Question

Question No.1 What would be the Retained Earnings of closing balance

if Opening balance: $4400 Profit of the year $550 and OCI: $300

Question No. 2 During 2018 Co. paid $ 90,000 for factory rent for the period 1 November 2017 to 30 April 2019. What figures should appear for rental expense and prepayments (accruals) for year ended 31 December 2018?

a. rental expense $ 60,000, prepayments (accruals) $ 30,000

b. rental expense $ 60,000, prepayments (accruals) $ 20,000

C. rental expense $ 67,500, prepayments (accruals) $ 22,500

d. rental expense $ 60,000, prepayments (accruals) $ 15,000

Question No. 3 When a company has a payroll (would like to pay wages to employees), the transaction will affect the balance sheet and the statement of comprehensive income as follows:

1)The effect is Statement of Comprehensive income.

2)The effect on the SFP

What will be the effect from below Available Options for 1) & 2)

Net income increases

OCl increases

Only Equity and Liabilities side changes

Only Assets side changes

Net income (P/ L) decreases

Both sides increase

Both sides decrease

OCI decreases

"Everything is Fine" Co. has a Retained Earnings T-account at the beginning of 2019 (01.01.2019), that can be seen below:   

Retained Earnings

B/F 8,000

The Company had the following trial balance at the end of 2019 (31.12.2019):

Account Payables: $2100

Cash Equivalents: $4710

Revenues: $6540

Wages expenses: ($1140)

Cost of Goods Sold: ($1630)

Raw-materials: $3160

Share Capital: $21970

Share Premium: $28370

Calculate the closing amount of Equity at the end of 2019 (31.12.2019).

Question 4: Cash from sales of inventories is considered an operating activity on the cash flow statement. (T/F)

Question 5: Where would you put the`lady behind the cash register in a retail company in the Balance Sheet of a business enterprise?

a. the. Non-current asset, tangibles, because she physically existed

b. Current asset, inventory, because her skills can be sold to another retail company

c. Non-current asset, intangible, because the Company only owns her skills, which is intangible

d. Not part of the Balance sheet

Question 6: Declaring dividend will decrease the retained earnings. (T/F)

Question 7: If the Company's total revenues are $80300 and all the expenses are $27800, then the profit will be?

Question 8: Where would you put the Audi Cars at automobile manufacturer company in the Balance Sheet of a business enterprise?

a. Current asset, tangibles

b. Current asset, inventory

c. Non-current asset, intangible

d. Not part of the Balance Sheet

Question 9: If a Company had:

$24700 Inventory

$8400 Account Payable

($5100) Cost of Goods Sold

$7800 Share Capital

($8000) Retained Earnings

$8600 Revenues

$1400 Dividend income

$5100 Software

$7600 Know-how

$13720 Work in Progress

Then the Company's Intangible assets would be?

Question 10: The Notes part of the IFRS financial statement cannot be more than 200 pages. (T/F)

Question 11:

Opening Share Capital: $ 53,800

Purchase (inventory): $ 3100

Cost of Goods Sold: $ 7500

Opening Cash and Cash Equivalents: $ 7,500

Closing inventory: $ 1700

Calculate Opening Inventory?

Where should EPS be presented in the financial statements?

a, Statement of Comprehensive Income

b, Statement of Financial Position

€, Statement of Changes in Equity

d, Notes to the financial statements

Choose one:

a.the. Statement of Changes in Equity

b. Statement of Comprehensive Income

c. Statement of Financial Position

d. Notes to the financial statements

Answer 1

Sol :

1)

Opening Balance of Retained Earnings $4400

ADD :Profit for the Year $550

LESS :Other Comprehensive Income $300

Closing Balance of Retained Earnings $4650

Note : Other comprehensive income (OCI) includes unrealized gains and losses reported in the equity section of the balance sheet that are netted below retained earnings.It is excluded from net income because the gains and losses have not yet been realized.

2)

Total Rent Paid for the period 1st Nov 2017-30April 2019 (18 Months) = 90,000

Rental Expense for the period 2018 Jan -Dec (12 Months ) = 90,000*12/18 = 60,000

Prepaid Rent (Jan-April) 4 Months =90000*4/18 = 20,000

So the correct option is b) rental expense $ 60,000, prepayments (accruals) $ 20,000

3)

a)Payroll Payable cannot have a effect on OCI and has effect on Liability side of Financial Position(Balance Sheet) and Payroll decreases the net Income.

b) Total Equity

Share Capital $21970

Share Premium    $28370

Retained Earnings $8000

Equity $58,340

4)

Operating activities include the production, sales, and delivery of the company's product as well as collecting payment from its customers. This could include purchasing raw materials, building inventory, advertising, and shipping the product.So sale of invetory is a Operating activity

5)

Not part of the Balance sheet.Should be in the payroll.

6)

When the dividends are paid, the effect on the balance sheet is a decrease in the company's retained earnings and its cash balance. In other words, retained earnings and cash are reduced by the total value of the dividend

When most people think of dividends, they think of cash dividends. However, companies can also issue stock dividends. When a company issues a stock dividend, it distributes additional quantities of stock to existing shareholders according to the number of shares they already own. Dividends impact the shareholders' equity section of the corporate balance shee the retained earnings, in particular.

7)

Total revenues = $80300

Expenses = $27800

Net Profit = $52500

8)

The correct option is b) Current Asset, Inventory

It is a goods to the company.

9)

Intangible assets of the company

$5100 Software

$7600 Know-how

10)

There is No limit on pages of Notes to FS.It can be based on size of entity & complexity.

11)

COGS = Opening Inventory+purchases -closing Inventory

$7500= Opening Inventory +$3100-$1700

Opening Inventory = $6100

12) EPS is presented in Notes to Financial Statements