Questions and Answers of Cost And Management Accounting An Introduction

Record end-of-period adjustments as debit and credit adjustments to a trial balance taken from the ledger accounts and produce figures for financial statements.AppendixLO1
Show that you understand the impact of transactions and events on ownership interest in company accounts.Additionally, for those who choose to study the supplement:AppendixLO1
Understand the methods by which a company’s shares may be issued when the company has a Stock Exchange listing.AppendixLO1
Explain the accounting treatment of dividends.AppendixLO1
Read and interpret the information reported by companies in their annual reports, in respect of the ownership interest.AppendixLO1
Explain the needs of users for information about the ownership interest in a company.AppendixLO1
ASB system and also the UK ASB equivalents.AppendixLO1
Understand the nature and purpose of the statement of changes in equity in the AppendixLO1
Explain and demonstrate how the ownership interest is presented in company accounts.AppendixLO1
Define a non-current (long-term) liability.AppendixLO1
Explain the needs of users for information about non-current (long-term) liabilities.AppendixLO1
Explain the different types of non-current (long-term) loan finance which may be found in the statements of financial position (balance sheets) of major companies.AppendixLO1
Understand the purpose of provisions and explain how provisions are reported in financial statements.AppendixLO1
Understand the nature of deferred income and explain how it is reported in financial statements.AppendixLO1
Know the main types of loan finance and capital instruments used by companies and understand the principles of reporting information in the financial statements.Additionally, for those who choose to
Prepare the ledger accounts to record provisions and deferred income.AppendixLO1
Explain why a provision may be required. (Section 11.4)AppendixLO1
Give three examples of situations which may lead to provisions. (Section 11.4)AppendixLO1
Explain how deferred income is recorded. (Section 11.5)AppendixLO1
Is it justifiable to report deferred income under the category of liability? (Section 11.5)AppendixLO1
Explain what is meant by each of the following terms: (Section 11.6)(a) loan stock;(b) debenture;(c) bond;(d) maturity date; and(e) convertible loan stock.AppendixLO1
On reviewing the financial statements, the company accountant discovers that a grant of £60,000 towards expenditure of the current year plus two further years has been reported entirely as revenue
On reviewing the financial statements, the company accountant discovers that there has been no provision made for urgent repairs to external doors and window frames, already identified as being of
The Washing Machine Repair Company gives a warranty of no-cost rectification of unsatisfactory repairs. It has turnover from repair contracts recorded as:Year Amount of turnover£1 80,000 2 90,000
General Engineering Ltd receives a government grant for £60,000 towards employee training costs to be incurred evenly over the next three years. Explain how this transaction will be reported in the
Explain why each of the following is recognised as a provision in the statement of financial position(balance sheet) of a telecommunications company:(a) On 15 December Year 2, the Group announced a
(Refer also to Chapter 10, section 10.3.2, on Contingent liabilities.)Explain why each of the following is reported as a contingent liability but not recognised as a provision in the statement of
Prepare bookkeeping records for the information in question B11.1.AppendixLO1
Prepare bookkeeping records for the information in question B11.2.AppendixLO1
Prepare bookkeeping records for the information in question C10.1.AppendixLO1
Prepare bookkeeping records for the information in question B10.3.AppendixLO1
Prepare bookkeeping records for the information in question B10.2.AppendixLO1
Prepare bookkeeping records for the information in question B10.1.AppendixLO1
The following file of papers was found in a cupboard of the general office of Green Ltd at the end of the accounting year. Explain how each would be treated in the financial statements and state the
The accountant of Brown Ltd has calculated that the company should report in its profit and loss account a tax charge of £8,000 based on the taxable profit of the period. Of this amount,£6,000 will
Plastics Ltd pays rent for a warehouse used for storage. The quarterly charge for security guard services is £800. The security firm sends an invoice on 31 March, 30 June, 30 September and 31
White Ltd commenced trading on 1 July Year 3 and draws up its accounts for the year ended 30 June Year 4. During its first year of trading the company pays total telephone expenses of £3,500. The
[S] On reviewing the financial statements, the company accountant discovers that an invoice for the rent of £4,000 owed to its landlord has been recorded incorrectly as rent receivable of £4,000 in
[S] On reviewing the financial statements, the company accountant discovers that a payment of £21,000 made to a supplier has been omitted from the cash book and other internal accounting records.
