Questions and Answers of Accounting 28th Edition

Explain the concept of eco-efficiency.
A division of a global multinational company reports sales of $675000, variable costs of $300,000, traceable fixed costs of $187,500, allocated regional common costs of $75,000 and allocated
The following data relate to the Chinese Division of Chee Incorporated.RequiredDetermine:a. The return on investment b. The residual income.
A segment of Owl Holdings reports sales of $560,000 and a profit of $120,000. The data below also relate to the segment of Owl Holdings.RequiredDetermine the return on investment if the investment
A family business has built a chain of fast-food outlets. The basic underlying principles of the chain, which has helped it to grow, are cost effectiveness, quality of service and product innovation.
The data below have missing values. Determine the missing values indicated by the letters (a) through (h).
Magic Dusters is considering a special order from Stay Clean Ltd for a special cleaning product for windows. One ingredient required for the product is Alpha A which Magic Dusters has in its
Earnings before interest and tax (EBIT), rather than profit, is sometimes used as the numerator in the return on asset ratio. Discuss the rationale for using EBIT rather than profit.
The following table shows the returns and valuations of selected listed retailers as at November 2015. The table is followed by an extract of an article reporting on challenges facing
The balance sheet for Capital Ltd reveals total assets of $840,000, total liabilities of $460,000 and equity of $380,000 as at the end of the reporting period. Using this data, calculate the debt
The following is a summary of key reported figures for Woolworths Ltd’s business segments for 2015 and 2014. Report on the profitability of the business segments. Sales revenue and operating profit
During 2018, Jo Geter, the sole shareholder in Coconut Plantations Pty Ltd, decided to invest in automotive manufacturing equipment to reduce direct labour costs. She decided to fund the investment
Graph the trend in JB Hi-Fi Ltd’s monthly share price over the past two years.
The most recent annual statement of profit or loss for Vertigo Enterprises is presented below. Prepare a vertical analysis of the statement. Income Expenses Cost of sales Advertising
There are a variety of tools available to assist business owners to better understand the performance and position of their business. One such tool is provided by ANZ that allows a financial ratio
Coconut Plantations Pty Ltd’s financial records reveal the following at 30 June 2018.a. Assuming a 365-day year, calculate the days inventory ratio. Interpret and explain this ratio.b. Coconut
The balance sheet and the statement of profit or loss for MobileNet are presented below.a. Calculate the following:i. The current ratioii. The return on assets (use year-end figures)iii. The return
Summary information from the 2018 statement of profit or loss of Coconut Plantations Pty Ltd is provided below.The operating expenses include $18,000 of interest expense.The following amounts have
Selected information for two companies competing in the catering industry have been presented below.Requireda. Analyse and compare the liquidity, solvency and profitability ratios of the entities.b.
The statement of profit or loss figures for the past five years for Grand Hotel are presented below.Using the information:a. Prepare a trend analysis and comment on the trendsb. Prepare a vertical
The reality check ‘Weekly recommendation, target price, earnings forecast changes’ discusses the buy, hold and sell recommendations by analysts. The article refers to fundamental analysis.
If days inventory for Forever30 retail outlet was 38 days and days creditors was 15 days, calculate what the cash cycle would be if credit sales for a year amounted to $66,000 and the average trade
The following financial ratios and information relate to Starbucks Corporation for the period 2003 to 2012.Requireda. Represent the 2012 horizontal analysis of the asset section of the balance sheet
The following table provides an historical summary of key financial ratios for Somy Corporation.a. With reference to the appropriate ratios, analyse the trend in Somy’s profitability providing
It is important for businesses to have efficient processes and systems in place for collecting monies from debtors. The business and industry portal of the Queensland government (www.business.qld.
Visit the Yahoo!7 Finance website (http://au.finance.yahoo.com) and call up information on JB Hi-Fi Ltd (symbol: JBH.AX).a. Identify JB Hi-Fi Ltd’s current share price (day 1), the previous day’s
Debt collection companies Credit Corp Group and Collection House have reported uplifts in revenue and profits for 2015 suggesting that the debt collection market is flourishing.Speaking about Credit
Maintaining premium wine prices and reacting to trends similar to the latest ‘handbag’ are some of the ways the wine industry can recover from struggling production profitability, according to
Explain why it is important to link operational budgets to strategic plans.
From the following data for Acoustic Sales, calculate the receipts from accounts receivable for September, October and November of 2018.Credit sales are normally settled according to the following
From the following data for Wang Enterprises, calculate the receipts from accounts receivable for June, July and August of 2018.Credit sales are normally settled according to the following pattern:
For the budgets you identified in 9.8 above discuss the type of information provided in each budget and who in the entity would provide such information.
‘Budgets need to be reviewed in the light of actual performance.’ Discuss.
Explain the meaning of the term ‘budgetary slack’.
