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Financial Accounting
Rectify the following errors assuming that a suspense account was opened. Ascertain the difference in trial balance.(a) Credit sales to Mohan ₹ 7,000 were posted to the credit of his account.(b)
Rectify the following errors assuming that a suspense account was opened. Ascertain the difference in trial balance.(a) Credit sales to Mohan ₹ 7,000 were posted to Karan as ₹ 5,000.(b) Credit
Rectify the following errors assuming that suspense account was opened. Ascertain the difference in trial balance.(a) Credit sales to Mohan ₹ 7,000 were recorded in Purchase Book. However,
Rectify the following errors :(a) Furniture purchased for ₹ 10,000 wrongly debited to purchases account.(b) Machinery purchased on credit from Raman for ₹ 20,000 was recorded through purchases
Rectify the following errors assuming that suspension account was opened. Ascertain the difference in trial balance.(a) Furniture purchased for ₹ 10,000 wrongly debited to purchase account as ₹
Rectify the following errors :(a) Depreciation provided on machinery ₹ 4,000 was not posted.(b) Bad debts written off ₹ 5,000 were not posted.(c) Discount allowed to a debtor ₹ 100 on receiving
Rectify the following errors :(a) Depreciation provided on machinery ₹ 4,000 was posted as ₹ 400.(b) Bad debts written off ₹ 5,000 were posted as ₹ 6,000.(c) Discount allowed to a debtor ₹
Rectify the following errors assuming that suspense account was opened. Ascertain the difference in trial balance.(a) Depreciation provided on machinery ₹ 4,000 was not posted to Depreciation
Trial balance of Anuj did not agree. It showed an excess credit of ₹ 6,000. He put the difference to suspense account. He discovered the following errors(a) Cash received from Ravish ₹ 8,000
Trial balance of Raju showed an excess debit of ₹ 10,000. He put the difference to suspense account and discovered the following errors :(a) Depreciation written-off the furniture ₹ 6,000 was not
Trial balance of Madan did not agree and he put the difference to suspense account. He discovered the following errors:(a) Sales return book overcast by ₹ 800.(b) Purchases return to Sahu ₹ 2,000
Trial balance of Kohli did not agree and showed an excess debit of ₹ 16,300. He put the difference to a suspense account and discovered the following errors:(a) Cash received from Rajat ₹ 5,000
Give journal entries to rectify the following errors assuming that suspense account had been opened.(a) Goods distributed as free sample ₹ 5,000 were not recorded in the books.(b) Goods withdrawn
Trial balance of Khatau did not agree. He put the difference to suspense account and discovered the following errors :(a) Credit sales to Manas ₹ 16,000 were recorded in the purchases book as ₹
Trial balance of John did not agree. He put the difference to suspense account and discovered the following errors :(a) In the sales book for the month of January total of page 2 was carried forward
On April 01, 2010, Bajrang Marbles purchased a Machine for ₹ 1,80,000 and spent ₹ 10,000 on its carriage and ₹ 10,000 on its installation. It is estimated that its working life is 10 years and
On July 01, 2010, Ashok Ltd. Purchased a Machine for ₹ 1,08,000 and spent ₹ 12,000 on its installation. At the time of purchase it was estimated that the effective commercial life of the machine
What are the causes of depreciation?
Berlia Ltd. Purchased a second hand machine for ₹ 56,000 on July 01, 2015 and spent ₹ 24,000 on its repair and installation and ₹ 5,000 for its carriage. On September 01, 2016, it purchased
Distinguish between straight line method and written down value method of calculating depreciation.
Ganga Ltd. purchased a machinery on January 01, 2014 for ₹ 5,50,000 and spent ` 50,000 on its installation. On September 01, 2014 it purchased another machine for ₹ 3,70,000. On May 01, 2015 it
In case of a long term asset, repair and maintenance expenses are expected to rise in later years than in earlier year. Which method is suitable for charging depreciation if the management does not
Azad Ltd. purchased furniture on October 01, 2014 for ₹ 4,50,000. On March 01, 2015 it purchased another furniture for ₹ 3,00,000. On July 01, 2016 it sold off the first furniture purchased in
M/s Lokesh Fabrics purchased a Textile Machine on April 01, 2011 for ₹ 1,00,000. On July 01, 2012 another machine costing ₹ 2,50,000 was purchased . The machine purchased on April 01, 2011 was
The following balances appear in the books of Crystal Ltd, on Jan 01, 2015
M/s. Excel Computers has a debit balance of ₹ 50,000 (original cost ₹ 1,20,000) in computers account on April 01, 2010. On July 01, 2010 it purchased another computer costing ₹ 2,50,000. One
Carriage Transport Company purchased 5 trucks at the cost of ₹ 2,00,000 each on April 01, 2011. The company writes off depreciation @ 20% p.a. on original cost and closes its books on December 31,
Give four examples each of ‘revenue reserve’ and ‘capital reserves’.
