Homework Questions.docx

8/18/2019 Homework Questions.docx

1/17

Homework Questions (All Modules/Weeks)

Week 1 – N/A (no homework)

Week 2

Chapter 1, DQ 7

Internal users of accounting information are: managers. They require special

purpose nancial statements to help them make soun! economic !ecisions for

the "usiness entity. It also helps them plan an! control the entity. #$ternal users

of accounting information are: cre!itors% in&estors% customers% employees%

go&ernments an! agencies. They require general purpose nancial statements

which gi&es them an o&er&iew of the "usiness's relati&e success an! presente!

with general information in min!.

Chapter 2, DQ !

The cash recei&e! from the sale of a goo! counts as income as an inow of cash

which is ser&ing to #NAN*# the owners current assets an! creates wealth for

the "usiness% with new money coming in. The cash contri"ute! "y an owner !oes

not constitute as income for the "usiness as the personal contri"utions an!

acti&ities of the "usiness owner nee! to "e kept separate from their personal

a+airs.

Chapter 2, DQ "

An asset !oes not nee! to "e legally owne! to "e recor!e! as an asset on the"alance sheet if the entity is a sole tra!er or a partnership. As long as the entity

owns the asset% it can "e recor!e! on the "alance sheet.

#$er%ise 2&"

Balance Sheet – contri"ution of cash% purchase of stu!io on cre!it% electricity

costs% stu!io fees% !rawings% money "orrowe!% cash hel! at en! of year

Income Statement – electricity costs% stu!io fees payment% rental of chille! water

machine

Statement of Changes in Equity – contri"ution of cash% !rawings%

Statement of Cash Flows – contri"ution of cash (nancing acti&ity)% stu!io fees

payment (operating)% !rawings (nancing)% cash hel! at "usiness at en! year%

money "orrowe! (nancing)% electricity costs pai! (operating)% chille! machine

rental (operating)

,The owners house shoul! not appear on any of the nancial statements.

'rolem 2&

See in text. All answers correct.

'rolem 2&!

A&


2/17

DAW*+ -D.*0-#*

-n%ome *tatement

for year en!e! - ecem"er 012

IN*34#

5er&ices Income 6 72 811

#9#N5#5

;ent #$pense 6 -811

5upplies #$pense 8081

#lectricity #$pense 2011

Telephone #$pense 7< >81

;3?IT 6 82 @81

&

DAW*+ -D.*0-#*

alan%e *heet

?or year en!ing - ecem"er 012

A55#T5 IABIITI#5

*ash at Bank 6 1 081 Accounts aya"le

6 281

Less: rawings

0- 711

ila awson% *apital – - ec 012 6

>8 -81

To n! the capital at the "eginning of the year:

,ll in the information you ha&e G prot for the year% !rawings% an! capital

en! of year (this is equal to equity on your "alance sheet


3/17

,a!! en! year capital to !rawings to gi&e total capital (>8-81 H 0-711

1>281),now minus prot from that total capital to gi&e you initial capital at the

"eginning of the year (1>281 – 82@81 8 11).

D& 5upplies are assets an! refer items (eg machinery) that the owner has "oughtthrough their own in&estment for purposes to "e use! within the "usiness. It is

recor!e! on the "alance sheet. 5upplies e$pense from the income statement are

what &alue (!ollar worth) of supplies ha&e "een use! up when performing the

ser&ice (eg the use of nail art when !oing a nail ser&ice in a salon)

Week

Chapter 2, #$er%ise 2&6

. Increase an asset an! increase a lia"ility Increase in Accounts aya"le% as

you can "uy something (eg supplies) on cre!it (that increases your assets)% an!you pay for them later (increases your lia"ilities)

0. ecrease one asset an! increase another asset Accounts ;ecei&a"le J *ash

at Bank% as you ha&e collecte! the money in Accounts ;ecei&a"le% which

transfers into your *ash at Bank (increases your asset) urchase an asset for

cash.

-. ecrease an asset an! !ecrease equity *ash at Bank an! 3wners'

rawings% as you take money out of your cash for personal use% an! therefore a

!ecrease in !rawings% which !ecreases your equity

7. Increase an asset an! increase equity *ash at Bank J *apital Account% asyou put more money into your *ash account% it will increase your capital (equity)

account.

8. ecrease a lia"ility an! !ecrease an asset Accounts aya"le. The "usiness

pays cash to its cre!itors – the Accounts aya"le account is re!uce! an! the

cash asset account is also re!uce!

