[ACC 311] - Final Exam Guide - Comprehensive Notes fot the exam (28 pages long!)
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Question 1
Which one of the following is not an externaluser of accounting information?
Customers | ||
Investors | ||
Regulatory agencies | ||
All of these are external users |
3 points
Question 2
The first step in solving an ethical dilemma is to
identify and analyze the principal elements in thesituation. | ||
identify the alternatives. | ||
recognize an ethical situation and the ethical issuesinvolved. | ||
weigh the impact of each alternative on variousstakeholders. |
3 points
Question 3
Generally accepted accounting principles are
income tax regulations of the Internal Revenue Service. | ||
standards that indicate how to report economic events. | ||
theories that are based on physical laws of the universe. | ||
principles that have been proven correct by academicresearchers. |
3 points
Question 4
Which of the following events is not a businesstransaction?
Issuance of stock in exchange for cash. | ||
Hired employees. | ||
Incurred utility expenses for the month. | ||
Earned revenue for services provided. |
3 points
Question 5
When assets are distributed to the owners of a corporation,these distributions are termed
depletions. | ||
consumptions. | ||
dividends. | ||
a credit line. |
3 points
Question 6
If total liabilities increased by $8,000, then
assets must have decreased by $8,000. | ||
stockholders' equity must have increased by $8,000. | ||
assets must have increased by $8,000, or stockholders' equitymust have decreased by $8,000. | ||
assets and stockholders' equity each increased by $4,000. |
3 points
Question 7
If total liabilities increased by $30,000 and stockholders'equity increased by $20,000 during a period of time, then totalassets must change by what amount and direction during that sameperiod?
$50,000 decrease | ||
$10,000 decrease | ||
$10,000 increase | ||
$50,000 increase |
3 points
Question 8
Misra Company compiled the following financial information as ofDecember 31:
Revenues | $ 340,000 |
Retained Earnings, Beginning | $ 60,000 |
Equipment | $ 80,000 |
Expenses | $ 250,000 |
Cash | $ 90,000 |
Dividends | $ 20,000 |
Supplies | $ 10,000 |
Accounts payable | $ 40,000 |
Accounts receivable | $ 70,000 |
Common Stock | $ 80,000 |
Misra's assets on December 31 are
$180,000. | ||
$250,000. | ||
$360,000. | ||
$ 490,000. |
3 points
Question 9
Mofro's Computer Repair Shop started the year with total assetsof $300,000 and total liabilities of $200,000. During the year, thebusiness recorded $500,000 in computer repair revenues, $300,000 inexpenses, and Mofro paid dividends of $50,000. Stockholders' equityat the end of the year was
$200,000. | ||
$100,000. | ||
$250,000. | ||
$300,000. |
3 points
Question 10
A balance sheet shows
assets, liabilities, and stockholders' equity. | ||
expenses, dividends, and stockholders' equity. | ||
revenues, expenses, and dividends. | ||
revenues, liabilities, and stockholders' equity. |
3 points
Question 11
At September 1, Foli Co. reported retained earnings of $136,000.During the month, Foli generated revenues of $20,000, incurredexpenses of $12,000, purchased equipment for $5,000 and paiddividends of $2,000. What is the amount of retained earnings atSeptember 30?
$136,000 | ||
$142,000 | ||
$8,000 | ||
$137,000 |
3 points
Question 12
Grayton Industries purchased supplies for $1,000. The Companypaid $500 in cash and agreed to pay the balance in 30 days. Thejournal entry to record this transaction would include a debit toan asset account for $1,000, a credit to a liability account for$500. Which of the following would be the correct way to completethe recording of the transaction?
Credit an asset account for $500. | ||
Credit the Retained Earnings account for $500. | ||
Credit another liability account for $500. | ||
Debit the Retained Earnings account for $500. |
3 points
Question 13
Radio Moscow Industries purchased supplies for $1,000. They paid$400 in cash and agreed to pay the balance in 30 days. The journalentry to record this transaction would include a debit to an assetaccount for $1,000, a credit to a liability account for $600. Whichof the following would be the correct way to complete the recordingof the transaction?
