Accounting and Finance Concepts
Added on 2021-04-19
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RUNNING HEAD: FINANCEFinance
Finance2Task 1Question 1Assets: According to the Australian Accounting Standards Board, assets are described as future benefits held by the company as a result of past transactions (Aasb.gov.au.). Items like cash, inventory, accounts receivables, land, building and equipment are come under the head assets. On a balance sheet, assets are classified as current and non-current (Maheshwari, Maheshwari & Maheswari, 2013).Liabilities: As per AASB, the future sacrifices of the economic benefits made by the companies to other entities as a result of past events is known as liabilities (Aasb.gov.au.). These are basically known as financial obligations of the entity, which are to be paid within a specific time period. Items included under this head are accounts payable, bank loan, bank overdraft, bonds and interest payable, income tax liability and all other obligations of the business. Just like assets, liabilities are also reported as current and non-current on the balance sheet (Banerjee, 2010).Question 2Bank statement: It is a printed statement that contains the record of all the transactions done by an account holder. It summarizes all the transactions that are made during the time from the previous statement to the current one. These are critically reviewed by the consumers and are kept for their financial records (Thomas, 2017).The bank statement helps in identifying following discrepancies:When a check is been issued by a firm, it is recorded in the bank column of the cash book on credit side. But the same will be not be debited in the firm’s account by the bank. Reason being, the person to whom the check is been issued, has not presented it
Finance3in the bank. Due to this time lapse between issuing and presenting the check, difference may occur in the balances of both the books (NCERT, n.d.). When a check is deposited in the bank by the firm, it is reported on the debit side of the bank column in the cash book. But the same transaction will only be recorded by the bank when the amount of check is realized. Once it is done, the bank will credit firm’s account with the respective amount. This may again lead to the discrepancies inthe books (Warren, 2014).Sometimes the money is directly deposited in the bank account of the firm. The entity will get to know about this transaction only when it received the statement from the bank. As a result, the balance of cash book will be different from that of pass book (NCERT, n.d.).The bank charges or fees and commissions on the different services, interest or dividend received, expenses paid by the bank on behalf of firm, dishonour of check ordiscounting of bill, all these transactions are recorded by the bank and the firm will know about them after looking at the bank statement. The difference between the balances of both the books can be identified through the statement (Warren, 2014).Hence, it can be said that the statement issued by bank can assist in identifying the discrepancies in the balances of both the books. Question 3GST stands for Goods and Services Tax is a value added tax imposed on the goods and services which are sold for domestic consumption. It is added to the sale price of the product and when the consumer purchase that product, he pay GST along with the price. The tax is then collected by the seller and forwarded to the government (ATO. 2018). Calculation for GST inclusive price:
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