Financial Accounting Assignment Answers by Experts

 

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Assignment Detail:-

• Number of Words: 2000

 

SECTION A – ANSWER ALL QUESTIONS

1. John has started a business and transferred his Motor vehicle, worth P20,500 into the business.

What are the accounting entries to record this?

1. Dr Capital                      Cr Motor vehicle
2. Dr Motor vehicle          Cr Drawings
3. Dr Motor vehicle          Cr Capital
4. Dr Drawings                  Cr Motor Vehicle

2. Samuel purchased some Fixtures and Fittings on 1 July 20X9 for P80,000. The scrap value of the fixtures and fitting in ten years’ time was estimated to be P8,000. Beta’s policy is to charge depreciation on the straight-line basis. Full Year depreciation is charged in the year of acquisition.

What should be the depreciation charge for the plant in Beta’s accounting period of twelve months to 30 December 20X9?

1. P 7,200
2. P 8,000
3. P 3,600
4. P 675

3. At 31 October 20×6 John s trial balance included the following balances:

• Machinery at cost P 12,890
• Accumulated depreciation P   8,950
• Inventory P 5,754
• Trade receivables P11,745
• Trade payables P 7,830
• Bank overdraft P 1,675
• Cash at bank P 150

What is the value of John ‘s current liabilities on 31 October 20×6?

1. P17,649
2. P17,499
3. P9,505
4. P13,734

4. According to IAS 38 intangible assets which of the following are intangible non-current assets in the financial statement of IOTA co?

1. A patent for a new glue purchased for 20 000 by IOTA co
2. Development costs capitalized in accordance with IAS 38
3. A license to broadcast a television series purchased y iota co for 150 000
4. A state-of-the-art factory purchased by iota co for 1.5 million

 

1. 1 and 3 only
2. 1,2 and 3
3. 2 and 4 only
4. 1,2,3 and 4 Only

5. What is the purpose of charging depreciation in financial statements?

 

1. To allocate the cost of a non-current asset over the accounting periods expected to benefit from its use.
2. To ensure that funds are available for the eventual replacement of the asset.
3. To reduce the cost of the asset in the statement of financial position to its estimated market value.
4. To account for the wearing of the asset over its life.

 

 

6. Which one of the following journal entries is required to record goods taken from inventory by the owner of a business?

 

1. DEBIT Drawing CREDIT Inventory
2. DEBIT Sales CREDIT Drawings
3. DEBIT Drawings CREDIT Purchases
4. DEBIT Purchases CREDIT Drawings

 

7. A manufacturer incurs the following costs: P38, 000 developing new techniques that will be put in place shortly to cut production costs: P 27,000 researching a new process to improve the quality of the standard product and P8,000 on market research into the commercial viability of a new type of product. It is company policy to capitalize costs whenever permitted by IAS 38 intangible Assets.

How much should be charged as research and development expenditure in profit and loss? (Ignore amortization)

1. P 35,000
2. P 27,000
3. P 38,000
4. P 73,000

8. Which of the following errors would cause trial balance not to balance?

 

1. An error in the addition in the cash book
2. Failure to record a transaction at all.
3. Cost of a motor vehicle debited to motor expenses account. The cash entry was correctly made.
4. Goods taken by the proprietor of a business recorded by debiting purchases and crediting drawings account

 

1. All four items
2. 1 and 2 only
3. 3 and 4 only
4. 1 Only

 

 

9. According to IAS 38 intangible assets, which of the following statements about research and development expenditure are correct?

 

1. If certain conditions are met, an entity may decide to capitalize development expenditure.
2. Research expenditure, other than capital expenditure on research facilities, must be written off as incurred.
3. Capitalized development expenditure must be amortized over a period not exceeding 5 years
4. Capitalized development expenditure must be disclosed in the statement of financial position under intangible non-current assets.

 

1. 1,2 and 4 Only
2. 1 and 3 only
3. 2 and 4 only
4. 3 and 4 Only

 

10. Which of the following is/are examples of payables of a business?

1. Interest owed from the bank
2. Loans and advances to employees
3. Money owed from customers
4. Tax owed to the tax authority

 

1. 4 only
2. 2 and 3 only
3. 2 and 4 only
4. 1 and 2 only

11. What are the journal entries for an accrual of rent expenses of P500?

 

1. DEBIT Prepayments P500, CREDIT Rent P500
2. DEBIT Accrual P500, CREDIT Rent P500
3. DEBIT Rent P500, CREDIT Accruals P500
4. DEBIT Rent P500 , CREDIT Prepayments P500

 

 

12. A non-current asset (Cost P 45,000, Accumulated Depreciation P 25,000 is given in part exchange for a new asset costing P20,500. The agreed trade-in value was P19,000.

Which of the following will be included in the statement of profit or loss?

1. A profit on disposal P 19,000
2. A loss on disposal P 1,000
3. A loss on purchase of a new asset P 1,500
4. A profit on disposal P 500

 

SECTION B 20 MARKS – ANSWER ONLY FOUR OUT OF THE SIX QUESTIONS

1. Prepare the trial balance for Matthew for the year ended 30 June 20×0 (5 Marks)

 

Details	000
Share capital	1250
Revenue	4500
Purchases	2850
Cash	50
Trade receivables	975
Inventory at 1 July 20×9	400
Trade payables	625
distribution and administrative expenses	800
Allowance for receivables at 1 July 20×9	25
Revaluation Surplus 1 July 20×9	175
Buildings at cost	1850
Building accumulated depreciation	150
Plant at cost	550
Plant accumulated depreciation	275
Retained earnings at 1 July 20×5	600
Income tax expense	125

 

2. Find part of the trial balance as at 30 October 20×0

Buildings at cost	740000
Building accumulated depreciation,1 November 20×9		60000
Plant at cost	220000
Plant accumulated depreciation, 1 November 20×9		110000

 

 

Notes:

• Building are depreciated over 40 years on a straight-line method
• Plant and machinery is depreciated at 20 % on diminishing balance method

Calculate the depreciation for Buildings and for plant and machinery (5 marks)