A) What are the main difference between financial accounting and management accounting? (6 marks) B)Identify each...
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A) What are the main difference between financial accounting and management accounting? (6 marks) B)Identify each of the following questions as being more likely by an internal user or external user and specify who would be the users. (6 marks) 1.How does the company's profitability compare to other companies? 2.Do we need to borrow in the near future? 3. Will the company be able to pay its short-term debts? C) Beekman Enterprises had the following selected transactions: 1. Invested $10,000 cash in business. 2. Billed customers $2,100 for services performed. 3. Paid $350 cash for advertising. 4. Borrowed $5,000 from the bank by signing a note. For each transaction, indicate the following. (i) The basic type of account debited and credited (asset, liability, equity). (ii) The specific account debited and credited (cash, rent expense etc.). (iii) The normal balance of the specific account. (8 marks) Question 2 (30 marks) ABC company is a small engineering firm. The following balances have been extracted from the accounts as at 31 December 2021. Capital Bank Transportation-in Transportation-out Sales and Purchases Discounts Equipment: At cost Provision for depreciation Drawings Long-term Loan Motor Expenses Premises: . At cost . Provision for depreciation DR $640 1,270 1,510 77,360 10,740 16,740 60,000 CR $72,100 11.690 Purchases and Sales Shop Expenses Inventory as at 1 January 2021 Accounts Receivables and Payables Wages Telephone and Insurance Expenses Sales and Purchases Returns Total You have also been given the following information: 1. Inventory as at 31 December 2021 was valued at $29,700. 2,190 16,840 20,000 10,000 132,700 276,300 21,380 35,820 12,490 9,210 46,330 1,750 1,300 1,700 420,030 420,030 a) Prepare an income statement (formerly a trading and profit and loss account) for the year ended 31 December 2021. (18 marks) 2. Motor expenses paid in advance were $350. 3. Wages unpaid at year end amounted to $1,840. 4. Equipment is to be depreciated at 12.5% using the reducing balance method. 5. Premises need to be depreciated using the straight-line method at 5%. b) Prepare a statement of financial position (formerly a balance sheet) as at 31 December 2021. (12 marks) Question 3 (22 marks) The following data relate to the business of BWA Co. which uses perpetual inventory system and uses FIFO inventory valuation method. Unit Cost $50 November 1 November 4 November 8 November 9 November 20 November 25 November 30 Units Inventory 50 Purchases 30 Sales 35 Purchases 40 Prepaid Insurance Supplies Sales 60 Purchases 40 Sales 10 (i) Compute the cost of ending inventory on November 30. (6 marks) (ii) Compute the cost of goods sold, total sales and gross profit on sales for the month of November. (16 marks) Question 4 (28 marks) A) The ledger of KM Co., on March 31, 2021, includes these selected accounts before adjusting entries are prepared. $55 $80 $60 $85 $65 $100 Equipment Accumulated Depreciation Equipment Unearned Service Revenue An analysis of the accounts shows the following. 1. Insurance expires at the rate of $100 per month. 2. Supplies on hand total $800. Debit $3,600 2,800 25,000 Prepare the adjusting entries for the month of March. Narratives are required. (16 marks) Credit 3. The equipment depreciates $200 a month. 4. During March, services were performed for one-half of the unearned service revenue. $5,000 9,200 Prepare the adjusting entries needed at August 31, 2021. (12 marks) - The End of the Paper - B) LKY Computer Services began operations on August 1, 2021. At the end of August 2021, management prepares monthly financial statements. The following information relates to August. 1. At August 31, the company owed its employees $800 in salaries and wages that will be paid on September 1. 2. On August 1, the company borrowed $30,000 from a local bank on a 15-year mortgage. The annual interest rate is 10%. 3. Revenue for services performed but unrecorded for August totaled $1,100. A) What are the main difference between financial accounting and management accounting? (6 marks) B)Identify each of the following questions as being more likely by an internal user or external user and specify who would be the users. (6 marks) 1.How does the company's profitability compare to other companies? 2.Do we need to borrow in the near future? 3. Will the company be able to pay its short-term debts? C) Beekman Enterprises had the following selected transactions: 1. Invested $10,000 cash in business. 2. Billed customers $2,100 for services performed. 3. Paid $350 cash for advertising. 4. Borrowed $5,000 from the bank by signing a note. For each transaction, indicate the following. (i) The basic type of account debited and credited (asset, liability, equity). (ii) The specific account debited and credited (cash, rent expense etc.). (iii) The normal balance of the specific account. (8 marks) Question 2 (30 marks) ABC company is a small engineering firm. The following balances have been extracted from the accounts as at 31 December 2021. Capital Bank Transportation-in Transportation-out Sales and Purchases Discounts Equipment: At cost Provision for depreciation Drawings Long-term Loan Motor Expenses Premises: . At cost . Provision for depreciation DR $640 1,270 1,510 77,360 10,740 16,740 60,000 CR $72,100 11.690 Purchases and Sales Shop Expenses Inventory as at 1 January 2021 Accounts Receivables and Payables Wages Telephone and Insurance Expenses Sales and Purchases Returns Total You have also been given the following information: 1. Inventory as at 31 December 2021 was valued at $29,700. 2,190 16,840 20,000 10,000 132,700 276,300 21,380 35,820 12,490 9,210 46,330 1,750 1,300 1,700 420,030 420,030 a) Prepare an income statement (formerly a trading and profit and loss account) for the year ended 31 December 2021. (18 marks) 2. Motor expenses paid in advance were $350. 3. Wages unpaid at year end amounted to $1,840. 4. Equipment is to be depreciated at 12.5% using the reducing balance method. 5. Premises need to be depreciated using the straight-line method at 5%. b) Prepare a statement of financial position (formerly a balance sheet) as at 31 December 2021. (12 marks) Question 3 (22 marks) The following data relate to the business of BWA Co. which uses perpetual inventory system and uses FIFO inventory valuation method. Unit Cost $50 November 1 November 4 November 8 November 9 November 20 November 25 November 30 Units Inventory 50 Purchases 30 Sales 35 Purchases 40 Prepaid Insurance Supplies Sales 60 Purchases 40 Sales 10 (i) Compute the cost of ending inventory on November 30. (6 marks) (ii) Compute the cost of goods sold, total sales and gross profit on sales for the month of November. (16 marks) Question 4 (28 marks) A) The ledger of KM Co., on March 31, 2021, includes these selected accounts before adjusting entries are prepared. $55 $80 $60 $85 $65 $100 Equipment Accumulated Depreciation Equipment Unearned Service Revenue An analysis of the accounts shows the following. 1. Insurance expires at the rate of $100 per month. 2. Supplies on hand total $800. Debit $3,600 2,800 25,000 Prepare the adjusting entries for the month of March. Narratives are required. (16 marks) Credit 3. The equipment depreciates $200 a month. 4. During March, services were performed for one-half of the unearned service revenue. $5,000 9,200 Prepare the adjusting entries needed at August 31, 2021. (12 marks) - The End of the Paper - B) LKY Computer Services began operations on August 1, 2021. At the end of August 2021, management prepares monthly financial statements. The following information relates to August. 1. At August 31, the company owed its employees $800 in salaries and wages that will be paid on September 1. 2. On August 1, the company borrowed $30,000 from a local bank on a 15-year mortgage. The annual interest rate is 10%. 3. Revenue for services performed but unrecorded for August totaled $1,100.
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A Key Distinctions Between Financial Accounting and Management Accounting Objective Financial Accounting The primary objective of financial accounting is to furnish external parties like investors cre... View the full answer
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Auditing a risk based approach to conducting a quality audit
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9th edition
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