List and discuss the characteristics of the International Accounting Standards Board (IASB) that reinforced the importance of an open, transparent and independent process.
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Assignment Question(s): (Marks: 15)
Question 1: (4 Marks)
List and discuss the characteristics of the International Accounting Standards Board (IASB) that reinforced the importance of an open, transparent and independent process.
Answer to Q1:
Question 2: (4 Marks)
Khaled Corporation’s capital structure consists of 50,000 ordinary shares. At December 31, 2022 an analysis of the accounts and discussions with company officials revealed the following information:
Sales SAR1,100,000
Purchase discounts 18,000
Purchases 642,000
Loss on discontinued operations (net of tax) 42,000
Selling expenses 128,000
Cash 60,000
Accounts receivable 90,000
Share capital 200,000
Accumulated depreciation 180,000
Dividend revenue 8,000
Inventory, January 1, 2011 152,000
Inventory, December 31, 2011 125,000
Unearned service revenue 4,400
Accrued interest payable 1,000
Land 370,000
Patents 100,000
Retained earnings, January 1, 2011 290,000
Interest expense 17,000
General and administrative expenses 150,000
Dividends declared 29,000
Allowance for doubtful accounts 5,000
Notes payable 200,000
Machinery and equipment 450,000
Materials and supplies 40,000
Accounts payable 60,000
The amount of income taxes applicable to ordinary income was SAR48,600, excluding the tax effect of the discontinued operations loss, which amounted to SAR18,000.
Instructions
(a) Prepare an income statement. (2 marks)
(b) Prepare a retained earnings statement. (2 marks)
Answer to Q2:
Question 3: (4 Marks)
The following trial balance was taken from the books of ALHANA Company on December 31, 2022.
Account Debit Credit
Cash SAR 12,000
Accounts Receivable 40,000
Note Receivable 7,000
Allowance for Doubtful Accounts SAR 1,800
Merchandise Inventory 44,000
Prepaid Insurance 4,800
Furniture and Equipment 125,000
Accumulated Depreciation–F. & E. 15,000
Accounts Payable 10,800
Share Capital–Ordinary 44,000
Retained Earnings 55,000
Sales 280,000
Cost of Goods Sold 111,000
Salaries Expense 50,000
Rent Expense 12,800
Totals SAR406,600 SAR406,600
At year-end, the following items have not yet been recorded.
a. Insurance expired during the year, SAR2,000.
b. Estimated bad debts, 1% of gross sales.
c. Depreciation on furniture and equipment, 10% per year.
d. Interest at 6% is receivable on the note for one full year.
e. Rent paid in advance at December 31, SAR5,400 (originally charged to expense).
f. Accrued salaries at December 31, SAR5,800.
Instructions
(a) Prepare the necessary adjusting entries. (2 marks)
(b) Prepare the necessary closing entries. (2 marks)
Answer to Q3:
Question 4: (3 Marks)
Prepare balance sheet in proper form for Golden Tulip hotel from the following list of the accounts at November 30 2022:
Answer to Q4:
College of Administration and Financial Sciences List and discuss the characteristics of the International Accounting Standards Board (IASB) that reinforced the importance of an open, transparent and independent process. Answer to Q1: The International Accounting Standards Board (IASB) is a private sector, independent, non-profit organization that develops and publishes International Financial Reporting Standards (IFRS). IFRSs are high-quality, global accounting standards that are used by more than 140 countries around the world. The IASB’s due process is designed to be open, transparent, and independent. This is important because IFRSs are used by a wide range of stakeholders, including investors, creditors, government regulators, and standard-setters. It is important that all of these stakeholders have a voice in the development of IFRSs and that they can be confident that the IASB’s decision-making process is fair and impartial. The following characteristics of the IASB reinforce the importance of an open, transparent, and independent process: Membership: The IASB’s membership is diverse, with members from different countries and professional backgrounds. This helps to ensure that the IASB’s standards are developed with a global perspective and that they take into account the needs of different stakeholders. Autonomy: The IASB is autonomous, meaning that it is not subject to the control of any government or other organization. This helps to ensure that the IASB’s standards are developed independently and that they are not influenced by special interests. Independence: IASB members must sever all ties to their previous employers and they are not allowed to represent any particular interest group. This helps to ensure that IASB members make their decisions based on what is in the best interests of the public, rather than on the interests of any particular stakeholder group. Voting: IASB standards are approved by a vote of the IASB’s members. A majority of 14 votes is required to approve a standard. This helps to ensure that all IASB members have a say in the development of standards and that no one member or interest group can dominate the decision-making process.
