Businesses providing taxable goods and services in Canada must register to collect either GST or HST, depending on where the business is registered. The federal government has set the GST rate at 5%. The HST varies by province. Since July 1, 2010, the province of Ontario has had a rate of 13% HST. A company must remit its GST/HST collections either on a monthly, quarterly, or annual basis, depending on the amount of annual revenue. At the end of each fiscal year, registrants must file a return summarizing the collection of GST/HST, the GST/HST paid by the registrant (input tax credits or ITCs), and periodic payments made to the Canada Revenue Agency (CRA). The CRA then uses this information to calculate a business’s maximum periodic instalment payment for the following year. The government gives small businesses with annual revenues of under $30 000 the option of registering to collect and remit. If businesses choose not to register, they do not have to charge GST/HST on their goods or services. The disadvantage is that they are then ineligible for a credit on the GST/HST paid on their supplies. If a business has registered and has annual taxable revenues less than $400000, the Quick Method can be used to calculate ITCs. When using the Quick Method in Ontario, the registrant charges customers 13% HST on sales of goods and services. The ITCs for the business are calculated by adding all purchases and expenses including the HST, and then subtracting employees’ salaries, insurance, and land. The taxable expense amount is then multiplied by 13/113. The result is the amount of ITC. Under the Quick Method, the numbers in the calculation vary by province.

a. Simon operates an HST-registered mobile glass repair service in Ontario. His service revenue for the year is $28 000. His HST taxable purchases amounted to $4000. Simon does not use the Quick Method for claiming ITCs. By calculating the difference between the HST he collected and the HST he paid, determine Simon’s HST remittance to the CRA.

b. Courtney operates a souvenir gift shop in Ontario. Her business is registered for the Quick Method of calculating ITCs. Her HST taxable sales were $185 000 for the year. HST-taxable purchases of goods for resale were 47% of sales. In addition, Courtney paid $48 000 in purchases and expenses, which included $42 000 for salaries and insurance.
i) Calculate how much HST Courtney remitted to the CRA when using the Quick Method.
ii) If she had not chosen to use the Quick Method of calculating ITCs, how much HST would she have to remit?
iii) What is the difference in remittances under the two methods?

20. A weakness of many struggling retailers this year may be due to the cost of operating too many branch stores with their high overhead - on top of the pandemic.

True or False

21. Warby Parker is a socially conscious accessories and apparel company that has built a global movement connecting customers to social change.

True or False

22. Demographics include population or consumer statistics regarding socioeconomic factors such as age, income, gender, occupation, education, family size, etc.

True or False

23. The three basic service levels in brick-n-mortar retailers are self-service, self selection and phone service.

True or  False

25. Product depth is the variety within each assortment category, with a  deep assortment having  many sizes or color offerings while a shallow assortment  has few size or color offerings.

True or false

26. A commissary store is a retailer that serves the environment in which it is housed, such as a hair/nail salon  or gift shop in a hotel lobby.

True or false

27. A big box retail location is a mixed-use property where one building can house retail/ restaurants/gyms/offices/ services on lower levels, and apartments/condos above on upper floors.

True or false

30. Shop! Retail Environments is an example of a trade periodical while  Inc. Magazine is an example of a consumer periodical.

True or false

31. A broad assortment contains  many styles of a product category , while a narrow assortment contains few styles.

True or false

32. A liquid asset is a reference to cash on hand or an asset that can be readily converted to cash; a non-liquid asset is not readily converted to cash – i.e., property, as there is no guarantee it will sell within a certain time period.

True or false

33. The three major levels of retail competition are Product Field, Subfield and Assets/Liabilities.

True or false

34. Referring to Ilse Metchek's guest presentation, The California Fashion Association (CFA) is the Business-to-Business (B2B) forum for California's Apparel and Textile Industries.

True or false

35. Consumers being shown the breakdown of the retail price of the products they buy - what the labor, materials, duties and transport as well as the store's profit - is known as retail vision.

True or false

Watch Me Flex (WMF)

Watch Me Flex (WMF) is a watch retailer based in Shanghai, China. It operates as a partnership between three owners, Eric, Nicolas, and Alvin. It specializes in the distribution of luxury branded watches, such as Rolex, Patek Phillipe, and Audemars Piguet. Due to the falling economic growth in China, WMF has been facing declining sales revenue during the past year. Further, with the crackdown of corruption, The State Administration of Taxation is reviewing many businesses. To prepare for WMF the owners hired a

Table 1: Select financial information for WMF for 2019. Figures in Chinese yuan (¥).

