Q1. You have been appointed as an accountant of M.K. Industries a company formed by Mr Mutiso and Mr K.Kyalo to manufacture cooking fats for sale. While reviewing the accounting records of the company, you discovered that the following transactions and events were recorded during the year ending 30 September 1993. (iv) Land was reported at its estimated selling price, which is substantially higher than its cost. The increase in value was included in the income statement. (v) The personal assets of M.Mutiso and KKyalo are not inchluded in the financial statements of the business although M.Mutiso and K.Kyalo are agreeable to guaranteeing the bank overdraft of the business. Required: For each of the above items, explain which basis of accounting principle(s), concept(s) or convection(s), if any, are violated or observed. In each case, indicate the correct treatment

Q1. You have been appointed as an accountant of M.K. Industries a company formed by Mr Mutiso and Mr K.Kyalo to manufacture cooking fats for sale. While reviewing the accounting records of the company, you discovered that the following transactions and events were recorded during the year ending 30 September 1993. (iv) Land was reported at its estimated selling price, which is substantially higher than its cost. The increase in value was included in the income statement. (v) The personal assets of M.Mutiso and KKyalo are not inchluded in the financial statements of the business although M.Mutiso and K.Kyalo are agreeable to guaranteeing the bank overdraft of the business. Required: For each of the above items, explain which basis of accounting principle(s), concept(s) or convection(s), if any, are violated or observed. In each case, indicate the correct treatment

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 63P: Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture...

