Test 3

Question 1

Accurals Prepaid Expenses

Eg. paying insurance in advance for 3 months

Answer 1

LIABILITIES

1. D: Insurance Premium
   D: Prepaid expenses (right to be used)
   Cr: Cash
2. D: insurance premium
   C: prepaid expenses (decrease right to be used)

” repeat every month

Question 2

Accruals Prepaid Revenue

eg. customer airplane ticket

Answer 2

ASSETS

1. At receipt
   D: Cash
   Cr: Deferred Income
2. Month 1
   D: Deferred Income (rest 2 months)
   Cr: Services Rendered
3. Month 2
   D: Deferred Income
   Cr: Services Rendered

Question 3

Accrual Accured Expenses

eg. electricity bills quarterly; used in December but bill doenst arrive until Jan

Answer 3

LIABILITY

1. D: Utilities
   Cr: Creditors for services rendered
2. D: Utilities
   Cr: creditors for services rendered
3. D: Creditors for services rendered
   Cr: Utilities

Question 4

Accurals Accured Revenue

eg. work done, but invoice comes later (as worker)

Answer 4

ASSET

1. D: Services rendered
   Cr: Trade recievables
2. D: Trade recievables
   Cr: Services rendered
3. D: Cash
   Cr: Trade recievables

Question 5

When are provisions booked?

Answer 5

1. present obligation
2. probable outflow
3. reliabile outflow estimate required to settle

Question 6

Provisions 1

Set aside too little money for provisions

Answer 6

D: Expense (by lacking amount)
> most normal, 678. Exceptional Losses

Cr: Provisions

Question 7

Provisions 2

set aside too much money for liabilitiy eg. expecting 5000 legal fees but only paying 4000

Answer 7

D: Provision
Cr: Provision surplus (by how much extra there is)

Question 8

NCA Aquisition on credit

Answer 8

D: PP&E

Cr: Current payable to suppliers of fixed assets (or non-current)

Question 9

NCA Initial measurement of intangible assets (on credit)

Answer 9

D: Comp. software

C: Current payables to suppliers of fixed assets
or non-current

Question 10

NCA Depreciation

Answer 10

D: Depreciation PP&E (681)
C: Accumulated Depreciation of PP&E (281)

Question 11

NCA Sale (or disposal) of fixed assets

Answer 11

D: Accumulated depreciation of PP&E (281)
D: Cash in Banks (572)
D: Losses (or gains) on PP&E

Cr: PP&E

Question 12

NCL Initial measurement

Answer 12

Fair value (actual initial value) - attributable transaction costs

Question 13

NCL subsequent measurement

Answer 13

amortisation cost (gradually paying off debt over time) og value + interest accured - repayments

Question 14

Cooporate tax payment required

Answer 14

D: Income tax (630)
Cr: Witholding and payments on account (473)

D: Income tax payable (4752)
Cr: Cash in banks (572)

Question 15

Corporate tax Refund owed

Answer 15

D: Income tax (630)
D: Recoverable taxes (4704)

Cr: Withholdings and payments on account (473)

Question 16

Initial measurement PP&E

Answer 16

aquisition/production cost + purchase price + necessary expenditures to get asset in place

Question 17

Subsequent measurements NCA

Answer 17

aquisition cost - accumulated depreciation - impairment

Question 18

net book value calc

Answer 18

NBV = og cost - accumulated depreciation - impairment

Question 19

Sale > NBV

Answer 19

gain

Question 20

Sale < NBV

Answer 20

loss

Question 21

when do i need NBV?

Answer 21

selling / disposal asset > need to know if gain or loss

Question 22

calculate interest

Answer 22

interest rate / amortisation costs of prev year

Question 23

general provisions entry

Answer 23

D: Expenses
Cr: Provisions

Question 24

COGS 1. buying goods

Answer 24

D: Purchases merch (600)
Cr: Trade payables (400)

Question 25

COGS 2. year-end (adjusting for unsold goods)

Answer 25

D: (300) merchandise Cr: (610) Changes in inventory

Question 26

COGS 3. start next year

Answer 26

D: (610) changes in inventory IF sold more than bought Cr: (300) merchandise Cr: (610) changes in inventory IF bought more than sold

Question 27

gross margin calc

Answer 27

sales r - COGS

Question 28

opening inventory

Answer 28

D 610 Changes in inventories Cr 300 Merchandise

Question 29

closing inventory

Answer 29

D 300 Merchandise Cr 610 Changes in inventories

Question 30

what do you debit when someone owes you money for a service you provided and you havent been paid?

Answer 30

trade recievables

Question 31

what do you credit when you owe someone who provided a service and you havent paid?

Answer 31

creditors for services rendered

Question 32

what do you credit when your company sells a service?

Answer 32

income from services

Question 33

what do you credit when your company sells goods?

Answer 33

sales of merchandise

Question 34

aim accrual

Answer 34

The aim of accruals is to recognize the expenses or the revenues, regardless of the date of collection or payment.