Preparing Financial Statements phần 6 docx

43 Study Period 20 continued 10 The following information is available for the year ended 31 December 19X9 for M. Ski Co, a well-run company: $ Opening cash 1,000 Closing cash 2,000 Opening balance on the payables' control account 8,000 Closing balance on the payables' control account 10,000 Opening balance on the receivables' control account 12,000 Closing balance on the receivables' control account 14,000 Cash paid to payables in the period 9,000 Opening inventory 6,000 Closing inventory 7,000 Mark up on Cost – 10% Assuming the information above is complete, what was the cash introduced or drawings during the period? A $2,000 B $1,000 C $5,000 D $6,000 You will find the solutions to this test at the end of this Study Programme. If you answer more than 5 questions correctly, your performance is satisfactory; if you answer more than 7 correctly, you are doing very well. You are now ready to attempt the first course exam. These exams are designed to give you some question practice at an early stage in your studies to enable you to obtain feedback on exam technique. Don’t worry too much if you have to revert to the material when answering questions. Obviously it will be beneficial to attempt them without reference to your Study Text and notes, but it is the technique in producing answers that is the valuable element at this stage. Once you have completed your attempt send your solutions, together with the front sheet, to: Marking Department BPP Professional Education Aldine House Aldine Place 142 – 144 Uxbridge Road Shepherds Bush Green London W12 8AW 44 Study Period 21 Partnership accounts Priority = Medium Examined: 6/05 Date due: Exam Guidance A note to the latest syllabus states that questions on partnership income statements may include the effects of the admission and the retirement of partners on the profit-sharing arrangements. This is a fairly straightforward procedure. Assuming that profits accrue evenly throughout the year, the profits for the year are dealt with in two sections. The profits up to the date of admission/retirement are apportioned according to the old profit-sharing ratio and the profits after that date are apportioned in the new profit-sharing ratio. Try questions 3 and 4 in progress test 3. Guidance through the Study Text These topics are covered in Chapter 18 Partnership accounts. Section Approach Essential points 1 The characteristics of partnerships Read through this carefully. Differences between partnerships and sole traders and limited liability companies 2 Preparing partnership accounts Pay particular attention to this section. Use of the appropriation account; current and capital accounts Try Question 25 and 26 in the Exam Question Bank of your Study Text Exam focus point There were 2 MCQs on partnership accounts in the June 2005 exam. 45 Study Period 21 continued Were you awake? If you've been concentrating, you should be able to answer some key questions. How does the proprietors' section of the balance sheet differ for partnerships? What goes into the capital and current accounts for each partner? What goes into the appropriation account? How do you account for a guaranteed minimum profit share? Any problems? Email (accaqueries @bpp.com) fax (020 8740 2293) or phone us (020 8740 2242/2245) Learning Resource Centre What do you want to do? How to do it! Reference Test your knowledge BPP i-Pass * Session 6: Limited liability companies and partnerships Learn interactively BPP i-Learn/BPP Virtual Campus Module 7 Improve your study skills BPP's Learning to Learn Accountancy book * * Included within your Home Study course If you want any of these products, visit: www.bpp.com/acca Common Pitfalls • Confusion between partners' current and capital accounts and what goes into each • Not practising partnership questions 46 Study Period 22 Cash flow statements Priority = High Examined: 6/05 Date due: Exam Guidance Cash flow statements can form an entire question or part of a discursive question. It is important that you are able to discuss the need for cash flow statements and the advantages and disadvantages, in addition to being able to perform calculations. Guidance through the Study Text These topics are covered in Chapter 20 Cash flow statements. Section Approach Essential points 1 IAS 7 Cash flow statements Read through this section carefully. Layout of the cash flow statement and notes 2 Preparing a cash flow statement Work through this very thoroughly. Learn the step by step method of preparation Try Question 27, 28 and 29 in the Exam Question Bank of your Study Text Exam focus point The June 2005 exam had an 11 mark question on preparing a company cash flow. 47 Study Period 22 continued Were you awake? If you've been concentrating, you should be able to answer some key questions. Why are cash flow statements needed? List the different categories of cash flow and what goes into each. What are the advantages of cash flow accounting? What are the disadvantages of cash flow accounting? Any problems? Email (accaqueries @bpp.com) fax (020 8740 2293) or phone us (020 8740 2242/2245) Learning Resource Centre What do you want to do? How to do it! Reference Test your knowledge BPP i-Pass * Session 9: Cash flow statements Learn interactively BPP i-Learn/BPP Virtual Campus Module 12 Improve your study skills BPP's Learning to Learn Accountancy book * * Included within your Home Study course If you want any of these products, visit: www.bpp.com/acca Common Pitfalls • Failure to learn the layout • Not using workings to calculate figures – it is important to use workings if your answer is to be clear and properly laid out • Incorrect workings for non-current assets. If you are given figures for opening and closing assets at cost and opening and closing accumulated depreciation you must use two T accounts (cost a/c and provision for depreciation a/c). If you are only given the opening and closing net book value then just use one T account (NBV a/c) to record all non-current asset movements 48 Study Periods 23 & 24 Interpretation of financial statements Priority = High Examined: 6/05 Date due: Exam Guidance The examiner will be looking to see whether you understand and can interpret the figures as well as being able to calculate them. Two study periods have been scheduled for this section. Guidance through the Study Text These topics are covered in Chapter 22 Interpretation of financial statements. Section Approach Essential points 1 The broad categories of ratios Read through quickly. 