Ainsworth Enterprises has provided the following estimates relating to the first quarter of 2018.The cash balance at 1 January 2018 was $19,800.RequiredPrepare a cash budget for the quarter ending 31
Kyle Company makes specially designed coffee mugs. The entity has developed its web page and is trying to switch customer behaviour to this form of medium. Sales for each quarter of 2017 were as
Ski Lifters is a business that provides a chairlift for tourists in the Alpine region. The peak season is in winter, with the low season during the summer months. Sales are high during the ski season
Vesty Travel Services plans to commence operations on 1 July 2018. The following data and estimates relate to the three months ending 30 September 2018.RequiredPrepare a monthly cash budget for the
During late 2016, Ski Lifters commenced a new business in the Alpine region to rent ski gear to tourists. A budget has been prepared for the coming financial year. Prepare a brief report to
One of the downsides of using a participative style of budgeting is the possibility of ‘budgetary slack’. Explain whether you consider the strengths of a participative style of budgeting outweigh
Coconut Plantations Pty Limited produces and sells two types of coconut-based products: soaps and candles. Jo Geter, the manager, is implementing a new marketing strategy in 2019. Actual sales in
Garden Sculptures presents the following data relating to the expected operations for the months of January to March 2018.Requireda. Prepare a cash budget on a monthly basis for the three months
Greenacres is a garden design and landscaping business. At 30 June 2018, it had a bank balance of $26,500. Provided below are estimates for receipts and payments for the three months ending 30
Coconut Plantations Pty Limited produces and sells two types of coconut based products: soaps and candles. The 2019 sales budget for the two products is as follows.The beginning inventory on 1
Kimona City has undertaken its budget planning for the coming accounting period.RequiredPrepare a budgeted statement of profit or loss for the coming accounting period. Budget item Sales Cost of
Lineham Services is preparing a master budget for the coming year. At present senior management are reviewing the inventory policies. Which budgets would policies concerning the level of inventories
Alette Renn is the newly appointed chief accountant at Aerospace Data Components (ADC), which designs and manufactures data components for the aerospace and car industries. One of Alette’s early
Ron Howard is the operational manager for Tours R Us. Ron’s bonus is dependent upon the reduction of his department’s operating expense budget by 10 per cent in the coming year. One initiative he
Refer to the discussion at the beginning of the chapter regarding the ABC Shop closures.Discuss how budgeting techniques were used by the ABC’s financial accountant to assist in making the decision
Mandy Dahl, the accountant for Crane Distributors, is currently preparing the budget for the coming year. One of the agenda items for next week’s finance meeting is consideration of whether an
Spreadsheet Service’s management expressed surprise that the budgeted profit was achieved despite actual sales being under by $50,000. Give reasons why the actual profit was able to match the
Dorquay Hotel has twenty rooms available for rent. During the month of December its average room rate is expected to be $150 and its room occupancy 85 percent. Due to the holiday season, the room
Dorquay Hotel has a dining room which has the capacity to seat 50 guests. It is opened for breakfast and lunch seven days a week. During January 2016, management has forecast the seat turnover for
The Zeal Company operates antique and second-hand goods stores throughout Victoria. Such stores are currently very popular and sales are increasing each month. It has budgeted the following sales for
Mike Triump is the owner/manager for Online Logistic Solutions, which is a small transport and courier company that provides logistic services to business. Mike is about to start the budget process
Rainbow Enterprises has presented the following estimates relating to 2018 activities.Sales in the December quarter of 2017 were $690,000. All sales are on credit, of which 55 percent are collected
Nancy Ho owns and operates the Always on Time printing company. Nancy and her staff do not engage in planning or budgeting, as they consider the business too small to warrant their attention to such
Lisa Lin is the manager of a large retail store specialising in children’s clothing and accessories. As Lisa is the longest-serving employee, she believes that she knows what is best for the store.
‘Nobody ever seems to be able to hit our sales targets. Why is that?’ (John Lyons, Chief Accountant of Clocktower Fashions). John Lyons was showing his frustration at the failure of the
Yummy Burgers R Us operates a store in Melbourne City, and the following is its average monthly statement of profit or loss:The owner is currently preparing the budget for next year and is
At the recent finance committee, the Chief Operating Officer advised the marketing department that a 10 per cent increase in sales is expected for the coming year. The increase is to apply to all
Nicholas Cash of Advantage Tennis Coaching (ATC) has received an offer from a top-ranked Australian player, Roger Novac, who wishes to spend two months in the beautiful Queensland weather and have 50
Pamcar Industries sells IT equipment, specialising in printers and faxes. The following statement reflects the contribution margin of each activity, and overall profit levels.Requireda. Calculate the
Find the missing figure for each of the following independent cases. Selling price/unit $40 18 e. 8 5 Variable costs/unit $20 C. 20 6 i. Units sold 60 000 10000 50 000 100 000 500
Vestal Industries operates in the IT industry, producing and selling computer and IT equipment. It is structured along functional lines (research and design, production, marketing and so on) and, for
Coconut Plantations Pty Ltd advertises weekly specials and makes sure that the shelf space (9 metres) at the entrance to the store showcases the specials. For the current week, their three products
How may an opportunity cost be relevant in an outsourcing decision?
