The significance of financial reporting for a business organization

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

 

 

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