2 – 5 Pay particular attention to these, as ratios are always examined. Learn the different ratios and the format of a ratio analysis report Try Question 32 and 38 in the Exam Question Bank of your Study Text Exam focus point The June 2005 exam had a 9 mark question on interpretation of accounts. 49 Study Periods 23 & 24 continued Were you awake? If you've been concentrating, you should be able to answer some key questions. Give two ratios that measure profitability and return. How do you calculate earnings per share? What does gearing measure? Give two ratios that interpret movements in working capital. Any problems? Email (accaqueries @bpp.com) fax (020 8740 2293) or phone us (020 8740 2242/2245) Learning Resource Centre What do you want to do? How to do it! Reference Test your knowledge BPP i-Pass * Session 10: Interpreting company accounts Learn interactively BPP i-Learn/BPP Virtual Campus Module 13 Improve your study skills BPP's Learning to Learn Accountancy book * * Included within your Home Study course If you want any of these products, visit: www.bpp.com/acca Common Pitfalls • Failing to learn the formulae • Making no comments on the ratios, or totally inappropriate ones. Sensible comments should get you marks – please do not use words like 'bad', 'good' etc 50 Study Period 25 The IASB and financial reporting Priority = Medium Date due: Exam Guidance This area could be examined in a discursive question. The examiner’s initial guidance indicates that you should be able to discuss the different methods of accounting for changes in price levels and that questions will not be set requiring detailed calculations. Because of the transition to IFRSs on 1 January 2005, the IASB and convergence issues are very topical. Note the new IFRS 1. Guidance through the Study Text These topics are covered in Chapter 24 The IASB and financial reporting. Section Approach Essential points All Read through quickly to obtain an overview of this chapter. Understand the differences between historical cost and current value Try Question 33 and 34 in the Exam Question Bank of your Study Text. Exam focus point The December 2003 exam had a 9-mark discussion question on historical cost accounting. 51 Study Period 25 continued Were you awake? If you've been concentrating, you should be able to answer some key questions. What are the differences between historic cost and current value accounting? What are the limitations of financial accounting? What are the criticisms of the accruals concept? What is the meaning of GAAP? Any problems? Email (accaqueries @bpp.com) fax (020 8740 2293) or phone us (020 8740 2242/2245) Learning Resource Centre What do you want to do? How to do it! Reference Test your knowledge BPP i-Pass * Session 11: Reporting financial performance Learn interactively BPP i-Learn/BPP Virtual Campus Module 14 Improve your study skills BPP's Learning to Learn Accountancy book * * Included within your Home Study course If you want any of these products, visit: www.bpp.com/acca Common Pitfall • Ignoring this chapter – the examiner likes discursive type questions 52 Study Period 26 Group accounts Priority = High Examined: 6/05 Date due: Exam Guidance This could be a key discursive exam area on the question of consolidations. However you are more likely to be asked to calculate an item on the consolidated balance sheet eg consolidated reserves or minority interest. Note that goodwill is no longer amortised. It is now kept in the balance sheet subject to annual impairment reviews. You are sure to need to know this! Guidance through the Study Text These topics are covered in Chapter 21 Group accounts. Section Approach Essential points All Pay particular attention to all sections. This is a very important chapter. Learn the definitions and when there is exclusion or exemption from group accounts Know how to calculate minority interests and all items in the consolidated balance sheet Try Questions 30 and 31 in the Exam Question Bank of your Study Text Exam focus point The June 2005 exam had 3 MCQs on group accounts. [...]... After correction of these errors the gross profit percentage will be: A B 16. 7% C 31.3% D 2 33.3% 27.8% You are given the following information regarding Elva Co as at 31 December 19X9: $ 22,000 9,000 6, 000 8,000 5,000 10,000 7,000 Receivables Inventories Short term investments Trade payables Bank overdraft 10% loan stock 20X6 Income tax payable What is the acid test ratio? A 1.4:1 B 1.85:1 C 1.12:1...Study Period 26 continued Were you awake? If you've been concentrating, you should be able to answer some key questions When can a subsidiary be excluded from group accounts? How do you calculate minority interests . practising partnership questions 46 Study Period 22 Cash flow statements Priority = High Examined: 6/ 05 Date due: Exam Guidance Cash flow statements can form an entire question or. 20 Cash flow statements. Section Approach Essential points 1 IAS 7 Cash flow statements Read through this section carefully. Layout of the cash flow statement and notes 2 Preparing a. asset movements 48 Study Periods 23 & 24 Interpretation of financial statements Priority = High Examined: 6/ 05 Date due: Exam Guidance The examiner will be looking to see whether