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Economics, Accounting & Business: Post your doubts here!

student92

student92

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Mohammed Hassan said:
the answer is A, see, the company made a bonus issue of one for one, which means that the ordinary shares which are 200000, increase by 200000.... and the right issue of 100000, increased the ordinary shares to 500000
we used the share premium available ( which is $80000 ) to pay the 2000000 shares of the bonus issue, but it was insufficient, so we used the revenue reserves too, so the balance of the share premium is zero now and the revenue reserves are now 40000 ( 200000 - 800000 - 1200000 = 0 ) and therefore, we paid the bonus issue....
now for the right issue, $0.40 * 100000 = 40000 which will go to the share premium account, making an increase to the balance ( which was zero ) to be 40000

hope that was helpful :/ and understandable...
Click to expand...
thanks alot
 
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Vinita Manek

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hey guys i hv doubt in des stwo pprs cn u guys plsss help......
9706/01/o/n/04 qt numb 13, 15 and 23.
9706/12/o/n/09 qt numb 16 and 17.....
ny help is appreciated :)
 
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Vinita Manek

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Explain how inflation affects the functions of money.
discuss whether stability in the domestic value of money is essential for a country's economic well being....
can anyone pls answer des qt fr me.....ASAP
 
M

Mohammed Hassan

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Vinita Manek said:
hey guys i hv doubt in des stwo pprs cn u guys plsss help......
9706/01/o/n/04 qt numb 13, 15 and 23.
9706/12/o/n/09 qt numb 16 and 17.....
ny help is appreciated :)
Click to expand...

in question 13, the value of closing stock using FIFO is usually more than the value obtained using LIFO, so higher amount of closing stock which leads to lower amount of cost of sales, and therefore higher gross profit and eventually, higher net profit

in question 15, u have goodwill of value $12000, which u will have to distribute in the goodwill account according to the old ratio ( equally, which means divide by 2, giving $6000 each ) in the debit side, and write capital. Now we will remove the goodwill from the accounts by making the same but in the credit side and using the new ratio ( equally between 3 partners, which means divide by 3, giving $4000 each ) and write capital too, and by this, the goodwill account is closed.
Now, partner A has goodwill of $6000 in the debit side, this will be in the credit side of the capital account, dont forget that u have already a balance of 6000 in the beginning of the question, partner A has also goodwill of $4000 in the credit side, this will appear in the debit side of the capital account,
credit side - debit side = capital's new balance ( 6000+6000-4000 = 8000 ) and the answer is B

in question 23, option A, may be the right, because when there is a large bad debt, it actually means that debtors are decreased, so that possibly do not increase the collection period as the amount of debtors are decreasing....

hope it was helpful :) and understandable :)
 
C

Cutecute

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any tips for business studies paper 2 (its on 24th)

what important/must kind topics that need to give focus kinda stuff ..pls help

thanks

ps: i'm very sorry if you already posted about it .....:cry: pls let me know again :cry:

really really appreciated your help :)
 
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Mohammad Taymur

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Vinita Manek said:
Explain how inflation affects the functions of money.

INFLATION IS RISE IN THE PRICE LEVEL AND THEREFORE A FALL IN THE VALUE OF MONEY.. ALTHOUGH THE HOLDER OF MONEY MAY LOOSE DUE TO ITS FALLING VALUE BUT AS LONG AS THE INTEREST RATES ARE HIGHER THAN INFLATION RATE MONEY WILL NOT LOOSE ITS FUNCTIONS.. IF THE INFLATION IS TOO HIGH THAT IS WHEN HYPER INFLATION MONEY COMPLETELY LOOSES ITS VALUE AND THE INTEREST RATES WILL FALL. PEOPLE WILL NOT LEND MONEY AND BANKS WILL ALSO NOT LEND MONEY , IF THEY DO SO THEY WILL LOOSE.. PEOPLE STOPS USING MONEY AND GO FOR BARTER OR WILL ADOPT OTHERS COUNTRY CURRENCY AS THEIR MONEY .

FOR THE SECOND QUESTION
Stability in value would be upset by inflation. This causes problems with
the efficient working of the price mechanism, international competitiveness
and aspects of redistribution. Price stability can dent expectations and
profits and lead to lack of confidence and stagnation. These effects would
harm economic well-being. This may be shown by inefficiency,
unemployment, lower living standards etc. However the level of harm
depends upon the actual rate of change, whether or not it has been
anticipated and the comparative rate internationally. If these are relatively
favourable the effects may not cause significant instability. A low and
stable level of inflation is thought to encourage production and growth so
absolute stability is not necessary.
Click to expand...
 
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Mohammed Hassan

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Vinita Manek said:
hey guys i hv doubt in des stwo pprs cn u guys plsss help......
9706/01/o/n/04 qt numb 13, 15 and 23.
9706/12/o/n/09 qt numb 16 and 17.....
ny help is appreciated :)
Click to expand...

for question 16, u have made a right issue of one for each 3, ( 600/0.25 to get the number of shares = 2400 ) then divide by 3 to get the number of shares to be issued ( 2400/3 = 800 ) each share of these 800 cost $0.30 each which means that 0.05 will go for the share premium account so, 800*0.05 = 40, and then add the 40 to the original share premium balance ( 150+40 = 190 )
and the total number of extra shares issued are 800, so the total number of ordinary shares ( 800+2400 ) multiply by the share price ( 3200*0.25 ) and here u go, ordinary shares new balance = $800
so the answer is C
in question 17, the company made a bonus issue of one for each 4 ( 12000/4 + 12000 = 15000 ) the new number of shares is 15000. Then a right issue is made of one share for each 2 at $1.60 each( 15000/2 * $1.60 = $ 12000 ) and therefore the answer is B

hope that was helpful... and understandable
 
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Vinita Manek

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Cutecute fr bs ppr 2....i wld recommend u to knw ur defn well in order to bag those 12 marks (cmbinin bth case studies)......espescially d defn of business organsation such as sole trader or partnership.....secondly know ur calculations well.....knw ur formulas n l b gud to go.....u will den hv to comment on ur results.....try make a comparative answer with whatever information you have been provided for......lastly and more importantly.....for dse huge mark questions try frane ur answer in the context of the case study and u l gt ur aplication marks.....ur theory wnt be judged here more but how u use it in the context is what matters....and ofcozzz wt all examiners are lookin for in d end do mk an evaluative statement.......

topics frequently askd are: government influences on business, adapting to a new marketing mix and human resource workforce topics....hope this helps :)
 
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Vinita Manek

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shanky631 ans to the first mcq should be $200 debit... and the second one should be $12.....lemme knw if they r ryt.....
first one....draw a suspense account the u will find disc allowed on the credit side $700 and machinery on the debit side $500....bal cd is $200 on the debit side.
second one....we dnt knw the budgeted hours...we knw the actual hours and actual xpenditure....and the over-absorbed to the actual expenditure figure and divide it by actual direct hours...u l gt $12.....i hpe its ryt....pls lemme knw :)
 
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