Questions

1. Why are balance day adjustments necessary? How are they different from Closing entries?
2. In assessing depreciation what do we mean by economic benefit? What does the Accumulated Depreciation Account show?
3. Why might we use Subsidiary Ledger Accounts? What function does the General Ledger Control Account have?
4. If we adopt the First In First Out assumption in Inventory Valuation what does this mean? Would the impact on profit and financial position be different from LIFO?
5. If Debits equal Credits in the Trial Balance at balance day does this mean the your records are necessarily accurate? What errors could still occur?

6 What is the benefit of keeping inventory records in a perpetual system, and at the close of the accounting period conducting a physical inventory stocktake?

7 How and why do we calculate depreciation? Is it important to do so?

8 Explain how you would determine whether an item is an asset based on the CF guidelines? If you were asked to assess whether a tree in a caravan park was an asset what would you conclude? Conduct an appropriate analysis.