Accounting Simplified 1st Edition Hilary Fortes - Solutions

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explain the international standard-setting process;
understand the extent to which financial reporting is regulated by national and international authorities;
understand the role and structure of the International Accounting Standards Board;
understand the ways in which international standards can interact with local regulatory frameworks.
Self-test Explain the need to have an international accounting standard setter.
Self-test A company reporting under IASB rules pays dividends to its owners. Where are these dividends shown?(a) Income statement(b) Statement of financial position(c) Statement of cash flows(d) Statement of changes in equity
Self-test Which of the following items are shown in the statement of cash flows?(a) Dividends paid(b) Revaluation of non-current assets(c) A rights issue of shares(d) A bonus issue of shares
Self-test Camden Trading Ltd. Using the answers from section
you are required to prepare the income statement and the statement of financial position for the company in compliance with international standards.
Self-test Hilmor Ltd. You have prepared the final accounts for the company based on the information given in section 29.2.7. You are now told that the company wishes to report using IASB standards.Using the information available you are required to:(a) prepare the income statement;(b) the statement
Self-test Hasta is an antique dealer operating from rented premises. He keeps few accounting records. All his sales and purchases are for cash, except for some sales to other dealers which are made on credit.The following information is available to prepare his income statement for the year ended
Self-test The receivables ledger control account of Atanga at 31 December 2006 shows a debit balance of $487,600. The list of receivables ledger balances at the same date totalled $455,800 debit. There were no credit balances.On investigation the following errors and revisions were found:1. The
Self test Hathan has just concluded a ratio analysis comparing its performance and position at 31 December 2006 with those at 31 December 2005. The directors are concerned to see that the current ratio and quick ratio show a considerable decline.Required:(a) State and explain TWO possible causes
explain the differences between a sole trader and a partnership;
prepare final accounts for a partnership;
understand the need for a goodwill adjustment;
make the necessary entries for partnership goodwill.
Self-test Smith and Jones decided to go into partnership and that they would contribute£30,000 and £20,000 respectively. It was agreed that Jones would work in the business and receive a salary of £5,000 p.a. Interest of 10 per cent p.a. was to be allowed on the capital accounts and the partners
Self-test Dun and Swail are equal partners. The partnership agreement provides for annual salaries of Dun, £24,000 and Swail, £23,000. It also provides for interest on capital of 7 per cent per annum and interest on drawings of 3 per cent per annum.The following information relates to the
Self-test X and Y prepare their annual accounts to 31 December. Interest on drawings is charged at 10 per cent p.a. while interest of 8 per cent p.a. is allowed on capital account balances. X receives a salary of £18,000 p.a. The profit or loss is shared in the ratio of 2:3.At 1 January 2009 the
Self-test 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 per month from the
Self-test Black and Whyte share profits in the ratio of 7:3. The balances on the capital accounts at 1 June 2009 were:Black 300,000 Whyte 180,000 The partners’ current account balances (credits) as at 1 June 2009 were:Black 20,000 Whyte 14,000 During the year ended 31 May 2010 the partners made
Self-test The partnership agreement of North, East and West stipulates that profits should be apportioned in the ratio of 3:2:1 after allowing interest on capital at 6 per cent per annum and crediting North with a salary of £28,000.The following information relates to their first financial year
Self-test The following is the trial balance of Jack and Jill as at 31 December 2009.Capital: Jack 20,000 Capital: Jill 15,000 Current account: Jack 1,900 Current account: Jill 4,100 Purchases/sales 44,823 71,460 Debtors/creditors 6,507 6,561 Building at cost 22,000 Fixtures at book value 7,150
Self-test Mike and Jean are partners in a gift business. The agreement they have is that profits are shared equally, but interest is paid on their capital accounts.The trial balance of Mike and Jean for the year ended 31 December 2009 is as follows:Fittings and fixtures 22,000 Accumulated
Self-test A and B share profits 3:2. A receives a salary of £20,000 p.a.On 1 January 2009 the capital account balances were:A B£17,000 £11,000.On 1 July 2009, C was admitted as a partner and the profit sharing ratio was changed to 5:3:2.(i) C was to receive a salary of £16,000 p.a.(ii) At that
explain the differences between financial statements of sole traders and non-profit organisations;
prepare receipts and payments accounts;
prepare income and expenditure accounts for non-profit organisations;
understand the need for special treatment of subscriptions and life membership;
prepare balance sheets for non-profit organisations.
