accounting difficult question

[ks136]

Thanks KS136 btw, This one is a very disturbing MCQ. Can anyone explain why the answer will be D for this??? May 04

18 When a company is short of liquid funds, for what purpose may the reserves be used?
A to finance the take-over of another business the company is anxious to acquire
B to maintain dividends during periods of low profitability
C to pay creditors promptly so as to obtain discounts
D to write down assets whose value to the business has fallen

reserves r not any cash item,,,,therfore first 3 r impossible,,,,when u right down d value of asset,,,u r not using cash in it,,,u just credit d asset ...but as to complete d double entry u'll have to Dr too,,,so reserved cud b used 4 dis purpose

 

[Sijan92]

How come reserve is not a cash item? We can pay dividends to the shareholders with the reserves? So isnt this working like cash???

 

[ks136]

How come reserve is not a cash item? We can pay dividends to the shareholders with the reserves? So isnt this working like cash???

no!!!....i think u r wrong

 

[Sijan92]

Like we credit profit loss and we debit reserves which means the retained profit can be paid back as dividend again...

 

[ks136]

http://www.xtremepapers.me/CIE/Internat ... 9_qp_1.pdf

q19???

 

[Sijan92]

http://www.xtremepapers.me/CIE/International%20A%20And%20AS%20Level/9706%20-%20Accounts/9706_s09_qp_1.pdf

q19???

First you change the net profit margin to net profit mark up which is 20/(100-20)= 25%. Then you apply this mark up to the total cost to figure out the net profit. 25% X (800000+400000-200000) = 250000. As you have the net proft now, You can easily calculate sales. Remember that net profit is 20% of sales. So, Sales = 250000/20 X 100 = 1250000 .hope it helped

 

[naavo.1234]

Let sales = x

Now find cost of sales:

increase in stock means you have to assume that closing stock is increased by 200. why????

if u read the question it says that those are figures for profit and loss account. now P&l account is created at year end so thats why we assume it to be closing stock.

ok !!!

cost of sales is purchases - closing stock

800 -200 = 600

gross profit is x - 600

netprofit is 20% of x so it becomes 0.2x

(x-600) - 400 (overheads) = 0.2x

-1000 = -0.8x

x = 1000/0.8
x = 1250

so option b is the answer

 

[ks136]

is div yield formula included in AS syllabus

 

[naavo.1234]

i guess not!!!

i dont remember our teacher explaining any thing about that. it is in a2.

 

[ks136]

then why it is in
http://www.xtremepapers.me/CIE/Internat ... 9_qp_1.pdf

q25

 

[Sijan92]

Probably cuz it was previously included.. Anyways, Can anyone please explain why realised sales of waste is subtracted in M/J 02 Q30???? The Ans is B btw....

 

[naavo.1234]

My teacher said that some times examiners give 1 mcq of A2 on purpose to test us.

actually it is calculated through a formula

[(declared rate of dividend x face value of share)/market price of share] x 100

first find that rate of dividend:

[9600/(240,000 x 0.50)]
0.08

[(0.08 X 0.50) / 3.20] x 100

1.25%

so option A

working capital cycle is also an A2 ratio. it was also given to test us.

 

[ks136]

Probably cuz it was previously included.. Anyways, Can anyone please explain why realised sales of waste is subtracted in M/J 02 Q30???? The Ans is B btw....

already answered

 

[ks136]

Let sales = x

Now find cost of sales:

increase in stock means you have to assume that closing stock is increased by 200. why????

if u read the question it says that those are figures for profit and loss account. now P&l account is created at year end so thats why we assume it to be closing stock.

ok !!!

cost of sales is purchases - closing stock

800 -200 = 600

gross profit is x - 600

netprofit is 20% of x so it becomes 0.2x

(x-600) - 400 (overheads) = 0.2x

-1000 = -0.8x

x = 1000/0.8
x = 1250

so option b is the answer

y aint the div deducted??????????????????

 

[naavo.1234]

Iam sorry but i did not under stand what you wrote?

what do you mean?

 

[ks136]

MEAN WHY DIVIDENDS ARE NOT DEDUCTED

 

[naavo.1234]

DIVIDENDS ARE DEDUCTED FROM THE NET PROFIT. IT IS SHOWN IN THE APPROPRIATION SECTION. (AFTER NET PROFIT)

THEY ARE NOT DEDUCTED FROM GROSS PROFIT. IT IS AGAINST THE COMPANIES ACT.

 

[hamza87]

can anyone please help me in june 2009 question no 21

 

[hamza87]

pleaseeeeeeeeeee ....................help

 

[ruzache]

The answer is $150000. The issued current share capital of the business is 400000x$0.25=$100000
They issue 200000 shares at $0.60 but only $0.25 is the par value. The rest 0.35 is premium. Therefore the addition made to the share capital account is 200000x$0.25=$50000

Therefore $100000 + $50000 = $150000