Accounting for Decision Making

Topics: Generally Accepted Accounting Principles, Balance sheet, Finance Pages: 1 (311 words) Published: December 19, 2012
Exercise week 1 (Fin. Accounting) Mr. Sloppy has left you a list of balances with instructions to prepare a closing balance sheet (at end of year) and a profit and loss account both in standard UK format. He has left you with no further instructions: Accumulated profit at beginning of the year Accumulated depreciation at beginning of the year Administrative expenses Cash Corporation tax Cost of sales Current liabilities Debtors Dividends paid Fixed assets Interest expenses Long term liabilities Owner’s equity Sales turnover Selling and distribution costs Stocks Depreciation 42,600 80,000 42,000 8,400 18,840 144,000 97,600 67,000 11,560 240,000 5,700 73,500 50,000 315,500 76,700 45,000 1,000

1. The balance sheet does not include: a. Fixed assets b. Shareholders’ equity 2. The income statement does not include: a. Sales b. Retained earnings 3. Assets equal: a. Shareholders’ equity b. Liabilities less shareholders’ equity

c. Operating result d. Retained earnings c. Interest income d. Accumulated depreciation

c. Liabilities plus shareholders’ equity d. Liabilities plus retained profit

4. Equity can be subdivided as: a. Funds contributed by shareholders, retained profit, reserves b. Funds contributed by shareholders, retained profit, distributed profit c. Funds contributed by shareholders, profit, provisions d. Funds contributed by shareholders, retained profit, provisions 5. Which of the following represents the layout of a balance sheet in the UK format: a. FA + {[St + Db + C] – STL} = LTL + OE b. FA + [St + Db + C] = STL + LTL + OE c. FA + {[St + Db + C] – STL} – LTL = OE d. C + Db + St + FA = STL + LTL + OE FA = Fixed assets, St = stock, Db = debtors, STL = short term liabilities, LTL = long term liabilities, OE = owners equity 6. Which of the following are not deducted before arriving at operating profit: a. Cost of sales b. Depreciation c. Administrative expenses d. Interest payable

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