Questions and Answers of Accounting For Non Accountants

Ian Levinson is setting up his own business as a gentleman’s barber. He has some of his own money and is going to borrow as well in order to get the business running. He wants you to construct a
Open and maintain the ledger accounts of P Shortland based on the following transactions: 1 November 4 November 7 November 12 November Paid 2,000 of own money into bank. Bought second-hand car for
The following transactions relate to H Taylor, a customer of the firm, for February 2015.Construct the ledger account of Taylor for the following transactions and calculate the balance on his account
Construct the double-entry accounts for the following transactions of a sole trader and balance off each account at the end of the month: 1 Jul 3 Jul 7 Jul 10 Jul 16 Jul 19 Jul 27 Jul 31 Jul Started
State the balance on the following types of account (debit, credit, or either): (a) Capital (b) Sales (c) Purchases (d) Returns outwards (e) Equipment (f) Loan from bank (g) Bank (h) Rent received
From the following data, produce a trading account for the year ended 31 December 2016. Opening inventory Closing inventory Purchases Sales 8,750 9,230 64,300 97,400
From the following data, produce a trading account for the year ended 31 December 2017. Opening inventory Closing inventory Purchases Sales 12,181 31,905 76,878 154,544
From the following data, produce a trading account for the year ended 31 December 2018. Opening inventory Closing inventory Purchases Sales Carriage inwards Returns inwards Returns outwards 8,130
The following data relate to the year-end balances for the business of J Holloway. From this data construct the income statement for the year ended 31 December 2015. Sales Purchases Opening inventory
The following data relate to the year-end balances for the business of J Fowler. From this data construct the income statement for the year ended 31 March 2018. Sales Purchases Opening inventory
From the following data, construct a balance sheet for A Jarvis as at 30 June 2015. Property Equipment Inventory Trade receivables Bank Trade payables Capital Net profit for year Drawings 95,000
From the following data, construct a balance sheet for J Amy as at 30 April 2016. Fixtures and fittings Equipment Inventory Trade receivables Bank Trade payables Cash Capital Net profit for year
From the following trial balance produce an income statement for the year to 31 December 2018 and a balance sheet as at that date. Sales Purchases Opening inventory Premises Vehicle Trade receivables
From the following trial balance produce an income statement for the year ended 31 March 2020 and a balance sheet as at that date. Trial balance as at 31 March 2020 Sales Purchases Opening inventory
Why is a bank overdraft classified as a current liability despite many businesses using the overdraft for more than one year?
From the following trial balance and additional information construct an income statement for the year ended 31 March 2016 and a balance sheet as at that date.Additional information:(a) Inventory as
From the following trial balance and additional information construct an income statement for the year ended 31 July 2017 and a balance sheet as at that date.Additional information:1. Inventory as at
A firm purchases a piece of equipment for £56,000. It is to be depreciated using the reducing balance method at a rate of 25 per cent.(a) What would be the net book value of this asset on the
Construct the ledger account for Rent and Rates based on the following information (it is to be presented in one ledger account rather than as separate accounts).• Rent owing as at 1 January
The following data are available about the firm’s trade receivables:• The balance of trade receivables as at 31 December is £48,000. However, this total includes an amount of £1,200 which is to
Wheatcroft owns and runs a computer supplies and repair shop. He has operated for a number of years and has generally been successful. He has never worried about expansion, particularly as he would
Simper is doing a stocktake in order to ascertain the value of her closing inventory. It has been discovered that there are four items that are damaged. These items had cost £18 each. Given that the
Chase runs a sandwich shop. She is compiling her end-of-year financial statements and wants your advice on a number of items:(a) She has a high degree of customer loyalty and wants to include this
‘Applying the consistency concept means sticking with the same method of depreciation even if it results in the net book value of a non-current asset being unrealistic.’To what extent do you
Goods sold on a sale or return basis are not normally included within the sales figures. Explain why this is the case and what relevant concepts are applied.
From the following data construct a manufacturing account for the year ended 31 December 2015.1. Rent is to be apportioned between factory overheads and office expenses in a 3:1 ratio.2. Inventory as
Sheridan, Wilson and Palmer are partners. They share profits and losses in the ratio of 3 : 2 : 1. In the first year of trading, ending 31 December 2016, the partnership earned a net profit of
Mahoney and Sutton are in partnership, sharing profits in the ratio of 3 : 2 respectively. Their capital account balances are as follows:They allow themselves interest on capital at the rate of 8 per
The Blay Darts Club charges its members an annual subscription of £60. It currently has 35 members. The following balances are available for the year ended 31 December 2014:From the above
The following receipts and payments account for the year ended 31 December 2017 hasbeen prepared for the St Mary’s Sports Club:The assets and liabilities of the club other than the bank balance
The following information relates to the production departments of Gadd Ltd:The factory overheads for the year ended 31 December 2003 were:(a) Prepare an overhead apportionment schedule apportioning
The following information relates to the departments of Scaife plc for the year ending 31 December 2013.The overheads of the service departments are allocated to the production departments on the
Jukes Ltd bases its job estimates on the following formulae:Total cost = Prime cost plus 50% for overheads Selling price = Total cost plus 30% for profit.Estimates for job PW1 and for job JC2 are as
Parker Ltd bases its job estimates on the following formulae:Total cost = prime cost plus 20% for overheads Selling price = total cost plus 25% for profit.Estimates for jobs SN18 and TY12 are as
A product costs £3 to produce and sells for £8. If fixed costs are £2,500, produce a schedule of costs, revenue and profits for an output range of 0–600 units.