@. ecrease an equity item an! !ecrease an asset 3wners rawings.

#$er%ise 2&11

A

A55#T5 IABIITI#5

H

#CDITE

*ash at Bank H 5upplies

H

#quipment oan

aya"le

H Accounts

aya"le

H .

Fones%

*apital

(

)

H6-8 111

H H6-8 111

(0

)

G7 1111

H

H607 111 H1

111

(-

)

0 111

H

H8 111

H 07 111 H1 111 H -8 111

H 8

111(7

)

0@ 111

H

H 07 111 H1 111 H 71 111

G


4/17

G 811 811

(8

)

07 811

H 0 11

H 07 111 H 1 111

H0 11

H -> 811

(@

)

07 811

H

G 781

0 11 H 07

111

H 1 111 H 0 11 H -> 811

G 781

(2

)

0- 181

HG 0 11

0 11 H 07 111 H 1 111

G 0 11

H -2 181

(>

)

01


5/17

*ash at Bank 6 01 81

>81

8 #quipment 8111


6/17

*ash at Bank

Accounts aya"le

eposit place! for equipment% with

amount paya"le in @1 !ays

811

7811

< A!&ertising #$pense

*ash at BankA!&ertising pai! "y cash

81

81

7 Accounts aya"le

*ash at Bank

5upplies pai! in cash to cre!itors

-01

-01

> 5alaries #$pense

*ash at Bank

5alaries pai! to employees


7/17

> Fune ai! salaries of 61O will "e pai! within @1

!ays.Analysis The accounts a+ecte! inclu!e rinting ?ees% *ash at Bank an!

Accounts aya"le. The *ash at Bank account has a !e"it entry of

60711% as 01O of fees were collecte!% which represents an

increase in an asset. The remaining >1O (6 *#0?-C#

rial alan%e

as at -1 Fune 01@

Account e"it *re!it*ash at Bank 6 -01 111Accounts

;ecei&a"le

82 811

3ce

#quipment

78 111

Buil!ings 20 111an! 1 111Accounts

aya"le

6 0-1 111

4ortgage

aya"le

@1 111

. iper% *apital @17 811,6 >


8/17

The calculation of prot is not as simple as !e!ucting cash payments from cash

collectionsP there are other &aria"les that may a+ect the prot (loss) of a

company. =e nee! to take into account other e$penses an! re&enues of the

"usiness that coul! a+ect the prota"ility of the companyP for e$ample wages%

rent or other cre!itor payments "eing ma!e that woul! re!uce the amount of

cash collections.

The income statement !oes not gi&e information on a cash "asis% it reports

information on accrual "asis meaning that any income (re&enue) earne! is

recor!e! when it is generate!% not when the cash is recei&e!. The e$penses are

only recognise! on the income statement when it is incurre!% reecte! "y a

consumption of those e$penses. The income statements reects all amounts

recei&a"le an! paya"le as assets an! lia"ilities% an! not Kust a"out the inow an!

outow of money.

DQ

=e classify assets in or!er of liqui!ity on the "alance sheet to highlight the

amount of liqui! cash the "usiness coul! ha&e in the futureP that is% we can see

how liqui! the company is "y looking at the "alance sheet an! analysing the rst

few assets an! seeing how liqui! the company is in the short term. ow much

the company coul! potentially sell their assets for in the short term.

#$er%ise ;&2

A&

Arch #tec

T3TA ;3?ITyear en!ing -1 Fune 01@

*ash

"asis

Accrual

"asis*ash income (;e&enue)

;e&enue earne! "ut not yet recei&e!

;e&enue recei&e! a!&ance "ut not

yet earne!

608 111

- 111

608 111

> 111

!AL I"C!#E $%e&enue' ()* +++ (,, +++ess #$penses5alaries% rent% insurance% incurre!

e$penses5alaries owing% not yet pai!

repai! e$penses not yet incurre!

1@ 111

@ 111

1@ 111

7 111

!AL E-E"SES (() +++ ((+ +++'roBt (loss) :1" 11 recei&a"les – asset (accounts recei&a"le)0. unpai! salaries of 67111 – lia"ility (accounts paya"le)


9/17

-. 6-111 a!&ance payment recei&e! on 8 Fune – lia"ility

7. cash payment of 6@111 for prepai! e$penses – asset

#$er%ise ;&!

