Questions and Answers of Accounting for Business

How would each of the following liabilities be classified (current, non-current, or both) at the end of the financial year? Unearned revenue Accrued expenses Provision for warranty repair costs
The following were among transactions of Everluck Enterprises Ltd during the financial years ending 30 June 2023 and 30 June 2024.Required Record in general journal form all the above transactions,
At 30 June 2024, the accountant for Woodbine Construction, Mary Ellam, is preparing the financial statements for the year ended on that date. To calculate the annual leave payable, the accountant had
On 21 November, the weekly payroll register of Parade Events Ltd showed gross wages and salaries of $$374$ 000. The organisation withheld $$89$ 760 for income tax, $$6$ 680 for life
At 30 June 2023, Huang Sun Electronics adjusted its Provision for Warranties so that it would be equal to 4% of sales for the year ended on that date. Sales for the year ended 30 June 2023 were
On 1 June, Zest Charters Ltd received authorisation from its board of directors to issue $2 500 000 of 6% 10‐year debentures dated 1 July. Interest is payable half‐yearly on 31 December and
The following information relates to a debentures issue of White Noise Ltd dated 1 January 2024.Required (a) Prepare general journal entries to record the:(i) issue of the debentures (ii) 30 June and
Dynamic Industries Ltd have recently purchased new premises in order to expand their warehouse space. The cost of the premises was $$1$ 500 000 and on 1 November they financed the purchase with
The following information has been extracted from the financial statements of Lunar Flights Ltd.Required (a) Calculate the following for 2024 and 2023:(i) current ratio (ii) quick ratio.(b) Comment
The following information is available for Western Opal Ltd.Required (a) Calculate the following ratios for 2024 and 2023:(i) debt ratio (ii) equity ratio (iii) capitalisation ratio.(b) What do these
Gigawatt Media has three employees. Their employment contracts entitle them to 13 weeks leave after 10 years of service. Refer to the following information about each employee at 30 June
The following information is used to calculate Interior Trader Ltd’s payroll for the week ending 30 June 2024.Employees’ superannuation contribution is 10% of their gross pay. PAYG tax is taken
The following accounts and balances appeared in the ledger of Broadway Pharmaceuticals Ltd on 30 April 2024:Required (a) Prepare entries in general journal form for Broadway Pharmaceuticals Ltd to
Euro Classics Ltd has been operating a successful business for many years specialising in servicing and reconditioning repairs for classic European automobiles. Servicing costs $$750$, while
Oakfield Operations Ltd, which has been trading profitably for many years, is planning to expand the business to meet the increasing demand for its services. The issue price of all shares is
Octavian Supplies Ltd has decided to purchase a new office building. It purchased land and a building for $$6$ 750 000 on 1 December 2023. Agreed financing arrangements included payment of an
Several potential investors have been studying the affairs of Northern Steel Ltd to decide whether to invest in the company by purchasing unsecured notes which the company was proposing to issue.
Chamberlain Plastic Ltd completed the following selected transactions during 2023 and 2024. The financial year for the company ends on 31 December. (Ignore GST.)Required (a) Show how the above
Chamberlain Plastic Ltd completed the following selected transactions during 2023 and 2024. The financial year for the company ends on 31 December.Required (a) Show how the above transactions,
Pulse Ltd wishes to raise $$3$ 500 000 to carry out construction work as part of a major expansion of its shopping mall operations. The directors decide to issue 20 000 $$100$ 8% debentures,
Explain the role of the differential reporting regime in Australia. Discuss why this was developed and implemented.
Given that disclosing entities are required to comply with the accounting standards why are the figures in financial statements sometimes disputed?
