(TIỂU LUẬN) THẢO LUẬN FINANCIAL ACCOUNTING 2 h is registered for sales tax the managing director has asked four staffs in the accounts department why the output tax for the last quarter

BỘ GIÁO DỤC VÀ ĐÀO TẠO TRƯỜNG ĐẠI HỌC THƯƠNG MẠI ──o0o── ĐỀ TÀI THẢO LUẬN HỌC PHẦN: FINANCIAL ACCOUNTING NĂM HỌC 2021 – 2022 EXERCISE FOR CHAPTER 11 AND 12 Lecturer: Phạm Thanh Hương Class: K55DD1 Group 5: Leader Đào Phương Thúy Phạm Thị Thu Thảo Nguyễn Thu Thủy Phạm Thu Trang Nguyễn Đình Trường Nguyễn Mạnh Tùng Quách Nguyễn Nhật Tường Nguyễn Thị Tố Uyên Nguyễn Hải Yến Hà Nội, 4/2022 I CHAPTER 11: REVENUE Question 1: H is registered for sales tax The managing director has asked four staffs in the accounts department why the output tax for the last quarter does not equal 17.5% of sales (17.5% is the rate of tax) Which one of the following four replies she received was not correct? A The company sold some products to businesses not registered for sales tax B The company made some sales of exempt products C The company made some sales of zero-rated products D The company had some exports that were not liable to sales tax The correct answer is: The company sold some products to businesses not registered for sales tax The other options could all be reasons why the output tax does not equal 17.5% of sales "The company sold some products to businesses not registered for sales tax" is incorrect as it makes no difference whether the customer is registered for sales tax or not Question 2: Which of the following lists is composed only of items which would appear on the credit side of the receivables control account? A Cash received from customers, sales returns, irrecoverable debts written off, contras against amounts due to suppliers in the accounts payable ledger B Sales, cash refunds to customers, irrecoverable debts written off, discounts allowed C Cash received from customers, discounts allowed, interest charged on overdue accounts, irrecoverable debts written off D Sales, cash refunds to customers, interest charged on overdue accounts, contras against amounts due to suppliers in the accounts payable ledger Question 3: A contract does not exist if A The contract was not approved in a written form B The parties of the contract have reached unanimous consent regarding termination of the contract C The contract has no fixed duration and can be terminated or modified by either party at any time D Each party to the contract has the unilateral enforceable right to terminate a wholly unperformed contract without compensating the other party  The answer is D For the purpose of applying this standard, a contract does not exist if each party to the contract has the unilateral enforceable right to terminate a wholly unperformed contract without compensating the other party [IFRS 15] Question 4: Which of the following is NOT the advantage to have the sales allowances policy? A Increasing the company’s cash flow by making older inventoty more attractive to buyers B Better understanding the percentage of returns on certain items C Items with allowances must be kept separate from other products in accounting software D Reducing reports of overstock, as the items are now able to be sold at a reduced price  The answer is C Items with allowances must be kept seperate from other products in accounting software In fact, items with allowances are harder to track in accounting software because they must be kept seperate from other products that not have this type of discount associated with them This will cause some problems when you go to restock items because it might be difficult and costly to so, which means there could also be additional costs associated with this strategy Question 5: Maria is a new accountant in Company A In the first day, she receives a sales discount for the buyer to take 2% discount in exchange for paying within 10 days of the invoice date, rather than the normal 30 days Which of the following is the best format to be noted on an invoice? A 2% 10 days – Net 30 B 2% 10 – Net 30 C 2% 10/Net 30 D 2% 10 days/Net 30  The correct answer is C 2% 10/Net 30 The typical format in which cash discount terms are recorded on an invoice is as follows: [Percentage discount][If paid within X days]/Net [Normal number of payment days] Question 6: On January 1st, Company A sends 100.000 copies of its magazines to retailers to sell on consignment The company specifies that the deadline to return unsold goods is January 31st The retail price per magazine is $10 and the price charged by Company A selling to the retailers is $5 Throughout the month of January, the retailers manage to sell 50.000 copies (the retailers notify Company A on January 30th) and there were 50.000 unsold magazines, which the retailers returned to Company A on January 31st Additionally, each magazine costs Company A $1 to make What is the correct journal entries for Company A?  