ACCT102 (C&D) Accounting and Financial Information

Tutorial 2
Discuss the questions below in your groups during class.

After your group discussion, write down a few key points to answer the questions

Discussion Questions (Custom book page 74)

Q Describe the elements of the accounting equation.

2.7 Describe the basis used to determine whether an asset is classified as current or non- current. Is the same
basis used for the classification of liabilities? (LO3)

Application Exercises (Custom book pages 75, 77, 78)

2.1a Would the following accounts be classified as assets? If not, how would they be classified? (LO2)

Account Yes If No, how classified

1 Accounts receivable
2 Accumulated depreciation
3 Investments purchased
4 Advance to employees
5 Prepaid insurance
6 Supplies used
7 Unearned service fees

2.1b Would the following accounts be classified as liabilities? If not, how would they be classified? (LO3)

Account Yes If No, how classified

1 Accounts payable
2 Loan taken out
3 Loan guarantee
4 Unused bank overdraft
5 Provision for major maintenance
6 Provision for warranty
2.5 Complete the table by inserting the missing figures ($).
(Use the accounting equation). (LO2)

(a) (b) (c) (d)

Current assets 13,900 18,300 13,200 ?
Non-current assets 51,600 71,600 110,700 69,600
Current liabilities 14,200 11,900 9,600 17,500
Non-current liabilities 17,900 ? 41,500 51,200
Opening capital 20,700 29,200 ? 26,700
Profit or loss 19,600 17,900 37,400 (9,500)
Drawings ? 8,700 11,700 7,200

2.7 The following is the list of the assets and claims of Crafty Engineering Ltd as at 30 June 2017: (LO2/4)

$
Accounts payable 86,000
Motor vehicles 38,000
Loan from St George Bank 260,000
Machinery and tools 207,000
Bank overdraft 116,000
Inventory 153,000
Freehold premises 320,000
Accounts receivable 185,000

(a) Using the vertical format, prepare the statement of financial position of the business as at 30 June 2017
from the above information.

(b) Discuss the significant features revealed by this financial report.