Accounting Answers

If company A uses accelerated depreciation method as compared to company B which uses straight line method, then what will be impact on the follwoing, whether they will increase, decrease or will be same. Plz explain

A) Interest Coverage ratio
B) Return on equity
C) Current Ratio
D) Debt to Equity Ratio

Expenses Details Actual ($) Budget ($) Variance ($)

Rent 16,000 15,000 1,000
Advertising 220,000 250,000 30,000
Office Salaries 550,000 500,000 50,000
Promotion 150,000 140,000 10,000
Total 936,000 905,000 31,000

Jack had great difficulty understanding the report, as he hadn’t been told what a variance is and didn’t understand the concept of budgetary control. He thought the report was rather unfair, as Office salaries included salaries of accounting and administrative staff over whom he had no control. Also, the rent paid, although relating to his department, was negotiated by the managing director. Jack raised these concerns with the accountant, who told him that he was not expected to do anything about the report; it was only ’for the record’.

You are required to comment briefly on the above.

Prepare the capital Expense Budget for the 2015 year?

The owner will purchase a new vehicle in the September quarter for $27,500.
In March they will purchase photocopiers for $5,500 and a computer system for $5,500 with an upgrade in March for a further $2,750. Each item is inclusive of GST.

1. The ATO has the power to make legally binding tax determinations. TRUE OR FALSE?

2. Part of the ATO’s mandate is to help people understand their rights and managing noncompliance with the law. TRUE OR FALSE?

3. Income is only assessable once it is physically received by the taxpayer. TRUE OR FALSE?

4. There are three methods of calculating income - Cash or receipts basis; Credit or statement basis; Accruals or earnings basis. TRUE OR FALSE?

5. Where a taxpayer becomes a resident for tax purposes during an income year, the Medicare Levy is charged only on taxable income derived while an Australian resident. TRUE OR FALSE?

6. Assessable income consists of ordinary income, special income and statutory income. TRUE OR FALSE?

Expenses Details Actual ($) Budget ($) Variance ($)
Rent 16,000 15,000 1,000
Advertising 220,000 250,000 30,000
Office Salaries 550,000 500,000 50,000
Promotion 150,000 140,000 10,000

Jack had great difficulty understanding the report, as he hadn’t been told what a variance is and didn’t understand the concept of budgetary control. He thought the report was rather unfair, as Office salaries included salaries of accounting and administrative staff over whom he had no control. Also, the rent paid, although relating to his department, was negotiated by the managing director. Jack raised these concerns with the accountant, who told him that he was not expected to do anything about the report; it was only ’for the record’. You are required to comment briefly on the above.

You have been asked to prepare the annual budget for a small business. The CEO has been helpful and shown you around. They have been responsible for the previous period’s budgets. You have been introduced to the three departmental managers of marketing, production and logistics. The marketing manager has given you a sales forecast that they are confident with.

a. Describe who else you will talk to in order to set the sales assumption forecast. How will you document this? How is the sales budget used to build the other budgets?

b. What five steps does shim propose for building the master budget?

c. Who is responsible and what standards for negotiations should be set during budget meetings with the managers and CEO?

d. In what circumstances do NFP’s complete for funding and what can influence the outcome of funding applications?

Sama Manufacturing uses general journal to record its day-to-day business transactions. Sama recently purchased a production plant to increase the production volumes. Sequence of the transactions relating to the plant are given below:
a. On 1 January 2012, purchased a plant for PKR 2,000,000 cash
b. On 31 December 2012, recorded depreciation expense using sum of years digit method with 5 years of useful life and zero salvage value at the end of useful life
c. On 1 January 2013, Sama replaced the old plant at 90% book value with a new plant for PKR 3,000,000
Record the general journal entries using the above sequence of transactions. (Show working)

The damaged stock, if its market price is less than its cost price, should be valued at cost price. please elaborate

The Accounting principle of Consistency require a company to use the same rate of depreciation for all of its assets. is it true or false? please explain with justification

please explain "Software expenses are depreciated on annual basis and charged to Profit and Loss Account"