Credit an asset account for $400. | ||
Credit another liability account for $400. | ||
Credit the retained earnings account for $400. | ||
Debit the retained earnings account for $400. |
3 points
Question 14
A credit to a liability account
must be accompanied by a debit to an asset account. | ||
indicates an increase in the amount owed to creditors. | ||
is an error. | ||
indicates a decrease in the amount owed to creditors. |
3 points
Question 15
In recording business transactions, evidence that an accountingtransaction has taken place is obtained from
business documents. | ||
the Internal Revenue Service. | ||
the public relations department. | ||
the SEC. |
3 points
Question 16
On June 1, Leno Inc. buys a copier machine for her business andfinances this purchase with cash and a note. When journalizing thistransaction, the company's accountant will
make a simple entry. | ||
use two journal entries. | ||
make a compound entry. | ||
list the credit entries first, which is proper form for thistype of transaction. |
3 points
Question 17
A three column form of account is so named because it hascolumns for
debit, credit, and balance. | ||
debit, credit, and date. | ||
debit, credit, and account name. | ||
debit, credit, and reference. |
3 points
Question 18
The first step in designing a computerized accounting system isthe creation of the
general ledger. | ||
general journal. | ||
trial balance. | ||
chart of accounts. |
3 points
Question 19
Chik Chik Company showed the following balances at the end ofits first year:
Cash | $ 6,000 |
Prepaid insurance | $ 9,400 |
Accounts receivable | $ 7,000 |
Accounts payable | $ 5,600 |
Notes payable | $ 8,400 |
Common stock | $ 2,800 |
Dividends | $ 1,400 |
Revenues | $ 44,000 |
Expenses | $ 35,000 |
What did Chik Chik Company show as total credits on its trialbalance?
$51,400 | ||
$60,800 | ||
$62,200 | ||
$70,200 |
3 points
Question 20
Which of the following time periods would notbe referred to as an interim period?
Monthly | ||
Quarterly | ||
Semi-annually | ||
Annually |
Emerald Ltd, a manufacturing company, commenced operations on 1 July 2016 by issuing 350 000 $5.00 shares, payable in full on application on a first-come, first-served basis. By 31 July 2016 the shares were fully subscribed and duly allotted. There were share issue costs of $10 000. No additional shares were issued during the year ending 30 June 2017.
For the year ending 30 June 2018, the company recorded the following aggregate transactions:
$ | |
Sales | 5 120 000 |
Interest income | 34 000 |
Sundry income | 25 000 |
Cost of Sales | 2 465 000 |
Employee benefit expenses | 856 000 |
Depreciation expense | 244 000 |
Amortisation - franchise | 25 000 |
Rental expense | 120 000 |
Advertising expense | 147 000 |
Insurance expense | 48 000 |
Freight out expense | 110 000 |
Doubtful debts expense | 16 000 |
Interest expense | 36 000 |
Borrowing Costs | 9 000 |
Other expenses | 8 000 |
Income tax expense | 320 000 |
The following additional information was noted during the preparation of financial statements for the year ended 30 June 2018:
75 000 fully paid ordinary shares have been issued on 1 October 2017 at the price of $4.00.
$135 000 dividends (31.76 cents per share) were declared and paid during the 2018 financial year. A final dividend for 2018 of $51 850 was proposed but not recognised in the financial statements.
There was a gain of $20 000 from the cash flow hedge arrangement during the 2018 financial year. Any gain or loss associated with the cash flow hedge is directly recognised in equity. There was no previously recognised cash flow hedge reserve before the 2018 financial year.
$25 000 of bank loans is repayable within 1 year.
$90 000 of other loans is repayable within 1 year.
The employee benefits of $32 000 are expected to be settled wholly within 12 months.
Emerald Ltd measures inventory at the lower of cost and net realizable value and property, plant and equipment using a cost model.
