Economics, Accounting & Business: Post your doubts here!

[Mad Gal]

see the image below, now it will be clear to you.

Thanks that helped!

 

[WaleedUQ]

how do we make adjustments for faulty stock
for exp.
100 A/C's got destroyed during renovation
their cost was 100$
but can only be sold for $40 with a repair of $ 5000
so how what should be the value of stock in the balance sheet

 

[WaleedUQ]

were you talking about 41 or 43? & yeah I think you are referring to the calculation of Trade & Other Payables. I cant say if marking scheme is wrong, but this type of question came for the first time(at least among ones I have seen) where only 1 year's balance sheet is given (& working capital is given as one figure). Anyways you calculate the Cash balance from the given balance using the same logic used in Cashflow statements(Profit+Depreciation-Redemption-Dividend). It'll be 82k, add it to original working capital 983k & subtract the Assets amount given 1610k to get the liabilities (besides loan stock)

But they have also taken operating profit into account
it means that if we are using the logic of cash flows in calculating the current liabilities
so profit before interest and tax should be included in the books right ?

 

[Echelon94]

how do we make adjustments for faulty stock
for exp.
100 A/C's got destroyed during renovation
their cost was 100$
but can only be sold for $40 with a repair of $ 5000
so how what should be the value of stock in the balance sheet

Lower of cost or Net Realisable value(Price expected to be received from sale - cost of putting them into saleable condition). But I think there maybe a fault in the values you have given. I am assuming repair cost is $500 & not $5000. Then it'll be done like this: Cost=$10000 & NRV=$4000-$500=$3500. Therefore we'll take the value as $3500 in the balance sheet.

 

[Anusuya]

How can diminishing marginal utility be used to derive the demand curve??

And can the production along the PPC curve be referred as pareto optimal?? Our normal economics text book says..Allocative efficiency cannot be depicted by a PPC...bt again i found it in many other books that production in PPC is allocatively efficient.

 

[2pac]

Eco MCQ doubt-
please help me with the following questions.some of them are related with the quantity theory of money,a concept which I am having difficulty in understanding.
q2,19,26 and 27 ofhttp://www.xtremepapers.com/papers/CIE/Cambridge%20International%20A%20and%20AS%20Level/Economics%20%289708%29/9708_w07_qp_3.pdf
q4,17,23 of http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_w07_qp_3.pdf
Please reply whenever possible and help me understand the core concept as there has been a trend of such questions over the years.
thanks

 

[reina81]

in Q1 "b" part, for the second point why didn't they show the effect of removing depreciation on the disposal?
http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_w10_qp_43.pdf

http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_w10_ms_43.pdf

 

[Shabih zohra]

Thanks manesh! I really appreciate your help

 

[reina81]

Depreciation on Disposal decreases the Accumulated Depreciation, Depreciation for the year figure shown in P&L a/c will not be affected by reduction of Accumulated depreciation.

i don't get it? usually dep on disposal is debited to dep A/C so this reduces the value shown in P&L right?

 

[reina81]

No it reduces the carried down value of Accumulated Depreciation, so it affects the Accumulated Depreciation shown in the Balance Sheet. The Depreciation for the year shown in P&L a/c is calculated by using the formulae (revaluation/straight line), its not a balancing figure...

ohhhh ok in the same paper Q2, in "a" they asked for an income statement and the appropriation A/c, but in the mark scheme they've made the income statement and the statement of changes in equity? why?

 

[vita199]

plzz help... dnt get Q3 part d what we have to do?? http://www.xtremepapers.com/papers/...AS Level/Accounting (9706)/9706_w11_qp_41.pdf
http://www.xtremepapers.com/papers/...AS Level/Accounting (9706)/9706_w11_ms_41.pdf

 

[WaleedUQ]

@echolen
One last thing
Tell me all possible entries for capital reduction

 

[WaleedUQ]

plzz help... dnt get Q3 part d what we have to do?? http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_w11_qp_41.pdf
http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_w11_ms_41.pdf

Just calculate profit or loss for 5000 chairs thats all

 

[reina81]

yeah I am confused too I am getting 142 days for 2010 & 106 days for 2011

How did you get 142 days for 2010? I got the correct answer ,i.e 204.6 days by dividing trade payables by cost of sales. This works only for 2010 not 2011 and I'm not sure if this is a correct method. Also how did you find the income gearing , in the mark scheme they've found the interest cover instead.

 

[reina81]

If finance cost and interest are the same why is it that in this format finance cost has been added and then interest paid subtracted?
http://www.docstoc.com/docs/8243537/FORMAT-FOR-CASH-FLOW-STATEMENT

 

[omegavamp]

http://www.xtremepapers.com/papers/... AS Level/Accounting (9706)/9706_w08_qp_4.pdf
http://www.xtremepapers.com/papers/... AS Level/Accounting (9706)/9706_w08_ms_4.pdf

Guys, In question 1 part C. How did they find the Goodwill amount?

 

[Echelon94]

http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_w08_qp_4.pdf
http://www.xtremepapers.com/papers/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_w08_ms_4.pdf
Guys, In question 1 part C. How did they find the Goodwill amount?

I would've answered you bro, but you said "If you're reading this, then you're probably wasting your time. I mean c'mon you have better things to do. Now stop reading this. Stop already! =/". So....

lol jk...
you gotta calculate it by the formula (Goodwill=Purchase Consideration-Fair Values of Net Assets taken). for P.C., it says 3 times the average profits of last 5 years, so it'll be 3/5 x (29+25+17+13+11+55+49+42+25+19) = $171000.
Fair Value of Assets taken will be 50+5+80+20+14.5 = $169500.
Therefore the Goodwill = $171000-$169500 = $1500

 

[omegavamp]

I would've answered you bro, but you said "If you're reading this, then you're probably wasting your time. I mean c'mon you have better things to do. Now stop reading this. Stop already! =/". So....

lol jk...
you gotta calculate it by the formula (Goodwill=Purchase Consideration-Fair Values of Net Assets taken). for P.C., it says 3 times the average profits of last 5 years, so it'll be 3/5 x (29+25+17+13+11+55+49+42+25+19) = $171000.
Fair Value of Assets taken will be 50+5+80+20+14.5 = $169500.
Therefore the Goodwill = $171000-$169500 = $1500

Thanks man!

 

[Manesh]

If finance cost and interest are the same why is it that in this format finance cost has been added and then interest paid subtracted?
http://www.docstoc.com/docs/8243537/FORMAT-FOR-CASH-FLOW-STATEMENT

because now redeemable preference dividend also comes under finance cost.

 

[Paradoxical]

I have a little bit of a problem in economics paper 4. Could someone please tell me the basic points I should be discussing in question 7:
http://www.xtremepapers.com/papers/...d AS Level/Economics (9708)/9708_s03_qp_4.pdf
Thanks.