A&

*AQIN'5 *#ANINL

Leneral Fournalate

-1 Fune

articulars e"it *re!it

Dnearne! *leaning 5er&ices

;e&enue

*leaning 5er&ices ;e&enue

;e&enue collecte! in a!&ance% not

earne!

$/eferral of unearned re&enue fromlia0ility account $dr' to income

account $cr''

- 011

- 011

0 epreciation #$pense

Accumulate! epreciation

epreciation e$pense for the

perio!$/eferral of 1re1aid ex1ense from an

ex1ense account $dr' to asset account

$cr''

0 111

0 111

- 5alaries #$pense

5alaries aya"le

5alaries occurre!% not yet pai!$Accrued entry for unrecorded

ex1ense from ex1ense account $dr' to

lia0ility 1aya0le account $cr'

@ 711

@ 711

7 Insurance #$pense

repai! #$pense

repai! insurance e$pire!$/eferral of 1re1aid ex1ense from an

ex1ense account $dr' to asset account

$cr''

011

011

8 Interest ;ecei&a"le

Interest ;e&enueInterest re&enue accrue!$Accrual of unrecorded re&enue from

an accounts recei&a0le $dr' to an

re&enue lia0ility account $cr''

@11

@11

&

rot 3Q#;5TAT# with e$penses not recor!e! 6< @11 (insurance H salaries

H !epreciation)

rots DN#;5TAT# with re&enues not recor!e! 67 >11 (ser&ices re&enue H

interest re&enue)

Therefore% 3Q#;5TAT#4#NT of prot without a!Kustments is 67 >11


10/17

'rolem ;&

*us%ription 0eenue

.nearned *us%ription 0eenue/2/@

//@

/-/2

/8/2

Balance

*ash at

Bank

*ash at

Bank

*ash at

Bank

622 811

7 >11

-7 011

@ 811

67- 111

'repaid -nsuran%e/2/@

8//@

Balance

*ash at

Bank

6


11/17

oan aya"le

Dnearne! rent rnueL5T aya"le

F. Fetson% *apital

F. Fetson% rawings

;ental ;e&enue

5alaries #$pense

;ent #$pense

;epair/4an

#$pense

4arine 5up

#$pense

Telephone #$pense

02 - @>1

< 221

00 771

7 @01

:;;

1

< @21

(f) @11

(e) 8@1

02 -1

@71

00 771

8 001

0 01

@ @111<

->1

01

081

8- @>1

@71

00 771

8 001

01 081

02 -1

;epair/4an

aya"le

Insurance #$pense

ep #$pense – Ketski

ep #$pense –

oce eq

5alaries aya"le

Telephone aya"le

Interest aya"le

Interest #$pense

(")

111

(c) 0>811

(c) -01

(g) 2

>11

(a)

>21

(!) -

2>1

(f) @11

(g) 2

>11

111

0> 811

-01

2 >11

:;2

!<

>21

- 2>1

@11

2 >11

:;2

!<

111

0> 811

-01

2 >11

:1!<

!;<

:12<

2!< 72 721

- 2>1

@11

2 >11

672

781


12/17

rot or oss 5ummary

*lose income accounts to prot

loss summary account

rot or oss 5ummary

#$pense Accounts*lose e$pense accounts to

prot/loss summary

rot or oss 5ummary

L. Bartel% *apital

*lose prot or loss to capital

L. Bartel% *apital

L% Bartel% rawings

*lose !rawings to capital

-< 721

@ ->1

0 81

-< 721

@ ->1

0

*tatement o Chan3es in #4uit5

?or month en!ing -1 Fune 01@

L. Bartel% *apital – Fuly 018 6 0 121

A!!: prot for the year @ ->1

ess: !rawings for the year

0


13/17

Interest aya"le *r 271

Accrue! interest

5er&ices performe! for clients% "ut not yet recor!e!% amount to 6@80>.7. 5er&ice ?ees ;ecei&a"le r @80>

5er&ice ;e&enue *r @80>?ees owe! an! not yet recei&e!

3n 8 5eptem"er% the company pai! 60>>1 for a @Gmonth a!&ertising

campaign "eginning on that !ate. This transaction was recor!e! "y

!e"iting repai! A!&ertising. At the en! of the year% a!&ertising costing

60071 ha! "een consume!8. A!&ertising #$pense r 0071

repai! A!&ertising*r 0071

A!&ertising consume! en! of year

The unearne! re&enue account has a "alance of 6@18% recor!e! when

cash was recei&e! on No&em"er. It was e$pecte! the 6@18 woul! "e

earne! equally o&er No&em"er% ecem"er an! Fanuary.@. Dnearne! ;e&enue r 121

5er&ice ?ees ;e&enue *r 121

5er&ice fees earne! for two months.(%@18 ,0/-)

The company !eci!e! to !eclare a !i&i!en! of 60 111 to its sharehol!ers

on - ecem"er.2. ;etaine! #arnings r 0 111

i&i!en! aya"le *r 0 111

i&i!en! !eclare!