Saraswati Ltd. purchased a machinery costing ₹ 10,00,000 on January 01, 2011. A new machinery was purchased on 01 May, 2012 for ₹ 15,00,000 and another on July 01, 2014 for ₹ 12,00,000. A part
On July 01, 2011 Ashwani purchased a machine for ₹ 2,00,000 on credit. Installation expenses ₹ 25,000 are paid by cheque. The estimated life is 5 years and its scrap value after 5 years will be
Explain the concept of ‘secret reserve’.
On October 01, 2010, a Truck was purchased for ₹ 8,00,000 by Laxmi Transport Ltd. Depreciation was provided at 15% p.a. on the diminishing balance basis on this truck. On December 31, 2013 this
Kapil Ltd. purchased a machinery on July 01, 2011 for ₹ 3,50,000. It purchased two additional machines, on April 01, 2012 costing ₹ 1,50,000 and on October 01, 2012 costing ₹ 1,00,000.
On January 01, 2011, Satkar Transport Ltd., purchased 3 buses for ₹ 10,00,000 each. On July 01, 2013, one bus was involved in an accident and was completely destroyed and ₹ 7,00,000 were received
Describe in detail two methods of recording depreciation. Also give the necessary journal entries.
On October 01, 2011 Juneja Transport Company purchased 2 Trucks for ₹ 10,00,000 each. On July 01, 2013, One Truck was involved in an accident and was completely destroyed and ₹ 6,00,000 were
Explain determinants of the amount of depreciation.
A Noida based Construction Company owns 5 cranes and the value of this asset in its books on April 01, 2017 is ₹ 40,00,000. On October 01, 2017 it sold one of its cranes whose value was ₹
Name and explain different types of reserves in details.
Shri Krishan Manufacturing Company purchased 10 machines for ₹ 75,000 each on July 01, 2014. On October 01, 2016, one of the machines got destroyed by fire and an insurance claim of ₹ 45,000 was
On January 01, 2014, a Limited Company purchased machinery for ₹ 20,00,000. Depreciation is provided @15% p.a. on diminishing balance method. On March 01, 2016, one fourth of machinery was damaged
An extract of Trial balance from the books of Tahiliani and Sons Enterprises on March 31, 2017 is given below:Additional Information:• Bad Debts proved bad but not recorded amounted to ₹
A Plant was purchased on 1st July, 2015 at a cost of ₹ 3,00,000 and ₹ 50,000 were spent on its installation. The depreciation is written off at 15% p.a. on the straight line method. The plant was
The following information are extract from the Trial Balance of M/s Nisha traders on 31 March 2017.Prepare bad debts accound, Provision for bad debts account and profit and loss account. Sundry
What is the journal entry for: (i). A credit sale of goods for $80 000 that cost $50 000? (ii). A cash sale of goods for $40 000 that cost $25 000?
What is the purpose of a journal entry?
Given the equality of debits and credits in a trial balance, what errors may still remain in a set of accounting records? How should these errors be guarded against?
What types of errors may be detected from a perusal of the items in a trial balance? What procedure should be used to locate the source of the discrepancy?
Penshurst Ltd began business on 1 July 2018 with each of the two owners contributing $25 000 cash. The company paid $2200 in advance for a two-year lease of its retail premises. Inventory worth $3500
Provide an example of a transaction which will increase and decrease the balance in the following accounts: (i). Accounts receivable (ii). Inventory
Identify the accounting concepts or principles that relate to each of the following sentences and explain what effect the concepts or principles have on financial statements:1. Users of financial
What determines whether specific transactions are to be recorded in the accounting records?
Beach Ltd experienced the following events. For each, say whether or not it is an accounting transaction and why, or why not. 1. The CEO decided that the company’s main factory would be
A newspaper article referred to a Gold Coast building company being wound up owing Queensland businesses more than $7.5 million. The article referred to the liquidator learning of creditors that
Which of the following events result in an accounting transaction for Clothing Ltd? 1. Clothing Ltd signed a contract to hire a new store manager for a salary of $150 000 per annum. The manager
Create T-accounts for cash (opening balance $4000), inventory (opening balance $2000), sales revenue and COGS and then post the following from the general journal to the ledger accounts. 10 Feb
What is a chart of accounts and what determines the number of account names to be included in a chart of accounts?
The events listed below all took place on 21 June 2019. Provide the journal entry necessary to record each event in the accounts of JKL Ltd for the year ended 30 June 2019. If no entry is required,
Why is it beneficial for transactions to be entered into a journal rather than being entered directly to a ledger?
Southward Stores Ltd is a general merchandise retailer operating in the suburbs. During a recent month, the events listed below happened. For each event, decide whether it is an accounting
The Great Outdoors Ltd has been established to retail bushwalking and mountaineering equipment. It proposes to open a shop in a suburban shopping centre that is at present under construction. To
RST Ltd starts the year with only two account balances: cash $10 000 and share capital $10 000. The following transactions occurred during the year:a. Credit sales for services, $80 000. b.
