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Transcript of T1W1
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Financial Accounting
Tutorial 1, Wk 1
1. (a) Define the term accounting.
(b) Distinguish between financial and management accounting.
2. Define the FOUR qualitative characteristics of accounting. Is there any reason why accounting
information might not possess all of these qualities?
3. List and explain any FIVE accounting conventions.
4. Copy and complete the following table.
Assets($) Liabilities($) Owners Equity($)
(a) 125,000 45,000 ?
(b) ? 347,000 223,000
(c) 645,000 ? 330,700
(d) 65,000 45,000 ?
(e) 225,000 225,000 ?
(f) 385,000 ? 385,000
(g)
5. List the users of accounting information. Describe the kinds of information needed by each user
group. Explain why one set of accounting information is unlikely to satisfy the needs of all
users.
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6. Henry starts a business on 1 March 2011. Hisbusiness transactions for the month of trading are
as follows:
1 March Henry pays 35,000 of his own money into a business bank account. He
also transfers his own motor car(valued at 18,750) to the business.
2 March Premises costing 120,000 are acquired for the business. 20,000 of this is
paid bybusiness cheque. The remaining 100,000 is borrowed and is due for
repayment in 10 years time.
5 March A stock of goods for resale is acquired at a cost of 24,600. These goods
are bought on credit from R Black Ltd.
7 March Stock costing 8,700 is sold on credit to P Stevens for 11,300.
16 March Stock costing 9,700 isbought from a supplier and is paid for immediately
bybusiness cheque.
21 March A 220 cheque is drawn on the business bank account to purchase opera
tickets forHenry and his wife.
23 March Stock costing 5,500 is sold on credit to K Jones for 7,850.
28 March Henry draws 1,000 out of the business bank account to cover personal
living expenses. He also takes goods out ofbusiness for his own use.
These goods had cost the business 500.
31 March A cheque for 10,000 is sent to R. Black Ltd in part payment of the
amount owing to the company.
Required: (a) Describe the effect of these transactions on the assets, liabilities and capital of the
business and show the balance sheet as at 31 March 2011.
(b) Record the above transactions in necessary T accounts and extract a trial balance.
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7. A business has the following assets and liabilities on 30 September 2011:
Assets & liabilities Amount ()
Trade debtors 12,670
Trade creditors 17,850
Bank overdraft 4,800
Cash in hand 35
Stock of goods for resale 21,950
Land andbuildings 54,000
Office furniture and equipment 3,500
How much is the owners capital on 30 September 2011
8. Help Marcus Adams to identify the debit and credit entries in the following transactions.
(a)Bought a machine on credit from Angelo, cost 6,400
(b)Bought goods on credit from Barnfield, cost 2,100
(c)Sold goods on credit to Carla, value 750
(d)Paid Daris (a creditor) 250
(e)Collected 300 from Elsa, a debtor
(f) Paid wages 5,000(g)Received rent bill of 1,000 from landlord Graham
(h)Paid rent of 1,000 to landlord Graham
(i) Paid an insurance premium of 150
9.
a. The basic accounting equation is Assets = Liabilities + __________ _______.
For each of the transactions in items b through h, indicate the two (or more) effects on the accounting equationof the business or company.
b. The owner invests personal cash in the business.
Assets: Increase Decrease No Effect
Liabilities: Increase Decrease No Effect
Owner's (or Stockholders') Equity: Increase Decrease No Effect
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c.The owner withdraws business assets for personal use.
Assets: Increase Decrease No Effect
Liabilities: Increase Decrease No Effect
Owner's (or Stockholders') Equity: Increase Decrease No Effect
d.
The company receives cash from a bank loan.
Assets: Increase Decrease No Effect
Liabilities: Increase Decrease No Effect
Owner's (or Stockholders') Equity: Increase Decrease No Effect
e.
The company repays the bank that had lent money to the company.
Assets: Increase Decrease No Effect
Liabilities: Increase Decrease No Effect
Owner's (or Stockholders') Equity: Increase Decrease No Effect
f.
The company purchases equipment with its cash.
Assets: Increase Decrease No Effect
Liabilities: Increase Decrease No Effect
Owner's (or Stockholders') Equity: Increase Decrease No Effect
g.
The owner contributes her personal truck to the business.
Assets: Increase Decrease No Effect
Liabilities: Increase Decrease No Effect
Owner's (or Stockholders') Equity: Increase Decrease No Effect
h.
The company purchases a significant amount of supplies on credit.
Assets: Increase Decrease No Effect
Liabilities: Increase Decrease No Effect
Owner's (or Stockholders') Equity: Increase Decrease No Effect