Question 1

What is meant by the concept of duality? Illustrate your answer with respect to the following three transactions (events):
$\bullet$Entity paid wages for services provided in the preceding fortnight.
$\bullet$Entity issued shares for land.
$\bullet$Entity paid $30 000 cash for equipment to be used in the business

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Question 2

X Ltd sold 2000 computers in June. The terms of sale included a 12-month warranty. The warranty provides that X Ltd will meet the cost of repairs that are associated with faulty parts attributable to manufacture. Past experience indicates that 10% of computer sales lead to warranty claims at an average cost of $70 for parts and $100 for labour, per computer.
Discuss whether the warranty commitment would meet the definition and recognition criteria of a liability to the firm at 30 June.

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Question 3

In June 2002 WorldCom, a US telecommunications firm, announced that it had misreported financial information in previous accounting periods - to the sum of USD $3.9 billion - by recording routine operating expenses as capital expenditure.
Discuss

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Question 4

What is the operating cycle of a business? How does this impact the classification of assets into current and non-current categories?

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Question 5

Briefly describe four sources of the common types of errors that may be made in recording transactions (events) in the worksheet.

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Question 6

The worksheet is a form of:

Accepted Answer

The worksheet is a working paper that is used to organize and summarize financial information before it is transferred to the formal financial statements. It is not a journal, financial statement, or ledger itself, but rather a tool used in the accounting process.

Question 7

The balance sheet includes information on the resources, financial structure, solvency and adaptability of a reporting entity. Discuss.

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Question 8

Identify the impact of the following events on the balance sheet equation.
a. The owner pays $3000 into the business bank account.
b. The business acquires equipment for $8000, paying a $3000 deposit, with the balance payable in 90 days.
c. The business provides services for $850 cash.
d. Paid salaries and wages $2300.
e. The business provides a potential customer with a quote of $900 for the provision of services.
f. The business purchases supplies for $385 cash.

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Question 9

During an accounting period, a transaction occurred involving the purchase of equipment for $9000. On reviewing the worksheet, it was discovered that the transaction had not been recorded. The most likely reason that the omission was picked up is:

Accepted Answer

The only plausible reason for the omission being picked up is the diligence of a bookkeeper who noticed it was missing during the review of the worksheet. The other options do not offer a logical reason for the omission to be discovered.

Question 10

Aria was trying to determine the amount of total equity in her music business. An exclusive list of accounts is listed below:  Based on this information, the total owners' equity in Aria's business was:

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Question 11

A common error encountered when examining a worksheet that does not balance is the discovery that the error is mathematically divisible by nine. This type of error is commonly referred to as:

Accepted Answer

Mathematically, when a number is transposed (i.e. the digits are switched around), the difference between the original number and the transposed number is always divisible by nine. Therefore, if an error on a worksheet is divisible by nine, it is most likely a transposition error.

Question 12

What role does the business entity principle play in accounting for the transactions, assets and liabilities of an entity?

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Question 13

Xavier Plata operates a small manufacturing business, trading under the name of Plata Products. The following list of financial data relates to the business as at 30 June.
  Additional information
  Required

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Question 14

At 30 June 2014, the non-current asset section of the balance sheet of Qantas included leasehold aircraft and engines valued at cost, $17 131 million and after depreciation and impairment, a written-down value $11 075 million. [Source: Note 15. Property, Plant and Equipment, Qantas Annual Report 2014, p. 85).

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Question 15

The accountant for Tiny Tots has compiled the following information about the company and its accounts:

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Question 16

What are the three components of the balance sheet? Briefly discuss each.

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Question 17

A Ltd sold a car for $75 000 which it had recorded in its accounts at $60 000. The effect on A Ltd's accounts is: AssetsLiabilities Equity

Accepted Answer

The sale of the car for a higher amount than what it was recorded in the accounts will result in an increase in assets (cash received) and an increase in equity (profit made on the sale). There will be no change in liabilities as the sale of the car does not affect any outstanding debts or obligations.

Quiz 5: Presentation of Financial Position and the Worksheet

In June 2002 WorldCom, a US telecommunications firm, announced that it had misreported financial information in previous accounting periods - to the sum of USD $3.9 billion - by recording routine operating expenses as capital expenditure. Discuss