a. What is a perpetual inventory system? b. Describe three methods of calculating the cost of fungible inventories. c. Explain the circumstances in which each of these methods may be justifiable.
> Explain the difference between the direct and indirect methods of ascertaining the ‘net cash inflow from operating activities’ shown in a statement of cash flows.
> Explain the purpose, uses and advantages of classified statements of cash flows prepared in accordance with IAS 7.
> List and describe the contents of the three headings/groups of items found in a statement of cash flows prepared in accordance with IAS 7.
> Explain the meaning of each of the following in the context of statements of cash flows: a. cash; b. cash equivalents.
> Explain how statements of cash flows differ from: (a) statements of profit or loss; and (b) statements of financial position.
> Describe the advantages and limitations of statements of cash flows.
> a. Explain the purpose(s) of a statement of cash flows. b. Describe the typical sources and applications of cash funds in an entity.
> The following is a list of balances in the general ledger of J. McKee at 30 June 20X9: Required a. Prepare a trial balance. b. The trial balance does not balance (on purpose). Which account is missing? How much is the balance on this account (the accou
> B. Jones is in business as a builders’ merchant. The following credit transactions took place during April 20X9: 1 Apr Bought goods on credit from Brick Ltd for £725 2 Apr Sold goods on credit to Oak Ltd for £410 4 Apr Bought goods costing £315 from Sto
> a. Explain with examples the nature of contingent assets and contingent liabilities. b. Describe the treatment of contingent assets and liabilities in published company financial statements.
> a. Explain with examples the nature of events after the reporting period. b. Describe the treatment of events after the reporting period in published company financial statements.
> a. Explain with examples the nature of prior period adjustments. b. Briefly describe the treatment of prior period adjustments in published company financial statements.
> a. Explain with examples the nature of exceptional items. b. Briefly describe the treatment of each of these items in published company financial statements.
> a. Explain the nature of acquisitions and discontinued operations. b. Briefly describe the treatment of each of these items in published company financial statements.
> Briefly explain the reason(s) for the separate disclosure of components of financial performance such as discontinued operations and exceptional items in published company financial statements.
> Explain the difference between a reserve and a provision.
> Explain the difference between revenue/distributable reserves and capital/non-distributable reserves, giving three examples of the latter.
> Set out below is the equity part of a company’s statement of financial position. Explain the purpose of each of the equity reserve accounts shown on this company’s statement of financial position.
> Explain with an example the difference between current liabilities, provisions and contingent liabilities.
> The following is a list of balances in the general ledger of R. Keith at 30 June 20X5: Required Prepare a trial balance.
> Explain the difference between the allotted share capital and called-up share capital of companies.
> Describe the contents of the statutory books of companies. What is the purpose of each of these books?
> What is the auditors’ report? How useful do you think this is in its present form and with its current legal standing in the UK?
> What is the difference between an interim dividend and a final dividend?
> Outline the main contents of a prospectus.
> Explain how each of the following arises: a. a share premium; b. a debenture discount.
> What are preliminary expenses?
> Describe the contents of the Memorandum and Articles of Association. What are the purposes of these documents?
> How does a public limited company differ from a private limited company?
> Describe the different kinds of preference share.
> The following is a list of balances in the ledger of C. Rick at 31 May 20X0: Required Prepare a trial balance.
> Explain the main difference between a limited company and a sole trader.
> What is the annual general meeting of a company? Describe the proceedings at such a meeting.
> What happens to the assets and liabilities of a partnership on dissolution?
> Describe three different methods of valuing goodwill where the purchase price is unknown.
> Jack Straw, a director in ABC Ltd, has suggested that the accounting treatment for two items be changed in the next set of financial statements. These are summarized as follows: 1. The first is goodwill. This has not been incorporated in the financial st
> a. Explain the circumstances in which goodwill might appear in the books of a partnership. b. Describe how it would be treated in the statement of financial position.
> a. What is the difference between positive and negative goodwill? b. What is the difference between purchased goodwill and internally generated goodwill?
> Explain the difference between each of the following ledger accounts in the books of a partnership: a. capital account; b. current account; c. drawings account.
> Lane and Hill have decided to form a partnership. Lane is to contribute £150,000 as capital and Hill £20,000. Hill is to work full time in the business and Lane one day a week. Because Hill has no other income, she anticipates making drawings of £1,000 p
> Explain each of the following in the context of partnership profit sharing: a. partners’ salaries; b. interest on capital; c. interest on drawings; d. residual profit.
> Enter the following transactions in the books of ‘Mary Ward’ for December (use T accounts). 1 Dec introduced a motor vehicle to the new business worth £8,000 1 Dec transferred a computer from home to the business: £500 1 Dec withdrew £200 cash from her
> If there is no partnership agreement the provisions of the Partnership Act 1890 apply. List the main provisions of this Act with regard to the rights of partners between themselves, including the sharing of profits or losses.
> Describe the different forms of incomplete records with which you are familiar.
> Describe the two main uses of a suspense account.
> Describe the types of errors that: a. cause a trial balance to disagree; b. do not cause a trial balance to disagree.
> Explain the main purposes of control accounts.
> Describe the procedures involved in the collection of the data needed to prepare a bank reconciliation statement.
