Financial Accounting Questions and Solutions

Financial Accounting Questions and Solutions

Question

Question 1: Ahmed’s Small Business Trial Credit

Question 1: Ahmed owns a small business that sells coffee machines to other businesses. On December 31, 2020, the following trial balance was decided.

1. The final stock price he was valued at $95,796.

2.Equipment is depreciated on a 10% straight line basis.

3.Cars are depreciated at 20% based on the depreciation balance.

4. Final Unpaid Wages 2020 premium is $3,015.
5. On November 1, 2020, Johns paid $1,350 in premiums valid through October 31, 2021.
6. Bad debts of $2,250 are written off.
7. Ahmed has decided to increase his receivables allowance to his $4,707.
8. Ahmed brought out $4,050 worth of merchandise for personal use.

a. Prepare Ahmed’s income statement for the year ending December 31, 2020.

b. Please prepare Ahmed’s balance sheet as of December 2020.

Question 2: The Stakeholder Equity section of Sun Ltd’s balance sheet. is:

B. Below is a portion of the orange company’s balance sheet. Prepare a section on

Operating activities before cash flow statement using the indirect method

Question 3: A. Please list and briefly describe the various types of errors that are not detected in the unreconciled trial balance. Please give an example.

B. Explain the importance of corporate governance and briefly describe the primary purpose of implementing corporate governance mechanisms. Please support your answer with an example.

C. Many executives want to manipulate the information in their financial statements. Give two reasons and briefly explain with an example.

Question 4: A. Ahmed runs his business as a sole proprietorship. Ahmed has prepared financial statements for the year ended December 31, 2020. Then I realized that as of December 31, 2020, I had not yet created a bank reconciliation invoice.

When I compared my cash book and my bank statement, I found the following discrepancies.

1.My bank statement showed a bank charge of $200 deducted on December 31st.

2. His $5,000 check from Mr. Ali, a loan customer, was on the ledger, but had not cleared the bank.
3. Ahmed accidentally paid her $200 for her private dinner with her business debit card. There was no entry in the cash register.
4. A $6,000 check paid by a loan customer on Dec. 27 had not been cashed on Dec. 31, and Ahmed decided to write off the amount as bad debt.
5. On December 30th, the US$2,500 interest received in the business savings account was credited to the business account as per Ahmed’s instructions, but this amount was not yet reflected in the cash book. did not.
6. A check to a vendor totaling $24,200 that Sarah entered on the ledger on December 31st had not yet appeared on her bank statement.
   The ledger shows her a debit balance of $15,400 before the adjustment posting, and the bank statement shows her a balance of $30,700.
7. Calculate the adjusted ending balance of the cash book.
8. Create bank reconciliation statements as of December 31, 2020, starting with the unreconciled ending balances reported in the cash book. B. Mary and Johns share a business, each organized as a partnership with her $70,000 stake. have capital. During the fiscal year they made a profit of $120,000. The raffle prizes were Mary her $7,000 and Johns her $9,000.

Their partnership agreement stipulates that:

The prize share is 2:3

8% interest on the principal

Subscription earns 10% interest

Mary receives a salary of $20,000 annually

REQUIRED: Prepare a partnership budget

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Question 5: Gulf and Co. is a manufacturer of computer accessories. Below are selected items presented on the Income Statement and Balance Sheet for the year ended December 31, 2020.

Use the information above to calculate. Find the company’s key figures below and comment on each:

a.Current ratio    

b.Asset Turnover

c.EPS

d.Interest cover 

e.Gearing ratio