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Business Accounting
The following balances have been extracted from the books of Mitchell plc on 31 July 20X2. From them draw up (i) a detailed trading and profit and loss account for internal use, for the year ended 31
From the following selected balances of State plc as at 31 December 20X8, prepare (i) A detailed trading and profit and loss account for the year ended 31 December 20X8 for internal use and (ii) A
Fresno Group plc have prepared their financial statements for the year ended 31 January 20X4. However, the financial accountant of Fresno Group plc had difficulty in preparing the statements required
Bunker plc is a trading company; it does not carry out any manufacturing operations. The following information has been extracted from the books of account for the year to 31 March 20X0:Additional
What do you think these advantages may be?
The reason for taking this approach ought to be fairly obvious. What do you think it is?
Why would most companies not want to publish detailed financial statements?
The following balances remained in the books of Polk Ltd on 31 March 20X4, after the profit and loss account and appropriation account had been drawn up. You are to draft the balance sheet as at 31
The following trial balance has been extracted from the books of Baganza plc as at 30 September 20X7:Additional information:1. The stock at 30 September 20X7 was valued at £3,600,000.2. Depreciation
Why do you think dividends of this kind must be shown separately?
After the profit and loss appropriation account has been prepared for the year ended 30 April 20X7, the following balances remain in the books of Tickers plc. Prepare up a balance sheet in accordance
The trial balance of Jeremina plc as at 31 March 20X2 is as follows:Notes:(i) Stock of finished goods on 31 March 20X2 £163,000.(ii) Motor expenses and depreciation on motors to be apportioned:
Why do you think these small companies are exempted from having their financial statements audited?
You are presented with the following information relating to Plott plc for the year to 31 March 20X1:Additional information:1. The above information has been obtained after the compilation of the
Why do you think companies are allowed to send their shareholders summary financial statements rather than the full statements?
The following information has been extracted from the books of Quire plc as at 30 September 20X1.The following additional information is to be taken into account:1. Stocks at 30 September 20X1 were
The following trial balance has been extracted from the books of Patt plc as at 31 March 20X0:Additional information:1. Following the preparation of the above trial balance, the following additional
Why do you think these notes are required rather than leaving it up to companies to provide the information they believe to be worthwhile including?
The following information has been extracted from the books of account of Billinge plc as at 30 June 20X6:Additional information:1. The company was incorporated in 20X0.2. The stock at 30 June 20X6
Cosnett Ltd is a company principally involved in the manufacture of aluminium accessories for camping enthusiasts. Its trial balance at 30 September 20X5 was:You are provided with the following
The following trial balance has been extracted from the books of Arran plc as at 31 March 20X7:Additional information:1. Stocks at 31 March 20X7 were valued at £150,000.2. Depreciation for the year
The following trial balance has been extracted from the books of account of Greet plc as at 31 March 20X8Additional information:1. Stock at 31 March 20X8 was valued at £150,000.2. The following
The accountant of Scampion plc, a retailing company listed on the London Stock Exchange, has produced the following draft financial statements for the company for the year to 31 May 20X7.You discover
The Companies Acts and accounting standards require a great deal of information to be disclosed in a company’s annual report and accounts.Required:List the disclosure requirements for the following
Imagine you are running a business and you have £500,000 that you won’t need for three months. How will you invest it?
(a) List the nine headings in the cash flow statement, as required by FRS 1.Data from FRS 1Cash flows relating to items classed as exceptional or extraordinary in the profit and loss account should
Why do you think that such items not affecting cash flows should still be reported in a note?
Give an example of the information to be included under each of the headings in an FRS 1-based cash flow statement and indicate why this information might be useful.Data from FRS 1Cash flows relating
When the items needed for the additional information required by the direct method are so easy to identify from the Cash Book, why do you think most companies prefer to use the indirect method?
Prepare a cash flow statement for Lee Ltd for the year ended 31 December 20X4 as required under FRS 1 using the direct method, together with note 1 to the statement. The profit and loss account,
Repeat Question 14.3, this time using the direct method prepare a cash flow statement following the requirements of IAS 7.DATA FROM Question 14.3Prepare a cash flow statement for Lee Ltd for the year
The balance sheets and additional information relating to Pennylane Ltd are given below. Prepare a cash flow statement for Pennylane Ltd for the year ended 31 December 20X3 as required under FRS 1
Repeat question 14.5A, this time following the requirements of IAS 7.Data from Question 14.5AThe balance sheets and additional information relating to Pennylane Ltd are given below. Prepare a cash
The following information has been extracted from the books of Nimmo Limited for the year to 31 December 20X9:Additional information:1. The directors are extremely concerned about the large bank
The following summarised balance sheets relate to Track Limited:Additional information:1. During the year to 30 June 20X1, some fixed assets originally costing £25,000 had been sold for £20,000 in
You are presented with the following summarised information relating to Ward plc:Notes:1. The taxation charge in the profit and loss account includes the following items:2. During the year to 30 June
The accountant of a private company has been able to get the use of a computer to produce the spreadsheets shown below but as yet the computer lacks a program to print out final accounts. The
You are presented with the following forecast information relating to Baker Limited for the nine months to 30 September 20X7. Forecast profit and loss accounts (abridged) for the three quarters to
The following information has been extracted from the draft financial information of V Ltd:(a) You are required to prepare a cash flow statement for V Ltd for the year ended 31 December 20X3 in
The financial statements of Arms Ltd are made up to 31 March in each year. Work on a certain contract started on 1 July 20X6 and completed on 31 January 20X8. The total contract price was £360,000,
As each contract has or will have a unique flow of revenue, it makes sound business sense to know the profit or loss it generates. Hence the use of individual contract accounts. When financial
Stannard and Sykes Ltd are contractors for the construction of a pier for the Seafront Development Corporation. The value of the contract is £300,000, and payment is by engineer’s certificate
What is the profit to date on Contract 44?