Answer: - On January 1st, no journal entry is required for sending 100.000 copies of its magazines to retailers - On January 30th, journal entries for sales on consignment by retailers and for de- recognition of magazines Debit Cash: $5 x 50.000 = $250.000 Credit Sales revenue: $250.000 Debit Cost of goods sold: $1 x 50.000 = $50.000 Credit Inventory: $50.000 - On January 31st, no journal entry is required for the return of 50.000 unsold magazines from retailers Question 7: Tommy is not registered for sales tax purposes He has recently received an invoice for goods for resale which cost $450 before sales tax, which is levied at 20% The total value was therefore $540 What is the correct entry to be made in Tommy's general ledger in respect of the invoice? A Dr Purchases $450, Dr Sales tax $90, Cr Payables $540 B Dr Purchases $540, Cr Payables $540 C Dr Purchases $450, Cr Payables $450 D Dr Purchases $540, Cr Sales tax $90, Cr Payables $450 The correct answer is: Dr Purchases $540, Cr Payables $540 Tommy is not registered for sales tax purposes and therefore cannot reclaim the input sales tax of $90 Question 8: Sales (including sales tax) amounted to $28,000, and purchases (excluding sales tax) amounted to $15,000 What is the balance on the sales tax account, assuming all items are subject to sales tax at 17%? The correct answer is: Output sales tax $28,000 x 17/117 Input sales tax $15,000 x 17/100 Balance on sales tax a/c (credit) Question 9: K Co has the following contract in progress: $ 700 Total contract price Costs incurred to date 200 Estimated costs to completion 300 Payments invoiced and received 250 Required: Calculate the amounts to be recognized for the contract in the statement of profit or loss and statement of financial position assuming the amount of performance obligation satisfied is calculated using the proportion of costs incurred method Solution (a) Calculate the estimated profit: $ Total contract price 700 Minus: Costs incurred to date (200) Less: Estimated costs to completion (300) Estimated profit 200 Pe r c e n t a g e o f c o n t r a c t u a l o b l igatio ns fulfill ed: Using the assumptions of the problem, there are: Expenses incurred / Total costs incurred to complete the contract = Expenses incurred / (Incurred costs + Estimated costs to complete the remaining obligations) = 200/(200 + 300) = 40% (c) Recorded in the Balance Sheet: $ 280 Revenue (40% x $700) Minus: Total Cost - Cost of sales [40% x (200 + 300)] (200) 80 Profit (d) Recorded on Income Statement business: $ Incurred expenses 200 Recognized profits 80 (250) Minus: Payments invoiced and received 30 Contract asset Retirement of long-term bonds payable A 1, and B 2, and C 1, 2, and D 2, 4, and  The answer is A 1, and (2) Depreciaiton is added back to net income in the operating activities section because the company’s net income was reduced by the depreciation expense shown on the income statement; however, the company’s cash was not reduced by depreciation expense (Depreciation expense is referred to as a non-cash expense) (3) The loss appeared on the income statement and reduced the company’s net income However, the company’s cash did not decrease The loss needed to add back that reduced net income on the income statement so that the amount reflects the cash from operating activities (5) Merchandise inventory is a current asset Changes in current assets and changes in current liabilities are shown in the operating activities section of the statement of cash flows An increase in merchandise inventory will be shown as a deduction in the cash from the operating activities section While (2) is investing activity, (4) is financing activity and (6) is financing activity Question 5: Which of the following could appear as separate items in the statement of changes in equity required by IAS Presentation of Financial Statements as part of a company's financial statements? Dividends on equity shares paid during the period Loss on sale of investments 17 Proceeds of an issue of ordinary shares Dividends proposed after the year end A 1, and only B 1, and only C and only D All four items  The answer is C and only Dividends on equity shares paid during the period and Proceeds of an issue of ordinary shares The loss on sale of investments will have been recognised in the statement of comprehensive income Dividends proposed after the year end are disclosed in the notes, they are not recognised in the accounts Question 6: Which of the following should be disclosed in the note to the financial statements for intangible assets? The method of amortisation used The carrying amount of internally generated intangible assets The useful life of the assets The gross carrying amount, the accumulated amortisation and the accumulated impairment losses as at the beginning and end of the period A 1, and 3,4 B and only C 2, and only D only Explain: For each class of intangible assets (including development costs), disclosure is required of the following 18 - The method of amortisation used - The useful life of the assets or the amortisation rate used - The gross carrying amount, the accumulated amortisation and the accumulated impairment losses as at the beginning and end of the period - The carrying amount of internally generated intangible assets The line item(s) of the statement of profit or loss in which any amortisation of intangible assets is included Question 7: A machine was acquired years ago for $10,000 New machine with the same specification would cost $40,000 today due to inflation The current market value of the machine in its present condition is $6,000 Machine is depreciated using the straight line basis over its useful life of 10 years Using the historical cost convention, what would be the net book value of the machine today? A $4,000 B $5,000 C $6,000 D $7,000  Answer: Net book value = Cost – Accumulated depreciation = 10.000 – (10.000 x 5/10) = 5.000 The machine would be assigned a historical cost of $10.000 and the replacement value ($40.000) and fair value ($6.000) would