Accounting Systems and Financial Statements

Accounting systems are made up of different ________. Double entry postings are made in the ________. ________ entries are made in the accounts in the subsidiary receivables and payables ledgers. The ledgers interact due to the fact that the ________ are entered into the control accounts in the general ledger and the ________ are entered into the accounts in the subsidiary ledgers.

• day book totals

• general ledger

• ledgers

• memorandum

• transaction totals

What is the effect on the following items in the financial statements when a sole trader purchases a non-current asset using a five year bank loan?

• Capital: Increased / Reduced / No effect

• Non-current assets: Increased / Reduced / No effect

• Current assets: Increased / Reduced / No effect

• Non-current liabilities: Increased / Reduced / No effect

• Current liabilities: Increased / Reduced / No effect

Identify which accounting principle the following statement is describing: A company has accumulated liabilities it is struggling to pay and its board of directors is therefore looking for additional funding but is finding it difficult to secure. The company’s accountant has added a statement to the notes of the accounts to advise potential investors of the company’s current financial situation. Select one option.

• Business entity

• Going concern

• Materiality

• Money measurement

• Prudence

With reference to the previous question, the directors had asked the accountant not to depreciate the non-current assets so that they would look more valuable and the profit figure would not be reduced by the depreciation charge. The accountant did not agree to the request, but what would the implications have been if they had? Select all that apply.

• As there is no requirement to depreciate non-current assets in these circumstances then there would have been no implications.

• The accounts would have included material misstatements.

• The accounts would have given potential investors a true and accurate picture of the company’s financial situation.

• The accountant would have been in breach of their fundamental ethical principles when preparing the accounts.

Complete the NCA register shown below by entering the details of the: 1. disposal 2. acquisition 3. depreciation for the year ending 30th September 20X9 All figures should be rounded and shown as whole £s.

What would the implications be of mistakenly capitalising expenditure that does not exceed the level specified in an organisation’s policy?

• Effect

• Increased/Overstated

• Reduced/Understated

• No effect

You have been asked to reconcile the general ledger balance of Robert’s non-current assets. An extract from the adjusted trial balance is shown below:

Complete the reconciliation statement using the information above and the NCA register from Question 5:

Identify which statement could account for the discrepancy.

• This year's depreciation for HSTR1050 has been omitted from the general ledger account for the accumulated depreciation of plant & machinery.

• This year's depreciation for HSTR1050 has been duplicated in the general ledger account for the accumulated depreciation of plant & machinery.

Are the following statements true or false?

• True

• False