Cantilever Ltd was awarded a contract to build an office block in London and work commenced at the site on 1 May 20X5.During the period to 28 February 20X6, the expenditure on the contract was as
You are required to prepare the contract account for the year ended 31 December 20X0, and show the calculation of the sum to be credited to the profit and loss account for that year. On 1 April 20X0
Why do you think preference shareholders do not have the same voting rights as ordinary shareholders?
What determines whether or not one company is a subsidiary undertaking of another company?
How are incorporated businesses affected by the provisions of FRS 2?
What benefits accrue to the investor in a parent undertaking by the use of consolidated financial statements?
How did FRS 2 change the way in which consolidated financial statements should be drawn up?
Why do you think the directors’ report is audited?
The following trial balance of X Limited, a non-listed company, has been extracted from the books after the preparation of the profit and loss and appropriation accounts for the year ended 31 March
OTL Ltd commenced business on 1 January 2017. The head office is in London and there is a branch in Highland. The currency of Highland is the crown. The following are the trial balances of the head
EG Company Limited, a manufacturing business, exports some of its products through an overseas branch whose currency is ‘florins’, which carries out the final assembly operations before selling
Star Stores has its head office and main store in Crewe, and a branch store in Leek. All goods are purchased by the head office. Goods are invoiced to the branch at cost price plus a profit loading
Nion is a retail goods outlet operating from a head office in London and a branch in Brighton. The following trial balances have been extracted from the books of account as at 31 October
LR, a trader, commenced business on 1 January 2016, with a head office and one branch. All goods were purchased by the head office and goods sent to the branch were invoiced at a fixed selling price
Packer and Stringer were in partnership as retail traders sharing profits and losses: Packer 3/4, Stringer 1/4. The partners were credited annually with interest at the rate of 6% per annum on their
Paper Products has a head office in London and a branch in Bristol. The following information has been extracted from the head office books of account as at 31 March 2016:Additional information:1
RST Limited is a family-controlled company which operates a chain of retail outlets specialising in motor spares and accessories. Branch inventory is purchased by a centralised purchasing function in
J Micheil Ltd, whose head office is in Cumbernauld, operates a branch in Lincoln. All goods are purchased by head office and invoiced to and sold by the branch at cost plus 60%. Other than a sales
If the current account balances do not represent assets or liabilities, what do they represent?
Gail Dawson is the owner of a retail business. She has employed an inexperienced bookkeeper to maintain her accounting records.(a) On 31 March 20X9, the end of the business’s accounting year, the
Arthur deals in bicycles. His business position at 1 October was as follows:Having established good relations with his supplier he is able to obtain bicycles on one month’s credit. He kept notes of
Trading account for:The stock valuations used in the above trading accounts at the end of 20X7 and at the end of 20X8 were inaccurate. The stock at 31 December 20X7 had been under-valued by £1,000,
Ivor Clue is a magician. He has conjured up the following results from his non-existent accounting records.Fees are equal to five times his direct costs.At any given time his stocks equal one
The following trial balance of The Shire Golf Club was extracted from the books as on 31 December 20X3:Notes:(i) Bar purchases and sales were on a cash basis. Bar stocks at 31 December 20X3 were
Using whichever of the following figures are required, prepare a manufacturing and trading account for 20X3. The manufacturing account should show clearly the prime cost of manufacture and the
Prepare manufacturing, trading and profit and loss accounts from the following balances of W Miller for the year ended 31 December 20X3.Rent is to be apportioned: Factory 3/4; Office 1/4. Stocks at
From the following information, draw up a manufacturing and trading account for the six months ending 30 September 20X5. You should show clearly:(a) Cost of raw materials consumed.(b) Prime cost of
On 1 January 20X1 a business purchased a laser printer costing £1,800. The printer has an estimated life of 4 years after which it will have no residual value. It is expected that the output from
From the following figures prepare manufacturing and trading accounts so as to show:(a) Cost of raw materials used in production.(b) Prime cost.(c) Production cost of finished goods produced.(d) Cost
E Wilson is a manufacturer. His trial balance at 31 December 20X2 is as follows:Prepare the manufacturing, trading and profit and loss accounts for the year ended 31 December 20X2 and a balance sheet