Items (¥)

Sales revenue 12,000,000

Total current assets 2,570,500

Total current liabilities 2,880,780

Utilities 95,320

Cost of goods sold (COGS) 10,500,000

Equity X

Rent 155,000

Salaries Y

Long-term bank loan 970,500

Depreciation (in 2019) 77,200

Net fixed assets 1,350,500

Total expenses 1,218,400

Interest 123,500

Promotion expenses 30,780

The State Administration of Taxation in China stipulates a standard corporate tax rate of 25%. The fiscal year ends on 31 December for WMF.

(a) State two features of a partnership. [2 marks]

(b) Using the financial information provided in Table 1, calculate the value of X (equity) for WMF

(show all your working). [2 marks]

(c) Using the financial information provided in Table 1, calculate the value of Y (salaries) for

WMF (show all your working). [2 marks]

(d) On a separate piece of paper, construct a profit and loss account for WMF for the year ending

2019. [4 marks]

Calculate the 5 number summary and the interquartile range of the following data:

37, 23, 3, 52, 35, 27, 28, 30, 41, 59, 20, 31, 48, 13, 937, 23, 3, 52, 35, 27, 28, 30, 41, 59, 20, 31, 48, 13, 9

Question 7

You have just taken on a role as Accountant for a garden and giftware shop called Allenby Home & Garden. The Chief Executive Officer (CEO) has asked you to review the organisations internal controls and asks you to re-allocate roles between all staff and yourself to maximize internal control of cash, and improve current procedures to assist this. The current staff and roles are as follows:

• Jane (Sales Assistant) works at the cash register which has a float of $200. Most in-store customers pay by cash, but if they are unable to pay immediately, Jane will sometimes allow them to pay in instalments for their purchase. When this is done, she will record the transaction in the sales ledger. Jane can also refund customers if requested by the customer. The cash in the till is reconciled every Friday by Jane against till records and updated on the accounting system against Cash Sales. The cash received during the week is given to Trish for banking, and the float is returned to the till.

• Trish (Accounts Clerk) works in Accounts and prepares sales invoices for wholesale customers and inputs accounts payable invoices. When accounts payable invoices need paying she identifies these invoices, and writes a cheque from the cheque book stored in her top drawer. Trish also opens all the mail, and records cheques and cash received from credit customers on the accounting system, and does a weekly banking of all cash and cheques received. Trish also records electronic payments received against customer accounts, and does a monthly reconciliation of the bank statement against the accounting records. Trish reconciles and reimburses the petty cash tin that is kept in the safe and used for milk/coffee/tea purchases for the lunchroom and any other small ad-hoc purchases.

• John (Chief Executive Officer) co-signs cheques with Trish.

• Your role (Accountant) has not yet been fully defined other than managing internal

  controls, preparing general journals and monthly/yearly financial statements.

  Required:

1. i) Explain how you could re-allocate tasks mentioned above between existing staff and yourself to maximise internal control of cash?

   [15 marks]

2. ii) What additional procedures would you recommend to maximise internal control of cash?

   [5 marks]

You have just taken on a role as Accountant for a garden and giftware shop called Allenby Home & Garden. The Chief Executive Officer (CEO) has asked you to review the organisations internal controls and asks you to re-allocate roles between all staff and yourself to maximize internal control of cash, and improve current procedures to assist this. The current staff and roles are as follows: • Jane (Sales Assistant) works at the cash register which has a float of $200. Most in-store customers pay by cash, but if they are unable to pay immediately, Jane will sometimes allow them to pay in instalments for their purchase. When this is done, she will record the transaction in the sales ledger. Jane can also refund customers if requested by the customer. The cash in the till is reconciled every Friday by Jane against till records and updated on the accounting system against Cash Sales. The cash received during the week is given to Trish for banking, and the float is returned to the till. • Trish (Accounts Clerk) works in Accounts and prepares sales invoices for wholesale customers and inputs accounts payable invoices. When accounts payable invoices need paying she identifies these invoices, and writes a cheque from the cheque book stored in her top drawer. Trish also opens all the mail, and records cheques and cash received from credit customers on the accounting system, and does a weekly banking of all cash and cheques received. Trish also records electronic payments received against customer accounts, and does a monthly reconciliation of the bank statement against the accounting records. Trish reconciles and reimburses the petty cash tin that is kept in the safe and used for milk/coffee/tea purchases for the lunchroom and any other small ad-hoc purchases. • John (Chief Executive Officer) co-signs cheques with Trish. • Your role (Accountant) has not yet been fully defined other than managing internal controls, preparing general journals and monthly/yearly financial statements. Required: i) Explain how you could re-allocate tasks mentioned above between existing staff and yourself to maximise internal control of cash? [15 marks] ii) What additional procedures would you recommend to maximise internal control of cash? [5 marks]

