Q1. Discuss the significance of financial reporting for a business organization from the perspective of internal and external users of financial information. Identify the role of IASB and FASB in developing the “Conceptual Framework for Financial Reporting” in the establishment of compatible standards worldwide. (1.5 Marks)
Answer:
Q2. The following information has been extracted from the books of XYZ Corporation for the year ended 31st December, 2017: (2 Marks)
Particulars
Amount ($)
Sales
455,000
Sales discounts
5,500
Sales returns and allowances
3,550
Cost of goods sold
190,000
Sales Salaries
4,500
Sales Commission
2,220
Travel expenses
6,200
Freight outward
7,200
Postage and stationery
3,200
Telephone expenses
5,210
Office salaries
5,800
Insurance expense
2,500
Depreciation of building
9,540
Dividend revenue
25,000
Gain on sale of investment
20,500
Interest on bonds
8,400
Income tax
45,800
You are required to prepare income statement for the year ended December 31st, 2017.
Answer:
Q3. The following ledger account balances have been extracted from the books of ZBT Corporation as at 31st December, 2018: (1.5 Marks)
Ledger Accounts Balances
Amount ($)
Cash
105,000
Travel and entertainment expenses
6,250
Insurance expenses
5,000
Account Receivable
90,000
Advertising supplies
31,250
Salaries expense
50,000
Rent expenses
11,250
Prepaid insurance
7,500
Office equipment
25,000
Dividends
6,250
Service revenue
135,000
Land and Building
27,500
Machinery
12,500
Unearned service revenue
23,750
Share capital-Ordinary
125,000
Notes Payable
62,500
Accounts payable
31,250