schemes Marking
More informationMGT101 All Solved Past Papers of Mid Term Exam in one file By
MGT101 All Solved Past Papers of Mid Term Exam in one file By http://vustudents.ning.com MIDTERM EXAMINATION 7 th Dec 2009 MGT101- Financial Accounting Question No: 1 Income of the business includes: Cash
More informationCOMSATS Institute of Information Technology Abbottabad
COMSATS Institute of Information Technology Abbottabad Department of Management Sciences Terminal Section A Class: Date: Subject: Accounting Instructor: Zaheer A. Swati Time Allowed: 30 Minutes Max Marks:
More informationAccounting Question Booklet. Examination information. Questions 1 to 4 Answer all questions Write your answers in this question booklet
South Australian Certificate of Education Accounting 2017 Question Booklet Questions 1 to 4 Answer all questions Write your answers in this question booklet Examination information Materials Question Booklet
More informationPlease spread the word about OpenTuition, so that all ACCA students can benefit.
ACCA COURSE NOTES June 2014 Examinations ACCA F3 FIA FFA Financial Accounting Please spread the word about OpenTuition, so that all ACCA students can benefit. ONLY with your support can the site exist
More informationLESOTHO GENERAL CERTIFICATE OF SECONDARY EDUCATION
LESOTHO GENERAL CERTIFICATE OF SECONDARY EDUCATION Lesotho General Certificate of Secondary Education Syllabus Accounting 0187 For examination in November 2018 National Curriculum Development Centre in
More informationCambridge IGCSE Accounting (0452)
www.xtremepapers.com Cambridge IGCSE Accounting (0452) International Accounting Standards (IAS) Guidance for Teachers Contents Introduction... 2 Use of this document... 2 Users of financial statements...
More informationKE 1 - FINANCIAL ACCOUNTING AND REPORTING FUNDAMENTALS Suggested Answers and Marking Grid
KE 1 - FINANCIAL ACCOUNTING AND REPORTING FUNDAMENTALS Suggested Answers and Marking Grid 1 SECTION 1 Question 01 1(a) 1.1. 1.2.6 Explain qualitative characteristics of financial statements/financial information.
More informationFinancial Accounting (Corporation)
Financial Accounting (Corporation) This course covers the topics shown below. Students navigate learning paths based on their level of readiness. Institutional users may customize the scope and sequence
More informationPRINCIPLES OF ACCOUNTS
PRINCIPLES OF ACCOUNTS Paper 7110/11 Multiple Choice Question Number Key Question Number Key 1 B 16 B 2 D 17 C 3 B 18 B 4 A 19 A 5 D 20 D 6 A 21 C 7 C 22 A 8 D 23 D 9 A 24 B 10 C 25 C 11 C 26 C 12 B 27
More informationStatement of cash flows PURPOSE & SCOPE
IAS 7 Statement of cash flows PURPOSE & SCOPE Purpose Users needs Scope The fundamental purpose of being in business is to generate profit, as this will increase the owners' wealth. Profitability relates
More informationFinancial Accounting
Drawings Assets expenses Capital Income Liabilities - Drawings - Capital - Assets - Income - Expenses - Liabilities Dt (Increases) Cr (Increases) Cr (decreases) Dt (decreases) Financial Accounting Financial
More informationLEAVING CERTIFICATE 2009 MARKING SCHEME ACCOUNTING ORDINARY LEVEL
Coimisiún na Scrúduithe Stáit State Examinations Commission LEAVING CERTIFICATE 2009 MARKING SCHEME ACCOUNTING ORDINARY LEVEL LEAVING CERTIFICATE ACCOUNTING - 2009 Ordinary Level Marking Scheme INTRODUCTION
More information100 Accounting Interview Questions and Answers
100 Accounting Interview Questions and Answers 1) Why did you select accounting as your profession? Well, I was quite good in accounting throughout but in my masters, when I got distinction I decided to
More informationEXAM #2 SAMPLE PROBLEMS
EXAM #2 SAMPLE PROBLEMS (Lessons 5-10) Use the following information to respond to problems 1-6 assuming Zee Corp. maintains their inventory records on a perpetual basis: 1/12 Zee Corp., a wholesaler of
More informationCambridge International General Certificate of Secondary Education 0452 Accounting June 2014 Principal Examiner Report for Teachers
ACCOUNTING Cambridge International General Certificate of Secondary Education Paper 0452/11 Paper 11 Key Messages Question 1 consisted of ten multiple choice items covering topics across the whole syllabus.