& ;e&ersal entries are only nee!e! for accruals. Therefore% only entries % - an!

7 nee! entries:

. =ages aya"le r 0181

=ages #$pense *r 0181

;e&ersing entry on wages accrue!

-. Interest aya"le r 271

Interest #$pense *r 271

;e&ersing entry of interest accrue!

7. 5er&ice ;e&enue r @80>

5er&ice ?ees ;ecei&a"le *r @80>

;e&ersing entry of fees owe!% not yet recei&e!

Week "

Chapter 7, DQ "


14/17

This error woul! "e !isco&ere! when n!ing the totals of the su"si!iary account

to the control account% "efore "eing poste! to the general le!ger. =hen the

accountant "alances the su"si!sary le!ger up% they will n! that an error has

"een ma!e. The error will nee! to "e poste! as an a!Kusting an! correcting

entry% that will appear on the general le!ger only.

#$er%ise 7&2

The control account !oes not "alance with the su"si!iary le!ger account "ecause

the incorrect num"ers were totalle!: The entry on the 8/@ shoul! "e -@1% not @-1

which was entere! incorrectly.

Amen!e! Accounts ;ecei&a"le *ontrol Account

at

e

#$planation ost

;ef

e"it *re!it Balance

/@

8/@-1/

@

-1/

@

Balances

5ales return5ales

*ash ;eceipts

LF>5<

*;@

8208-@1

-201

7 111

-@71


15/17

@ *ales Fournal is poste! to the ACC+.* 0#C#-?A=# 5DB #L#; as

a deit

A%%ounts 0e%eiale

*usidiar5 =ed3er

L. ierate ost ;ef e"it *re!it Balance0/7 5F -08 -08

5onic t!ate ost ;ef e"it *re!it Balance8/7 5F 01 01

*a&alllaro t!ate ost ;ef e"it *re!it Balance08/7 5F 2@1 2@1

. Burtonate ost ;ef e"it *re!it Balance

0


16/17

ughh

De%ision Anal5sis

A& Ees% a 5ales Fournal woul! "e useful for this company% as they are making a lot

of sales !eli&eries to gi&e customers in the surroun!ing !istricts fuel% with arange of !i+erent customers. A 5ales Fournal will "e helpful% as it will allow the

Leneral Fournal to "e less time consuming% an! one person can work on it% while

another accountant employe! can work on a !i+erent special Kournal. The 5ales

Kournal coul! "e specic to the type of pro!uct "eing use!% such as analysis of

sales through the !i+erent pro!uct lines. Dsing a computerise! account coul!

help spee! up the automatic mailing of in&oices to their customers.

& urchases *AN "e recor!e! in the general Kournal% if they are things that occur

infrequently. If the company is regularly making new purchases (whether for

stocking in&entory% oce supplies% equipment% etc) then a urchases Fournal

woul! "e important to help consoli!ate the Accounts aya"le accounts in thegeneral le!ger. A multipurpose Kournal coul! help with recor!ing !i+erent types

of purchases on the one Kournal.

C& A *ash ;eceipts Kournal woul! "e a goo! i!ea for this company% as they are

preparing a lot of sales !ockets after a sale. These coul! "e easily consoli!ate!

into a *ash ;eceipts Kournal so It is more ecient an! timely. Also% customers are

also allowe! a !iscount% an! this Kournal woul! allow the company to create a

iscount Allowe! account to help track !iscounts. The other accounts that woul!

"e use! inclu!e Accounts ;ecei&a"le% an! *ash at Bank.

D& Ees% if the company is making purchases using cash (such as the cashpurchase of an in&entory)% it woul! "e a goo! i!ea to set up this special Kournal.

owe&er% if they are not making many purchases an! wages are pai! twice

weekly% it may not "e necessary.

Week 7

Chapter ", DQ

This

DQ 6

This

#$er%ise "&6

This

#$er%ise "&1!

This


17/17

'rolem "&; (, C, D

This

'rolem "&! (, C, D)

This

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