Account P2 discussion

[Asad 619]

hello every1!!!! what was the net pay??? and can anyone tell me about the concepts which prevent goodwill?

 

[hammadthepcgeek]

Guys the answer to the first question was 3000 for both owners capital and capital employd which can be calculated by bank plus stock minus loan. In case if u havnt noticd the question askd for the owners capital and capital employd at 1st april ( not the end of the year). Therefore both figure would be same. And for concept i wrote prudence and going concern, the later being wrong. Only concepts which wud b corect is money measurement and produce. No other. Because non of the other makes sense when applied to goodwill not being recorded.

My friend, it cannot be. Yes the capital figure is right but keep in mind that Capital Employed is Total Assets less CUREENT LIABILITIES. Now since the bank loan was long term liability it could not have been subtracted in the calculation of Capital Employed. The capital employed would thus be $6500.

And don't count too much upon the concepts. I wrote the same concepts as you but I think Going concern does make sense. Lemme tell you how. Goodwill usually results upon the sale of a business and the going concern clearly states the business will continue for the foreseeable future, not to be sold. Hence, if the business would run for the foreseeable future, then why recording goodwill?

 

[Sijan92]

@hammad: Bro, are you sure about the capital employed? I thought capital employed is total assets minus total liability. While capital would be the amount initialy invested in the business. If you think of a capital account then capital would be balance bd( capital at the start) and capital employed would be balance cd( capital at the end/total assets minus total liabilities). And for the trial balance i wrote 3thousand in the capital. Am i write on that?

 

[usamakhalid1]

manufacturing answer was 2020000...however i mistakenly overadded provision on furniturebut balance sheet still balanced...how much marks will be deducted?
aur us ka answer kya tha chan aur doosray partner kay capital ka...i got 30000 for chan and the capital was same for other partner am i right?
and what was the total cost for tusang of employying the worker?

 

[usamakhalid1]

@hammad: Bro, are you sure about the capital employed? I thought capital employed is total assets minus total liability. While capital would be the amount initialy invested in the business. If you think of a capital account then capital would be balance bd( capital at the start) and capital employed would be balance cd( capital at the end/total assets minus total liabilities). And for the trial balance i wrote 3thousand in the capital. Am i write on that?

yes 3000 the capital and the capital employed was 6500 because it is equal to fixed assets + working capital....so working capital wsa 6500 and there were no fixed assets

 

[faisal93]

Your manufacturing cost is right but partner capital was i guess 20000 and the other was 10000

 

[Mr.Pakistan]

hammad is absolutely right!! for concepts i wrote money measurement and business entity some of my friends saying matching aswell !

 

[usamakhalid1]

sorry i wrote wrong one ...my answer was 20000...sry...and by the way in last qs i wrote "only" provision for depreciation wrongly how much marks are going to be deducted

 

[fierro]

@One who says trial balance balanced at 15400,
Are you sure? Because I think I am right. You must have included closing stock in the trial balance which doesnt come there. Closing stock is always outside the trial balance. You must have thought it was opening stock. and Gross Profit doesnt come too.

 

[faisal93]

i also have the same question as i do not think gross profit comes in trial balance..but stock comes in trial balance as it is an asset for us...

 

[Sijan92]

There goes my distinction! Man wat a mistake i made by including gross profit in the trial balance .. I just didnt realize then that trial balances are prepared before the financial statements. :'(

 

[faisal93]

man i only made mistake in calculation of depreciation...otherwise all my question are right...

 

[Sijan92]

Then u did very well. For depriciation you are likely to lose two marks.

 

[Mr.Pakistan]

man no mistake!!! just included gp in tb

 

[fierro]

Dude only opening stock comes in the trial balance not the closing stock and they gave us the closing stock. The trial balance total was 10800.

 

[usamakhalid1]

how many marks will be deducted i worte gross profit and closing stock in the trial balance

 

[hammadthepcgeek]

Well Sijan92 I am sure about this. Capital is Total Assets Less Total Liabilities while Capital Employed is Total Assets Less Current Liabilities. As for that Trial Balance, I included all of the items in it and there's a reason why: Trial Balance are not just prepared before the preparation of financial statements. There are three types of trial balance: 1. Pre Closing Trial Balance which is made usually during a financial period. 2. Pre Adjustment Trial Balance which i used to prepare financial statements 3. Post Closing Trial Balance which is prepared after the financial statements and of which balances are transferred into the next period.

Since the question never did specify which trial balance we had to make, we should be deemed correct by CIE.