Explain the primary goal of maintaining a cash book. Use a case study company of your own choice to demonstrate how such a goal (Your arguments must only relate to the main goal of a cash book) can be attained. Provide examples as
Explain the primary goal of maintaining a cash book. Use a case study company of your own choice to demonstrate how such a goal (Your arguments must only relate to the main goal of a cash book) can be attained. Provide examples as
College Accounting (Book Only): A Career Approach
13th Edition
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:Scott, Cathy J.
Chapter10: Cash Receipts And Cash Payments
Section: Chapter Questions
Problem 5QY
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Question
- Explain the primary goal of maintaining a
cash book . Use a case study company of your own choice to demonstrate how such a goal (Your arguments must only relate to the main goal of a cash book) can be attained. Provide examples as approperiate - Clearly explain how a cash book can be integrated in the extraction/development of the
Trial Balance . - Are trade discounts included in the cash book? If not or if yes, explain why
- Are credit transactions included in the cash book? If not or if yes, explain why
- Ledgers help to organize accounting information into categories normally known as ‘’classes’’. With examples explain the nature and differences between revenue and capital ledgers
- Using two revenue and capital ledgers, explain how you will treat them in the trial balance.
- Explain the treatment of the proprietor’s additional contribution to an already existing business. In addition, explain the underlying accounting principle you will apply in answering this question.
-
Thames Cotton Mills Ltd. take a periodic inventory of their stock at the end of each month. The physical inventory taken on 30th June shows a balance of 1,000 litres of chemicals at hand @ €2.28 per litre. [20 marks]
The following transactions took place during July:
July 1: 14,000 litres @ €2.30 per litre
July 7: 10,000 litres @ €2.32 per litre
July 8: issued 6,000 litres
July 9: 14,000 litres @ €2.30 per litre
July 20: Issued 7,000 litres
July 25: 5,000 litres @ €2.35 per litre.
You are required to compute the inventory value on July 31, using each of the following methods:
- First in First out
- Last in First out; and
- Average cost method
- How are the three inventory methods you have used in answering question (a) to (c) above differ from each other? Comment using the answers you generated for each of these three methods, how such answers impact on the gross profit
- Explain three (3) most important reasons why
inventory valuation must be conducted - Based on the theory learned in this course, explain whether inventory is valued at cost or at selling price. Reflect your answer on the income statement prepared at the end of each accounting period
- By using the concepts learned in inventory valuation chapter, explain the underlying accounting principle relating to inventory valuation.
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