Benchmark Assignment - Data Analysis Case Study

The Cicero Italian Restaurant was founded by Anthony Tanaglia in 1947 in Cicero, Illinois, a suburb of Chicago. He built the business with his family from a small pizza and pasta restaurant to 10 locations in the Chicago area. Michael Tanaglia, Anthony’s grandson, moved to Arizona to escape the cold Chicago winters and opened a restaurant in the Chandler area. The Arizona restaurant gained momentum thanks to the Chicago-style pizza and quality Italian dishes. Anthony decided to expand operations in Arizona, adding a second location in Glendale. The Glendale location was managed by Michael’s son Tony.

After a year of operations, Michael had some concerns with the Glendale location. Michael does not want his family’s business to fail, and he wants his grandfather’s legacy to last. Michael also understands how important an operational evaluation can be to identify the strengths and weaknesses of a business. Michael confides his concerns to you and asks if you will do him a favor and use your quantitative analytic expertise to help him evaluate the Glendale location’s operations in three key areas: customer satisfaction, customer forecasting, and staff scheduling. As his friend, you agree – though his offer to treat you to the large pizza of your choice did not hurt.

First Evaluation

The first evaluation required an understanding of the factors that contribute to customer satisfaction and spending. Refer to the data Michael provided in the Excel spreadsheet “Benchmark Assignment - Data Analysis Case Study Data.” Identify which variables are significant to predicting overall satisfaction. Develop and interpret the prediction equation and the coefficient of determination. Based upon the data in this evaluation, what areas should Michael and Tony Tanaglia focus on to improve customer satisfaction?

Second Evaluation

The second evaluation requires a forecast of customers based upon demand. Michael reviewed data for the previous 11 months to better forecast restaurant customer volume.

Which method should, the business owner use to yield the lowest amount of error and what would be the forecast for December? Refer to the Excel spreadsheet “Benchmark Assignment - Data Analysis Case Study Template.”

Third Evaluation

The third evaluation concerns staff scheduling. Some of the customers have complained that service is slow. The restaurant is open from 11:00 a.m. to midnight every day of the week. Tony divided the workday into five shifts. The table below shows the minimum number of workers needed during the five shifts of time into which the workday is divided.

The owners must find the right number of staff to report at each start time to ensure that there is sufficient coverage. The organization is trying to keep costs low and balance the number of staff with the size of the restaurant, so the total number of workers is constrained to 15.

1-Based on these factors, recommend the staff for each shift to accommodate the minimum requirements for customer service.

IMPORTANT:

• Always put comma to separate figures.
• Wrong spelling wrong.
• Unnecessary spaces will be marked as incorrect (e.g. There are two spaces between the words accounts and receivables: Accounts Receivable)

CHART OF ACCOUNTS:

• Cash
• Accounts Receivable
• Accounts Receivable (Credit)
• Due from Factor
• Subscription Receivable
• Refundable Contract Deposit
• Claims Receivable
• Advances to Employees
• Advances to Affiliates
• Notes Receivable Discounted
• Unearned Sales Revenue
• Sales Revenue
• Unearned Interest Income
• Interest Income
• Loss on Discounting of Notes Receivable
• Loss on Factoring
• Allowance for Doubtful Accounts
• Allowance for Sales Allowances
• Allowance for Sales Discount
• Allowance for Sales Returns

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Question 1-A

On July 1, 2020, Bookshelf Co. sold goods in exchange for a P200,000 8-month noninterest-bearing note receivable. At the time of the sale, the note's market rate of interest was 12%.

What amount did Lee receive when it discounted the note at 10% on September 1, 2020?