Self-test The Valley Sports Club closes its financial year on 31 December. The following are the assets and liabilities of the club at year end:at
at 31.12.09 Exercise equipment 4,700 6,200 Cash at bank 1,900 11,080 Outstanding amounts: Telephone 48 65 Electricity 120 140 Rent 200 300 Purchases for restaurant unpaid 690 950 Restaurant stock 1,200 1,400 The following are the receipts and payments made for the year ended 31 December
Self-test The Trainer Club prepares its accounts at 31 December each year. At 31 December 2008 the following was the balance sheet at that date:Gym equipment 8,900 Bar stocks 1,200 Cash at bank 700 10,800 Accumulated funds 10,800 The receipts for the year to 31 December 2009 were:Subscriptions for
differentiate between private and public companies;
differentiate between ordinary and preference shares;
show how dividends are calculated and paid;
understand the various terms – bonus shares, rights issue, reserves and debentures;
discuss the process of issuing shares;
prepare accounts to record a share issue.
Self-test To ensure that you are aware of the differences in the terms market value and nominal value, the following exercise is given. You are asked to fill in the amounts in the missing spaces.Number of shares Nominal value Total value 300,000 ? £300,000? 50p £250,000? 40p £320,000 1,500,000
Self-test Green Ltd has issued 500,000 ordinary £1 shares, 60,000 6 per cent £1 preference shares and £200,000 9 per cent debentures. You are told that the effective tax rate is 30 per cent.You are required to calculate the return to ordinary shareholders if the operating profits (before
Self-test Bee Co. plc has an authorised share capital of 500,000 £1 ordinary shares. At present the issued capital is 200,000 ordinary shares issued at a premium of 40p each.The company decides to issue a further 200,000 ordinary shares at a premium of 60p each. Payment is to be 90p on application
Self-test Explor Limited is incorporated on 3 January 2010 with an authorised capital of£1,800,000 divided into 1,800,000 ordinary shares of £1 each.On 3 January it issues 500,000 shares at a premium of 30p per share. The full amount is due and paid on 3 January 2010.On 11 January 2010 the
Self-test This question uses the same information as contained in sections
and
above. Prior to the acquisition it is agreed that the following values will be placed on the assets of Company B:Motor vehicles 6,000 Office equipment 4,000 Computer equipment 8,000 Stock 2,000 Debtors 2,100 Company A agrees to acquire the assets (excluding bank account) of Company B for a purchase
Self-test Highway Connections Ltd, which builds roads, and Wessex Quarries Ltd, which mines stone used in the construction industry, have merged. The new company is called Roadworks Ltd and has an authorised share capital of 2,500,000 ordinary shares of £1 each. The new company was formed on l
Self-test The directors of Sun Limited and Land Limited decided to combine the companies with effect from 1 January 2006.The current summarised balance sheets of the two companies are given below.Balance sheets at 31 December 2005 Sun Limited Land Limited Buildings 70,000 –Machinery 20,000 80,000
prepare a company profit and loss account and balance sheet;
understand and comply with the requirements of the Companies Act 2006;
detail and discuss the contents and use of a directors’ report;
discuss the need for an auditors’ report.
Self-test Larnaca Limited has an authorised capital of £350,000 in ordinary shares of£1 each. The financial year ends on 31 March. At 31 March 2006 the following figures were extracted from the books, subject to final adjustment.Debit Credit Ordinary shares issued, fully paid 200,000 Profit and
Self-test Trial balance of Lister Limited at 30 June 2009 Carriage outwards 3,000 Bank 700 Trade creditors 13,900 Trade debtors 32,800 Directors’ remuneration 5,500 Electricity and gas 2,800 Insurance 1,700 Plant and machinery – at cost: 42,000 Accumulated depreciation at 1 July 2008 15,200
Self-test Allied Holdings Ltd was registered with an authorised capital of £3,000,000. This is divided into 800,000 6 per cent preference shares of £1 each and 4,400,000 ordinary shares of 50p each. All the preference shares and 2,000,000 ordinary shares were issued and fully paid.You are
Self-test Delta Furnishing Ltd Trial balance – 31 December 2009 Bad debts 700 Provision for bad debts 1st January 2009 250 Profit and loss account 1 January 2009 43,000 Stock – 1 January 2009 18,800 Freehold property – at cost 180,850 Creditors 24,640 Ordinary share capital – fully paid
Self-test Hilmor Ltd has an authorised capital of £200,000 divided into 20,000 6 per cent preference shares of £1 each and 180,000 ordinary shares of £1 each. All the preference shares and 100,000 ordinary shares were issued and fully paid.Trial balance as at 31 December 2009 Ordinary share
Self-test Washer Trading Ltd was formed with an authorised share capital of 500,000 £1 ordinary shares.The following is the list of balances of Washer Trading Ltd at 31 December 2010.Trade creditors 195,000 Trade debtors 260,000 Bank overdraft 78,000 Bank interest 5,200 Office expenses 122,200
Self-test Nuwaste Trading Ltd was formed with an authorised share capital consisting of 1,500,000 £1 ordinary shares.The following is the list of balances extracted from the company books at 31 December 2010.Debtors 480,000 Overdraft 144,000 Debenture interest 9,600 Selling commissions and rent
Self-test The following is the list of balances of Camden Trading Ltd at 31 December 2010.Trade creditors 75,000 Trade debtors 100,000 Bank overdraft 30,000 Debenture interest 2,000 Administrative expenses 47,000 Selling and distribution expenses 10,000 5 per cent debentures 60,000 Land and
apply any adjustments required to the trial balance;
understand the format of annual accounts;
prepare partnership accounts;
prepare a company profit and loss account and balance sheet.
