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Fundamentals of financial accounting
CHAPTER 3 – LEDGER ACCOUNTING AND DOUBLE-ENTRY
BOOKKEEPING
3.1 C
3.2 B
3.3 B
CHAPTER 4 – FROM TRIAL BALANCE TO FINANCIAL
STATEMENTS
4.1 HIJ owes EFG $510. In the ledgers of HIJ this would represent a liability
balance.
4.2 At 31st January XYZ’s ledger accounts included a debit balance for DEF of
$575. This represents an asset to XYZ.
CHAPTER 5 – NON-CURRENT ASSETS: ACQUISITION AND
DEPRECIATION
5.1 D
Painting and replacing windows are maintenance and repairs, and so are
classified as ‘revenue expenditure’ and must be expensed through the
statement of profit or loss. The purchase of a car for resale means that the car
is an item of inventory for the business, not a non-current asset. Legal fees
incurred in purchasing a building are included in the cost of the building, and so
are part of the non-current asset cost, i.e. capital expenditure.
5.2 C
5.3 $87,800
Depreciation on additions: 20% × $24,000 × 8/12 = $3,200
Depreciation on disposals: 20% × $42,000 × 10/12 = $7,000
Depreciation on other assets: 20% × ($430,000 – $42,000) = $77,600
Total = $3,200 + $7,000 + $77,600 = $87,800
5.4 B
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