More informationPRINCIPLES OF ACCOUNTS 7110 GCE O Level FOR EXAMINATION IN Exclusions
PRINCIPLES OF ACCOUNTS 7110 GCE O Level FOR EXAMINATION IN 2008 Exclusions This syllabus must not be offered in the same session with any of the following syllabuses: 0452 Accounting 0614 Accounting (Botswana)
More informationCambridge International General Certificate of Secondary Education 0452 Accounting November 2012 Principal Examiner Report for Teachers
ACCOUNTING Cambridge International General Certificate of Secondary Education Paper 0452/11 Paper 1 Key Messages This question paper contained a mixture of multiple-choice, short-answer and structured
More informationC O V E N A N T U N I V E RS I T Y P R O G R A M M E : A C C O U N T I N G A L P H A S E M E S T E R T U T O R I A L K I T L E V E L
C O V E N A N T U N I V E RS I T Y T U T O R I A L K I T P R O G R A M M E : A C C O U N T I N G A L P H A S E M E S T E R 2 0 0 L E V E L DISCLAIMER The contents of this document are intended for practice
More informationLimited Companies Question: Explain the meaning of the following terms so as to make clear the differences between them: Ordinary Shares are
Limited Companies Explain the meaning of the following terms so as to make clear the differences between them: Ordinary Shares are certificates of ownership to a company. They are issued to shareholders
More informationFFA. Financial Accounting. OpenTuition.com ACCA FIA exams. Free resources for accountancy students
September/December 2015 exams OpenTuition.com Free resources for accountancy students ACCA FIA F3 FFA Financial Accounting Please spread the word about OpenTuition, so that all ACCA students can benefit.
More informationPart 5: GLOSSARY OF TERMS
Part 5: GLOSSARY OF TERMS ABN Withholding Tax Account Levels Accounts Accounting Equation Accounts List Accounts Payable Accounts Receivable Accounting Period The amount withheld from a supplier who provides
More informationMIDTERM EXAMINATION Fall 2009 MGT101- Financial Accounting (Session - 2)
MIDTERM EXAMINATION Fall 2009 MGT101- Financial Accounting (Session - 2) Question No: 1 ( Marks: 1 ) - Please choose one Particulars Rs. Opening written down value of machine 1,00,000 Cost of new machine
More informationa. True b. False a. True b. False a. True b. False a. True b. False a. True b. False a. True b. False a. True b. False a. True b.
2005 SLC Accounting II Page 1 Indicate whether the sentence or statement is True or False. Mark A if True or B if False. 1. Most companies have a code of conduct that they distribute and/or communicate
More informationAM01 Syllabus (2019): Accounting AM SYLLABUS (2019) SYLLABUS
ACCOUNTING AM SYLLABUS (2019) AM01 SYLLABUS 1 Accounting AM01 Syllabus (Available in September) Paper I (3 hrs) + Paper II (3 hrs) Introduction The syllabus seeks to develop the students financial literacy,
More informationCorporate Finance. Prof. Dr. Frank Andreas Schittenhelm. Introduction to Financial Accounting. Prof. Dr. Frank Andreas Schittenhelm
Corporate Finance Introduction to Financial Accounting Corporate Finance slide 1 Literature Basic Literature Anthony/Hawkins/Merchant: Accounting, 11 th ed., McGraw-Hill Additional Literature Dyckman/Dukes/Davis:
More informationPaper-12 : COMPANY ACCOUNTS & AUDIT
Paper-12 : COMPANY ACCOUNTS & AUDIT Study Note 1: Conceptual Framework for Preparation and Presentation of Financial Statements Question No. 1 Discuss the use of the General Purpose Financial Statement
More informationFinancial Accounting (Sole Proprietorship)
Financial Accounting (Sole Proprietorship) This course covers the topics shown below. Students navigate learning paths based on their level of readiness. Institutional users may customize the scope and
More informationFinancial Statements of Limited Companies
Osborne Books Tutor Zone Financial Statements of Limited Companies Chapter activities Osborne Books Limited, 2016 2 f i n a n c i a l s t a t e m e n t s o f l i m i t e d c o m p a n i e s t u t o r z
More informationCOUNCIL FOR THE INDIAN SCHOOL CERTIFICATE EXAMINATIONS P-35, 36, Sector VI, Pushp Vihar, New Delhi NEW DELHI ISC ACCOUNTS
COUNCIL FOR THE INDIAN SCHOOL CERTIFICATE EXAMINATIONS P-35, 36, Sector VI, Pushp Vihar, New Delhi-110017 NEW DELHI ISC ACCOUNTS Guidelines pertaining to Companies Act 2013 Applicable for the Eamination
More informationModel Test Paper - 1 IPCC Gr. I Paper - 1 Accounting Question No. 1 is Compulsory. Attempt any five question from the remaining six question. 1.