Advantage Tennis Coaching (ATC) has been engaged to provide tennis coaching services to students at a local private girls’ college. ATC has put forward a proposal to the University of
When making a non-routine operating decisions are all future costs relevant? Explain.
Discuss the effect on CVP analysis of a lower income tax rate.
Discuss how knowledge of the break-even point and the margin of safety will assist management in its risk assessment of business operations.
Coconut Plantations Pty Ltd management plans to introduce detergents to their product range in 2018. They have provided the following information relating to their planned activities.Requireda.
Explain the importance of the relevant range in relation to cost behaviour when considering the costs of expanding business activities.
The Coffee Club sells specialist coffee drinks from a rented cart on the beachside on the Gold Coast. Provided below is a summarised version of the statement of profit or loss for July 2016.The cost
The Cone Head House sells ice-cream cones in a variety of flavours. Financial data for a recent week are shown below.The Cone Head’s manager received a call from a university student club
If an entity has an objective of profit maximisation, break even analysis is not necessary. Discuss this assertion.
Briefly outline some of the key qualitative risk considerations with respect to outsourcing decisions.
Coconut Plantations Pty Ltd manufactures and sells candles, soaps and detergents and distributes them to stores located in Australia and New Zealand. The normal selling price per carton of candles is
Coconut Plantations Pty Ltd manufactures three coconut-based products, candles, soaps and detergents. On average 75,000 candles, 50,000 soaps and 125,000 detergents are sold. Next year, the company
Diamond Light Company incurred the following costs to produce 50,000 light switches for floor lamps in 2017.The Ignition Company has offered to supply the switches for $16 per unit. An analysis of
Pruton Processing is a single-product entity, and provides the following summary data relating to its product for 2017.Requireda. Calculate the break-even in units and sales dollars for 2017.b.
The statement of profit or loss for Menage Industries for 2016 is as follows.Cost behaviour seems to follow this pattern: all of the cost of sales is considered variable; 50 per cent of the total
Taff Services offers three core accounting and bookkeeping services. After a cost behaviour study, the following profitability analysis has been preparedThe management of Taff Services estimates that
Winslet Company has the capacity to manufacture 100,000 units annually of its only product. The following information is available.Requireda. Calculate the number of units that need to be sold
Magic Dusters has also identified that another ingredient Delta D (500 litres required) will also be used in the special order for Stay Clean Ltd, (see problem 10.46). Unlike Alpha A, Delta D is
Nardeb Company is a software producer and sales company. Currently, it pays all sales staff on a fixed base salary. Recently, management has been considering switching sales staff across to an
In its first year of operations, Benson Pty Ltd earned $160000 in services revenue, $24000 of which was on account and still outstanding at the end of the reporting period. The remaining $136000 was
Brendan and Paul, owners of competing businesses, agree to form a partnership on 1 July 2017. Their individual assets and liabilities were independently valued, and it was on this basis that the
J. Robottom commenced business on 1 October 2017 as a beautician operating as iBeauty Salon and Services. Transactions for the month of October were as follows.Requireda. Prepare a statement of
What do the following terms mean?a. Unlimited liabilityb. Mutual agencyc. Dividendd. Preference sharese. Unit trust
The shareholders’ equity section of the balance sheet for a public company includes:a. Share capital (contributed equity).b. Retained earnings.c. Reserves.d. All of the above.
Using your knowledge of the accounting equation, solve the missing values in the following table. Assets 200 000 b. 250 000 17 800 = = Liabilities 46 000 66 000 C. 11 600 + + + + Equity a. 140 000 46
Go to the ASX website, www.asx.com.au. In the search window, type ‘listing on the ASX’. How does the ASX define ‘Listing’? What are the key benefits of ‘Listing’ according to the ASX?
The directors of Kent Ltd provide you with the following financial information for the period ended 31 December 2017: selling expenses $76050; interest expense $29250; legal fees $4875;
Samuel and Vinnie decided to form a partnership on 1 January 2017. They secured the services of a solicitor to draw up their partnership agreement as follows:a. Samuel is to contribute the
The closing balance sheet items are given below for Jason Woodstock in accounting equation form as at 30 June 2018. Transactions for the following month of July are also given.Transactions for July
Determine the missing entries. Current assets $ 5000 7000 21 000 Non-current assets $ 9000 5000 61 000 Current liabilities $6000 2000 9000 Non-current liabilities $ 1400 3 000 12
Complete the following table. Current assets 200 6400 15100 d. Non-current assets a. 19 700 8400 5700 = Current liabilities 1700 50 3900 10700 Non-current liabilities 1100 400 2200 17 900 +
Refer to the reality check ‘Differential Reporting project’. Access the latest update on the project from the AASB website (www.aasb.gov.au/admin/file/content102/c3/Differential_Reporting_
Refer to the Balance Sheets for Advantage Tennis Coaching and Coconut Plantations Pty Ltd.Requireda. Summarise the differences in the ownership structure of the two business entities.b. What are the

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