From the following information for sole trader J Pfahlert, software designer, draw up a statement of financial position as at the end of the financial year (30 June 2020). You are also required to determine the amount of owner’s capital: accounts payable $9600; land $120 000; cash on hand $12 000; office building $276 000; bank mortgage $16 800; profit $800; accounts receivable $9180; computer equipment $1200.
> The directors of Pumpkin Ltd provide you with the following financial information for the period ended 31 December 2020: selling expense $76 050; interest expense $29 250; legal fees $4875; administrative expense $60 450; income tax expense $31 200; cost
> Julia and Evie, owners of competing businesses, agree to form a partnership on 1 July 2020. Their individual assets and liabilities are independently valued and on this basis the following values are assigned to the partnership. Required Prepare a state
> Go to the Australian Taxation Office website (www.ato.gov.au) and select the ‘Business’ tab, then select ‘Businesses’ under the ‘Online Services’ heading. Next, select ‘Standard Business Reporting’ and then ‘What is Standard Business Reporting (SBR)?’ R
> Go to the Westpac website (www.westpac.com.au) and download the latest annual report. Required Use these statements to answer the following questions. (a) What is the total value of each of the following items at the end of the current reporting year in
> What are the three elements of a business plan? Consider the situation of two sisters contemplating a new business hiring surfboards and providing surf lessons on the Sunshine Coast. Explain how the business plan would assist the sisters in planning thei
> Go to www.jbhifi.com.au and find the consolidated statement of profit or loss and the consolidated statement of financial position for JB Hi-Fi Ltd in the latest annual report. Required Use these statements to answer the following questions. (a) What is
> The following business transactions and business events relate to Andrew’s Business Services Pty Ltd. 2020 June 1 Andrew commenced business with $15 000 given to him by his Aunt Kate. 4 Purchased new computer for his business $1200 on credit. 5 Received
> Rotterdam Financial Services Pty Ltd, managed by Saphira Browne, provides accounting, taxation and financial planning services to clients residing in the inner Melbourne area. The statement of financial position for Rotterdam Financial Services Pty Ltd a
> (a) Using the business transactions in problem 4.33, record the transactions in the ledger of Kristy Jones. (b) What is the advantage of recording in the ledger compared to the journal? (c) Prepare a trial balance for Kristy Jones at 30 June 2020. In pr
> From the following business transactions of Kristy Jones, landscape consultant: (a) State the impact on the accounting equation for each transaction. For example: (b) Prepare a worksheet and a statement of financial position for the month of June 2020 f
> Using the data from the trial balance in problem 4.31, prepare a statement of profit or loss for the period ending 31 May 2020 and a statement of financial position as at 31 May 2020. In problem 4.31 Using the data in problem 4.30: (a) Record the transa
> Using the data in problem 4.30: (a) Record the transactions in the ledger for Anthony Reader for the month of May 2020. (b) Prepare a trial balance at 31 May 2020. (c) What is the purpose of the trial balance? Illustrate, by example, situations that woul
> The following transactions were taken from the records of Anthony Reader, an interior designer, for the month ending 31 May 2020. You are required to design a suitable accounting worksheet for the period. 2020 May 1 Commenced business with cash at bank o
> Choose appropriate account names and demonstrate the dual effect that occurs when the following business transactions for Brett Little take place. For example, in (a) we increase cash $14 000 and increase capital $14 000. (a) Brett Little commenced busin
> Using the information in problem 4.27, prepare a: (a) Statement of profit or loss for the period ending 31 July 2021 (b) Statement of financial position as at 31 July 2021. In problem 4.27 The closing statement of financial position items are given belo
> Integrated reporting is a type of reporting that has been adopted in countries such as South Africa. What do you think are the advantages and disadvantages to the company of providing such disclosures?