not be considered in the valuation 19 Question 8: Blue Co has a tax liability relating to 20X7 brought forward in 20X8 of $27,000 This liability is finally agreed at $29,000, which is paid in 20X8 Blue’s accountant estimates their tax liability for profits earned in 20X8 will be $40,000 What should the charge for taxation be in Blue’s statement of profit or loss for the year ended 31 December 20X8? A $40,000 B $38,000 C $56,000 D 42,000  The answer is D The charge of taxation: 29,000-27,000+ 40,000= 42,000 In X7 Blue will only have charged 29,000 as an expense Since the actual charge turned out to be 27,000, they really should have had an expense of 29,00 in X8 However the X7 financial statements will already have been finalized and so it is too late to go back and change the figures for X7 So instead of changing things for X7, they correct the problem by charging the extra 2,000 this year (X8) instead So, the answer is correct and the full expense charged in X2 will be the 40,000 estimated for X8, plus the ‘correction’ of 2,000 (the amount undercharged in X7) Question 9: At 31 December 20X2 the following matters require inclusion in a company's financial statements: On January 20X2 the company made a loan of $22,000 to an employee, repayable on 30 April 20X3, charging interest at per cent per year On the due date she repaid the loan and paid the whole of the interest due on the loan to that date The company has paid insurance $18,000 in 20X2, covering the year ending 31 July 20X3 20 In January 20X3 the company received rent from a tenant $5,000 covering the six months to 31 December 20X2 For these items, what total figures should be included in the company's statement of financial position at 31 December 20X2? Receivables and Prepayments A 32,000 B 32,940 C 37,940 D 22,000 (1) 31/12/20X2: + Loan receivable : $22,000 + Interest receivable = $22,000 x 0.02 = $440 (2) The company paid insurance from 1/8/20X2 to 31/7/20X3 To the date 31/12/20X2, the company had used insurance for months and there are still months in the future Insurance Prepayment = $18,000 x 7/12 = $10,500 (3) Before the time of receiving the money from the tenant and on December 31, 20X2, this amount is still on the list of receivables: (Debit) Rent receivable $4,000 All of the above amounts are in accounts receivable and prepayments (Receivables and Prepayments), none of them are in accounts payable and accruals  Payables and accruals = NIL 21 Receivables and Prepayments = Loan receivable + Interest receivable + Insurance prepayment + Rent receivable = 22,000 + 440 + 10,500 + 5,000 = $37,940 Question 10: The following extract is taken from a draft version of company’s statement of cash flows, prepared by a trainee accountant $ Net cash flow from operating activities Profit before charges Depreciation charges Profit on sale of property, plant and equipment Increase in inventories Decrease in trade and other recievables Increase in trade payables 815 Cash generated from operations Four possible mistakes that may have been made by the trainee accountant are listed below The profit on sale of property, plant and equipment should be subtracted, not added The increase in inventories should be added, not subtracted 22 The increase in trade payables should be subtracted, not added The decrease in trade and other receivables should be added, not subtracted Which of the four mistakes did the trainee accountant make when preparing the draft statement? A and only B and only C and only D and only  The answer is C (2) True, because the cash flow statement is always prepared using the net income before tax (Profit before tax) to adjust the sources of money coming in and going out.) (3) True, because expenses incurred without affecting working capital will be added Depreciation costs will always be added as they are incurred without having to be paid in cash It has to be added back to show that there is actually no cash out due to depreciation expense (4) False, profits from liquidation of assets should be deducted from the balance of pre-tax profits The liquidation profit is always deducted as it is not really a trading profit (5) True, value added from inventory must be deducted This is always deducted because: Inventories increase, which means more goods are purchased or goods sold for less than goods purchased Then the cash flow will come out → Must be subtracted to show cash outflow (5) False, the impairment value from accounts receivable must be added These must always be added up because: A decrease⇔ in receivables means that money has been collected from sales invoices for the debt Received more money → Must be added to show the inflow of cash 23 (6) True, the added value from accounts payable shows that the company has borrowed more money The company has more money → Add in to show the source of money coming in So: • Liquidation profit should be subtracted, not added => Number • Dilutions from accounts receivable must be added, not subtracted => Number Additional questions Question 11: What are the statement's reporting objectives? How many methods are used to prepare it? Identify similarities and differences between them - The reporting objectives of the statement of cash flows is to provide information about important cash inflows and outflows for business decision makers It answers specific questions such as: (1) how does a company obtain its cash? (2) Where does a compay spend its cash? (3)What is the