Model Test Paper - 1 IPCC Gr. I Paper - 1 Accounting Question No. 1 is Compulsory. Attempt any five question from the remaining six question. 1. (a) M/s Progressive Company Limited has not charged depreciation
More informationFAQ: Financial Statements
Question 1: What is the correct order in which financial reports must be created? Answer 1: The income statement is created first, then the owners' equity statement, and finally the balance sheet. This
More informationAccountings Summary OUTLINE
Accountings Summary OUTLINE 1. Accounting and Business Environment 2. Recording Business Transaction 3. The Adjusting Process 4. Completing the Accounting Cycle 5. Merchandising Operations 6. Accounting
More informationIAB Level 4 Certificate in International Accounting Standards and IFRS 603/3017/X. Qualification Specification
IAB Level 4 Certificate in International Accounting Standards and IFRS 603/3017/X Qualification Specification Contents 1 Introduction to the qualification... 2 2 Statement of level... 2 3 Aims... 2 4 Target
More informationFRS 102 CASE STUDY HOW TO CONVERT YOUR FINANCIAL STATEMENTS
FRS 102 CASE STUDY HOW TO CONVERT YOUR FINANCIAL STATEMENTS market leaders for financial training Case Study This document represents the case study that is used during the presentation of the seminar:
More informationComposed & Solved Hafiz Salman Majeed
FINALTERM EXAMINATION Fall 2008 MGT101- Financial Accounting (Session - 4) Question No: 1 ( Marks: 1 ) - Please choose one Wages outstanding given in the trial balance will be treated as a (an): Asset
More informationACCOUNTING. Written examination 1. Tuesday 9 June 2009
Victorian Certificate of Education ACCOUNTING Written examination 1 Tuesday 9 June Reading time: 2.45 pm to 3.00 pm (15 minutes) Writing time: 3.00 pm to 4.30 pm (1 hour 30 minutes) QUESTION BOOK Number
More informationDMX Corporation Limited and Controlled Entities Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2017 Note Consol
Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2017 Note Consolidated 2017 Consolidated Revenue 3 1,814,949 1,711,808 Other income 4 8,785 84,169 Cost of goods sold
More informationPaper F7 (UK) Financial Reporting (United Kingdom) Fundamentals Pilot Paper Skills module. The Association of Chartered Certified Accountants
Fundamentals Pilot Paper Skills module Financial Reporting (United Kingdom) Time allowed Reading and planning: Writing: 15 minutes 3 hours ALL FIVE questions are compulsory and MUST be attempted. Do NOT
More informationAsset Finance Limited
Asset Finance Limited Financial Statements & Annual Report For the ended 31 March 2012 Asset Finance Limited CONTENTS COMPANY DIRECTORY... 3 DIRECTORS' CERTIFICATE... 4 FINANCIAL OVERVIEW... 5 STATEMENT
More informationMIDTERM EXAMINATION Fall 2009 FIN621- Financial Statement Analysis (Session - 4)
MIDTERM EXAMINATION Fall 2009 FIN621- Financial Statement Analysis (Session - 4) Time: 60 min Marks: 50 Asslam O Alikum FIN621- Financial Statement Analysis 2009 (Session 4) solved by Afaaq n Shani Bhai
More informationAim: to use a general journal entry from the previous lecture (week 2) and post to a T account.
Reconstruction of accounts and error correction 1/07/2017 3:53 PM Lecture T accounting (Part 1) The video lecture for this topic is in two parts, which together look at steps 3-5 of the accounting, cycle
More informationMIDTERM EXAMINATION Spring 2010 MGT101- Financial Accounting (Session - 6)
MIDTERM EXAMINATION Spring 2010 MGT101- Financial Accounting (Session - 6) Time: 60 min Marks: 47 Question No: 1 ( Marks: 1 ) - Please choose one Double entry accounting system includes: Accrual accounting
More informationCOMPREHENSIVE EXAMINATION A PART 1 (Chapters 1-6)
COMPREHENSIVE EXAMINATION A PART 1 (Chapters 1-6) Problem A-I Multiple Choice. Choose the best answer for each of the following questions and enter the identifying letter in the space provided. 1. How
More informationTiill now you have learnt about the financial
Cash Flow Statement 6 LEARNING OBJECTIVES After studying this chapter, you will be able to : state the purpose and preparation of statement of cash flow statement; distinguish between operating activities,
More informationAdvanced Financial Accounting 2 nd Year Examination
Advanced Financial Accounting 2 nd Year Examination May 2014 Exam Paper, Solutions & Examiner s Comments NOTES TO USERS ABOUT THESE SOLUTIONS The solutions in this document are published by Accounting
More informationMGT101 FINANCIAL ACCOUNTING SOLVED QUIZZES 3 LESSON 1 30
MGT101 FINANCIAL ACCOUNTING SOLVED QUIZZES 3 LESSON 1 30 Wages paid to laborers working in the manufacturing department is treated as an expense of: Cost of goods sold Administrative expense Selling expense
More information