Statement of profit or loss and comprehensive income and statement of changes in equity.Determine whether the following transactions would appear in the statement of profit or loss and other
Reserves, dividends, statement of profit or loss and other comprehensive income, statement of changes in equity The following information relates to Ruby Red Ltd at 30 June 2025. Share capital 50 000
The summarised statement of financial position of Modern Mayhem Ltd at 30 June 2025 for presentation to management is as follows.Required (a) Prepare the statement of financial position for external
The following information was obtained for Winsome Ltd for the year ended 30 June 2025.Required (a) Prepare a statement of profit or loss and other comprehensive income for Winsome Ltd for the year
Statement of profit or loss and other comprehensive income and retained earnings account The information below relates to Lincoln Town Ltd for the year ended 30 June 2025.Required (a) Prepare a
Statement of profit or loss and other comprehensive income and note for income The ledger of Pine Valley Ltd at 30 June 2025 contained the following information.Required (a) Prepare a statement of
Dividends and statement of changes in equity On 1 July 2024, the equity of Oregon Services Ltd was as follows.Required (a) Prepare journal entries (in general journal format) for the listed
The equity of Richenuff Ltd at 30 June 2025 is as follows.Required Based on the above information, answer the following questions.(a) What is the issue price per share of the ordinary shares?(b) If
The following was obtained from the ledger of Crocodile Apparel Ltd as at 30 June 2025.Required (a) Prepare a statement of changes in equity for Crocodile Apparel Ltd for the year ended 30 June 2025.
The following information relating to the year ending 30 June 2025 for Artemis Ltd has been obtained from the company’s records.Required (a) Record the above adjustments in the ledger.(b) Prepare a
The equity of Twoforsix Ltd at 14 February 2025 consisted of the following.Required (a) Prepare general journal entries for the above transactions.(b) Show the Retained Earnings account up to 31
Statement of profit or loss and other comprehensive income(a) Prepare a statement of profit or loss and other comprehensive income for Shanghai Venture Ltd in accordance with the requirements of IAS
The following information relating to Country Cottages Ltd has been obtained from balance sheet as at 30 June 2025.In addition to the above, it is noted that during the year ended 30 June 2025:1. 100
Reserves, dividends, statement of profit or loss and other comprehensive income, statement of changes in equity The equity of Papanui Ltd at 30 June 2025 was as follows.Required (a) Prepare general
Bella Boats Ltd commenced trading many years ago. Equity at 30 June 2024 comprised the following.Required (a) Prepare entries in general journal format to record the above transactions. Ignore
Takeover of existing business, issue of ordinary shares, statement of financial position Jones Ltd was formed on 1 March 2025 for the purpose of purchasing the business of Hazel Ltd whose assets and
Ruby and Portia, the proprietors of a consulting business, decided to convert their business into a limited company known as Straight Up Ltd. The following was the statement of financial position for
Statement of profit or loss and other comprehensive income, statement of financial position and retained earnings Non-GST version The trial balance of Arrogate Ltd at 30 June 2025 was as shown
The ledger balances of Tasman Attire Ltd as at 30 June 2025 are shown below.The following adjustments are yet to be taken into the accounts.1. Inventory on hand at 30 June 2025 valued at
The following unadjusted trial balance is for the year ended 30 June 2025.Required (a) Prepare the journal entries (in general journal form) required by the ten items listed in (3)above.(b) Prepare
Explain why cash flows from operating activities are different from operating profit.
An accounting student asked the following question: ‘Why does the cash on hand balance as at the end of December 2024 in the statement of cash flow not concur with the cash balance shown in current
Explain the choice in classifying interest received and paid in a statement of cashflows.
Describe the direct method of preparing the cash flows from operating activities in a statement of cash flows. Contrast this with the indirect method. Identify which is the preferred method and why.