change in the cash balance? - The statement can be prepared using the direct method or the indirect method for reporting cash flows from operating activities - Similarities: Both methods report the same net cash flow from operating activities Both methods classify cash flows into operating, financing, and investing categories Both methods provide exactly the same information in the financing and investing categories Both identify the change in cash, beginning cash, and ending cash Both are acceptable methods for financial reporting - Differences: Cash flow from operating activities is determined differently The direct method determines all operating cash inflows and outflows, and then subtracts total operating outflows from inflows The indirect methodstarts with net income and 24 applies a series of adjustments to reconcile this accrual basis number to a cash basis number The direct method requires an extra section reconciling net income to cash flows from operating activities The direct method is recommended by the FASB The indirect method is more widely used Question 12: What is the statements of financial position? What are the certain line items must be presented in the statement of financial position? - Statement of financial position is a list of all the assets controlled and all the liabilities owed by a business as at a particular date: it is snapshot of the financial position of the business at a particular moment Monetary amounts are attributed to assets and liabilities It also quantifies the amount of the owners’ interest in the company: equity - Certain line items MUST be presented in the statement of financial position property, plant and equipment investment property intangible assets financial assets equity accounted investments biological assets inventories trade and other receivables cash and cash equivalents assets held for sale trade and other payables provisions 25 financial liabilities current tax amounts deferred tax amounts liabilities held for sale non-controlling interests issued capital and reserves Question 13: The following Trial balance was extracted from the Books of Mega Enterprise as at 31 December 2017 Maria Sanchez, an accountant by trade, moonlights as a personal trainer Maria is curious about her cash inflows and outflows from her personal work for the month of February Using the following information, prepare a statement of cash flows for Maria Cash for Supplies Inventory Cash for Advertising Cash Paid for Equipment Cash Loan Cash Paid for Insurance Cash Customers Cash Paid for Taxes Cash Balance, 2/1 26 Answer: Maria Sanchez Statement of Cash Flows For the Month of February Cash flows from Operating Activities Cash from Customers $2,200 Cash for Advertising ($300) Cash for Supplies Inventory ($400) Cash paid for Insurance ($700) Cash paid for Taxes ($400) Net cash provided (used) by operating activities $ 400 Cash flows from Investing Activities Cash paid for equipment ($800) Net cash provided (used) by Investing activities ($800) Cash flows from Financing Activities Cash from Bank Loan $1,000 Net cash provided (used) by Financing activities $1,000 Net Increase (Decrease) in Cash $600( = 400 – 800 + 1000) Cash and Cash Equivalents balance as at 1st February $500 Cash and Cash Equivalents balance as at End of February $ 1.100 Question 14: Paradise Company has hired you to prepare financial statements for the year ending 12/31 On your first day of work, your assistant comes to you with several items that 27 could be classified as expenses or could be classified as assets Based on your knowledge of accounting so far, determine whether the following items should be recorded as an expense or an asset 1.On 12/31, Paradise paid $14,000 to rent office space for the next twelve months 2.On 10/1, Paradise paid $40,000 for insurance that covered the company’s property for the last quarter of the year 3.On 6/1, Paradise purchased $27,000 in supplies, all of which were used by 12/31 4.On 12/31, Paradise purchased $5,000 worth of supplies for the coming month Answer : Determine whether the following items should be recorded as an expense or an asset Answer provided in the table below A Items months of the year 28 On $27,000 in supplies, all of which were used by 12/31 On $5,000 worth of supplies for the coming month 29 CỘNG HÒA XÃ HỘI CHỦ NGHĨA VIỆT NAM Độc lập – Tự – Hạnh phúc BIÊN BẢN HỌP NHÓM I Danh sách thành viên tham gia STT AI Thời gian địa điểm - Thời gian: 14h ngày 24/4/2022 - Địa điểm: zoom meeting III Nội dung họp 30 - Nhóm trưởng triển khai công việc, phân chia nhiệm vụ thảo luận cho thành viên - Các thành viên nhận nhiệm vụ, đồng thời đưa đóng góp, ý kiến thân thảo luận - Tất thắc mắc, ý kiến đóng góp q trình làm nhóm thảo luận Group Messenger IV Đánh giá - Buổi họp diễn nghiêm túc, đầy đủ thành viên - Các thành viên đóng góp ý kiến tích cực Nhóm trưởng 31 ...CHAPTER 11: REVENUE Question 1: H is registered for sales tax The managing director has asked four staffs in the accounts department why the output tax for the last quarter does not... = $22 ,000 x 0. 02 = $440 (2) The company paid insurance from 1/8 /20 X2 to 31/7 /20 X3 To the date 31/ 12/ 20X2, the company had used insurance for months and there are still months in the future Insurance... operating, financing, and investing categories Both methods provide exactly the same information in the financing and investing categories Both identify the change in cash, beginning cash, and ending