> The closing statement of financial position items are given below for Jason Woodstock in accounting equation form as at 30 June 2021. Transactions for the following month of July are also given. 2021 July 2 Received $2800 from accounts receivable. 3 Pai
> Enter the following transactions for the month of March 2020 in a worksheet and calculate the profit or loss for the period. Explain how the worksheet assists in the calculation of profit or loss. 2020 March 3 Injected capital to commence business $250 0
> For each of the following independent scenarios, explain why each transaction is or is not a business transaction. (a) Maggie, a sole trader, meets with her bank and negotiates a loan to provide additional finance to her business. (b) Maggie, a sole trad
> For each of the following transaction outcomes, describe an example of a transaction that would result in that outcome. (a) Both asset and equity accounts decreased. (b) Both asset and equity accounts increased. (c) Liability account increased and equity
> Choose two appropriate account names for each of the following business transactions. State whether you would debit or credit each of the accounts. (a) D Dango commenced business DD by contributing cash. (b) Cash sales by DD to customer. (c) Paid busines
> Cash sales of $2079 have caused the worksheet to be out of balance because a mistake was made when the figures were put into the worksheet. The bookkeeper accidentally increased the cash account by $2097 and increased the profit or loss account in the wo
> Complete the following table. (Note: Each row should be treated independently.) Current Non-current Current Non-current Profit/ assets + assets liabilities liabilities + Capital loss $ 200 $ 1 700 $ 1100 $4 000 $ 700 a. $19 700 50 b. 6400 400 750 151
> State the effect of each of the following business transactions for Trevor’s Trampolines. For example, in (a) we increase cash and increase capital. (a) P Trevor commenced business by injecting cash into her business. (b) Paid wages. (c) Purchased goods
> From the following descriptions of business transactions, choose two appropriate column headings for the worksheet. Justify for each description your choice of heading. (a) The owner contributes capital to the business. (b) The business purchases cabinet
> Determine the missing entries. Current Non-current Current Non-current assets assets liabilities liabilities Capital Income Expense $ 5000 $ 900 $6 000 $ 1400 $3 00 $ 5000 a. 7 000 5000 2 000 3 000 2000 $26 000 b. 21 000 61 000 9000 12 000 C. 60 100
> (a) Using the business transactions in part B, record the transactions in the ledger of Colin Clark. (b) Prepare a trial balance for Colin Clark as at 31 August 2020. (c) Prepare a statement of profit or loss for the month ending 31 August 2020. (d) Prep
> Using your knowledge of the accounting equation, solve the missing values in the following table. Assets Liabilities Equity $200 000 $58 000 a. %3! b. 66 000 $120000 250 000 C. 38 000 22 400 11 600 + d. + + + + +
> Classify each of the following according to whether it is an asset, liability or equity account. Apply your learning from the definitions in the introduction to accounting and business decision making chapter to provide a justification for each classific
> You are the bookkeeper for Chic Styles and, on review of the business’s records and reports, you realise the trial balance does not balance. Your supervisor asks you to investigate why this occurred. Explain with examples what type of errors would have c
> Can errors still exist in the trial balance if the sum of the debit and credit columns equals the same amount? If so, provide an example.
> Illustrate three scenarios of incorrect recordings that may cause a trial balance to not balance.
> Summarise the procedures you would undertake if an accounting worksheet does not balance.
> Discuss the purpose of a double-entry bookkeeping system.
> Both the journal and the ledger can be used to record a large number of transactions. Differentiate between financial recordkeeping in the journal and the ledger.
> What is meant by the concept of duality? Provide an illustration involving a business transaction where the business purchases a motor vehicle on credit.
> Describe how an accounting worksheet assists in the preparation of the statement of profit or loss and the statement of financial position.
> The following business transactions relate to Colin Clark (financial planner) for his first month of business operations in August 2020. 2020 August 1 Commenced business operations with a $300 000 cash injection of personal funds. 2 Paid monthly rent $15
> What is the purpose of a statement of profit or loss for an entity? List typical items that you would see in the statement of profit or loss for a computer service technician.
> Explain what is meant by an ‘arm’s length business transaction’ when a business buys accounting software on credit.
> Another relatively widespread business structure is a trust. What are the two main forms of trusts in Australia? What are the tax issues associated with family trusts?
> Illustrate with an example the difference in the format of the equity section of the statement of financial position between a sole trader, partnership and company.
> What are two major advantages and disadvantages of a company structure? Provide an illustration with a company listed on the ASX (such as JB Hi-Fi Ltd, CSL Ltd, BHP Billiton Ltd).
