Questions from General Accounting

Q: Donald’s transactions for the month of March 2021 are as follows:

Donald’s transactions for the month of March 2021 are as follows: Required (a) Enter the above transactions in appropriate ledger accounts. (b) Balance each account as at 31 March...

Q: Explain why an increase in cash during a particular accounting period does

Explain why an increase in cash during a particular accounting period does not necessarily mean that an entity has made a profit. Answer: Accounting profit is not normally the difference between c...

Q: The differentiation between the so-called capital and revenue expenditure is

The differentiation between the so-called capital and revenue expenditure is quite arbitrary and unnecessary.’ Discuss. Answer: 1. It is true that the classification of transactions into capital...

Q: How far does a statement of financial position tell users how much

How far does a statement of financial position tell users how much an entity is worth? Answer: 1. Very little. The statement of financial position total is a combination of transactions entered a...

Q: Depreciation methods and rates should be prescribed by law.’ Discuss

Depreciation methods and rates should be prescribed by law.’ Discuss.

Q: Explain why it is quite easy to manipulate the level of gross

Explain why it is quite easy to manipulate the level of gross profit when preparing a trading account. Answer: 1. Primarily because of difficulties in the timing of recognising transactions involv...

Q: How far is it possible for an entity to build up hidden

How far is it possible for an entity to build up hidden amounts of profit (known as secret reserves) by making some adjustments in the statement of profit or loss for doubtful debts? Answer: 1. Q...

Q: The following trial balance has been extracted from Jody’s books of account

The following trial balance has been extracted from Jody’s books of account as at 30 April 2020: Required: Prepare Jody’s statement of profit or loss and statement...

Q: The following trial balance has been extracted from the books of Garswood

The following trial balance has been extracted from the books of Garswood as at 31 March 2021: Required: Prepare Garwood’s statement of profit or loss and statement of retained earni...

Q: The following statement was made by a student: ‘I cannot

The following statement was made by a student: ‘I cannot understand why accountants have such a high status and why they have so much influence.’ How would you respond to such assertions?