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You have been appointed as an accountant of M.K. Industries a company formed by Mr Mutiso and Mr K.Kyalo to manufacture cooking fats for sale. While reviewing the accounting records of the company, you discovered that the following transactions and events were recorded during the year ending 30 September 1993. (i) Land was reported at its estimated selling price, which is substantially higher than its cost. The increase in value was included in the income statement. (ii) The personal assets of M.Mutiso and K.Kyalo are not included in the financial statements of the business although M.Mutiso and K.Kyalo are agreeable to guaranteeing the bank overdraft of the business. Required: For each of the above items, explain which basis of accounting principle(s), concept(s) or convection(s), if any, are violated or observed. In each case, indicate the correct treatment.
Determine the Income and Expenses of this situation: The business is a trading business. For the period, it purchased goods for sale valued at ₱100,000.The goods were all sold for a total price of ₱120,000. For the sale only 10% was received as downpayment, 60% were later collected, and at the end of the year 30% are still for collection. How much isthe business income?
For each of the following situations write the principle, assumption, or concept that justifies or explains what occurred. A. A landscaper received a customers order and cash prepayment to install sod at a house that would not be ready for installation until March of next year. The owner should record the revenue from the customer order in March of next year, not in December of this year. B. A company divides its income statements into four quarters for the year. C. Land is purchased for $205,000 cash; the land is reported on the balance sheet of the purchaser at $205,000. D. Brandys Flower Shop is forecasting its balance sheet for the next five years. E. When preparing financials for a company, the owner makes sure that the expense transactions are kept separate from expenses of the other company that he owns. F. A company records the expenses incurred to generate the revenues reported.
Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture of office supplies. To be able to assess the financial capabilities of the company, Mike has been given the companys financial statements for the 2 most recent years. Required: Note: Round all answers to two decimal places. 1. Compute the following for each year: (a) return on assets, (b) return on stockholders equity, (c) earnings per share, (d) price-earnings ratio, (e) dividend yield, and (f ) dividend payout ratio. 2. CONCEPTUAL CONNECTION Based on the analysis in Requirement 1, would you invest in the common stock of Kepler?
Given the following financial statements for Voice-Soft, a voice recognition company, answer the questions on the next page. Income Statements Year Ended December 31, 20X2 20X1 Sales 8000 5000 Cost of goods sold (COGS) 7300 4380 EBITDA 700 620 Depreciation and Amortization 200 120 EBIT 500 500 Interest Expense 75 100 EBT 425 400 Taxes (20%) 85 80 Net Income 340 320 Balance Sheets As of December 31, 20X2 20X1 Assets Current assets: Cash 300 20 Short term investments 460 100 Accounts receivable 640 400 Inventories 800 480 Total current assets 2200 1000 Net plant and equipment 1800 1500 Total assets 4000 2500 Liabilities and Stockholders' Equity Current liabilities: Notes…
Please donot provide solution in image format provide solution in step by step and fast solution The financial reports of Al Wefaq Trading Company at the end of the year 2022 showed the following data: Income statement for the year ending on 12/31/2022 Net sales 75600 Cost of goods sold -42400 Gross profit 33200 Administrative and operational expenses -12800 Income from operating activities 20400 gains from the sale of land 6000 Subtracts interest expense -1200 net income before tax 25200 subtracts income tax -7440 Net income after tax 17760 financial position at the end of the year 2021 and 2022 2021 2022 Statement Assets 9,400 16,500 cash 14,400 21,600 Receivables 26,700 22,100 Inventory 450 880 Interest paid in advance 50,950 61,080 Total current assets 21,600 13,600 Affiliate investment 68,000 74,000 lands 22,600 31,400 Machines (6,400) (7,900) Consumption Complex 16,200 23,500 The net book value of the machines 156,750…
Provide a good illustration of how businesses should adhere to accounting principles and assumptions, as discussed on slide 16 of Chapter 1. Use this example as a guide for your answer. According to the cost accounting principle, if a firm purchases land for SR400,000 but an outside appraiser values it at SR600,000, the land should still be recorded in the books at SR400,000.
Adam’s Car Repair Shop started the year with total assets of RO 60000 and total liabilities of RO 40000. During the year, the business recorded RO 100000 in car repair revenues, R0 55000 in expenses, and drawings of RO 10000. The net income reported by the shop for the year was ____________ Select one: a. RO 35000 b. RO 90000 c. RO 20000 d. RO 45000
You have the following financial statements for two building companies and have been asked to compare them: Income statements for the year to 31st December 2019 Rachel Ltd Ronald Ltd £`000 £`000 Sales 2500 3600 Cost of Sales (450) (600) Gross Profit 2050 3000 Operating expenses (150) (350) Operating Profit 1900 2650 Interest Payable (40) (56) Profit Before Taxation 1860 2594 Taxation (68) (75) Profit After Taxation 1792 2519 Dividends (30) (43) Retained Profits 1762 2476 Statements of financial position as at 31st December 2019 Rachel Ltd Ronald Ltd £`000 £`000 Non-current assets 3056 3868 Current assets Inventories 70 35 Trade receivables 200 260 Cash at bank 56 20 Less: Current liabilities Trade payables (70) (65) Taxation (50) (42)…
You have the following financial statements for two building companies and have been asked to compare them: Income statements for the year to 31st December 2019 Rachel Ltd Ronald Ltd £`000 £`000 Sales 2500 3600 Cost of Sales (450) (600) Gross Profit 2050 3000 Operating expenses (150) (350) Operating Profit 1900 2650 Interest Payable (40) (56) Profit Before Taxation 1860 2594 Taxation (68) (75) Profit After Taxation 1792 2519 Dividends (30) (43) Retained Profits 1762 2476 Statements of financial position as at 31st December 2019 Rachel Ltd Ronald Ltd £`000 £`000 Non-current assets 3056 3868 Current assets Inventories 70 35 Trade receivables 200 260 Cash at bank 56 20 Less: Current liabilities Trade payables (70) (65) Taxation (50) (42)…
You have the following financial statements for two building companies and have been asked to compare them: Income statements for the year to 31st December 2019 Rachel Ltd Ronald Ltd £`000 £`000 Sales 2500 3600 Cost of Sales (450) (600) Gross Profit 2050 3000 Operating expenses (150) (350) Operating Profit 1900 2650 Interest Payable (40) (56) Profit Before Taxation 1860 2594 Taxation (68) (75) Profit After Taxation 1792 2519 Dividends (30) (43) Retained Profits 1762 2476 Statements of financial position as at 31st December 2019 Rachel Ltd Ronald Ltd £`000 £`000 Non-current assets 3056 3868 Current assets Inventories 70 35 Trade receivables 200 260 Cash at bank 56 20 Less: Current liabilities Trade payables (70) (65) Taxation (50) (42)…
You have the following financial statements for two building companies and have been asked to compare them: Income statements for the year to 31st December 2019 Rachel Ltd Ronald Ltd £`000 £`000 Sales 2500 3600 Cost of Sales (450) (600) Gross Profit 2050 3000 Operating expenses (150) (350) Operating Profit 1900 2650 Interest Payable (40) (56) Profit Before Taxation 1860 2594 Taxation (68) (75) Profit After Taxation 1792 2519 Dividends (30) (43) Retained Profits 1762 2476 Statements of financial position as at 31st December 2019 Rachel Ltd Ronald Ltd £`000 £`000 Non-current assets 3056 3868 Current assets Inventories 70 35 Trade receivables 200 260 Cash at bank 56 20 Less: Current liabilities Trade payables (70) (65) Taxation (50) (42)…