Rephrase the answers
College of Administrative and Financial Sciences Assignment 1 Deadline: 02 /03/ 2024 @ 23:59 Student’s Name: Student’s ID Number: CRN: Course Name: Financial Accounting Course Code: ACCT 201 Semester: 2 Academic Year: 2023- 24 For Instructor’s Use only Instructor’s Name: Students’ Grade: …… /15 Level of Marks: High/Middle/Low nstructions – PLEASE READ THEM CAREFULLY • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. • Assignments submitted through email will not be accepted. • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page. • Students must mention question number clearly in their answer. • Late submission will NOT be accepted. • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions. • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). • Submissions without this cover page will NOT be accepted. Assignment Question(s): Marks 15 Chapter 1 to 5 College of Administrative and Financial Sciences Q1 Globalization demands a single set of high-quality international accounting standards. List the elements of HighQuality Standards and explain the two major boards that set standards. (3 Marks) Answer: The elements of High-Quality Standards: 1. A single set of high-quality accounting standards established by a single standard-setting body. 2. Consistency in application and interpretation. 3. Common disclosures. 4. Common high-quality auditing standards and practices. 5. Common approach to regulatory review and enforcement. 6. Education and training of market participants. 7. Common delivery systems (e.g., extensible Business Reporting Language—XBRL). 8. Common approach to corporate governance and legal frameworks around the world. Two Major Organizations: • International Accounting Standards Board (IASB) ➢ Issues International Financial Reporting Standards (IFRS). ➢ Standards used on most foreign exchanges. ➢ Standards used by foreign companies listing on U.S. securities exchanges. ➢ IFRS is used in over 115 countries. • Financial Accounting Standards Board (FASB) ➢ Issues Statements of Financial Accounting Standards (SFAS). ➢ Required for all U.S.-based companies. College of Administrative and Financial Sciences Q2. Q2. What do you understand by deferrals and accruals in adjusting entries? Give numerical examples on how such adjusting entries are made. (4 Marks) Answer: Deferrals are either: Prepaid expenses that Expenses paid in cash and recorded as assets before they are used or consumed. Pioneer purchased advertising supplies costing $25,000 on October 5. Journal entry to record purchase of the supplies. An inventory count at close of business on October 31 reveals that $10,000 of the advertising supplies are still on hand. Unearned revenues that Revenues received in cash and recorded as liabilities before they are earned. Pioneer Advertising received $12,000 on October 2 from KC for advertising services expected to be completed by December 31. The journal entry to record the receipt on Oct. 2nd. Analysis reveals that Pioneer earned $4,000 of the advertising services in October. Thus, Pioneer makes the following adjusting entry. College of Administrative and Financial Sciences Accruals are either: Accrued revenues that Revenues earned but not yet received in cash or recorded. In October Pioneer earned $2,000 for advertising services that it did not bill to clients before October 31. Thus, Pioneer makes the following adjusting entry. Accrued expenses that Expenses incurred but not yet paid in cash or recorded. Pioneer signed a three-month, 12%, note payable in the amount of $50,000 on October 1. The adjusting entry on Oct. 31 to record the accrual of interest. Q3. Fill in the blanks (1 Mark) Sales Revenue 500,000 – Cost of goods sold ? = Gross Profit 175,000 – Operating expenses ? = Net Profit 76,500 ? 305,800 ? 