Australia’s Payment Times Reporting Scheme requires large businesses and large government enterprises to report twice a year on their small business payment terms and times. Discuss the aim of such
Marc Korda is reviewing the statement of cash flows for his technology business. The Statement has been provided by his accountant. He is dismayed that the statement shows net cash outflows for
Surguy Ltd has disclosed the following non-current asset classes as at 30 June 2025. Required (a) Prepare general journal entries to record the revaluations, including any closing entries at the end
The following machines were scrapped as worthless by Caelum Pty Ltd:Required (a) Prepare separate entries to record the disposal of the machines by Caelum Pty Ltd. Machine Cost Accumulated Removal
On 3 January 2023, Bennetti Ltd paid $$33$ 000 for a machine with a useful life of 10 years and a residual value of $$3000$. On 31 December 2027, accumulated depreciation on the machine was
Carmichael Ltd acquired a truck with a cost of $$125$ 000, an estimated useful life of 6 years and a residual value of $$15$ 000. The truck is expected to travel 30 000km per year for each year
On 4 March 2025, Nguyen Ltd exchanged a machine with a cost of $$307$ 000 and accumulated depreciation of $$107$ 000 for a new similar machine with a cash price of $$330$ 000. Ignore
Kapor Ltd exchanged machinery with a cost of $$175$ 000 and accumulated depreciation of $$90$ 000 for a parcel of land. There were no other assets given in exchange. Ignore GST.Required(a)
On 1 January 2022, Leibhardt Ltd acquired two identical pieces of equipment for a total cost of $$540$ 000. It was estimated that each item would have a useful life of 8 years and a residual value
Alterator Ltd, which operated a lithium mine, was purchased by Faraonio Ltd for $$80$ 000 000 (residual value $$5$ 000 000). It is estimated that the mine will produce 20 million tonnes of
Davis Ltd uses the composite-rate method to record depreciation of its store equipment. On 1 January 2025, the company owned the following store equipment (ignore GST).Required (a) Calculate the
Sage Ltd is considering the purchase of Rosemary Ltd, which produces a product that Sage Ltd uses in its manufacturing process. Relevant data for Rosemary Ltd are as follows.Required (a) Determine
During 2025, Truong Ltd disposed of four different non-current assets. On 1 January 2025 the accounts were as follows.Truong Ltd depreciates its motor vehicles and machines by the straight-line
On 1 July 2025, Weiland Pty Ltd owned several farming vehicles that had cost a total of $$155$ 000. Accumulated depreciation on these vehicles to 1 July 2025 amounted to $$73$ 000.On 30 September
On 30 June 2025, Wong Ltd reported the following information for equipment in its statement of financial position.Investigation of the property and plant records showed that the equipment consisted
Zeller Ltd acquired the business of Adams Ltd for a cash outlay of $$5$ 000 000 on 1 July 2025. The summarised balance sheet of Adams Ltd on that date was as follows.Most of the assets were
The following information was obtained from the accounting records of Crothers Ltd.Required (a) Prepare the journal entries (in general journal form) for all vehicle transactions from 1 July 2024 to
Dunedin Ltd acquired two new machines for cash on 1 January 2023. The cost of machine A was $$400$ 000, and of machine B, $$600$ 000. Each machine was expected to have a useful life of 10 years,
On 2 January 2024, Gormly Ltd purchased a machine for $$165$ 000. The machine had a useful life of 5 years and a residual value of $$5000$. Straight-line depreciation is used. The machine is to
Harrison Ltd has a policy of revaluing its motor vehicles to fair value. The details at 30 June 2026 relating to Harrison Ltd’s motor vehicles, which had previously been revalued upwards by $28000,
Jacobs Ltd reported the following non-current assets at 30 June 2025.Required (a) Prepare journal entries to record the transactions. Jacobs Ltd uses straight-line depreciation for buildings and
Khan Ltd entered into the following transactions during the year ended 31 December 2025. Ignore GST.Required (a) Prepare entries in general journal form to record the above transactions. Jan. 4 Sold
The beginning balance in the Machinery control account and Accumulated Depreciation account, and dates in the accounts for various machinery acquisitions and disposals during the year by Liu Ltd are
On 1 January 2023, Martini Ltd bought a machine for $$218$ 000 cash; its useful life was 12 years and its residual value was $$26$ 000. It was decided to depreciate the machine by the
The following errors were discovered during the current year.1. A machine with a cost of $$33$ 500 and accumulated depreciation to the date of sale of $$24$ 000 was sold for $$9000$. The sale
Below are extracts from the financial reports of Wollowiec Traders Ltd for the years ended 30 June 2025 and 30 June 2026.Additional information 1. The revaluation surplus at 30 June 2025 was raised
On 1 January 2020, Jeffries Ltd purchased two identical new machines at a total cost of $$700$ 000. It was estimated that the machines would have a useful life of 10 years and a residual value of
The following transactions and events affected the accounts of Heritage Ltd for the current year (ignore GST).1. On 3 January of the current year, Heritage Ltd paid $$550$ 000 in legal fees for the
Adam Hamilton, who recently won a major prize in a lottery, left his coaching job to invest in a business of his own. He found what he believed was an ideal business for his background, Hamilton Gym,
Bittoto Ltd has four different intangible assets at the end of 2025. Facts concerning each are as follows.1. Franchise. On 2 January 2025, Bittoto Ltd purchased a franchise to distribute a new
Morgan Ltd, which started operations on 1 October 2022, prepared the following account balances as at 30 June 2025.Additional information 1. Morgan Ltd calculates depreciation to the nearest month
On 1 July 2025, Foster Ltd acquired the assets and liabilities of Jenkins Ltd. The assets and liabilities of Jenkins Ltd consisted of the following.In exchange for the business of Jenkins Ltd, Foster
Identify and discuss the issues involved in accounting relating to employee benefits.