> Explain the purpose of a bank reconciliation statement.
> Explain fully the basis on which finished goods and work-in-progress inventories should be valued in final financial statements.
> Explain the circumstances in which inventories might be shown in the financial statements at a value different from their historical cost.
> You have received goods from trader X who invoiced you and delivered the invoice with the goods. You have just received a debit note for £100. a. What is a debit note? b. How should the £100 be accounted for?
> Explain how the matching principle is applied to the valuation of inventories.
> Work-in-progress and finished goods inventories should be valued at the cost of purchase and conversion. Explain.
> a. Explain the nature of accrued and prepaid expenses. b. Describe how the amount of each may be ascertained.
> a. Businesses often create an allowance for irrecoverable debts. i. Of which concept is this an example? Explain. ii. What is the purpose for creating an allowance for irrecoverable debts? iii. How might the amount of an allowance for irrecoverable debts
> a. Which accounting concepts directly influence the creation of an allowance for irrecoverable debts? b. Explain your reasoning.
> Examine the purpose and logic behind an allowance for irrecoverable debts, with particular reference to the timing of profits and losses arising from credit sales.
> a. Explain the nature of an allowance for irrecoverable debts. b. Explain the difference between a specific and general allowance for irrecoverable debts.
> What do you understand by the term ‘irrecoverable debts’? In what circumstances might a debt be treated as irrecoverable?
> Describe two common methods of depreciation including the resulting pattern of charges to the statement of profit or loss for depreciation expense over an asset’s useful economic life. In what circumstances might each of these be the most appropriate met
> Describe the data needed in order to compute depreciation.
> A customer returns goods to your business because they were not the items ordered. What documentation should you issue to the customer and which books of account have to be updated as a result of this transaction?
> Explain fully the nature of depreciation.
> a. Describe how non-current assets are valued under historical cost accounting. b. How would your account for expenditure on double-glazing? Explain your reasons.
> a. Explain the difference between tangible and intangible non-current assets. b. What is goodwill and how does it usually arise in a statement of financial position?
> Briefly explain the circumstances in which each of the following would be regarded as a non- current asset: (a) Tools; (b) Investments; and (c) Advertising expenditure.
> a. Explain the difference between capital expenditure and revenue expenditure. b. What criteria would you use to decide whether expenditure should be classified as relating to a non-current asset?
> In the year to 31 December 20X9, Amy bought a new non-current asset and made the following payments in relation to it: Required a. State and justify the cost figure that should be used as the basis for depreciation. b. What does depreciation do, and wh
> ‘Although the straight-line method of depreciation is the simplest to apply, it may not always be the most appropriate.’ Explain and discuss.
> Explain the nature of non-current assets.
> Explain each of the entries in the following inventory account:
> Explain the relevance of inventory in the determination of gross profit.
> Explain the difference between a direct debit transaction and a standing order transaction.
> a. Explain the purposes of a statement of profit or loss and a statement of financial position. b. Describe the structure of each.
> a. Describe how a petty cash imprest system operates. b. Explain how such a system facilitates control.
> a. Describe the purpose and format of a columnar petty cash book. b. Explain how you would determine the appropriate number of analysis columns.
> Describe the entries in the cash book and general ledger in respect of discount allowed and discount received.
> Describe the different forms of two- and three-column cash books with which you are familiar.
> a. Tate two fundamentally different types of transactions/items that are recorded in the journal. b. Describe how these two transactions are recorded in the journal.
> a. Outline the purposes of those books of prime entry referred to as day books. b. Describe the contents, and state which documents are used to write up each of the following: i. The sales day book; ii. The purchases day book; iii. The sales returns day
> What are the advantages of a trial balance?
> Explain the main purposes of a trial balance.
> Explain the purpose of books of prime entry.
> Explain the difference between a credit card transaction and a debit card transaction.
> Briefly describe the nature of a bill of exchange.
> List the books of prime entry with which you are familiar and briefly describe what each is intended to record, including the documents used to write them up.
> Explain the difference between an invoice and (a) a statement; (b) a receipt.
> Outline the purpose and content of (a) an invoice; (b) a debit note; and (c) a credit note.
> Explain the difference between trade discount and cash discount.
> Explain the difference between a cash transaction and a credit transaction.
> Roger has a building worth £25,000, land worth £125,000, a car worth £10,000. He has a mortgage on the building of £20,000 and a car loan of £12,000. He owes R. Graham £2,000 for supplies bought during the year. These have all been used up. He sold goods
> Discuss the relevance and limitations of the historical cost concept in accounting.
> Explain the relevance of the accounting period concept in accounting.
> Explain briefly what is meant by the following terms: profit; capital; and capital maintenance.
> Prepare J. Magee’s statement of financial position (vertical format as utilized in the chapter) as at 31 December 20X9 from the following: Note: You have to determine J. Magee’s equity capital balance.
> a. State the accounting equation and explain its components. b. The financial position of a business at any time is represented in the statement of financial position. Why is it that every business entity’s position should ‘balance’?
> Define and distinguish between the following: a. assets and liabilities; b. capital and revenue expenditure.
> Explain the role of a non-executive director to a company and outline possible benefits of such an appointment to the company.
> Outline six characteristics of good corporate governance, detailing how each can influence company value.
