FIN611 Advance Financial Accounting assignment NO 2 FALL2012
Posted: Thu Jan 17, 2013 11:27 am
FIN611 Advance Financial Accounting assignment NO 2 FALL2012
Disscussion and solution
ADVANCED FINANCIAL ACCOUNTING (FIN611)
ASSIGNMENT NO. 02
DUE DATE: 21ST JANUARY 2013
MARKS: 25
TOPIC TO BE TESTED:
•
Accounting Policies, Changes in Accounting Estimates, & Errors (IAS – 8)
LEARNING OBJECTIVES:
•
To develop an understanding about the correct treatment of errors as per IAS-8,
found in financial statements.
ASSIGNMENT QUESTION:
When the financial statement of Local Industries Ltd. for the year ended December 31,
2012 was being prepared, it was discovered that due to arithmetical errors, inventories at
December 31, 2011 were understated by Rs. 30,000.
Following are the extracts from financial statement before the correction of error.
Income Statement
Dec. 31,
Dec. 31,
Particulars
Sales
Less: Cost of sales
Gross Profit
Less: Operating expenses
Net Profit
2012
Rs.
424,000
(300,000)
124,000
(30,000)
94,000
2011
Rs.
310,000
(204,000)
106,000
(16,000)
90,000
Statement of Retained Earnings
Dec. 31,
Dec. 31,
Particulars
Retained earnings at the beginning
Net profit for the year
Dividend paid
Retained Earnings at the end
2012
Rs.
164,000
94,000
(16,000)
242,000
2011
Rs.
84,000
90,000
(10,000)
164,000
Note: Paid-up capital of the company is Rs. 24,000
Required:
Prepare the following financial statements for the years 2011 and 2012 after
correcting the above mentioned error.
1. Income Statement;
2. Statement of Retained Earnings; &
3. Statement of Changes in Owners’ Equity.
07 Marks
07 Marks
08 Marks
(N OTE: 03 MARKS FOR GOOD FORMATTING AND PRESENTATION)
Disscussion and solution
ADVANCED FINANCIAL ACCOUNTING (FIN611)
ASSIGNMENT NO. 02
DUE DATE: 21ST JANUARY 2013
MARKS: 25
TOPIC TO BE TESTED:
•
Accounting Policies, Changes in Accounting Estimates, & Errors (IAS – 8)
LEARNING OBJECTIVES:
•
To develop an understanding about the correct treatment of errors as per IAS-8,
found in financial statements.
ASSIGNMENT QUESTION:
When the financial statement of Local Industries Ltd. for the year ended December 31,
2012 was being prepared, it was discovered that due to arithmetical errors, inventories at
December 31, 2011 were understated by Rs. 30,000.
Following are the extracts from financial statement before the correction of error.
Income Statement
Dec. 31,
Dec. 31,
Particulars
Sales
Less: Cost of sales
Gross Profit
Less: Operating expenses
Net Profit
2012
Rs.
424,000
(300,000)
124,000
(30,000)
94,000
2011
Rs.
310,000
(204,000)
106,000
(16,000)
90,000
Statement of Retained Earnings
Dec. 31,
Dec. 31,
Particulars
Retained earnings at the beginning
Net profit for the year
Dividend paid
Retained Earnings at the end
2012
Rs.
164,000
94,000
(16,000)
242,000
2011
Rs.
84,000
90,000
(10,000)
164,000
Note: Paid-up capital of the company is Rs. 24,000
Required:
Prepare the following financial statements for the years 2011 and 2012 after
correcting the above mentioned error.
1. Income Statement;
2. Statement of Retained Earnings; &
3. Statement of Changes in Owners’ Equity.
07 Marks
07 Marks
08 Marks
(N OTE: 03 MARKS FOR GOOD FORMATTING AND PRESENTATION)