Questions and Answers of Introduction To Financial Accounting

The following balances existed in the accounting records of Koppa Ltd at 31 December 20X9:In preparing the company’s statement of comprehensive income and statement of financial position at 31
Topaz Ltd makes up its financial statements regularly to 31 December each year. The company has operated for some years with four divisions; A, B, C and D, but on 30 June 20X9 Division B was sold for
a. Explain the purpose(s) of a statement of cash flows.b. Describe the typical sources and applications of cash funds in an entity.
Capital at the end of 20X8 is £2,000.Capital at the end of 20X9 is £3,000.There were no drawings; and no capital had been introduced.RequiredCalculate the profit for the year ended 20X9 from the
Martin and Stephen share profits in the ratio 2 : 1. They decide to terminate their partnership on 31 December 20X9. Their statement of financial position is as follows:The dissolution progressed as
X, Y and Z are in partnership sharing profits and losses in the ratio 4 : 2 : 2. Z died on 30 June 20X9. The partnership statement of financial position as at that date was:Additional informationIt
What are the main reasons for dissolving a partnership?
A, B and C are in partnership sharing profits and losses in the ratio of 50 : 25 : 25 per cent. Each partner receives a salary of £40,000 and interest on opening capital balance of 15 per cent per
Hawthorn and Privet have carried on business in partnership for a number of years, sharing profits in the ratio of 4 : 3 after charging interest on capital at 4 per cent per annum. Holly was admitted
Matthew, Mark and Luke were in partnership sharing profits and losses in the ratio 5 : 3 : 2, financial statements being made up annually to 30 June. Fixed capital accounts were to bear interest at
Street, Rhode and Close carried on business in partnership sharing profits and losses, in the ratio 5 : 4 : 3. Their draft statement of financial position as on 31 March 20X9 was as follows:Street
Blackburn, Percy and Nelson are in partnership, sharing profits equally. On 1 January 20X9 Nelson retired and Logan was admitted as a partner. Nelson has agreed to leave the amounts owing to her in
Brown and Jones are in partnership sharing profits and losses equally. The statement of financial position drawn up on 31 March 20X9 showed the following position:Brown retired as from 1 April 20X9
Jack Straw, a director in ABC Ltd, has suggested that the accounting treatment for two items be changed in the next set of financial statements. These are summarized as follows:1. The first is
a. Explain the nature of goodwill.b. Describe the business attributes that are thought to give rise to goodwill.
Capital at the end of 20X8 is £2,000.Capital at the end of 20X9 is £3,000.Drawings were £700.RequiredCalculate the profit for the year ended 20X9 from the above information.
ABC manufacturing entity (sole trader) has provided you with the following information at the year ended 31 July 20X4:During the year ended 31 July 20X5 the following transactions took place:ABC
The following is an extract from the published financial statements of Blue Light plc for the year ended 31 March 20X9.Additional information:The equity shares and debentures are currently quoted on
The following is a summary of some of the accounting ratios of two companies in the same industry and of a comparable size for the year ended 30 June 20X9.RequiredWrite a report to a prospective
Two companies show the following financial statements for the year to 30 November 20X9.Additional information1. A. Ltd paid a dividend of £150,000 during the year.2. B. Ltd paid a dividend of
The outline statements of financial position of the Nantred Trading Co. Ltd were as shown below:Additional informationThe only other information available is that the revenue for the years ended 30
Key working capital and liquidity ratios for A plc are as follows:RequiredWrite a report to one of A plc’s major shareholders on the change in its liquidity and working capital position over the
You are given below, in draft form, the financial statements of Algernon Ltd for 20X8 and 20X9. They are not in publishable format.Requireda. Calculate for Algernon Ltd, for 20X8 and 20X9, the
Toome Ltd is a manufacturer of mechanical toys for boys. You have been provided with a schedule of key performance ratios for the company for the period 20X5 to 20X9 as follows:RequiredUsing the
The trial balance extracted at 30 April 20X1 from the books of Upton Upholstery, a furniture manufacturer, is given below.1. At 30 April 20X1 accrued direct factory wages amounted to £600 and office
W. Wagner, a manufacturer, provided the following information for the year ended 31 August 20X5:Additional information1. Amounts owing at 31 August 20X5:2. Depreciation on plant and machinery is to
Veronica is the owner of a manufacturing business. The following trial balance was extracted from her books as at 31 December 20X4:The following information was also made available:1. Expenses are to
Zacotex Ltd, a manufacturer, produced the following financial information for the year ended 31 March 20X5.Additional information1. The inventories held at 31 March 20X5 were:2. One-quarter of the
Ashley Ltd is a manufacturing firm. The bookkeeper supplies you with the following financial information for the year ended 31 March 20X5.Other information1. On 1 April 20X4 the company arranged a
