Task 1: Theory Assessment Student Instructions 1. Type all the answers in a word document if required. 2. You can conduct internet research to answer these questions. 3. Provide explanation of 2-3 lines when answering 'Describe' questions. 4. Provide detailed workings for calculations questions. 5. Provide answers in table format wherever possible. Question 1 - Multiple Choose Questions Select the letter you consider to be the nearest correct alternative. 1. A depreciation method that uses the capital cost, effective life and residual value is the: a) units of use method b) appraisal method c) diminishing value method d) straight line method. 2. Capital expenditure is: a) funds spent from the Capital account b) assets consumed in one accounting period c) drawings by the owners of the business d) non-current assets providing benefits for more than one accounting period. 3. What does the Accumulated depreciation account represent? a) An operating expense of the business b) A cash fund accumulated to replace worn-out or obsolete non-current assets c) The expired capitalised cost of a non-current asset acquired in previous accounting period d) A non-current liability. 4. Office equipment purchased for $8000 (net of GST) has an expected life of five years with a residual value at the end of five years of $1000 (net of GST). The depreciation charge for year four applying the straight line method would be: a) $1400 b) $2000 c) $1600 d) $1750 5. Factory plant purchased for $65 000 (net of GST) has an expected residual value of at the end of eight years of $8000 (net of GST). The depreciation charge for year three applying the diminishing balance method at a rate of 20% would be: a) $7296 b) $8320 c) $9344 d) $8125 Question 2 - Ture/False State weather the following statements are True or False. 1. For a trading firm, revenue is recognised when the goods are delivered. 2. In the income statement, insurance would be classified as a financial expense. 3. Allowance for doubtful debts is a negative liability. 4. Accrued expenses are liabilities yet to be paid. 5. The physical stocktake valuation at the end of the accounting period is deducted from 'Cost of goods available for sale'. Question 3 - Written Answers Provide answers to questions below in 1-2 paragraphs. a) What is the difference between the profit and loss account and the income statement? b) What are the two types of balance day adjustments? c) Why are prepayments classified as assets? d) List the double entry bookkeeping principals. e) List three (3) key accounting standards related to preparation of financial reports. f) Provide details regarding two (2) different accounting software's being used within Australia. g) List and describe policies and procedures related to preparation of financial reports within an organisation. Question 4 - Cost of Goods Sold Calculate the Cost of Goods Sold from the following data. Details Amount ($) Cartage outwards 8500 Insurance 10900 Customs duty 5400 Purchases 58300 Stock (opening) 3950 Cartage inwards 6200 Stock (closing) 5700 Purchases returns 1000 Sales commissions 5300 Task 2: Case Study and Practical Assessment Student Instructions 1. Type all the answers in a word document if required. 2. You can conduct internet research to answer these questions. 3. Provide explanation of 2-3 lines when answering 'Describe' questions. 4. Provide detailed workings for calculations questions. 5. Provide answers in table format wherever possible. Additional Information a) Accounting Standards: http://www.aasb.gov.au/Pronouncements/Current-standards.aspx b) Organisational policies and procedures: http://startupjunkies.com/extras/acct-policies.pdf Question 1 - City Wide Stores a) The trail balance of City Wide Stores is given in Appendix and following information relates to the end of reporting period adjustments for 30 June 20XX. 1. Inventory on hand, $8600. 2. Wages (general) due but unpaid, $600. 3. Insurance paid in advance, $250. 4. It is estimated that 6% of accounts receivable will not be collected. 5. Depreciation, expense to be charged against revenue a. Building, 5% per annum. b. Plant and equipment, 10% per annum. c. Motor vehicles, 33% per annum. 6. Accrued employee entitlements: a. Sick Leave $ 420 b. Annual Leave, $3700. c. Long-service, $1890 You are required to prepare: 1. end-of-period adjustments 2. preparing an adjusted trial balance 3. closing entries. b) As an accountant, you are required to select 3 most appropriate accounting software packages for the company. Shortlisting one software package based on the merits, shortcomings, cost and the usefulness of the package for the organisation. You must discuss with your manager (Trainer) and do the role play of accountant in convincing and getting his/her approval. You will be questioned and observed for your communication and research and analysis capabilities. Question 2 - Asset Register Using the following information below, complete a Property, Plant and Equipment Register AND a Disposal Register. A 'Dissan' utility was purchased for $38 500 (incl. GST) on 1 July 2015 from HJK Motors. Depreciation is to be calculated by the straight line method. The utility was expected to have a three year life, at the end of which it was estimated to have a residual value of $10 000 (excluding GST). When not in use the utility was kept in the warehouse. The utility was sold to RTY Builders at the end of three years (30 June 2018) for $11 550 (incl. GST). After completing the Plant register, make the necessary entries in the Disposal register. See appendix for required template. Question 3 - End of year financial management Information for period ending 30 June 2016 is following: 1. Stock at 30 June 2016$13 800 2. Allowance for doubtful debts to be adjusted to 7.36% of trade debtors (nearest $1 up) 3. Depreciation of Plant and Equipment @10% per year 4. Wages due but not yet paid $550 5. Annual insurance premium paid 1 January 2016 $1200 6. Interest on Bonds paid every six months on 1 February and 1 August, @ 9.75 % per year 7. Monthly rent received from tenant June 15, 2016 $500 8. Close GST paid and GST collected to GST clearing Complete the following tasks. a) Write down the general journal entries for balance day adjustments based on information provided. Narrations not required. Template is available in Appendix b) Complete a multi-column worksheet in order to produce a general ledger Trading account, Profit and loss account and Balance sheet. You will find the multi-column worksheet in Appendix c) Prepare a classified Income statement for the period ending 30 June 2016. Template is available in Appendix d) Prepare a classified Balance sheet for the period ending 30 June 2016. Template is available in Appendix Question 4 - Trial Balance Errors a) Give example of following: 1. Errors that effect trial balance and 2. Errors which does not affect trial balance. b) Show the required journal entry with narration for correcting the errors in recording the following transactions: Purchase goods from Jonathan for $400.00 was recorded correctly in purchase journal but posted in Yonathan's account