Oliver Saunders manages a sandwich stall in town. He estimates that his costs in producing the sandwiches are as follows:His fixed costs per week are as follows:The average selling price of a
Will Pierce sells organic vegetable boxes, which cost on average £4.80, for an average price of £8. The fixed costs of his business are £26,800 per year. He is currently selling 10,000 boxes per
Fowler Ltd manufactures a range of products. One type of product is interactive whiteboards for schools and colleges. Data relating to the costs for October 2014 are as follows:The fixed costs are
Hinds Ltd, as part of its product range, produces the ‘SILVTO’. This product normally sells for £160. The following costs are associated with its production:The directors have recently received
Hawkins Ltd manufactures three types of wheelbarrow. These wheelbarrows are designated as A1, A2 and A3. All three types of wheelbarrow use the same grade of skilled labour and the wage rate of this
Calculate the labour variances from the following data. Note that there is no need to ‘flex’any budgeted figures in this example; you can assume that this has been done for you. (1) Product H17
Calculate the materials variances from the following data. Again, there is no need to flex any data. (1) Material ZX3 (2) Material WE32 Standard price per kg Standard usage per unit Actual price per
Thompson plc manufactures a single product. The budgeted costs per unit for the month of April 2014 were:Anticipated production for April 2014 was 10,000 units.The actual results for April 2014
Odejayi Ltd produces computer desks. The production manager has collected the following information in order to produce a production budget for the next four months:(i) Demand is expected to be 320
Bruno produces go-karts which he sells to local retailers. He has decided to produce a sales and debtors budget to help him plan ahead. The following data are available for January to June 2014.•
From the following data, construct a cash budget for the six months ending 31 December 2016:(a) Purchases and sales are expected to be as follows:(b) The selling price of each unit is £50.(c) The
A firm has an annual demand for inventory of 240,000 units. Each unit costs £60 to store for one year and the cost of placing an order is £500. Calculate the EOQ and the number of orders that will
A firm has an annual demand for inventory of 36,000 units. Each unit costs £15 to store for one year and the cost of placing an order is £1,200. Calculate the EOQ and the number of orders that will
Give three reasons why a just-in-time policy for management of inventory may lead to problems.
Richardson Ltd is trying to decide which project should be taken up, out of three possible investments. The initial investment would amount to £40,000. Scrap value at the end of use would be nil.The
The net cash inflows from the three projects under consideration are:For each possible project you are required to calculate:(i) payback;(ii) net present value. Year 1 Year 2 Year 3 Year 4 Year 5 XC1
Throup Ltd is considering extending its operations into the production and sale of components used in the making of lawnmowers. The components cost £7 to manufacture and would be sold on to the
Stoddard plc started in business on 1 January 2012. Its issued share capital was 120,000 ordinary shares of £1 each and 30,000 6% preference shares of £1 each. The following information is
Carlin plc started trading on 1 January 2014. The issued share capital was as follows:• Ordinary share capital: 80,000 £1 shares.• Preference share capital: 20,000 £1 shares (4%).Details
The trial balance of Fender plc is as follows:Based on the above trial balance, produce a statement of comprehensive income for the year ended 31 December 2017 and a statement of financial position
Why do you think it has been suggested that micro-entities might be allowed to produce their trading statement on a cash basis rather than on an accruals basis?
What benefits are there in replacing all existing UK GAAP standards with one overall standard (draft FRS 102)?
What purpose does the IFRS conceptual framework serve?
From the following data, present an extract from the statement of cash flows showing the net cash flow from operating activities:Net profits for the year ended 31.12.14 were £56,890 and depreciation
The following are extracts from the balance sheets of a company:• There were no purchases of land and property during the year.• During the year, plant and equipment costing £60,000 and with a
The following extracts are taken from the balance sheet of Surridge Ltd:The income statement for the year ended 31 December 2018 shows an entry for taxation as £187,000.Calculate the amount of
In the statement of cash flows, why do the following adjustments need to be made to the operating profit in order to calculate the cash flow from operating activities?(i) Subtraction of any profit on
Below are two balance sheets for Throup Ltd for the most recent and the previous year’s trading periods.The folioing extract from the income statement is available:In addition, the following
Below are two balance sheets for Stroish Ltd for the most recent and the previous year’s trading periods.Additional information is available:1. An extract from the income statement appears below.2.
Waite runs a small antiques shop in Chichester. He has provided extracts from two years’ final accounts. He would like you to analyse the accounts to assess the profitability of the firm. The
Preston runs a toy shop. She is concerned with the liquidity position of her firm as she has heard that liquidity problems are one of the most frequent explanations for failure.The following data are
A small audio equipment retailer has just completed the second year of trading. Profits are up, but the manager is slightly concerned. She feels that the firm could face liquidity problems in the
The following information is available for the past two years:(a) Calculate both the trade receivables’ collection period and the trade payables’ payment period for each of the two years.(b)
The following data relates to extracts from the financial statements of Haxell Ltd for the year ended 31 December 2017:The value of inventory as at 31 December 2017 was £180,000. The market price of