F3 Topics Single Entry RelatedParties Etc.batuyong Concepcion

8/17/2019 F3 Topics Single Entry RelatedParties Etc.batuyong Concepcion

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SINGLE ENTRY


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when a system of record keeping in which

transaction are not analyzed and recorded inthe double entry framework.

For proprietorship or partnership

Capital, end the year xxx

Add: withdrawals xxx

Less: Capital, beg of yr xxx Additional in. xxx

!et income "loss# $$$


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For corporation

%etained earnings, end xxx

Add: diidends dec or pd. xxx

&ther items that

decreased the %' xxx

Less: ret. earnings, beg xxx

&ther items that

increased the %' xxx!et income "loss# $$$


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RELATED PARTIES


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(. the ability to control the other party

%elated )arties * if one party has: * +- or more ownership

. the ability to exercise signi/cant in0uenceoer the other party

* - to 12- 3. 4oint control oer the entity

* key management personnel

* Close family members


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Control the other )arty

5igni/cant 6n0uence

)A%'!7 589566A%;

6!


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(. A related party transaction is a transfer of resources or obligations

A. 9etween related parties, when price is charged

9. 9etween related parties, regardless of whether a price is chargedC. 9etween unrelated parties, when price is charged

. 9etween unrelated parties, regardless whether a price is charged

. =hat is control of one party by another party>

A. 7he holding of signi/cant proportion of the ordinary shares9. 7he contractually agreed sharing of control oer an entity

C. 7he power to participate in the /nancial and operating policydecisions

. 7he power to goern the /nancial and operating policies of an entityso as to obtain bene/ts

3. Close family members of an indiidual include all of the following except

A. 7he indiidual?s spouse and children

9. Children of the indiidual?s spouse

C. ependents of the indiidual or indiidual?s spouse

. 9rothers and sisters of the indiidual


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REPORTING

AND

ACCOUNTINGCHANGES


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6nterim Financial %eporting

* means preparation and presentation of F5 fora period less than ( year.

* can be monthly, @uarterly or semi*annually

Condensed set of F5

6nterim %eports

5elected 'xplanatory

!otes


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Accounting Changes

* it is a normal recurring correction orad4ustment

7wo types of Accounting Changes

* Change in Accounting )olicy

* Change in Accounting 'stimate


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An entity shall change an accounting policyif:

* is re@uired by 5tandard of 6nterpretation

* results in the F5 proiding reliable andmore releant information

Application of changes 6n accounting policy:

* %etrospectie application

* )rospectie application


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Changes in Accounting 'stimate

* 9ad ebts

* 6nentory &bsolescence

* F< of /nancial assets and liabilities

* 8seful life of assets

* epreciation method

Application of changes in accountingestimate:

* 6n the period of change if the changeaects that period only

* 6n the period of change and future

periods, if the change aects both


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6nterim %eporting

(. 8nder )A5 31, interim /nancial reports shall be published

A. &n a @uarterly basis9. =heneer the entity wishes

C. &nce a year at any time in the same year

. =ithin one month from the end of the year

. As a minimum re@uirement, interim /nanciak reports should include:A. A balance sheet and a statement of comprehensie income

9. A complete set of /nancial statements pursuant to )A5 (

C. A condensed set of /nancial statements and selected explanatorynotes

. A balance sheet, statement of cash 0ows and statement of

comprehensie income

3. )A5 31 states a presumption that anyone reading interim /nancialreports will

A. Bae access to the records of entity

9. Bae access to the most recent annual reportC. 5hould not make decisions based on interim report


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1. 5tatement 6. An entity shall apply the same accounting policiesin its interim F5 and in its annual F5.

5tatement 66. %eenues are generally recognized for interim reportdon the same basis as for the annual period while costs andexpenses are recognized as incurred on interim period

A. 7rue, true

9. 7rue, false

C. False, true. False, false

+. A rare and unusual casualty loss occuring in the second @uartershall be recognized as a loss

A. 6n the second @uarter only9. At the end of /scal year

C. )roportionately in each of the second, third and fourth@uarters

. )roportionately in each /rst, second, third and fourth @uarters


15/27

. Drapes company?s )(2, net income for the @uarterended sept. 3, ( included the following items:

**A )(, gain on disposal of e@uipment realized on april3, ( was allocated e@ually to nd, 3rd and 1th @uarter

**A )3, cumulatie eect loss resulting from a change

in inentory aluation was recognized in august 1, (

6n addition, grapes paid )2, on february (, ( forcalendar year property tax, of this amount )1, wasallocated to the 3rd @uarter of (.

