BSBFIA401 1

BSBFIA401
Prepare Financial Reports
Practice Task Answer Booklet 
Activity 1

1.     What is the difference between BAS agent service and Tax Agent service? Refer to
Tax Agent Services Act 2009 (TASA 2009). 

Activity 2

1. Perform asset valuation and depreciation.

TMT Express purchased a motor vehicle for delivery on 1/7/2017.

Asset Asset General Date Cost inc. Disposa Residual Person

ID description ledger a/c purchased GST l value responsible
MV1 Delivery   1/7/2017 66,000 N/A N/A  
Vehicle
A. Complete the General Journal entries for the asset acquisition and depreciation
B. Compete an asset register

General Journal                                     

Date Account Debit Credit

Asset acquisition

1/7/20xx Cash at bank    66,000

  Motor vehicles 66,000  

  GST paid 6,000  

Total 66,000  66,000

Depreciation entry

Accumulated depreciation- M.V   7,500 

30/6/20xx

  Depreciation ( MV ) 7,500   

Total 7,500  7,500 

TMT Express

Asset register
  

Authorisation Asset Date Details Asset Accumulated

ID Depreciation

Debit Credit Balance Debit Credit Balance

  mv1 1/07/2017 purchase 60000    60000      

  mv1  1/07/2018  depercition     52500  7500  7500 

  mv1 1/07/2019  depercition     45000    7500  15000 

  mv1  1/07/2020  depercition     37500    7500 22500

  mv1 1/07/2021  depercition     30000   7500 30000

  mv1 1/07/2022  depercition     22500    7500 37500

  mv1  1/07/2023  depercition     15000    7500 45000

  mv1  1/07/204  depercition     7500    7500 52500

                   

   

Authorisation Disposal date Disposal method Disposal amount

       

2. On 11 October 2017 Sunshine Pty Ltd paid $3,960 (including $360 GST) to renew the
annual insurance policy due to expire on 31 October 2017 (Chq. 1245). The payment was
correctly recorded in the Prepaid Insurance account. On 30 June 2018, before any adjusting
entries, the balance in the Prepaid Insurance account was $4 720.             

Required:                                                                                                             
A.    Explain why it was correct to record the payment as prepaid insurance.
                                                                                                                    
The item provide a future benefit to the business in the next reporting period is the
result of a past transaction. It  should remain as a prepaid item until consumed in the
subsequent reporting period. 
B.    Prepare the necessary General Journal entries to record the                            
 balance day adjustment                                                                      
 Closing entry relating to insurance for the year ending 30 June 2014. (Narrations are
not required.)
General Ledger
General
Date Particulars Ledger Subsidiary Ledger
 2014   Debit Credit Debit Credit
    $ $ $ $
30
june Insurance expense 3 540      
Prepaid insurance
  expense   3 540     
           
Profit & loss
  summary 3 540      
  Insurance expense   3 540    
 
C.       State the effect on the Balance Sheet if the balance day adjustment relating to insurance was
not made.
 
Item Overstated/Understated/No Change

Effect on assets  overstated

  Effect on liabilities No change

  Effect on
owner,s 
equity overstated
 
D.       Explain why closing entries are required as part of the accounting process.
 Accounts are closed so that profit can be calculated for the current reporting period.
Accounts are also returned to zero balancos so that they are ready the next reporting period