Test

Question 1

What is the layout for the statement of profit and loss?

Answer 1

Revenue
Less: COGS
Gross profit
Other income
Less: distribution cost
Less: administration cost
Profit from operations
Less: finance cost
Profit before tax
Less: tax
Profit for the year

Other comprehensive income
Revaluation
Total comprehensive income

Question 2

How do you work out COGS?

Answer 2

COGS =
Opening inventory
Plus: purchases
Less: closing inventory
Plus: depreciation

Manufacturing wages also go into COGS

Question 3

How do you calculate depreciation?

Answer 3

Depreciation straight line method = (use revalued amount)
cost * depreciation rate

Depreciation reducing balance method =
cost - acc. dep. = NBV
NBV * depreciation rate

Question 4

How do you calculate tax?

Answer 4

Taxation =
current year estimate + amount in trial balance - deferred tax

Question 5

How do you calculate the revaluation reserve?

Answer 5

Revaluation reserve (no depreciation) =
Revalued amount - cost

Revaluation reserve (with depreciation) =
cost - acc. dep. = NBV
revalued amount - NBV

Question 6

How do you calculate total comprehensive income?

Answer 6

total comprehensive income =
Profit after tax + revaluation reserve

Question 7

What costs go into distribution costs?

Answer 7

Distribution cost
Commission
Dep.

Question 8

What costs go into administration costs?

Answer 8

Administration cost
Admin salaries
Dep.
Admin expenses accrued
Bad debt written off

Question 9

What is the layout for the statement of financial position?

Answer 9

Assets
NCA
CA
Total assets
Equity and liabilities
Equity
Total equity
NCL
CL
Total liabilities
Total equity and liabilities

Question 10

What goes into NCA?

Answer 10

Goodwill
PPE

Question 11

What goes into CA?

Answer 11

Closing inventory
Trade receivables
Cash and cash equivalent

Question 12

What goes into equity?

Answer 12

Share capital
Share premium
Revaluation reserve
Retained earnings

Question 13

What goes into NCL?

Answer 13

Bank loan
Deferred tax

Question 14

What goes into CL?

Answer 14

Bank overdraft
Current tax payable
Trade payables

Question 15

How do you calculate PPE?

Answer 15

Cost
Less: Acc. dep.
Less: current year dep.
Add: revaluation

Question 16

How do you calculate share premium?

Answer 16

(Issue price - previous price of shares) * no. of shares

Question 17

How to calculate RE?

Answer 17

RE =
Opening balance RE
Plus: profit for the year
Less: dividends

Question 18

What is the layout for the statement of changes in equity?

Answer 18

Along top:
Share capital
Share premium
Revaluation
RE
Total

Along side:
Opening balance
Issue of shares
Revaluation
Profit for the year
(-) dividends
Closing balance

Question 19

How do you calculate sale of PPE?

Answer 19

Cost - acc. dep. = NBV
NBV +/- gain/ loss on sale

Question 20

How do you calculate PPE bought?

Answer 20

Opening balance
Less: dep. for year
Less: disposal NBV
Less: closing balance

Question 21

How do you calculate dividends paid?

Answer 21

RE opening balance
Plus: profit for the year
Less: RE closing balance

Question 22

How do you calculate the group structure?

Answer 22

No. of shares purchased/ total no. of ordinary shares

Question 23

What does investment cancel out (consolidated financial statements)?

Answer 23

Investment will cancel out S Ltd share capital and share reserves.

Question 24

How do you calculate goodwill?

Answer 24

Find net assets:
Share capital
Plus: share premium
Plus: RE on date of acquisition
Plus: increase in fair value

Goodwill =
Cost of investment - (net assets * group structure) - impairment

Question 25

Where does fair value go on the consolidated statements?

Answer 25

Fair value is included in PPE (have to add it to PPE)

Question 26

How do you calculate consolidated RE?

Answer 26

(RE of S Ltd - RE on acquisition) * group structure P Ltd RE + this - goodwill impairment

Question 27

How do you work out NCI?

Answer 27

(S Ltd share capital + S Ltd share premium + RE + increase in fair value) * NCI group share (structure)

Question 28

Where does NCI go on the FNST?

Answer 28

NCI is added to equity under consolidated RE (consolidated statement of financial position)

Question 29

How do you calculate provisions for unrealised profit?

Answer 29

Profit of goods * % of unsold goods This is then deducted from RE This is then added to inventory

Question 30

How do you complete intra group sales in the consolidation statement of profit and loss?

Answer 30

Intra group sales are: Deducted from revenue Deducted from COGS

Question 31

How do you complete unrealised profit in the consolidation statement of profit and loss?

Answer 31

Unrealised profit is: Deducted from inventories Increased in COGS Deducted from profit

Question 32

How is impairment recorded on the consolidated statement of profit and loss?

Answer 32

Impairment on goodwill is an operating expense

Question 33

What profit is used in the consolidated statement of profit and loss?

Answer 33

Only use POST-acquisition profit (pre-acquisition cancels with goodwill)

Question 34

How do you calculate NCI in the consolidated statement of profit and loss?

Answer 34

S Ltd profit after tax * NCI % of ownership

Question 35

What is included in financing operations?

Answer 35

Proceeds of share issue (cap + prem) Increase in loan Dividends paid

Question 36

What is the layout for a cashflow statement?

Answer 36

Profit from operation Adjustments Depreciation Gain/ loss on sale of PPE Operating cashflow before working capital Inventories Receivables Payables Cash generated from operations Interest Tax Net cash from operating activities Investing activities Purchase of NCA Proceeds of sale of PPE Net cash from investing activities Financing activities Proceeds of share issue Bank loan Dividends paid Net cash from financing activities Net increase/ decrease in cash Cash at beginning of year Cash at end of year

Question 37

How to work out EPS?

Answer 37

Profit after tax / weighted average no. of shares