FA CH-10 & 12

Leisure co owns two properties which it rents to tenants. In the year ended 31 December

20X6, it received S280,cm in respect of property I and $160mo in respect Of property 2.

Balances on the prepaid and accrued income accounts were as follows:

31 December 20X6

Property 1

Property 2

31 December 20X5

5,400 Dr

What amount should credited to the statement Of profit or loss for the year ended

31 December 20X6 in respect Of rental income?

Troy Co has a property rental business and received cash totalling $838,600 from tenants

during the year ended 31 December 20X6.

Figures for rent in advance and in arrears at the beginning and end of the year were:

Rent received in advance

Rent in arrears (all subsequently received)

31 December

20X5

102,600

42,300

31 December

20X6

88,700

48,400

What amount should appear in Troy CO's statement of profit or loss for the year ended

31 20X6 for rental income?

On 1 May 20XO, Bao commenced business and paid an annual rent charge of for the

to 30 April 20X1.

What is the charge to Bao's statement of profit or loss and the entry in the statement of

financial position for the accounting period ended 30 November 20XO?

• $1,050 charge to statement of profit or loss and prepayment of $750 in the statement

  of financial position.

• $1,050 charge to statement of profit or loss and accrual of $750 in the statement of

  financial position.

• $1,800 charge to statement of profit or loss and no entry in the statement of financial

  position.

• $750 charge to statement of profit or loss and prepayment of $1,050 in the statement

  of financial position.

At 1 September, the motor expenses account showed 4 months' insurance prepaid Of $80

and fuel costs accrued Of 95. During September, the outstanding fuel bill was paid, plus

further bills of $245. At 30 September there was a further outstanding fuel bill of $120.

What was the expense included in the statement Of profit or loss for motor expenses for

September?

The annual insurance premium for Shan for the period I July 20X3 to 30 June 20X4 was

$13,200, which is 10% more than the previous year. Insurance premiums are paid on 1 July.

What is the statement Of profit or loss charge for insurance for the year ended

31 December 20B?

Which Of the following statements is false?

• Accruals decrease profit

• Accrued income decreases profit

• A prepayment is an asset

• An accrual is a liability

On 9 October, Ping paid the heat and power bill for the three months ended 30 September

20X4. The bill included a meter rental charge Of $60 for the three months ending

31 December 20X4 and a usage charge of $135 for the three month period to 30 September

20X4. Ping has an accounting year end date of 31 October 20X4.

Which of the following pairs of adjustments is required in relation to the heat and power

expense as at 31 October 20X4?

• Rental accrual of $40

  Usage prepayment of $45

• Rental accrual Of $45

  Usage prepayment Of $40

• Rental prepayment of $40

  Usage accrual of $45

• Rental prepayment Of $45

  Usage accrual Of $45

Which of the following statements about the requirements relating to IAS 37 Provisions,

Contingent Liabilities and Contingent Assets are correct?

1. 1. A contingent asset should be disclosed by note if an inflow Of economic benefits is

probable,

2. 2. No disclosure of a contingent liability is required if the of a transfer of

economic benefits arising is remote.

3. 3. Contingent assets must not be recognised in financial statements unless an inflow of

economic benefits is virtually certain to arise.

• 1, 2 and 3

• I and 2 only

• 1 and 3 only

• 2 and 3 only

Which the following statements relating to the requirements of IAS 37 Provisions,

Contingent Liabilities and Contingent Assets is correct?

• A contingent asset must always be recognised and accounted for in the financial

  statements.

• A contingent asset must always be disclosed in the notes to the financial statements.

• A contingent liability must always be disclosed in the notes to the financial statements

  if it is regarded as possible.

• A contingent liability must always disclosed in the notes to the financial statements

  if it is regarded as probable.

Which the following statements relating to the requirements of IAS 37 Provisions,

Contingent Liabilities and Contingent Assets is correct?

• A contingent asset must be recognised and accounted for in the financial statements

  if it is regarded as probable.

• A contingent asset must never be recognised in the financial statements.

• A contingent liability must either be recognised and accounted for in the financial

  statements, or disclosed in the notes to the financial statements.

• A contingent liability may not be required to be accounted for or disclosed in the notes

  to the financial statements under certain circumstances.