College of Administration and Financial Sciences In addition to these characteristics, the IASB also follows a rigorous due process when developing IFRSs. This due process includes public consultation, exposure drafts, and a final round of voting. The IASB also has a number of safeguards in place to ensure that its standards are of high quality and that they are consistent with its conceptual framework. Overall, the IASB’s characteristics and due process help to ensure that its standards are developed in an open, transparent, and independent manner. This is important because IFRSs are used by a wide range of stakeholders around the world and they have a significant impact on the global economy. Question 2: (4 Marks) Khaled Corporation’s capital structure consists of 50,000 ordinary shares. At December 31, 2022 an analysis of the accounts and discussions with company officials revealed the following information: Sales SAR1,100,000 Purchase discounts 18,000 Purchases 642,000 Loss on discontinued operations (net of tax) 42,000 Selling expenses 128,000 Cash 60,000 Accounts receivable 90,000 Share capital 200,000 Accumulated depreciation 180,000 Dividend revenue 8,000 Inventory, January 1, 2011 152,000 Inventory, December 31, 2011 125,000 Unearned service revenue 4,400 Accrued interest payable 1,000 Land 370,000 Patents 100,000 Retained earnings, January 1, 2011 290,000 Interest expense 17,000 General and administrative expenses 150,000 Dividends declared 29,000
College of Administration and Financial Sciences Allowance for doubtful accounts 5,000 Notes payable 200,000 Machinery and equipment 450,000 Materials and supplies 40,000 Accounts payable 60,000 The amount of income taxes applicable to ordinary income was SAR48,600, excluding the tax effect of the discontinued operations loss, which amounted to SAR18,000. Instructions (a) Prepare an income statement. (2 marks) (b) Prepare a retained earnings statement. (2 marks) Answer to Q2: Porter Corporation INCOME STATEMENT For the Year Ended December 31, 2010 Sales $1,100,000 Cost of goods sold: Merchandise inventory, Jan. 1 $152,000 Purchases $642,000 Less purchase discounts 18,000 Net purchases 624,000 Merchandise available for sale 776,000 Less merchandise inv., Dec. 31 125,000 Cost of goods sold 651,000 Gross profit on sales 449,000 Operating expenses: Selling expenses 128,000 General and administrative expenses 150,000 Total operating expenses 278,000 Operating income 171,000 Other revenue and expense: Dividend revenue 8,000 Interest expense (17,000) (9,000) Income before taxes 162,000 Income taxes 48,600 Income before extraordinary item 113,400 Extraordinary loss due to earthquake, net of applicable taxes of $18,000 (42,000) Net income $ 71,400 Per share of common stock— Income before extraordinary item $2.27 Extraordinary loss, net of tax (.84) Net income $1.43
College of Administration and Financial Sciences B- Porter Corporation RETAINED EARNINGS STATEMENT For the Year Ended December 31, 2010 Retained earnings, January 1, 2010 $290,000 Add: Net income $71,400 Deduct: Dividends declared 29,000 42,400 Retained earnings, December 31, 2010 $332,400 Question 3: (4 Marks) The following trial balance was taken from the books of ALHANA Company on December 31, 2022. Account Debit Credit Cash SAR 12,000 Accounts Receivable 40,000 Note Receivable 7,000 Allowance for Doubtful Accounts SAR 1,800 Merchandise Inventory 44,000 Prepaid Insurance 4,800 Furniture and Equipment 125,000 Accumulated Depreciation–F. & E. 15,000
College of Administration and Financial Sciences Accounts Payable 10,800 Share Capital–Ordinary 44,000 Retained Earnings 55,000 Sales 280,000Cost of Goods Sold 111,000 Salaries Expense 50,000 Rent Expense 12,800 Totals SAR406,600 SAR406,600 At year-end, the following items have not yet been recorded. a.Insurance expired during the year, SAR2,000.b.Estimated bad debts, 1% of gross sales.c.Depreciation on furniture and equipment, 10% per year.d.Interest at 6% is receivable on the note for one full year.e.Rent paid in advance at December 31, SAR5,400 (originally charged to expense).f.Accrued salaries at December 31, SAR5,800.Instructions (a)Prepare the necessary adjusting entries. (2 marks)(b)Prepare the necessary closing entries. (2 marks)Answer to Q3: A a.Insurance Expense2,000 Unexpired Insurance 2,000 b.Bad Debt Expense2800 Allowance for Doubtful Accounts 2800 c.Depreciation Expense12,500 Accumulated Depreciation 12,500 d.Accrued Interest Receivable 420 Interest Revenue 420
College of Administration and Financial Sciences e.Prepaid Rent5,400 Rent Expense 5,400 f.Salary Expense5,800 Salaries payable 5,800 Answer to Q3: B Closing Entries Sales 280,000 Interest Revenue 420 Income Summary 280,420 Income Summary 191,500 Salaries Expense 55,800 Rent Expense 7,400 Depreciation Expense 12,500 Bad Debt Expense 2,800 Insurance Expense 2,000 Cost of Goods Sold 111,000 Income Summary 88,920 Retained Earnings 88,920 Question 4: (3 Marks) Prepare balance sheet in proper form for Golden Tulip hotel from the following list of the accounts at November 30 2022: Accounts receivable SAR10,000 Accounts payable 18,000 Building 28,000 Common stock 30,000 Cash 8,000 Notes payable 45,000 Office equipment 12,000 Retained earnings ? Trucks 55,000
College of Administration and Financial Sciences Answer to Q4:
College of Administration and Financial Sciences
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