The summarised balances are provided below:
Year-end balances, 30 June 2018 | $ |
Cash on hand | 960 000 |
Cash on deposit, at call | 82 000 |
Accounts Receivables | 665 000 |
Allowance for doubtful debts/ Impairments | 24 000 |
Other debtors | 27 000 |
Finished goods inventories, 30 June 2018 | 600 000 |
Work in Progress inventories 30 June 2018 | 105 000 |
Land | 94 000 |
Buildings | 230 000 |
Accumulated depreciation â buildings | 60 000 |
Plant and equipment | 1 385 000 |
Accumulated depreciation â plant and equipment | 330 000 |
Franchises | 140 000 |
Accumulated amortisation of franchise | 50 000 |
Goodwill | 620 000 |
Bank loans | 92 000 |
Other loans | 440 000 |
Accounts payable | 696 000 |
Provision for employee benefits | 116 000 |
Income tax payable | 35 000 |
Deferred tax liability | 140 000 |
Retained earnings, 30 June 2017 | 225 000 |
Dividends paid | 135 000 |
Cash flow hedge reserve (equity) | 20 000 |
Required:
For the year ending 30 June, 2018,
a) Using the pro forma table supplied in appendix B, prepare a preliminary trial balance for Emerald Ltd; (5 Marks)
b) Prepare a statement of profit or loss and comprehensive income for Emerald Ltd in accordance with the requirements of AASB 101. Emerald Ltd uses the single statement format for the statement of comprehensive income and classifies expenses by function within the statement; (18 marks)
c) Prepare a statement of changes in equity for Emerald Ltd in accordance with the requirements of AASB 101; (15 marks)
d) Prepare a statement of financial position for Emerald Ltd in accordance with AASB 101. Use the current/non-current presentation format; (17 marks)
e) Prepare appropriate notes to the accounts. (You do not need to prepare notes related to income taxes. Include the following note as note 1. You may optionally add accounting policies to this note): (25 marks).
â1. Summary of significant accounting policies
Basis of accounting
The financial report is a general purpose financial report which has been prepared on the historical cost basis, except where stated otherwise.
Statement of Compliance
The financial statements have been prepared in accordance with the requirements of the Corporations Act, Australian Accounting Standards which include Australian equivalents to International Financial Reporting Standards (AIFRSs) and AASB Interpretations. Compliance with AIFRSs ensures the financial statements and notes comply with International Financial Reporting Standardsâ
APPENDIX A: PRESENTATION REQUIREMENTS (Departures attract a penalty)
The hard copy of the assignment must be handed in to the lecturer in class. It is also required to be submitted through Turnitin by the due date;
It is worth 20% of the final grade but will be marked out of 100;
The assignment will be marked on the basis of a requirement of "suitable for publication", that is, the relevant statements/notes comprise an external report and each statement is to be presented on one page;
The assignment must be performed individually.
You are to employ an aggregated format whenever appropriate and consistent with provision of minimum line items prescribed in AASB101;
The financial statements and the notes are to be typed in 12 point font;
You are not to use specialized accounting software packages, such as are employed by professional accounting firms, to produce your financial reports;
You are to apply the âcost of salesâ method to the classification of expenses in the income statement (see AASB101 paras 97-105);
You are directed to use the current/non-current format for the statement of financial position (balance sheet) and supply a ânet assetsâ line item;
The notes are to be simplified equivalences to published reports; that means a list of constituent components of a given line item with their respective dollar amounts, not footnotes
Your hard copy assignment is to be collated in the following order:
Coversheet (optional for electronic version but mandatory, signed with ticked module and Turnitin ID, for hard copy), Part A followed by Part B (trial balance, statement of profit or loss comprehensive income, statement of changes in equity, statement of financial position, and notes to the accounts.
APPENDIX B
Emerald Ltd - Trial Balance as at 30 June 2018 | DR | CR |
Sales | $â000 | $â000 |
Interest income | ||
Sundry income | ||
Cost of sales | ||
Employee benefit expenses | ||
Depreciation expense | ||
Amortisation - franchise | ||
Rental expense | ||
Advertising expense (selling) | ||
Insurance expense | ||
Freight out expense | ||
Doubtful debts expense | ||
Interest expense | ||
Borrowing costs | ||
Other expenses | ||
Income tax expense | ||
Cash on hand | ||
Cash on deposit, at call | ||
Accounts Receivables | ||
Allowance for doubtful debts/ Impairments | ||
Other debtors | ||
Finished goods inventories, 30 June 2018 | ||
Work in Progress inventories 30 June 2018 | ||
Land | ||
Buildings | ||
Accumulated depreciation â buildings | ||
Plant and equipment | ||
Accumulated depreciation â plant and equipment | ||
Franchise | ||
Accumulated amortisation of franchise | ||
Goodwill | ||
Bank loans | ||
Other loans | ||
Accounts payable | ||
Provision for employee benefits | ||
Income tax payable | ||
Deferred tax liability | ||
Retained earnings, 30 June 2017 | ||
Dividends paid | ||
Cash flow hedge reserve | ||
Share capital | ||
Totals |