[S] On reviewing the financial statements, the company accountant discovers that a supplier’s invoice for an amount of £10,000 has been omitted from the accounting records. The goods to which the
Explain what is meant by the matching concept. (Section 10.7)AppendixLO1
What is meant by an accrual? How is it recorded? (Section 10.7)AppendixLO1
How are the current liabilities for (a) bank overdraft and (b) trade creditors measured?(Section 10.6)AppendixLO1
What information do users of financial statements need to have concerning current liabilities of a company? (Section 10.4)AppendixLO1
What is a contingent liability? (Section 10.3.2)AppendixLO1
What is the effect of understatement of liabilities? (Section 10.3.1)AppendixLO1
What is the distinction between a long-term liability and a current liability? (Section 10.2)AppendixLO1
What is the definition of a liability? (Section 10.2)AppendixLO1
Record the transactions of question B9.3 in ledger accounts for L1 Receivables(debtors), L2 Provision for doubtful debts, L3 Cash and L4 Profit and loss account.AppendixLO1
Record the transactions of question B9.4 in ledger accounts for L1 Receivables(debtors), L2 Provision for doubtful debts, L3 Cash and L4 Profit and loss account.AppendixLO1
Record the transactions of question B9.5 in ledger accounts for L6 Expense of insurance and L7 Prepayment.AppendixLO1
Define a liability and explain the distinguishing feature of current liabilities.AppendixLO1
Explain the conditions for recognition of liabilities.AppendixLO1
Explain how the information presented in a company’s statement of financial position (balance sheet) and notes, in relation to liabilities, meets the needs of users.AppendixLO1
Explain the features of current liabilities and the approach to measurement and recording.AppendixLO1
Explain the terms ‘accruals’ and ‘matching concept’ and show how they are applied to expenses of the period.AppendixLO1
Explain how liabilities for taxation arise in companies.Additionally, for those who choose to study the supplement:AppendixLO1
Prepare the ledger accounts to record accruals.AppendixLO1
What is the bookkeeping entry for an increase in an asset?AppendixLO1
What is the bookkeeping entry for a decrease in a liability?AppendixLO1
What is the bookkeeping entry for an increase in an expense?AppendixLO1
What is the bookkeeping entry for a withdrawal of owner’s capital?AppendixLO1
What is the bookkeeping entry for an increase in revenue?AppendixLO1
Explain the benefits and problems of producing annual financial statements.AppendixLO1
Explain the purpose and structure of the statement of financial position (balance sheet).AppendixLO1
Explain the purpose and structure of the income statement (profit and loss account).AppendixLO1
Explain the purpose and structure of the statement of cash flows.AppendixLO1
Comment on the usefulness to users of the financial statements prepared.Additionally for those who choose to study the supplement:AppendixLO1
Apply the debit and credit form of analysis to the transactions of a short period of time, summarising them in a list which may be used for preparation of simple financial statements.AppendixLO1
Explain why an accounting period of 12 months is used as the basis for reporting to external users of financial statements. (Section 3.3)AppendixLO1
Explain how the structure of the statement of financial position (balance sheet) corresponds to the accounting equation. (Section 3.4)AppendixLO1
Explain how the structure of the income statement (profit and loss account) represents a subsection of the accounting equation. (Section 3.5)AppendixLO1
Explain how the structure of the statement of cash flows represents another subsection of the accounting equation. (Section 3.6)AppendixLO1
List three features of a statement of financial position (balance sheet) which are particularly useful in making the format helpful to readers. (Section 3.4.3)AppendixLO1
List three features of an income statement (profit and loss account) format which are particularly useful in making the format helpful to readers. (Section 3.5.1)AppendixLO1
List three features of a statement of cash flows which are particularly useful in making the format helpful to readers. (Section 3.6.1)AppendixLO1
Analyse the debit and credit aspect of each transaction listed at (a), (b) and (c) of question B3.2.AppendixLO1
Prepare a spreadsheet similar to that presented in Table 3.10, setting out on the first line the items contained in the list of assets and liabilities of question B3.2 and then on lines 2, 3 and 4
List and explain the qualitative characteristics desirable in financial statements.AppendixLO1
Explain the approach to measurement used in financial statements.AppendixLO1
Explain why there is more than one view on the role of prudence in accounting.AppendixLO1
Understand and explain how and why financial reporting is regulated or influenced by external authorities.AppendixLO1
Be aware of the process by which financial statements are reviewed by an investor.AppendixLO1
Explain what is meant by each of the following: (Section 4.2)(a) relevance;(b) reliability;(c) faithful representation;(d) neutrality;(e) prudence;(f) completeness;(g) comparability;(h)
Explain the accounting measurement principles of each of the following: (Section 4.3)(a) going concern;(b) accruals;(c) consistency;(d) the concept of prudence.AppendixLO1
Explain why companies should avoid overstatement of assets or understatement of liabilities. (Section 4.4)AppendixLO1
Explain the responsibilities of directors of a company towards shareholders in relation to the financial statements of a company. (Section 4.5.2).AppendixLO1
Explain the impact on financial statements of each of the following: (Section 4.5)(a) company law;(b) the International Accounting Standards Board; and(c) the UK tax law.A4.6 Explain how the
Explain each of the following:(a) The IAS Regulation(b) The Financial Reporting Council(c) The Auditing Practices Board AppendixLO1
Explain any two accounting measurement principles, explaining how each affects current accounting practice.AppendixLO1
Discuss the extent to which the regulatory bodies explained in this chapter have, or ought to have, a particular concern for the needs of the following groups of users of financial statements:(a)
Choose one or more characteristics from the following list that you could use to discuss the accounting aspects of each of the statements 1 to 5 and explain your ideas:l Relevance l understandability
Choose one or more accounting measurement principles from the following list that you could use to discuss the accounting aspects of each of the problems 1–5 and explain your ideas.l going concern
Explain how the accounting equation is applied to transactions of a service business.AppendixLO1
Analyse the transactions of a service business during a specific period of time, using the accounting equation.AppendixLO1
Prepare a spreadsheet analysing the transactions and show that the results of the spreadsheet are consistent with the financial statements provided by the organisation.AppendixLO1
Explain the main aspects of the statement of cash flows, income statement (profit and loss account) and statement of financial position (balance sheet) of a service business.Additionally, for those
Analyse the transactions of a service business using the rules of debit and credit bookkeeping.AppendixLO1
Prepare, from a list of transactions of an organisation, ledger accounts and a trial balance which could be used to prepare the financial statements provided by the organisation.AppendixLO1
The following list of transactions relates to a television repair business during the first month of business. Explain how each transaction affects the accounting equation:(Section 5.2)(a) Owner puts

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