Adhoc

Question 1

What are two primary objectives of financial statements?

Answer 1

To show results of management stewardship

To provide information about financial position performance in cash flow to make decisions

Question 2

How do you work out the wages cost to a business?

Answer 2

Employee gross pay + employers NIC

Question 3

What is the double entry to record a sale of goods exclusive of VAT on credit?

Answer 3

Dr sales
Dr VAT
Cr receivables

Question 4

what is closing inventory in the SOPL? (Debit or credit)

Answer 4

Closing inventory is a debit

Question 5

What is the effect of using FIFO on financial statements in terms of accounting equation?

Answer 5

Increase current assets and decrease loss (dependent on question)

Question 6

If an accrual was treated as a prepayment, what does this do to the profit?

Answer 6

It overstates profit by X

Question 7

What is classed as a current liability in the balance sheet of a sole trader?

Answer 7

Bank overdraft and interest charges not tax as this does not come up in the balance sheet

Question 8

What does it mean if the total credit in the profit and loss ledger exceeds the debits?

Answer 8

Profit has been made

Closing capital=
Cr capital
Dr profit

Closing capital can be calculated by crediting capital account and debiting profit and loss ledger by profit

Question 9

When reconciling the bank balance with the cash at bank account, what do you do?

Answer 9

Remove any bank charges, add back the errors and payments which have not cleared bank, remove anything that hasn’t been credited

1. Remove charge.
2. Add error or unclear payments
3. Remove what hasn’t been credited.

Question 10

What is the double entry for impairment and insurance payment?

Answer 10

Dr trade and other receivables (insurance amount)
Dr admin expenses (impairment)
Cr purchases (impairment)
Cr other income (insurance amount)

Question 11

Explain VAT

Answer 11

Output= sales
Input= purchase

If output is greater than input, then you have paid too much

Net = exclusive = 20%
Gross = inclusive = 1/6th

Question 12

Create a t table for interest receivable

Answer 12

Debit BF interest receivable and SPL value

Credit CF interest receivable and cash(x)

Question 13

Create a t table for interest or tax payable

Answer 13

Debit CF payable and cash (x)

Credit BF payable and SPL

Question 14

Create a T table for carrying amount of PPE

Answer 14

Debit BF amount and addition (x)

Credit CF amount and depreciation and disposal

Question 15

Create a T table for accumulated depreciation

Answer 15

Debit CF amount and disposal
Credit BF amount and depreciation (x)

Question 16

What reflects the concept of matching?

Answer 16

Depreciation

Question 17

What does a credit balance on tax liability of prior year imply?

Answer 17

You have overpaid and should therefore reduce from the current year tax charge

Question 18

What is a redeemable and irredeemable preference share?

Answer 18

Redeemable is a loan
Irredeemable is equity

Question 19

In SOCF, how do you treat a fall in prepayment accrual and provision?

Answer 19

Add prepayment
Minus accrual and provision