The following is the statement of financial position of Round Music as at 30 June 20X8:During the year ended 30 June 20X9 there was a fire that destroyed the books of account and supporting
Miss Fitt owns a retail shop. The statement of profit or loss and statement of financial position are prepared annually by you from records consisting of a bank statement and a file of unpaid
Peter and Paul, whose year end is 30 June, are in business as food wholesalers. Their partnership deed states that:a. profits and losses are to be shared equally;b. salaries are: Peter £20,000 per
After stocktaking for the year ended 31 May 20X9 had taken place, the closing inventory of Cobden Ltd was aggregated to a figure of £87,612.During the course of the audit that followed, the
Miscup showed a difference on their trial balance of £14,650. This was posted to a suspense account so that the financial statements for the year ended 31 March 20X9 could be prepared.
The following is the trial balance of C. Jones as at 31 December 20X9:Additional information1. Inventories at 31 December 20X9 are valued at £99,356.2. The rent of the premises is £6,400 per annum,
The following is the cash book of T. Trading for the month of September 20X9:The following is the bank statement received for T. Trading for the month of September 20X9:RequiredPrepare the bank
Arthur started a new business on 1 January 20X9. You are supplied with the following nominal ledger accounts, which have been closed off and a trial balance extracted. These are Arthur’s only
A trial balance failed to agree. On investigation the following errors were found:a. Wages of £250 have been credited in the cash account but no other entry has been made.b. The credit side of the
Chocolate is a confectionery shop owned by Thomas McKee. Thomas operates a manual bookkeeping system and employs a cashier and a bookkeeper. When writing up the books of account for the year ended 31
When preparing a trial balance the bookkeeper found it disagreed by £600, the credit side being that much greater than the debit side. The difference was entered in a suspense account.The following
You are required to compute the profit for the year ended 30 June 20X9 and prepare a statement of financial position at that date. Show separately the cost of non-current assets and the aggregate
Jock is a clothing retailer. At 31 December 20X9 he asks you to prepare his final financial statements from very incomplete records. You were able to extract the following information from the
A year ago, you prepared financial statements for A. Wilson, a retailer. His closing position was then:Mr Wilson does not keep full records (despite your advice) and once again you have to use what
Jacobs Ltd has recently completed its draft financial statements for the year ended 30 December 20X9, which showed a draft profit for the year of £300,000. During the audit a number of mistakes and
Happy did not keep proper books of account. At 31 August 20X8 his balances were:Details of transactions in year to 31 August 20X9:At 31 August 20X9 the assets and liabilities were:Depreciation on
The following is the statement of financial position of A. Fox at 31 July 20X8.The only book kept by A. Fox is a cash book in which all transactions passed through the bank account are recorded. A
T. Murray has prepared the following bank ledger account for the year ended 31 March 20X9:T. Murray has also supplied you with the following information.a. Commissions received included £85, which
The draft final financial statements of RST Ltd for the year ended 30 April 20X9 showed a net profit for the year of £78,263.During the subsequent audit, the following errors and omissions were
Bugs Bunny, a wholesale dealer in ready-made menswear, achieves a gross profit ratio of 50 per cent. The statement of financial position of the business as at 30 June 20X8 was as follows:Since this
Light and Dark are in partnership sharing profits and losses in the ratio 7 : 3, respectively. The following information has been taken from the partnership records for the financial year ended 31
Clayton and Hammond are in partnership sharing profits and losses equally. The partnership agreement provides for annual salaries of Clayton: £17,000 and Hammond: £13,000. It also provides for
The following is the trial balance of Peace and Quiet, grocers, as at 31 December 20X9.Additional information1. The inventory at 31 December 20X9 was valued at £5,970.2. There is electricity accrued
Anna and Thomas are in partnership sharing profits and losses equally. The partnership agreement provides for an annual salary to Anna of £57,000. It also provides for interest on capital of 10 per
Brick, Stone and Breeze carry on a manufacturing business in partnership, sharing profits and losses: Brick one-half, Stone one-third and Breeze one-sixth. It is agreed that the minimum annual share
The partnership of Anna, Mary and Seamus has just completed its first year in business. In their partnership agreement each partner is entitled to interest on capital of 12% each year and Anna is to
Simon, Wilson and Dillon are in partnership. The following trial balance has been prepared on 31 December 20X9:Additional information1. The inventory at 31 December 20X9 was valued at £31,000.2.
