Accounting Pathway for HSC Answers to Workbook

Exercise 1

Circle those items that are assets to a business: a) land b) amounts contributed by the proprietor c) computer equipment d) filing cabinets e) cash at bank f) accounts payable (amounts we owe) g) accounts receivable ( amounts owed to us) h) cash withdrawn by the owner to pay personal debts i) owners contribution to business j) office furniture

Circle those items that are liabilities to a business: a) loan to sales manager b) interest on bank loan c) loan from JLW Finance Company d) bank overdraft e) accounts payable f) accounts receivable g) cash at bank h) mortgage i) factory equipment j) A lease on a car

Exercise 2

Revision

OWNED Assets are items ………………… by the business. There are two categories of assets: Current assets (assets that will be kept by the business for no longer than 12 months). 1. 2. 3. 4. Non current assets (purchased by the business with the view that they will be kept and used by the business for more than 12 months). Liabilities are the amounts ……………………. by the business. There are two categories of liabilities: Current liabilities (amounts that will be repaid by the business within 12 months). Non current liabilities (amounts that will be repaid by the business over a longer period of time, that is it will take longer than 12 months to pay off). Accounts Receivable Cash at Bank Inventory Petty Cash Investment account (for 3 years) Motor vehicle Plant & Equipment OWED Accounts Payable Bank overdraft Mortgage Loan (due in 18 months) Please Note: these are examples only and other accounts may apply under the various categories / classifications.

OWNERS Proprietorship represents the …………………. SHARE of the business. This includes the amount originally invested, profits and losses, additional investment etc. 1. 2. 3. Income or revenue is the ……………………of the business. Expenses are the …………………. of running the business. 4. 5. 6. Capital Drawings Net Profit or Net Loss EARNINGS Sales Rent Received Interest Received COSTS Salaries and Wages Electricity Rent Interest Accountancy Fees Stationery Please Note: these are examples only and other accounts may apply under the various categories / classifications.

PUZZLE

DEB I T I NVENTORY A R E D I T I C O M JOURNAL E V E N E S S E S SOURCE I NVENTORY A K R E D I T I C O M JOURNAL PROFIT E V E N E S S E S G O O D W I L

Exercise 3

Liability Credit Asset Debit Asset Debit Proprietorship Credit Expense Debit Income Credit Income Credit Expense Debit Asset Debit Asset Debit Liability Credit Asset Debit Liability Credit Income Credit Expense Debit Expense Debit

Exercise 4

4 a) 15000 22000 2250 100 20000 19000 96620 1375 1180 36750 41625 15000 20000 125 185000 90250 2150 4850 244350 21675 419650 419650

4 b) 15000 2000 50 100 50000 10000 5620 375 180 6750 1625 15000 20000 125 85000 10250 150 850 28800 1675 650 127100 127100

4 c) 15000 22000 50 100 50000 10000 56620 375 180 26750 11625 15000 20000 125 185000 110250 150 4850 146700 11675 1650 344050 344050

Exercise 5

Circle the missing word (debit or credit) to complete the following statements …. a) increase in proprietorship are recorded as a debit credit b) goodwill will usually have a ? balance debit credit c) decreases in income are recorded as a debit credit d) bad debts will usually have a ? balance debit credit e) assets usually have a ? balance debit credit f) rent and interest received have a ? balance debit credit g) drawings have a ? balance debit credit h) payments from the bank account are a debit credit i) decrease in expenses are recorded as a debit credit j) rent will usually have a ? balance debit credit

Exercise 6

Circle the correct response to the question below : (i) An example of a current liability would be: (a) Bank overdraft (b) Mortgage on buildings (c) 5 year loan (d) Cash at Bank (ii) The principle that for every debit there is an equal and corresponding credit or debits = credits, is referred to as: (a) golden rule (b) matching (c) balanced sides (d) double entry (iii) Which type of business ownership features joint and several liability? (a) Sole trader (b) Company (c) Partnership (d) both (a) and (c) (iv) An example of a non current asset would be: (a) Loan from ABC Loans (b) Plant and Machinery (c) Accounts Receivable (v) Which type of business ownership has limited liability?

(vi) The owners share of the business is called: (a) liabilities (b) expenses (c) assets (d) proprietorship (vii) The business will incur costs on a regular basis, these costs are referred to as: (a) incomes (b) balances (c) revenues (d) expenses (viii) An example of a non current liability would be: (a) Loan (due to be repaid in 36 months) (b) Plant and Machinery (c) Accounts Receivable (d) overdraft at bank (ix) An example of a Current Asset would be: (a) Motor vehicle (b) Accounts receivable (c) Bank overdraft (d) Accounts payable (x) Cash drawn by the owner of the business for their personal use is debited to: (a) cash at bank (b) capital (c) drawings (d) purchases

Exercise 7

Find the missing figure in the following transaction analysis ASSETS = LIABILITIES + PROPRIETORSHIP $55,000 = + $13,850 $47,500 = $23,250 + $26,085 = + $13,982 d) = $14,744 + $9,437 e) $152,350 = $139,875 + 41,150 24,250 12,103 24,181 12,475

Exercise 8

a) Cash at bank $ 4,700 Inventory $33,250 Debtors (acc receivable) $13,130 Capital $??,??? Assets = Liabilities + Proprietorship b) Cash on hand $27,568 Inventory $??,??? Office Furniture $ 8,769 Creditors (acc payable) $15,237 GST Clearing $ 1,200 Capital $32,892 Cash at bank 4700 Inventory 33250 Debtors 13130 Capital ? 51,080 Cash on hand 27568 Inventory 12992 Office Furniture 8769 Creditors 15237 GST Clearing 1200 Capital 32892

Assets = Liabilities + Proprietorship c) Inventory $12,356 Motor Vehicles $27,451 Accounts Receivable $ 8,452 Bank $ 2,767 GST Clearing $??,??? Accounts Payable $ 6,325 Capital $40,999 Assets = Liabilities + Proprietorship Inventory 12 356 Motor vehicle 27 451 Accounts Receivable 8 452 Bank 2 767 GST Clearing? 3 702 Accounts Payable 6 325 Capital 40 999

d) Cash at bank $ 9,884 Premises $127,360 Sundry debtors $???,??? Sundry creditors $ 13,772 Loan from Citibank $ 90,846 GST Clearing $ 7,623 Capital $ 39,391 Assets = Liabilities + Proprietorship Cash at Bank 9 884 Premises 127 360 Sundry Debtors? 14 388 Sundry Creditors 13 772 Loan from Citibank 90 846 GST Clearing 7 623 Capital 39 391

Assets = Liabilities + Proprietorship e) Petty cash $ 750 Debtors $44,295 Loan to J Brown $??,??? Creditors $57,987 Bank Overdraft $ 4,362 Capital $ 7,549 Assets = Liabilities + Proprietorship Petty Cash 750 Debtors 44 295 Loan to J Brown? 24 853 Creditors 57 987 Bank Overdraft 4 362 Capital 7 549

Exercise 9

Exercise 10