> Explain with examples the major differences between a company limited by shares (such as JB Hi-Fi Ltd) and a proprietary company (such as Coconut Plantations Pty Ltd).
> Distinguish between personal transactions and business transactions. Illustrate with five examples of each.
> You are a friend of Penny Williams, who is thinking about starting a business to sell her personalized embroidered towels. Advise Penny on the four factors that should be considered before deciding what form of business structure to operate under.
> Compare and contrast the views of Hobbes with those of Smith and Friedman.
> The following account balances, dated 30 September 2020, are of sole trader Victoria Stone (Stone Bike Hire): capital (V Stone) $108 125; hire revenue $45 000; bike maintenance $10 000; administrative expense $5000; rent expense $2750; wages $10 000; int
> Teddy Thomas, a real estate agent, requires you to prepare a statement of profit or loss for the period ended 31 December 2020: donations $120; office wages $8400; sales salaries $30 000; sales commission expense $6000; advertising $4800; rent expense $2
> Go to the Business Queensland website (www.business.qld.gov.au) and select ‘Starting a business’, then ‘Business types and legal structures’. Next select ‘Setting up a legal business’ under the heading ‘Business legal structures’. List the various consid
> Go to the ASX website (www.asx.com.au). In the search window, type ‘listing with ASX’. What are the key benefits of listing according to the ASX?
> Lou and Stu are sole traders who run their own separate businesses providing accounting and bookkeeping services. On 31 December 2019, their individual statements of financial position show the following accounts. Starting in 2020, Lou and Stu have agre
> Refer to the JB Hi-Fi Ltd consolidated statement of financial position in figure 3.3 to answer the following questions. Figure 3.3 (a) What is the major difference between the format of this statement and that of a partnership? (b) List two current asse
> Refer to the JB Hi-Fi Ltd statement of profit or loss in figure 3.2 to answer the following questions. Figure 3.2 (a) What is the major difference between the format of this statement and that of a sole trader? (b) What do you think is the purpose of th
> Explain what a transposition error is and identify how you can detect that one has occurred.
> Using the information shown in exercise 3.30, produce a statement of profit or loss for the period ended 30 September 2020. In exercise 3.30 Presented below are financial statement items for Jupiter Planet (a sole trader) for the period ended 30 Septemb
> Presented below are financial statement items for Jupiter Planet (a sole trader) for the period ended 30 September 2020. Determine which items should appear in the statement of profit or loss and which items should appear in the statement of financial po
> Jenny and Margaret agree to form a partnership on 16 September 2020 to supply first-aid kits to motor vehicle dealers. They agree on the following market values given to them by an independent valuer. • Jenny’s contribution: – Cash $10 000 – Inventory $1
> Produce the shareholders’ equity section of the statement of financial position for Geelong Davis Ltd, a public company. Use the following information: share capital (200 000 $1 ordinary shares and 30 000 $4 preference shares, all fully paid up); profit
> From the six scenarios described below, indicate (giving your reasons) the business form each one is likely to take — sole trader, partnership, company or trust. (a) Conor and Ella wish to start an internet business marketing cosmetics. They are concerne
> Didi, a sole trader operating a small landscaping business, asks you to prepare her statement of financial position (showing her equity) for the year ended 30 June 2020: contributed capital $26 440; profit $5600; drawings $3600; cash $36 000; fixtures an
> What is risk management and why is it included in the ASXCGC Corporate Governance Principles and Recommendations?
> Identify and discuss five fundamental principles of the Code of Professional Conduct.
> What is an IFRS and how does it impact on standard setting in Australia?
> How do accounting standards assist large companies?
> Describe the structure of corporate governance as put forward by Farrar.
> Comment on the approach put forward by The Ethics Centre in deliberations of an ethical issue.
> Briefly describe how the AASB develops accounting standards.
> Explain the relationship between the Australian Accounting Standards Board (AASB) and the International Accounting Standards Board (IASB).
> Are ethics and corporate governance important topics in the study of accounting and the business environment? Why or why not?
> ‘Complying with the law will always mean that you are acting ethically.’ Discuss this statement.