A. Cherry owned a farmhouse and land, the latter being used by him and his sons, Tom and Leo, in carrying on a fruit and poultry business in partnership. The partnership agreement stipulated that the
a. When accounting for the relationship of partners inter se, the partnership agreement provides the rules which, in the first instance, are to be applied.What information would you expect to find in
Field, Green and Lane are in partnership making up financial statements annually to 31 March. Owing to staff difficulties proper records were not maintained for the year ended 31 March 20X9, and the
S. Kee is a horse trainer. Prepare the accounting equation for S. Kee at 30 November 20X9 Breeding stock Stables Overdraft Amounts owed for feed Fencing posts Jeep Oil in
On 15 May 20X9 Mrs Lake received her monthly bank statement for the month ended 30 April 20X9. The bank statement contained the following details:For the corresponding period, Mrs Lake’s own
A young and inexperienced bookkeeper is having great difficulty in producing a bank reconciliation statement at 31 December. He gives you his attempt to produce a summarized cash book, and also the
The following is an extract of the cash book for J. Robin:The bank statement of J. Robin in the account with the Bank of ABC is as follows:RequiredComplete the cash book and prepare the bank
Catherine Big has a cash balance of £52,900 on 1 June 20X9. She opens a current account on that date, with Belfast Bank, depositing £50,000. Her transactions during the next three days included the
The books of original entry for James Plc showed the following for the month ended 31 March 20X9:Previous trade receivable/trade payable balances were £53,450/£42,150.RequiredPrepare the sales
The following information has been extracted from the books of a trader at 1 July 20X8:RequiredWrite up the sales ledger control account and the purchases ledger control account for the year ended 30
The bank statement for G. Graduate for the period ended 30 June 20X9 was received. On investigation it emerged that the balance per the statement was different to the balance per the cash
The following particulars relating to the year ended 31 March 20X9 have been extracted from the books of Ball and Chain Ltd. All sales have been recorded in personal accounts in the sales ledger, and
The books of K. Wills include three ledgers comprising the general ledger, sales ledger and purchases ledger. The general ledger contains sales ledger and purchases ledger control accounts as part of
The following particulars relating to the year ended 31 March 20X9 have been extracted from the books of a trader:Prepare the sales ledger control account for the year ended 31 March 20X9, using
The books of Trader Ltd include three ledgers comprising a general ledger, sales ledger and purchases ledger. The general ledger contains sales ledger and purchases ledger control accounts as part of
The following figures relating to the year ended 31 March 20X9 have been extracted from the books of a manufacturer:The balances on the control accounts, as shown above, have been included in the
Formica purchases inventory on credit from a large number of suppliers. The company maintains a purchases ledger control account as an integral part of its double-entry system and in addition
The following particulars relating to the year ended 31 March 20X9 have been extracted from the books of Heel and Toe, footwear wholesalers. All sales have been recorded in personal accounts in the
Prepare the sales ledger control account and the individual credit customer’s accounts for the month of November 20X9 from the details provided below.It was decided that Rachel would not pay her
The balance of the purchases ledger control account in the general ledger of A. Brook and Co. at 1 September is £1,984.50, the details being as follows:The following are the transactions relating to
Fox & Co. maintain control accounts, in respect of both the sales ledger and purchases ledger, within their nominal ledger. On 31 December 20X9 the net total of the balances extracted from the
