Accounting Questions from the 2009 Mid-Year

[Flaming_Arrow]

for the missing credit sales question... doesnt make sense to say net profit under the revenue heading since it isn't revenue. and by extentision, if you chose net profit, you might aswell chose gross profit and adjusted gross profit

Net Profit = Revenues - Expenses

[turley]

i'm not sure what you are supporting
do you mean by 'Net Profit = Revenues - Expenses' we can or cannot treat it as revenue?

[Flaming_Arrow]

i'm not sure what you are supporting
do you mean by 'Net Profit = Revenues - Expenses' we can or cannot treat it as revenue?

we cant

[Eddyg_235]

just a question, with 1.8 the cash v profit question, i said that the owner may have sold a non current asset resulting in an increase in cash balance but not profit.
is this right??

[taylor tay bags]

That's possible but not relevant to unit 3. I'm pretty sure sales of NCA is unit 4?

[phanphy]

just a question, with 1.8 the cash v profit question, i said that the owner may have sold a non current asset resulting in an increase in cash balance but not profit.
is this right??

that example is fine, so long as you specified which non current asset was sold

[rhjc.1991]

1.7 A credit sale that occurred in June has not been recorded State the effect of this omission on the profit and loss statement     

Revenues:
Credit Sales: Understated
Net profit: overstated
Expenses:
Cost of sales Expense: understated

I would have put:

Credit Sales: understated
Net profit: understated

Revenue:
Credit Sales: understated

Expenses:
COS: understated
Stock Loss: overstated

Stock Loss is overstated, because when you do physical stocktake at the end of the reporting period, you would realise you have less stock than you actually do, and this would be recorded as Stock Loss. Since COS was understated earlier, the influence on Other Expenses total would be none.

However, Credit Sales was understated before, thus the net effect of net profit would be understated.

Technically, you would have a high bank balance than expected, so this should be recognised as a revenue item, resulting in Net profit = no effect, but this is beyond the scope of the course.

If I got some facts wrong, it could be because I haven't seen the exam.

[Flaming_Arrow]

1.7 A credit sale that occurred in June has not been recorded State the effect of this omission on the profit and loss statement     

Revenues:
Credit Sales: Understated
Net profit: overstated
Expenses:
Cost of sales Expense: understated

I would have put:

Credit Sales: understated
Net profit: understated

Revenue:
Credit Sales: understated

Expenses:
COS: understated
Stock Loss: overstated

Stock Loss is overstated, because when you do physical stocktake at the end of the reporting period, you would realise you have less stock than you actually do, and this would be recorded as Stock Loss. Since COS was understated earlier, the influence on Other Expenses total would be none.

However, Credit Sales was understated before, thus the net effect of net profit would be understated.

Technically, you would have a high bank balance than expected, so this should be recognised as a revenue item, resulting in Net profit = no effect, but this is beyond the scope of the course.

If I got some facts wrong, it could be because I haven't seen the exam.

there is only one row for expenses
i think the answer should be Stock Gain Understated due to fact stock loss is overstated

[rhjc.1991]

well, if the question had a positive stock gain, you would be right.

[sunniya]

-with the creditors schedule there were 3 creditors
-for bell computing probably reliability and yeh u would have had to talk bout verifying the accuracy of the schedule against the statement of accounts
-with the equities section you had to show current and non current liabilities as well as owners equity
- with the ommision of a credit sale the second revenue was stock gain. i know i was like wtf i think it was overstated but im not too sure. net profit is not a revenue
-with the question where the owner stated they dont want to make a profit etc. i think the only acceptable answer was dep'n because normally you have to draw you example from the scenario, unfortunately i didnt think of it until i got outa the exam
-with that question where you had to record the stuff with the computer and all you were supposed to record it at market value and the characteristic was relevance
- ur other answers all seem right
-also i dont think too many ppl have realised this but with the last lot of BDA question when the owner withdrew stock back in may the correct entry is not to dr. drawing and cr. stock control
but rather dr. drawings and cr.stock loss as it would have been recognised as a stock loss at the end of the rp. unfortunately i thought of that in the exam but i thought you wouldnt record anything at all but u had cr. stock loss and dr.drawings
- and did anyone else put the balance in the cfs as 20,000? its 0 , realised after exams and that sucked.
anywhooo hope thats useful