Self-test Kitt Ltd Trial balance at 31 December 2009 Ordinary share capital 100,000 7% preference shares 100,000 Share premium account 110,000 Profit and loss account at 1 January 2009 190,000 7% debentures 200,000 Stock at 1 January 2009 400,000 Purchases 700,000 Sales 1,500,000 Sales returns
Self-test Muddle Ltd Trial balance at 31 December 2008 Ordinary share capital 220,000 Profit and loss account 380,000 9% debentures 320,000 Opening stock at 1 January 2008 640,000 Purchases 1,150,000 Sales 2,200,000 Sales returns 49,600 Goods returned to suppliers 70,000 Motor vehicles at cost
Self-test Allie Ltd Trial balance at 30 June 2009 Advertising 30,130 Bank 19,900 Creditors 69,214 Debentures 10% 70,000 Debtors 301,440 Directors’ remuneration 55,000 Electricity 22,134 Insurance 17,890 Investments – fixed asset 28,500 Investment income 4,240 Machinery:At cost 410,320
Self-test Trial balance of Sunnie Ltd as at 30 June 2009 Telephone and postages 12,032 Cash at bank 19,870 Creditors 236,788 12% debentures 200,000 Debtors 452,310 Directors’ salaries 165,000 Electricity and gas 26,780 Insurance and rates 12,114 Loose tools 29,760 Interest received 8,135 Plant
Self-test Terry Ltd prepared their profit and loss account and balance sheet for the year but were not able to use the correct formats. You are presented with the accounts as prepared and required to redraft them and present them in the correct format.Profit and loss account as at 30 June 2008
Self-test Sarah and Mary commenced business on 1 January 2008. They are equal partners and each contributed £50,000 capital. Interest of 7 per cent was to be paid on this capital and, in addition, each partner would receive a salary of £28,000 and an equal share of profits.The following are
Self-test NuDeal Ltd was formed with an authorised share capital of 2,000,000 ordinary shares of 50p each.NuDeal Ltd Trial balance at 31 December 2010 Bad debts 2,800 Provision for bad debts 1,000 Profit and loss account 1 January 2010 172,000 Stock at l January 2010 75,200 Land and buildings at
Self-test James Ltd was registered with an authorised capital of £200,000 divided into 20,000 6 per cent preference shares of £1 each and 360,000 ordinary shares of 50p each.Trial balance as at 31 December 2010 Ordinary share capital 100,000 Preference share capital 20,000 Share premium account
Self-test Aye Ltd has an authorised capital of 400,000 ordinary shares of £1 each. The company has issued 120,000 ordinary shares. At the year end it declares a dividend of 8 per cent. What is the total dividend to be paid?
Self-test Which of the following statements is correct?A company is able to improve its cash balance by:(a) An issue of bonus shares.(b) A rights issue.(c) A transfer of money from the share premium account.(d) A redemption of debentures.