> 1. A business organised as a separate legal entity that is owned by shareholders is a: (a) Family trust. (b) Company. (c) Sole trader. (d) Legal partnership. 2. The shareholders’ equity section of the statement of financial position for a public company
> What do the following terms mean? (a) Unlimited liability (b) Mutual agency (c) Dividend (d) Preference shares (e) Unit trust
> What are the major differences in equity funding between a partnership and a public company?
> Differential reporting is applicable to which entities? Name four areas where the reduced disclosure requirements apply.
> Go to the ATO website (www.ato.gov.au) and provide a definition for each of the following. (a) Pay as you go (PAYG) (b) Capital gains tax (CGT) (c) Goods and services tax (GST) (d) Tax file number (TFN) (e) Wine equalisation tax (WET)
> Differentiate between financial and management accounting. Give an example of how a management accounting report would be incorporated into financial accounting reports.
> It is important that partners draw up a partnership agreement. What details should be specified in this agreement?
> Illustrate with an example how sole traders and partners are taxed in Australia. What are the advantages and disadvantages compared to paying company tax?
> Compare and contrast the roles of the Financial Reporting Council (FRC) and the Australian Securities Exchange (ASX).
> Discuss whether an accountant should take on an appointment outside their area of expertise.
> What are the benefits of professional association membership for accounting graduates?
> One of the limitations of accounting information is the historical nature of the financial reports. Provide an example of an asset from the statement of financial position of Qantas Group where the asset’s historical cost may not reflect its current valu
> Outline the major maxims of Kantianism and describe what they mean.
> What is the relationship between the AASB and international standard-setting bodies such as the IASB?
> Compare and contrast teleological theories and deontological theories. Discuss whether you think these theories have a place in modern business society.
> Give an example of the role accounting information plays in the investment planning for a retired footballer and a retired schoolteacher.
> What is a business transaction and how does it relate to the accounting process? Illustrate the concept of a business transaction with five examples relating to an SME such as a provider of Chinese therapeutic massages.
> You are an accountant with XYZ Ltd and are confronted with the situations described below. State in each case whether there has been a breach of the APES 110 Code of Ethics for Professional Accountants. (a) You are appointed the auditor of Jones Ltd, a s
> You are faced with the following situations. Use the Langenderfer and Rockness model to help determine the course of action you would take. (a) You are a manager within a large entity and need to make a recommendation to the CEO on which tender to accept
> Every time there is a spate of corporate collapses, the accounting profession has been closely scrutinised and many members of the professional bodies have appeared before disciplinary hearings. The professional bodies publish a professional conduct annu
> As the director of a company, you need to make a decision regarding whether to shift the manufacturing operations offshore. Over recent years, the influx of cheap imports has made it harder to compete on a cost basis. However, shifting the operations off
> Comment on the following situations in relation to the ASX CGC Corporate Governance Principles and Recommendations. (a) A member of a board of directors insists on being involved in the employment of personnel. (b) The auditor of a company is the brother
> Your client MJM Ltd consults with you in relation to the new financial information system that it wishes to have installed. You are technically competent in this area, and so accept the engagement. You carry out an analysis of software available and make
> Members of the two accounting professional bodies, CPA Australia and the Chartered Accountants of Australia and New Zealand (CAANZ), have to comply with the APES 110 Code of Ethics for Professional Accountants. This code lists several possible threats to
> Outline some of the legal constraints in legislating for the consideration of stakeholder interests.
> I put it to you that the directors are responsible to the shareholders for profit in perpetuity; and that this general expression of a principle permits, indeed requires, directors to pay full regard to their employees, to labour relations generally, to
> Describe the relationship between the revised Conceptual Framework and the accounting standard AASB 116 Property, Plant and Equipment.
> The directors of Carlos Ltd provide you with the following financial information for the period ended 30 September 2019: selling expenses $96 000; occupancy expenses $12 000; finance expenses $26 400; loss due to legal action $5400; administrative expens
> CPA Australia and CAANZ have designated areas on their websites for technical resources and updates. Go to each of the respective bodies’ websites (www.cpaaustralia.com.au and www.charteredaccountantsanz.com) and summarise the resources provided.