115,750 65,250 Sales Revenue – Cost of goods sold = Gross Profit – Operating expenses = Net Profit 500,000 325,000 175,000 98,500 76,500 486,800 305,800 181,000 115,750 65,250 Answer: ✓ Cost of goods sold = Sales Revenue – Gross Profit = 500,000 – 175,000 = 325,000 ✓ Operating expenses = Gross Profit – Net Profit = 175,000 – 76,500 = 98,500 ✓ Gross Profit = Net Profit + Operating expenses = 65,250 + 115,750 = 181,000 ✓ Sales Revenue = Gross Profit + Cost of goods sold = 181,000 + 305,800 = 486,800 College of Administrative and Financial Sciences Q4. a. What do you understand by allocation to non-controlling interest and discontinued operations? Explain how they are reported in the income statement. (2 Marks) Answer: Allocation to Non-Controlling Interest If a company prepares a consolidated income statement that includes a partially own subsidiary. IFRS requires that the net income of the subsidiary be allocated to the controlling and non-controlling interest. This allocation is reported at the bottom of the income statement after net income. Discontinued operations • A component of an entity that either has been disposed of, or is classified as held-for-sale, and: 1. Represents a major line of business or geographical area of operations, or 2. Is part of a single, co-coordinated plan to dispose of a major line of business or geographical area of operations, or 3. Is a subsidiary acquired exclusively with a view to reselling. • Companies report as discontinued operations: 1. (In a separate income statement category) the gain or loss from disposal of a component of a business. 2. The results of operations of a component that has been or will be disposed of separately from continuing operations. 3. The effects of discontinued operations net of tax, as a separate category after continuing operations. A company that reports a discontinued operation must report per share amounts for the line item either on the face of the income statement or in the notes to the financial statements. Q4b. Intra-period Tax Allocation. Answer: Relates the income tax expense to the specific items that give rise to the amount of the tax expense. • On the income statement, income tax is allocated to: (1) Income from continuing operations before tax (2) Discontinued operations College of Administrative and Financial Sciences XYZ Co. has income before income tax of SR 50,000. XYZ Co. has a gain of SR 10,000 from discontinued operation. Assuming a 35 percent income tax rate, how would XYZ Co. present the information on the income statement, and if it had a loss of SR 10,000 from a discontinued operation. Assuming a 35 percent income tax rate, show the changes in Income on the income statement. (2 Marks) Prepare: 1. Changes in Income on the income statement when Loss made from discontinued operations. Answer: Description Amount Income before income tax 50,000 Income tax (17,500) Income from continuing operations Loss from discontinued operations Less: Applicable income tax reduction 32,500 10,000 3,500 (6,500) Net Income 26,000 2. Changes in Income on the income statement when Gain made on discontinued operations. Answer: Description Amount Income before income tax 50,000 Income tax (17,500) Income from continuing operations Gain on discontinued operations Less: Applicable income tax 32,500 10,000 3,500 6,500 Net Income 39,000 College of Administrative and Financial Sciences Q5 The following information in SAR. Prepare a Cash Flow Statement: – (3 Marks) Opening Cash Balance Closing Cash Balance Increase in current liabilities Decrease in current assets Fixed assets purchase Redemption of 12% bonds Profit for the year Depreciation 15,000 23,000 13,000 17,000 30,000 14,000 18,000 4,000 Answer: Description Amount Operating Activities Profit for the year 18,000 Depreciation 4,000 Increase in current liabilities 13,000 Decrease in current assets Cash flow from Operations 17,000 52,000 Investing Activities Fixed assets purchase Cash flow from Investing (30,000) (30,000) Financing Activities Redemption of 12% bonds Cash flow from Financing (14,000) (14,000) Net increase in cash 8,000 Opening Cash Balance 15,000 Closing Cash Balance 23,000
Collepals.com Plagiarism Free Papers
Are you looking for custom essay writing service or even dissertation writing services? Just request for our write my paper service, and we'll match you with the best essay writer in your subject! With an exceptional team of professional academic experts in a wide range of subjects, we can guarantee you an unrivaled quality of custom-written papers.
Get ZERO PLAGIARISM, HUMAN WRITTEN ESSAYS
Why Hire Collepals.com writers to do your paper?
Quality- We are experienced and have access to ample research materials.
We write plagiarism Free Content
Confidential- We never share or sell your personal information to third parties.
Support-Chat with us today! We are always waiting to answer all your questions.