Self-test In the following question, Top Ltd acquires Bottom Ltd.It acquires all the assets, except the bank account. In addition it assumes responsibility for the creditors. The purchase price is £30,000 of which 27,000£1 ordinary shares are issued at par and the balance paid in cash.You are
Self-test Using the details in section
assume that Top Ltd purchases Bottom Ltd for £120,000. Neither the bank account nor the liabilities to creditors are taken over by Top Ltd.Prior to the acquisition it is agreed that the assets of Bottom Ltd will be revalued as follows:Equipment £14,000 Vehicles £7,000 Stock £2,400 Debtors £900
Self-test Robin and Ann trade as partners. Their year end is 30 June and after allowing for the adjustments, as contained in their partnership agreement, the remainder of the profits or losses are to be shared equally between them.The following are the additional adjustments to be made:(i)
Self-test Monica, Cyril and Gene are in partnership. The trial balance at 31 December 2010 is as follows:Capital accounts – Monica 55,000– Cyril 35,000– Gene 15,000 Current accounts – Monica 8,600– Cyril 3,800– Gene 4,800 11 per cent loan due 1 December 2012 49,000 Land and buildings
Self-test K, L and M are in partnership, sharing profits and losses 2:1:1. They prepare accounts to 31 December each year.The following is the balance sheet as at 31 December 2008:Fixed assets Cost Depr NBV Delivery vehicles 46,000 11,000 35,000 Office computers 11,000 4,000 7,000 57,000 15,000
Self-test Rush and Aldridge are in partnership sharing profits and losses in the ratio 3:2 respectively. The following list of balances has been extracted from the books of the business for the year ended 30 November 2006.£Land at cost 120,000 Fixtures and fittings (cost) 70,000 Fixtures and
Self-test Dixon and Phillips are in partnership sharing profits and losses in the ratio 2:1 respectively. The following trial balance has been drawn up at 31 March 2009.DR CR £ £Land – at cost 100,000 Buildings – at cost 126,000 Fixtures – at cost 8,000 Cumulative depreciation (at 1 April
Self-test Filling and Kap are partners in a dentistry business. The following trial balance was extracted from their books on 31 March 2006.Debit Credit£ £Capital accounts 1 April 2005 – Filling 100,000– Kap 50,000 Current accounts 1 April 2005 – Filling 5,000– Kap 15,000 Drawings –
Self-test Sylett Cricket Club has been in existence for a number of years.On 1 April 2005 the club’s assets and liabilities were as follows.£Sports equipment 40,000 Subscriptions due 250 Subscriptions received in advance 100 Cash at bank 10,000 Members pay an annual subscription of £50, which
Self-test The Charford Social Club presents you with the following receipts and payments for the year ended 31 December 2002.Receipts £ Payments £Subscriptions 4,200 Rent 500 Sales of draw tickets 900 New furniture 200 Sales of annual dance ticket 1,000 Caretaker’s wages 5,200 Sales of
Self-test Staff at Bromsgrove High School take students camping each year during the summer holiday. The School Camp accounts showed the following balances on 1 August 2001, immediately after the 2001 camp:tents £20,000;cash at bank £6,200;pots and pans £460;debtors £320.Three hundred students
explain the reasons for the difference between profit and changes in cash balances;
prepare a reconciliation statement between operating profit and the cash flow from operating activities;
understand the importance of cash to a business;
prepare a cash flow statement in the format consistent with FRS1;
describe how information can help the assessment of the current financial position and future prospects.
Self-test To illustrate the difference between cash and profit you need to complete the following table. In each case state if the transaction affects profit or cash flow or both. Indicate if the transaction increases, decreases or has no effect on the profit and/or cash flow.Transaction Effect on
Self-test The following table has certain areas where the amount is missing. Using the information that you have read, you are required to complete the table.A BC Change in stock +2 −50 +70 Change in debtors +30 −15 −10 Change in creditors +5 ? −18 Depreciation 15 20 25 Operating profit
Self-test Complete the following table:Increase in debtors 4,250 Sales ?Bad debts written off 170 Cash received 19,331 Increase in creditors 3,320 Purchases 17,192 Cash paid ?
Self-test You are presented with the following balance sheet for J J Motors Ltd. The company has made a profit in 2009 of £30,600. The director advises you that he is short of funds and, in fact, has an overdraft at the year end of £3,240. He does not understand where all the money has gone and
Self-test You are presented with the following balance sheet for Maxwell & Co. Ltd. You are required to prepare the cash flow statement for the year.Balance sheet as at 31 December 2009 2008 2009 Fixed assets 115,475 137,825 Provision for depreciation 11,175 12,665 104,300 125,160 Current assets
Self-test You are required to prepare the cash flow statement for the year ended 31 December 2009 for Hilmar Trading Ltd from the information provided below:Profit and loss account for the year ended 31 December 2009 Net profit before charging the following: 1,182 Depreciation 251 Loss on sale of
Self-test The balance sheet of Peter Paul plc as at 30 June 2009 is given below, together with a summary profit and loss account for the year. You are required to prepare the cash flow statement for inclusion with the annual report.Balance sheet as at 30 June 2008 2009 Fixed assets Land and
Self-test You are given the following extract of balance sheet items:

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Accounting Simplified 1st Edition Hilary Fortes - Solutions

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