Jean Marsh owns a small business making and selling children’s toys. The following trial balance was extracted from her books on 31 December 20X9.You are given the following additional
The financial year end of Mendip Limited is 30 June. At 30 June 20X2, the following balances are available:(i) The stocks at 30 June 20X2 were: raw materials £22,000; finished goods £35,600.(ii)
State which depreciation method will be the most appropriate in the case of each of the following assets and why. Also, indicate to what extent obsolescence will affect each of the assets.(a) A
The following list of balances as at 31 July 20X6 has been extracted from the books of Jane Seymour who commenced business on 1 August 20X5 as a designer and manufacturer of kitchen
From the following you are to draw up the trading account for Fine’s Department Store for the year ended 30 June 20X6. Stocks: Carpet Department White Goods Department Music Department Sales for
J Horner is the proprietor of a shop selling paintings and ornaments. For the purposes of his financial statements he wishes the business to be divided into two departments:The following balances
From the following list of balances you are required to prepare a departmental trading and profit and loss account in columnar form for the year ended 31 March 20X5, in respect of the business
The balance sheets of F Black, a sole trader, for two successive years are shown below. You are required to draw up a cash flow statement for the year ended 31 December 20X4 (a) Using the FRS 1
Draw up a cash flow statement for Gerry Peace for the year ended 31 December 20X3 using (a) The FRS 1 layout and (b) The IAS 7 layout. You are told that fixtures bought in 20X3 cost £400,
Malcolm Phillips is a sole trader who prepares his accounts annually to 30 April. His summarised balance sheets for the last two years are shown below.Malcolm is surprised to see that he now has an
From the following details you are to draft a cash flow statement for D Duncan for the year ended 31 December 20X5: using (a) The FRS 1 layout and (b) The IAS 7 layout.*Debtors 20X4 £8,800
You are required to draw up a cash flow statement for K Rock for the year ended 30 June 20X9 from the following information using (a) The FRS 1 layout and (b) The IAS 7 layout.*Debtors 20X8
Stanley and Barclay enter a joint venture to share profits or losses equally resulting from dealings in second hand digital TVs. Both parties take an active part in the business, each recording his
Bull, Craig and Finch entered into a joint venture for dealing in strawberries. The transactions connected with this venture were:Required:Show the joint venture accounts in the books of Bull, Craig
Rock, Hill and Pine enter into a joint venture for dealing in paintings. The following transactions took place:Required:Show the joint venture accounts in the books of the three parties. Show in full
Black, Brown and Cook are partners. They share profits and losses in the ratios of 2/9, 1/3 and 4/9 respectively.For the year ended 31 July 20X2, their capital accounts remained fixed at the
Gray, Wilkes and Booth are partners. They share profits and losses in the ratios of 3/8, 3/8 and 1/4 respectively.For the year ended 31 December 20X3 their capital accounts remained fixed at the
I Skip and U Jump sell toys. Their individual investments in the business on 1 January 20X4 were: Skip £80,000, Jump £40,000.For the year to 31 December 20X4, the net profit was £30,000 and the
Draw up a profit and loss appropriation account for the year ended 31 March 20X8 and balance sheet extracts at that date, from the following:(i) Net profits £111,100.(ii) Interest to be charged on
Draw up a profit and loss appropriation account for Cole, Knox and Lamb for the year ended 31 December 20X5, and a balance sheet extract at that date, from the following:(i) Net profits
Frame and French are in partnership sharing profits and losses in the ratio 3/5 : 2/5, respectively. The following is their trial balance as at 30 September 20X5.Required:Prepare a trading and profit
A and B are in partnership sharing profits and losses 3:2. Under the terms of the partnership agreement, the partners are entitled to interest on capital at 5 per cent per annum and B is entitled to
Scot and Joplin are in partnership. They share profits in the ratio: Scot 70 per cent; Joplin 30 per cent. The following trial balance was extracted as at 31 December 20X7.Required:Draw up a set of
Sage and Onion are trading in partnership, sharing profits and losses and equally. Interest at 5% per annum is allowed or charged on both the capital account and the current account balances at the
Bush, Home and Wilson share profits and losses in the ratios 4:1:3 respectively. Their trial balance as at 30 April 20X4 was as follows:Draw up a set of financial statements for the year ended 30
Reid and Benson are in partnership as lecturers and tutors. Interest is to be allowed on capital and on the opening balances on the current accounts at a rate of 5% per annum and Reid is to be given
The partners have always shared their profits in the ratios of Vantuira 3: Aparecida 2: Fraga 5. They are to alter their profit ratios to Vantuira 4: Aparecida 1: Fraga 3. The last balance sheet
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