The debt ratio is the inverse of the equity ratio. If the company decreases its level of leveraging what will the effect be on the equity ratio?
Finesse Jewellers Ltd performed a physical stocktake on 31 December 2024 and identified stock on hand at that date valued at $$82,800$. The accountant performed an audit and identified the
Inventory cost flow methods — periodic inventory system Inventories and purchases for the month of January for Good Buys Electrical Ltd are presented in the table below:Required:Using the periodic
Lower of cost and net realisable value The inventory of Premium Fasteners Ltd contains the following packs of screws, nails, nuts and bolts at 30 June 2024. Unit Price Inventory Item Quantity of
Handyman’s Hardware Ltd conducts classes for the general public focusing on DIY projects using various power tools. One of the most popular power tools used in the DIY demonstrations is a 600-watt
The following information relates to the inventory of the Denki Ltd during the month of August:Denki Ltd uses the perpetual inventory method of accounting for inventory. Ignore GST.Required Determine
FIFO and average cost flow methods — periodic and perpetual inventory systems Non-GST version Clean Air Ltd sells air purifiers. The table below summarises the inventory movements for the most
Personal Tech Ltd records its inventory of fitness watches using the FIFO cost allocation for perpetual inventory. The following information summarises the inventory movements for their most popular
Audio Attitude Ltd uses the perpetual inventory system to maintain its inventory records of Play it car stereos. The computerised accounting system identified the closing inventory value was $$245$
Sun Solar Ltd manufactures and sells a portable folding solar panel blanket for use in caravans and camping. Inventory balances at 1 July 2023 totalled 900 units at a cost of $$250$ and sold at
Battery Supplies Ltd manufacturing batteries for use in the automotive industry. During the annual audit for 2023/2024, the accountant identified incorrect procedures occurred when conducting the
The Statement of Profit or Loss for Galaxy Donuts for a period of 3 years are presented below:Due to errors, the 2023 ending inventory is overstated by $$3$ 000 and the 2024 ending inventory is
Part A Alpha Ltd’s inventory on 1 January 2024 had a cost of $$150$ 000 and a retail value of $$255$ 500. During the month of January, the company’s purchases of inventory amounted to
Rods and Reels Ltd, a specialist retail business selling fishing supplies, performed a physical stocktake of inventory at retail price at the end of the current year. The manager calculated the total
The table below summarises inventory transactions for Staples Ltd for the month of March 2024:Required (a) Staples Ltd has adopted a periodic inventory system using the FIFO method of cost
(a) Explain the effect of each of the following errors in the ending inventory of a retail business.i. Incorrectly included 200 units of Product A, valued at $10 per unit, in the ending inventory;
The following information relates to the inventory of the ‘Coffee Bean’, a retail business that sells speciality coffee. A summary of the transactions for coffee beans are presented below for the
Solar Heat Ltd sells and services solar hot water systems. Different models and sizing of units are referred to by brand and model number. Ignore GST.The inventory on 1 July 2024 is as
Heaven Scent is a retail business selling handmade soaps, essential oils, candles and lotions. The manager is required to prepare quarterly financial reports to the owner of the business. To assist
Clean Chem Industrials Ltd manufactures cleaning solvents used in industrial dry cleaning and laundry services. On 25 April, the electrical system in the factory shorted causing a fire. When the fire
Air Support Ltd manufactures long distance drones. The drones were developed primarily for use in the agricultural industry, but are now sought after by other industries for their ability to capture

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