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    Lecture 1 - Questions

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    Kevzinoo
    1) The document provides examples and exercises related to financial accounting and the key financial statements: the income statement and balance sheet. 2) Questions ask the reader to classify different line items as either assets, liabilities, revenue, or expenses based on accounting definitions. Other questions require preparing partial or full financial statements based on provided financial information. 3) Examples of asset, liability, revenue and expense accounts are given, as well as exercises that test understanding of the accounting equation and how to prepare basic financial statements.

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    Lecture 1 - Questions

    Uploaded by

    Kevzinoo
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    1) The document provides examples and exercises related to financial accounting and the key financial statements: the income statement and balance sheet. 2) Questions ask the reader to classify different line items as either assets, liabilities, revenue, or expenses based on accounting definitions. Other questions require preparing partial or full financial statements based on provided financial information. 3) Examples of asset, liability, revenue and expense accounts are given, as well as exercises that test understanding of the accounting equation and how to prepare basic financial statements.

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    Lecture 1- Questions

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    1) The document provides examples and exercises related to financial accounting and the key financial statements: the income statement and balance sheet. 2) Questions ask the reader to classify different line items as either assets, liabilities, revenue, or expenses based on accounting definitions. Other questions require preparing partial or full financial statements based on provided financial information. 3) Examples of asset, liability, revenue and expense accounts are given, as well as exercises that test understanding of the accounting equation and how to prepare basic financial statements.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    13 views3 pages

    Lecture 1 - Questions

    Uploaded by

    Kevzinoo
    1) The document provides examples and exercises related to financial accounting and the key financial statements: the income statement and balance sheet. 2) Questions ask the reader to classify different line items as either assets, liabilities, revenue, or expenses based on accounting definitions. Other questions require preparing partial or full financial statements based on provided financial information. 3) Examples of asset, liability, revenue and expense accounts are given, as well as exercises that test understanding of the accounting equation and how to prepare basic financial statements.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    SESSION 1 - INTRODUCTION TO FINANCIAL

    ACCOUNTING AND THE FINANCIAL STATEMENTS


    LECTURE:
    Q1 Question from Wood and Sangster
    Which of the following are shown under the wrong headings?

    ASSETS LIABILITIES
    Cash at bank Loan from J Graham
    Fixtures Machinery
    Creditors Motor vehicles
    Building
    Stock of goods
    Debtors
    Capital
    (Business Accounting 1, Frank Wood & Alan Sangster, FT Prentice Hall)

    Q2 You are provided with the following list of balances the year ended 31/12/20X5:

    £ A/L/R/E B/S or P&L


    Shop premises at net book value 45,000
    Selling & distribution costs 75,000
    Vehicles at net book value 30,000
    Debtors 15,300
    Creditors 5,000
    Sales 200,000
    Purchases 90,000
    Fixtures & fittings at net book
    value 4,000
    Stock as at 1/1/X5 3,000
    Administration costs 55,000
    Bank 5,500
    Petty cash 985
    Capital 100,000
    Retained profit 18,785
    Required:
    Classify each item as to whether it is an asset (A), liability (L), revenue (R) or an
    expense (E)

    Exercise from Thomas & Ward

    Q7.7 Roger has a building worth £25,000, land worth £125,000, a car worth
    £10,000. He has mortgage on the building of £20,000 and a car loan of
    £12,000. He owes R. Graham £2,000 for supplies bought during the year.
    These have all been used up. He sold goods to G. Live for £1,000. G. Live
    has not yet paid him.

    Required:
    a) Use the accounting equation to determine Roger’s net worth (capital
    balance).
    b) Prepare a statement of financial position in vertical format using the
    accounting equation information

    Exercise from Thomas & Ward

    Q7.9 Prepare J. Magee’s statement of financial position (balance sheet) as at


    31 December 20X4 from the following:

    £
    Office machinery 18,000
    Trade payables 1,000
    Sundry payables 800
    Inventory of goods 2,900
    Stationary inventory 200
    Cash at bank 550
    Trade receivables 8,150
    Sundry receivables 2,000
    Note: You have to determine J. Magee’s capital balance.

    Q3 You have been provided with the following trial balance for P. Salmon who
    trades under the name Salmon for the year ended 31/12/20X5:

    £ £
    Shop premises at net book value 45,000
    Fixtures & fittings at net book
    value 4,000
    Vehicles at net book value 30,000
    Debtors 15,300
    Creditors 5,000
    200,00
    Sales 0
    Purchases 90,000
    Stock as at 1/1/15 3,000
    Administration costs 55,000
    Selling & distribution costs 75,000
    Bank 5,500
    Petty cash 985
    100,00
    Capital 0
    Retained profit 29,985
    Drawing
    s 11,200
    334,98
    334,985 5

    Closing stock is valued at £5,000.

    Required:
    Construct a statement of profit or loss for the year ended 31/12/X5 and a
    statement of financial position at that date for this sole trader business.

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