Explain the purpose of books of prime entry.
> 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.
> 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 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 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.
> Why does corporate governance influence company value?
> Explain the term ‘corporate governance’.
> Explain the audit expectations gap to a new trainee auditor.
> Describe the five main stages of an audit briefly.
> Explain the term ‘audit risk’.
> What is the objective of an audit?
> You are working in the finance department of a school. The school is 15 years old. Identify whether the following items are capital or revenue expenditure. 1. A desk 2. Payments to a handyman for painting the classrooms 3. Payments for the paint 4. Pens,
> ‘It is unrealistic to expect a conceptual framework of accounting to provide a basis for definitive or even generally accepted accounting standards in the foreseeable future because of inherent conflicts and inconsistencies between, for example, the qual
> According to the Conceptual Framework there is a potential conflict between the characteristics of relevance and verifiability. There can also be tension between two aspects of reliability – consistency and faithful representation. Explain the nature of
> Describe the constraints on the qualitative characteristics of financial information.
> Define and explain materiality.
> Define and explain the qualitative characteristics of comparability and understandability.
> Define and explain the qualitative characteristic of faithful representation, including the attributes of completeness, neutrality, and being free from error.
> Outline the circumstances that must be prevalent before a change in accounting policy is permitted under IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (IASB, 2018a).
> Explain the relevance of prudence to the appropriateness of accounting policies.
> According to IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors (IASB, 2018a) management should develop and apply an accounting policy that provides quality information that will be of benefit to users. Outline the main attributes th
> Describe the nature of each of the following: a. measurement bases b. accounting policies c. estimation techniques. Give one example of each.
> S. Kee is a horse trainer. Prepare the accounting equation for S. Kee at 30 November 20X9
> Complete the following table showing which ledger accounts are to be debited and which are to be credited:
> Explain the nature of the accruals concept and the matching concept. Give an example of the application of each.
> Explain the nature of the going concern assumption and its implications for the preparation of financial statements.
> Describe the nature of accounting principles.
> Describe the nature of any adjustments required and the information that should be disclosed when an entity changes an accounting estimate.
> Describe the nature of any adjustments required and the information that should be disclosed when an entity changes an accounting policy.
> Describe the information that should be disclosed in financial statements relating to an entity’s accounting policies and estimation techniques.
> a. Outline the objective of financial statements as set out in the IASB’s Conceptual Framework for Financial Reporting (2018) b. Identify the users of financial statements and briefly describe their information needs. c. Explain the relevance of the enti
> What is a general purpose financial statement?
> ‘A conceptual framework of accounting is likely to lead to greater standardization, less choice, less innovation and thus reduced comparability because of the existence of fundamental differences between companies in the way they conduct their activities
> Describe the nature and contents of a conceptual framework of accounting.
> Minisoft plc, a manufacturer of computer software, has spent £10 million in the current accounting year on staff recruitment, training and development. It proposes to include this on its statement of financial position as a non-current asset. Discuss.
> What is the difference in role between the IASB Conceptual Framework and IFRSs?
> Describe the purposes of a conceptual framework of accounting.
> Explain the role and objectives of the IFRS Advisory Council.
> Explain the role of the IFRS Interpretations Committee.
> Discuss the current activities of the International Accounting Standards Board (IASB) in the convergence/harmonization of accounting standards.