L. Johnson started business on 1 March 20X0 with capital of £10,000 in a bank current/chequeaccount. During March 20X0 he made the following transactions:1 Mar Paid £5,000 by cheque for a 10-year
B. Player buys and sells soft furnishings and office equipment. On 1 September 20X9 the bank balance per the cash book was £1,950 and the cash balance per the cash book was £860. DuringSeptember
C. Harlow has a petty cash book that is used to record his cash receipts and payments. This also incorporates an imprest system that has a float of £400. During February 20X9 the following cash
M. Shaft has an accounting year ending on 31 December. At 31 December 20X8 the ledger contained the following balances:The allowance for irrecoverable debts consisted of a general allowance of £500
What do you understand by the term ‘irrecoverable debts’? In what circumstances might a debt be treated as irrecoverable?
The following is the trial balance of A. Evans as at 30 June 20X9:Additional information1. The inventory at 30 June 20X9 has been valued at £4,920.2. The bank loan is repayable on 1 June
Brian Ltd starts selling footballs in 20X8. Although each ball looks the same, the unit cost of manufacture (which is done in batches) has fluctuated during the period. Details of the costs are as
Anna started a picture framing business on 1 July 20X9. The following transactions occurred in the six months ended 31 December 20X9:Additional information1. On 1 July 20X9 Anna started the business
John Ltd starts selling mobile phones in 20X9. Details of purchases in the year are as follows:Details of sales in the year are as follows:Requireda. Calculate the cost of sales for the year ended 31
Explain the nature of non-current assets.
A businessman started trading with a capital in cash of £6,000, which he placed in the business bank account at the outset. His transactions, none of which were on credit, were as follows (in date
The trial balance for Jock at 31 December 20X8 is as follows:Additional information1. Closing inventory value is £500.2. The rates in the trial balance cover the 15 months to 31 March 20X9.3. The
B. Good drew up the following trial balance as at 31 March 20X9.Closing information included the following:1. Inventories at the year end were valued at £35,650.2. An accrual for wages of £400 has
The balances extracted from the books of Cara Van at 31 December 20X9 are given below:Requireda. Prepare the trial balance.b. What is the missing account?Additional informationAt 31 December 20X9:1.
The following trial balance has been prepared from the books and records of Sulphur Products as at 30 September 20X9. We are also told that the figures have to be amended to take into account further
S. Trader carries on a merchandising business. The following balances have been extracted from his books on 30 September 20X9:The following further information is to be taken into account:1.
The following is the trial balance of J. Clark at 31 March 20X9:Additional information1. Goods on sale or return have been treated as sales. These cost £300 and were invoiced to the customer for
The following trial balance has been extracted from the ledger of Andrea Howell, a sole trader, as at 31 May 20X9, the end of her most recent financial year.The following additional information as at
F. Harrison is in business as a trader. A trial balance taken out as at 31 January 20X9 was as follows:The following information is to be taken into account:1. Included in sales are goods on sale or
The trial balance extracted from the books of Mary, a sole trader, as at 31 December 20X9 was as follows:Additional information1. Inventory on hand on 31 December 20X9 is £94,280.2. Rates paid in
Explain the purpose of a bank reconciliation statement.
Describe the procedures involved in the collection of the data needed to prepare a bank reconciliation statement.
The following is a summary of the cash book of Grow Ltd for March 20X9:On investigation you discover that at 31 March 20X9:1. The last page of the paying-in book shows a deposit of £1,904 that has

Showing 100 - 200 of 255