Question 1-B

On December 31, 2020 the accounts receivable control account of Ever Co. had a balance of P191,000.  An analysis of the accounts receivable account showed the following:

What is the correct balance of trade accounts receivable of Ever Co. on December 31, 2020?

UTS: Accounting For Business Decisions A
27 MC Questions:

1. If Accounts Payable had a normal balance of $50,000 on 31^st December (end of the month) and there were debit postings totalling of $17,000 and credit postings of $32,000 during December. What would the Accounts Payable balance on 1^st December have been?
   1. $35,000 credit
   2. $65,000 credit
   3. $28,000 debit
   4. $35,000 debit
   5. $65,000 debit

2. Residual value is:
   1. Equal to the acquisition cost of a tangible operational asset.
   2. Expected amount recovered when asset disposed.
   3. Equal to acquisition cost plus repairs expenditure.
   4. The current value of an asset as of the balance sheet date.
   5. The same as book value of an asset.

3. On 1 February 2012 unearned revenue was credited for the amount of $16,000, representing revenue for eight months for the period 1 February to 30 September 2012. On the last day of the financial period, 28 February, 2012, the company should:
   1. Debit fees revenue for $14,000
   2. Credit fees revenue for $2,000
   3. Credit fees revenue for $14,000
   4. Credit fees receivable for $14,000
   5. Credit unearned fees for $2,000

4. Residual value is:
   1. Equal to the acquisition cost of a tangible operational asset.
   2. Expected amount recovered when asset disposed.
   3. Equal to acquisition cost plus repairs expenditure.
   4. The current value of an asset as of the balance sheet date.
   5. The same as book value of an asset.

5. In a period of increasing inventory prices, which inventory method will result in the highest profit (lowest expense)?
   1. FIFO
   2. LIFO
   3. Weighted average cost
   4. Cannot be determined with the limited information given
   5. This depends on the level of inventory held at the end of the period

6. James’ Company's inventory was destroyed by flood. Its records show net sales of $315,000, beginning inventory of $65,000, net purchases of $120,000 excluding GST, and a gross profit rate of 60%. What is the estimated value of the inventory?

1.     $30,000
2.     $40,500
3.     $59,000
4.     $374,000
5.     $575,500

7. Priska Star, an entrepreneur, began the year with total assets of $120,000, and liabilities of $70,000. During the year, she earned revenue of $140,000 and paid expenses of $30,000. She also invested an additional $20,000 in the business and withdrew $60,000 for living expenses. How much is the equity of the firm at year-end a) $90,00, $120,000, $130,000, $160,000 $100,000

8. Which principle provided the basis for recordings assets at cost:
   1. comparability principle
   2. real principle
   3. relevance principle
   4. reliability principle
   5. cost principle

9. According to AASB 102 Inventory must be reported at its:

1. 1. Sale price
   2. Net realisable value
   3. Market Value
   4. Lower of Cost or Net Realisable Value
   5. Acquisition Cost

10. Which of the following statements is true?

1. 1. If a debit entry is made to an account in the general journal, the same account will receive a credit entry when the amount is posted to the general ledger.
   2. If all transactions are correctly posted to the general ledger, the sum of the accounts with debit balances should be equal to the sum of the accounts with credit balances
   3. Posting occurs when numbers in the general ledger accounts are transferred to the general journal
   4. If the sum of debit balances equals the sum of the credit balnaces, this proves that there were no mistakes made in the posting process
   5. All of the above are true

11. A set of interrelated activities which when taken together define how an organisation conducts its operations is called:
    1. Supply chain
    2. Business model
    3. Value chain
    4. Joint venture
    5. Operating cycle

12. Which of the following is a characteristic of management accounting?
    1. It is used primarily by external users
    2. It often lacks flexibility
    3. It is future-oriented
    4. It involves the use of general reports relating to all areas of business
    5. The information it provides is extremely precise

13. It is usual for a retail shop to recognise revenue when
    1. The goods have been delivered to the customers premises
    2. The customer becomes legally obliged to pay for the goods
    3. The goods for sale have arrived from the supplier
    4. At the date the invoice is mailed to the customer
    5. At the date the customer's payment is received

14. The adjusting entry for supplies involves:
    1. A debit to Supplies Expense
    2. A credit to Supplies On Hand
    3. A debit to Cash
    4. A credit to Accounts Payable
    5. It depends if supplies are originally recorded as an asset or expense

15. As a starting point in the budgeting process which of the following is usually carried out?
    1. Cash budgeting
    2. Sales forecasting
    3. Variance analysis
    4. Financial statement analysis
    5. Cost estimation

16. In any organisation budgeting is important because:
    1. It provides accountants with work.
    2. It allows the organisation to know the future.
    3. It aids in financial statement analysis.
    4. It helps in the recording of transactions.
    5. It aids management planning.