Cleaner Pools Ltd is a small pool shop situated in Oatley in the southern suburbs of Sydney. The business sells and repairs pool filters as well as providing consulting services on pool layouts. At
Financial statements are highly summarised documents, representing thousands of transactions. Financial newspapers and commentators produce information about companies that is even more summarised.
Carlson Ltd is a business selling freezers to the public. This is its first year of operations. The chart of accounts is as follows.Transactions for April 2019 were as follows: 1. Enter the
Your bookkeeper rushes into your office to apologise for the fact that posting of cash sales to the general ledger has been accidentally forgotten for that month. The journal showed that cash
At a recent Student Accounting Club wine and cheese party, local business people mixed with students. One small-business entrepreneur was heard to say, ‘All that financial accounting information
Identify some differences you might expect to find between the transaction filters and accounting books and records of a large corporation and those of a corner shop run by one person.
At the end of last year, Fergama Productions Ltd, a company in the film industry, had the following closing accounts (in no particular order). During this year, the company’s activities
State whether or not you agree with each of the statements below and, in a few words, say why. a. If an event satisfies all five of the transaction criteria, you can be sure it will be recorded
Why is it essential that an accurate source document be prepared for every transaction?
Which of the following errors would be detected by the preparation of a trial balance? 1. Goods were sold to a customer for $540. The invoice showed $5.40, which was the amount duly paid by the
Indicate the source documents that would be used for making entries for the following transactions:a. A cash payment b. A cash receipt c. A credit sale d. Cost of goods sold e. A
Entertainment Ltd will be hosting a concert on 29 August 2019. Entertainment Ltd has the following transactions in August 2019 associated with the concert and its business. Prepare the journal
Greenthumbs Ltd opened a gardening consulting company on 1 August 2019 with each of the two owners contributing $20 000 cash. A one-year bank loan of $80 000 at 6 per cent per annum was obtained from
The following transactions occurred during the year ended 31 December 2019 for Como Ltd: a. Issued share capital for $400 000 cash. b. Expiration of prepaid rent expense (i.e. prepaid rent
The closer to cash, the more precise the measure. Discuss this statement with respect to cash and accrual accounting.
The more that accountants try to make financial statements economically relevant, the more they must include estimates and other sources of imprecision or error. Discuss.
What is the purpose of accrual accounting adjustments?
For each of the accrual accounting adjustments, explain the impact on profit for the period and the balance sheet.
Your old school friend has joined the maintenance group of a large airline. He asks you the following question: ‘Our customers pay us large amounts of cash but we call this a liability. Surely it
Forbes Ltd’s annual accounting year ends on 30 June. It is 30 June 2019 and all of the 2019 entries except the following adjusting entries have been made. a. On 1 April 2019 the company
The accountant at a large mining company tells you that they have some contractors who do the work but often don’t get around to billing for about three months after the job is complete. She notes:
What is the purpose of depreciating non current assets?
For a manager thinking about disposing of some assets, why is book value important?
NOP Ltd purchased a one-year insurance policy on 1 April. The entire premium of $8000 was recorded by debiting prepayments. Year-end is 30 June. 1. Give the 30 June adjusting entry. 2. What
Respond, in point form, to the following complaint by a businessperson: ‘I find modern financial accounting really annoying. The basis of financial strength is the availability and use of real
ABC Ltd pays its employees every Friday for a five-day working week from Monday to Friday. The weekly payroll amounts to $150 000. The accounting year-end is 30 June. 1. Assuming that 30 June
The following information has been extracted from the accounts of PQR Ltd.Additional information: a. Balances as at 30 June 2019:b. Credit purchases of inventory totalled $176 000 for the
On 31 December, the end of the accounting period of Ultra Corp., the company accountant is about to make some adjustments. Describe a set of circumstances where, in making the typical year-end
CBD made the following errors in adjusting the accounts at year-end (30 June).a. Did not accrue $1400 owed to the company by another company renting part of the building as a storage
XYZ Ltd rents one office to a tenant who paid three months’ rent in advance on 1 June. The firm credited unearned rental revenue to record the $6000 received. Year-end is 30 June. 1. Prepare
If management wished to overstate profit during the year, consider the implications for each of the following adjustments (that is, what actions could be taken by fraudulent management to increase
Accrual-based financial reports prepared by departments or governments will differ significantly from cash based reports covering the same period. Provide some examples of the information provided in
Write a paragraph or two discussing the following topic: ‘The only thing worse than the large and complex set of practices, standards and theories that make up GAAP would be if there were no such
The chairperson of the board of directors of a large public company said in frustration: ‘The company’s written and unwritten contracts with its shareholders are so different from those with its
i. The general manager of a small company recently said: ‘We need to have an external auditor for our financial statements so we can guarantee their accuracy to our bank.’ Will that be the result
Define a liability. What are the essential characteristics of a liability?
1. Explain why each of the following concepts is important in relation to financial reporting to markets and other economic agents that rely on such reporting: a. Economic entity
Describe each of the following methods for measuring assets and liabilities: a. Historical cost b. Price-level-adjusted historical cost.c. Market value d. Value in use e liquidation
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