Accounting Answers

Brief Discussion Questions

a) Why is accounting considered a language of business? How is it related to management

process?

b) Discuss about the four basic financial statement (income statement, statement of owners’

equity, balance sheet, and statement of cash flows); comparing and contrasting their

differences in merchandising firms Vs. service providing entities

c) Discuss about the four finance functions (financial management decisions)

Consider the following equations for a small open economy for both the goods and money markets.

C = 3000 + 0.8Y^d; T = 1000 + 0.3Y; G = 6000; TR = 500; I = 4000 + 0.24Y – 100r; M = 3000 + 0.2Y; X = 2000; L_P = 1000 + 0.15Y; L_T = 2000 + 0.25Y – 15r; Ls = 1000 – 35r; MS = 40,000; P= 4

a.      Derive both the IS and LM equations for the economy and compute the Equilibrium level of Income and Interest Rate.

b.     At this equilibrium level of income and interest, compute the levels of disposal income, total transactions demand for money, investment demand and the value of net exports.

c.      Suppose the government raises govt. expenditure by 20% in order to increase aggregate demand. Show how this policy results in the crowding out effect.

The following are taken from the accounting records of MNO Partnership.

December 31, 2023

Mario, Capital

₱58,960

Nancy, Capital

₱63,200

Olga, Capital

₱64,890

The partnership generated net income of ₱75,400 in 2024. According to the partnership contract,the profit and loss sharing ratios are as follows: Mario (25%), Nancy (37.5%), and Olga (37.5%)

The following were transactions with the partners during the year: 

• Mario made an additional contribution of ₱7,640. 

• Nancy withdrew ₱5,000 from the business. 

• Olga contributed ₱12,000 but withdrew ₱5,430

Prepare the partnership’s Statement of Changes in Equity.

The following are taken from the accounting records of MNO Partnership.

December 31, 2023

Mario, Capital

₱58,960

Nancy, Capital

₱63,200

Olga, Capital

₱64,890

The partnership generated net income of ₱75,400 in 2024. According to the partnership contract,the profit and loss sharing ratios are as follows: Mario (25%), Nancy (37.5%), and Olga (37.5%)

The following were transactions with the partners during the year: 

• Mario made an additional contribution of ₱7,640. 

• Nancy withdrew ₱5,000 from the business. 

• Olga contributed ₱12,000 but withdrew ₱5,430

Prepare the partnership’s Statement of Changes in Equity.

Kibur Plc uses a job order cost system. Overhead is applied at the rate of Br 30 per direct labor

hour. Job #251 includes a prime cost of Br 20,000 and a conversion cost of Br 25,000. For this

job, 500 direct labor hours were used. Compute the total cost of Job 251.

AB Co. applies overhead to jobs using a predetermined rate of $1.25 per direct labor hour. For

2008, actual overhead was $25,750; overhead was over applied by $1,500. What estimate of actual

activity in direct labor hours did AB Co. assume when establishing its overhead rate for 2003.

AB.Co applies overhead to jobs a predetermined rate of $1.25 per direct labor hour. For 2008, actual overhead was $25,750; overhead was over applied by $1500. What estimate of actual activity in direct labor hours did AB Co. Assume when establishing its overhead rate for 2003.

AB.Co applies overhead to jobs a predetermined rate of $1.25 per direct labor hour. For 2008, actual overhead was $25,750; overhead was over applied by $1500. What estimate of actual activity in direct labor hours did AB Co. Assume when establishing its overhead rate for 2003.

AB.Co applies overhead to jobs a predetermined rate of $1.25 per direct labor hour. For 2008, actual overhead was $25,750; overhead was over applied by $1500. What estimate of actual activity in direct labor hours did AB Co. Assume when establishing its overhead rate for 2003.

The data given below relate to Frempomaa Ltd. for the year ended 31/12/2000:

Fixed factory overhead cost was GHC160,000

Production units 1,000 units

Sales 800 units at GHC500

Administration cost was GHC40,000

Variable selling and distribution overheads GHC80

Direct labour GHC70 per unit

Direct material GHC50 per unit

Prepare the profit and loss account using each of the following cost techniques:

(a) Marginal Costing

(b) Absorption Costing