Accounting Systems and Processes

MAC001

Trimester 3, 2018 Final Examination Guideline

Student Id Number Student Name

Class Day/Time: ________________

Date: UBSS to Complete

Time: UBSS to Complete

Reading Time: 10 minutes

Exam Writing Time: 2 hours

Exam Weight: 50%

 This is a CLOSED BOOK Exam

 The exam is 2 hours excluding10 minutes reading time.
 Write your Student Name and Number at the top of this page IN THE BOX
PROVIDED
 Write the DAY and TIME of your class below your name.
 Begin each new question on a new page IN THE EXAM BOOKLET
PROVIDED.
 Write using black or blue pen.
 You may ask for extra writing booklets if you need more space.
 Do NOT remove any pages from this booklet.
 You may NOT take any exam papers, writing booklets, used or unused, from
the exam room.
 NO MOBILE PHONES or ELECTRONIC DEVICES ARE ALLOWED to be
used whatsoever
 Except for silent calculators without significant text storage capacity may be
used.

Theory: Accounting Concepts and Principles: For example 25 marks

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  The accounting entity concept.
 The going concern principle.
 The cost principle.
 The monetary principle.
 Conservatism principle.
 Working capital.
 Full disclosure principle.
 Accounting period
 Accrual Accounting
 Cash Accounting

Understanding Debit and credit principles in transaction, Journal entries, ledger concept and
trial balance. 6 marks

Understanding sales transaction and credit terms with journal entry 6marks

Sample Exercise: A credit sale is made on 10 July for $5000, terms 2/10, n/30. On 12 July,
$500 of goods are returned for credit. Give the journal entry on 19 July to record the receipt
of the balance due within the discount period.

Understanding Accounts receivable journal entries 10 marks

Sample Exercise:

On 30 June, George Ltd estimated that $10,000 of its receivables were likely to be
uncollectable given the debtor was in serious financial difficulty. The company recorded this
amount as an additional to Allowance for Impairment.

On 11 November, George Ltd determined that the debt was uncollectable and wrote it off.

On 12 December, the debtor unexpectedly paid the amount previously written off.

Required:

Prepare the journal entries on 30 June, 11 November and 12 December

Understanding Cost of Sales, Gross profit, expenses, and net profit 12 marks

Sample exercise practice in class.

Understanding Income statement and statement of changes in equity and balance

sheet 20 marks

Sample Exercise:

On the 1 March 2013 Patrick set up a business as an accountant. Patrick has had several
years’ experience with a large CPA firm in Sydney and when he received a large inheritance

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from a long lost relative he decided now was the time to take the risk of being his own boss.
The following transactions occurred during his first month of operation.

1. Contributed $80,000 to the accounting practice.

1. Patrick agreed to rent a large office space from his good friend Bill

3. Patrick and his girlfriend spent the morning shopping for office furniture and
equipment. He managed to negotiate credit terms for 7 days and received a discount
on the furniture and equipment. The original price of was $29,500 but the invoice
price is $25,000.

5 Purchased two computers, two printers and a modem for the business, paid $12,000
cash.

5 Paid $3000 for the first month’s rent on office space

7 Hire a personal assistance and agreed to pay $400 per week

9 Patrick completed a tax return for a desperate client and received $400 cash.

12 Paid for the office furniture and equipment

14 Paid his personal assistant $700

25 Sent an invoice to a client for services rendered of $3475

21 Paid his personal assistant $300

30 Paid utilities expenses of $900

30 Withdraw from bank $1200 for personal use

Required:

a. Prepare the following statements for March;

An Income Statement

A Statement of Changes in Equity; and

A Balance Sheet

Understanding balance day adjustment entries. 21 marks

Sample Exercise:
Prepare adjusting entries for Jolly Ltd as at 30 June for the following situations:
a. The Supplies account shows a balance of $1000, but a physical count shows only
$400 if supplies.
b. The company purchased a 1-year insurance policy for $6000 on 1 may, debiting
Prepaid Insurance.

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 c. On 1 June the company received $12000 from another entity which is renting a small
building from lasagne Ltd for 6 months. Lasagne Ltd credited Rent Revenue
Received in Advance.
d. Lasagne Ltd.’s accountant discovered that the company had performed services for a
client totalling $9000 but has not yet invoiced the client or recorded the transaction.
e. Lasagne Ltd pays employees $2500 per 5 day working week, and 30 June falls on a
Wednesday.
f. The company owns a van that cost $18,000 and has a useful life of 6 years (no
residual value). The company purchased the van in early April this year.

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