17. Which of the following statements regarding the statement of cash flows is true?
    1. The statement of cash flows analyses the changes in consecutive balance sheets in conjunction with the income statement
    2. The statement of cash flows is organised to present classifications for total cash inflows and cash outflows
    3. The statement of cash flows analyses only the changes in current assets and current liabilities
    4. The statement of cash flows is an optional financial statement
    5. All of the above

18. A sunk cost is:
    1. a cost that is historical and irrelevant to future decisions
    2. an outlay expected to be incurred in the future because of a decision
    3. a historical cost that may be relevant to future decisions
    4. relevant to a decision because it changes depending on the alternative selected
    5. a cost that can be hidden

19. Carin’s Corner is a cafe specialising in making Turkish coffee. Being new, it can also afford to purchase 60 cups for $2 each. The cups come with matching saucers for $0.40 per saucer. Beans are purchased in 1kg bags for $17 each, capable of providing enough coffee for 60 persons. It buys 10 bags of coffee beans. It serves 400 people in its first week selling coffee for $3.80 per cup. Based on the scenario above, how much does the ‘fixed costs’ amount to at the end of the first week?

1.              $120
2.             $140
3.              $144
4.             $ 314
5.             $ 1520

20. Which of the following items is NOT important to future decision making

1. 1. Net Cash Flows
   2. Sunk Costs
   3. Relevant Costs
   4. Fixed Costs
   5. Variable Costs

21. Andrea’s Mowers manufactures two products; a mower and a blower. The following data is available:

The company can manufacture two mowers per machine hour or three blowers per machine hour. Andrea’s Mowers has production capacity of 2500 machine hours per month. The contribution margin per machine hour for the blower is:

1.      $65
2.      $108
3.      $324
4.      $233
5.      $466

22. The excess of expected sales over break-even sales is:

1. 1. contribution margin
   2. margin of safety
   3. net profit
   4. sales revenue
   5. unexpected sales

23. Matt Pty Ltd paid six months’ rent on June 1 and debited Prepaid Rent $18,000. To be able to prepare accurate financial statements on June 30, Matt Pty Ltd should make an adjusting entry that includes:

1. 1. credit Rent Expense $18,000
   2. debit Prepaid Rent $15,000
   3. debit Rent Expense $3,000
   4. credit Prepaid Rent $21,000
   5. nothing – there is no need to make an adjusting entry

24. If Net Sales Revenue is $760,000 Gross profits $340,000 and Operating expenses are $280,000. What is the Cost of Goods Sold and Net Profit or Loss?

1.     COGS $420,000 and Profit $140,000
2.     COGS $420,000 and Profit $60,000
3.     COGS $760,000 and Loss $20,000
4.     COGS $480,000 and Profit $280,000
5.     None of the above

25. Cost of Goods sold is $26,000. Beginning inventory is $12,000. Ending inventory is $12,000. If there is no freight-in and total purchases are $30,000, calculate purchase returns and allowances?

1.      $1,000
2.      $2,000
3.      $3,000
4.      $4,000
5.     Cannot be calculated because of the limited information given

26. Nguyen sells two types of products X and Y. Product X sells for $35 per unit and has a variable cost of $20. Product Y sells for $50 and has a variable cost of $30. Total fixed costs are $20,000. Nguyen typically sells three X’s for every one Y. The break-even point in units is:

1.        500
2.        1,231
3.    1,500
4.        2,000
5.        10,000

27. Amanda Wong is a forensic accountant at Sheng’s Chartered Accountants. One of Amanda’s main roles as a forensic accountant is:
    1. Advising clients on investment options.
    2. Interpreting financial statements prepared under different accounting standards.
    3. Responsibility for the financial archives of large corporations.
    4. Pursuing customers who have overdue accounts with a business.
    5. Examining financial records and identifying fraudulent transactions

Please answer the following MC's. Thank you!