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Accounting Discussion

hredoymohammad

hredoymohammad

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new termionologies supposed to be used in the exam ...they are easy..will take 2 or 3 min to learn so have a luk
 

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ThatReallyReallyWeirdDude

ThatReallyReallyWeirdDude

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Purchases is not known as raw materials!
Raw Materials only in manufacturing accounts!!! And things like cost of goods sold/cost of sales...really it's the same thing, there's no need to worry bout that, only major ones...long term liabilities are obviously non current :| It's up to you but there's better things to focus on.
And syllabus is attached, ethics and IT are not included at all. You can use Ctrl + F find function to check :|
 

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Muzammil100

Muzammil100

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8141f197.png

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JackTheRipper

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Guys, I'm having a bit of a problem here.
In s10 variant 11, Q6(d) (including the answer) it says:

Code: 
Cash received from sales, $3400, had not been banked. This had been used to pay for
additional purchases. No entries had been made in the books.
In the table below, place a tick () under the correct heading to show the effect of this
error.
 
                                              Increase    Decrease    No change
Gross Profit                                                              TICK
Percentage of Gross Profit to Sales                          TICK         
Rate of stock turnover                          TICK

I don't understand how there's no change with the Gross Profit.
Wouldn't Sales be understated (-3400) and Purchases be overstated (+3400, since it's been used for additional purchases) ?
Meaning Gross Profit would be understated as a whole.
How am I wrong ? Help ?
 
sasq111

sasq111

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JackTheRipper said:
Guys, I'm having a bit of a problem here.
In s10 variant 11, Q6(d) (including the answer) it says:

Code: 
Cash received from sales, $3400, had not been banked. This had been used to pay for
additional purchases. No entries had been made in the books.
In the table below, place a tick () under the correct heading to show the effect of this
error.
 
                                              Increase    Decrease    No change
Gross Profit                                                              TICK
Percentage of Gross Profit to Sales                          TICK       
Rate of stock turnover                          TICK

I don't understand how there's no change with the Gross Profit.
Wouldn't Sales be understated (-3400) and Purchases be overstated (+3400, since it's been used for additional purchases) ?
Meaning Gross Profit would be understated as a whole.
How am I wrong ? Help ?
Click to expand...
because it has been compensated
the sales have been used to pay for the purchases so why would it be overstated ?
 
ThatReallyReallyWeirdDude

ThatReallyReallyWeirdDude

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JackTheRipper said:
Guys, I'm having a bit of a problem here.
In s10 variant 11, Q6(d) (including the answer) it says:

Cash received from sales, $3400, had not been banked. This had been used to pay for
additional purchases. No entries had been made in the books.
In the table below, place a tick () under the correct heading to show the effect of this
error.

Increase Decrease No change
Gross Profit TICK
Percentage of Gross Profit to Sales TICK
Rate of stock turnover TICK

I don't understand how there's no change with the Gross Profit.
Wouldn't Sales be understated (-3400) and Purchases be overstated (+3400, since it's been used for additional purchases) ?
Meaning Gross Profit would be understated as a whole.
How am I wrong ? Help ?
Click to expand...
No; sales would be understated and purchases would be understated too, leading to no net change.
Percentage of gross profit to sales would decrease since the gross profit is the same but the sales is less
Rate of Stock turnover = Cost of Sales/Average stock, so since purchases decreased, so does Cost of Sales
 
JackTheRipper

JackTheRipper

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Hm I got your reply on my email but not here. I'll reply anyway.
What you said:
Oops my bad, must've not been focusing.
Since it's RATE of stock turnover, it's Average Stock/Cost of Sales multiplied by 365(for days), 52(for weeks) or 12(for months)
GPM = Gross Profit as percentage of sales? If so, GPM = Gross Profit/Sales
Gross Profit = Sales - Cost of Sales
Since both sales and cost of sales increase by 3400 there is no net change i.e.
G.P = sales + 3400 -(Cost of sales + 3400)
=sales +3400-cost of sales -3400
=sales - cost of sales
However, sales increases, so GPM decreases.
Click to expand...

Sales increases ? I thought it decreases ? (understated)
so GPM should increase.
(GPM is Gross Profit Margin, another name for the percentage).

a) How is goodwill treated on balance sheet - as a fixed asset?
Click to expand...
Wasn't goodwill intangible ? (that is, no numbers ?)
It IS a fixed asset but I don't think it should ever be recorded on a balance sheet.

http://www.xtremepapers.com/papers/CIE/Cambridge IGCSE/Accounting (0452)/0452_s10_qp_13.pdf
Why is the answer to 1(c) A? Shouldn't it be B?
Click to expand...
Here's how it *could* get to A:
To restore $50, you'll need to have $250 at the end..
but you paid $400 of expenses, so you had $650.
You drew $150. So you originally had $500. Dafuq ?!
 
ThatReallyReallyWeirdDude

ThatReallyReallyWeirdDude

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JackTheRipper said:
Hm I got your reply on my email but not here. I'll reply anyway.
What you said:


Sales increases ? I thought it decreases ? (understated)
so GPM should increase.
(GPM is Gross Profit Margin, another name for the percentage).


Wasn't goodwill intangible ? (that is, no numbers ?)
It IS a fixed asset but I don't think it should ever be recorded on a balance sheet.


Here's how it *could* get to A:
To restore $50, you'll need to have $250 at the end..
but you paid $400 of expenses, so you had $650.
You drew $150. So you originally had $500. Dafuq ?!
Click to expand...
LOL I deleted that comment, because it's mostly wrong XD
I'm sleepy
And that question is...something which doesn't have marriage rights in many states. *Cough*
Intangible means it has no physical form, but that doesn't mean it doesn't have value? Let me ask my super-smart friend >.<
I know it doesn't make sense right!?!
 
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fifooo

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guys can someone explain how to calculate credit sales
and give me good notes on control accounts?
Please..... i'd really appreciate it.
 
Meg

Meg

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ThatReallyReallyWeirdDude said:
LOL I deleted that comment, because it's mostly wrong XD
I'm sleepy
And that question is...something which doesn't have marriage rights in many states. *Cough*
Intangible means it has no physical form, but that doesn't mean it doesn't have value? Let me ask my super-smart friend >.<
I know it doesn't make sense right!?!
Click to expand...

OMG :O
Listen!
Goodwill has a value ofcurz!
It comes FIRST in the Fixed Assets list -_-
But most of the time, the goodwill account is written off so it doesnt feature in the balance sheet!
No value? o_O
What is wrong with u lol :p
 
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