For the @uarter ended september 3, (, how muchshould grapes report as net income>


16/27

Accounting Changes

(. 6t is the speci/c principle, basis, conention, rule and practice adoptedby an entity in preparing and presenting the /nancial statements

A. )rior period error

9. Accounting policy

C. Accounting estimate

. DAA)

. A change in accounting policy shall aected when:

6. %e@uired by an accounting standard ot its interpretation

66. 6t helps an entity sae on corporate taxes by way of understating netincome

666. 7he change results in F5 proiding more releant or reliable /nancialinformation about reporting entity

A. 6 and 66

9. 66 and 666

C. 6 and 666

. 6, 66 and 666


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3. =hich is considered as a change in accounting policy rather than changein accounting estimate>

A. %eision of an intangible?s useful life9. Change in residual alue of a building used as a plant site

C. Change in inentory aluation from F6F& to weighted aerage method

. Change in depreciation method from straight line to double decliningbalance method

1. 6t is diEcult to distinguish between a change in accounting estimate andaccounting policy, then the change is

A. )rior period error

9. Current period error

C. Change in accounting policy

. Change in accounting estimate

+. )rior period errors discoered in the current period are reported as

A. 'xtraordinary items

9. Component of current income from ordinary actiities

C. Ad4ustments to the opening balance of %'

. Component of current income from continuing operations


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6tems *2

7L Co. decided on 4anuary , (, to eect the following changes inaccounting policies:

9A '975: 9ad debt percentage from - to 1- of accounts receiable.

'nding balance of A% is )2, and the allowance for bad debt has a debit

balance of ),.

')%'C6A76&!: From 5; to straight line method of depreciation and a reised

remaining useful life of ( years as of 4anuary , (. 7here is no change in

residual alue of )+,. 5aid e@uipment was purchased on 4anuary (, for )(,(+,, a total useful life of (+ yrs and )+, residual alue.

. 7he eect of the entry to record the current proision for bad debts on bad

debts expense is:

. 7he carrying alue of the accounts receiable is:

G. 7he depreciation expense for the current year is:

2. 7he carrying alue of the e@uipment as of december 3(, ( is:


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CASH

AND

ACCRUALBASIS


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Cash 9asis

* income is recognized when receiedregardless of when earned, and expense isrecognized when paid regardless of when incurred.

* does not recognized A%, A), accrued income,

deferred income, accrued expense and prepaidexpense.

Accrual 9asis

* income is recognized when earned regardlessof when receied, and expense is recognized when

incurred regardless of when paid.


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Computation of 5ales

Cash sales xxx5ales on Account :

7rade A% and !%, end xxx

Collections of A% and !% xxx

5ales ret, discnts, and allow xxx

A% and !% written o xxx

7rade !% discounted

"!% directly credited# xxx xxxLess: 7rade A% and !%, beg. xxx

7otal 5ales* Accrual 9asisxxx


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)urchases

)urchases per book xxx

)urchases on Account:

7rade A) and !). 'nd xxx

)ayment to A) and !) xxx

)urchases ret, dscnt and allow xxx

7otal xxx

Less: 7rade A) and !), beg xxx xxx 7otal )urchases H accrual basis xxx


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Computation of 'xpenses

'xpenses paid H cash basis xxx

Add: )repaid expenses* beg xxx

Accrued expenses* end xxx 7otal xxx

Less: )repaid expenses H end xx

Accrued expenses H beg xx xxx

'xpenses H Accrual basis xxx


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6ncome other than sales

6ncome receied H cash basis xxx

Add: eferred income H beg xxx

Accrued income H end xxx

7otal xxxLess: eferred income H end xxx

Accrued income H beg xxx xxx

6ncome other than sales* accrual xxx


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(. 8nder cash basis of accounting

A. %eenue is recorded when earned

9. Accounts receiable would appear in the statement of /nancial positionC. epreciation of assets haing an economic life of more than ( year is

not recognized

. Iatching principle is ignored

. 6f ending balance exceeds the beginning balance of accounts receiable

A. Cash collections during the year exceed sales9. !et income is less than cash basis income

C. !o cash was collected during period

. Cash collections during the year are less than sales

3. 8nder the cash basis of accounting, reenue is recorded

A. =hen earned and realized

9. =hen earned and realizable

C. =hen earned

. =hen realized


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1. =hen an item of expense has been incurred but notyet paid. 6t is called

A. )repaid expense

9. Ad4usted expense

C. 'stimated expense

. Accrued expense

+. 7he ending balance in unearned fees represents

A. Cash receied in adance and not yet earnedduring the period

9. 7he decrease in accounts receiable for the period

C. Cash paid in adance and not yet incurred duringthe period

. 7he increase in accounts receiable for the period


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. 8nder the accrual basis, rental income of 7A%A 5A C&!& Co. for thecurrent year is ),. Additional information regarding rental income

is as follows:** 8nearned rental income, 4an. ( )+,

** 8nearned rental income, dec. 3( +,

** Accrued rental income, 4an. ( 3,

** Accrued rental income, dec. 3( 1,

Bow much cash was receied from rental in the current year>

. Delou Company maintain records using cash basis of accounting butuses accrual basis in preparing its F5. uring (, the entity collected)+,, in fees from clients. &n december 3(, (+, accountsreceiable of )G, and unearned fees of )+, had beenrecorded.

&n december 3(, (, accounts receiable increased to )(,+,while unearned fees increased to )2,. 6n the accrual basis, what isthe serice reenue for (

F3 Topics Single Entry RelatedParties Etc.batuyong Concepcion

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