Homework: Assessment 1 - Financial Transactions and Interim Reporting

This homework assignment covers key concepts in financial accounting, including multiple-choice questions, manufacturing statements, trading accounts, and profit and loss statements. The assignment requires students to prepare financial statements based on provided data, including calculations for cost of goods sold, gross profit, and net operating profit. It also explores inventory valuation methods, specifically FIFO, within a perpetual inventory system, and requires journal entries for materials transactions. Furthermore, the assignment addresses the importance of inventory control and contrasts the periodic and perpetual inventory methods. The solution includes detailed calculations and explanations to demonstrate the application of accounting principles and practices.

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FNS50215 Diploma of Accounting/ FNSACC507/ 2017/ T4/ Assessment Tool

Assessment1
(Process financial transactions and interim report)
Part 1 - Multiple Choice ( Circle the one best answer)
1. Which one of the following would be considered a user of management accounting
information?
A. Stockholders B. Controller C. Creditors D. Suppliers B. (Controller)
2. Which of the following would NOT be a characteristic of managerial accounting?
A. It is designed to influence the behavior of managers.
B. It is future oriented.
C. It must follow GAAP just like financial accounting.
D. It varies from hourly reports to reports that may span 20 years.
A. It is designed to influence the behaviour of managers.
3. The term used to describe the assignment of direct costs to the particular cost object is
A. cost allocation. B. cost tracing. C. cost aaccumulation. D. cost assignment.
B. Cost tracing
4. The term used to describe the assignment of indirect costs to a particular cost object would be
A. cost allocation B. cost tracing C. cost accumulation D. cost assignment.
A. Cost allocation
5. As the quantity produced increases, fixed costs per unit are expected to
A. increase per unit.
B. decrease per unit.
C. stay the same per unit.
D. None of the above.
B. Decrease per unit
6. The cost of materials that have been started into production, but are not completely
processed, would be found in which inventory account on the balance sheet?
A. Direct materials inventory.
B. Work-in-process inventory.
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FNS50215 Diploma of Accounting/ FNSACC507/ 2017/ T4/ Assessment Tool

C. Supplies inventory.
D. Finished goods inventory.
B. work in process inventory
7. Costs at a service sector company are normally considered
A. inventoriable costs.
B. period costs.
C. prime costs.
D. None of the above.
B. Period cost
8. Which of the following is NOT a feature of cost accounting and cost management?
A. Calculating the cost of cost objects.
B. Obtaining information for planning, control and performance evaluation.
C. Analyzing relevant information for making decisions.
D. Allocating period costs to specific products.
C. Analyzing relevant information for planning, control and
performance evaluation
9. As activity changes, a cost that is variable will
A. vary per unit.
B. remain the same per unit.
C. vary inversely with activity per unit.
D. remain the same in total amount.
A. Vary per unit
10. Ford Automotive Company is considered an example of a
A. merchandiser.
B. service company.
C. manufacturer.
D. wholesaler.
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C. Manufacturer
Part 2 Answer all questions below
Question: 1.
Zebra Productions presents you with the following data for the month of March 2014.
$
Purchases 42 300
Direct labor cost 10 000
Cost of goods sold 61 000
Manufacturing overheads 15 000
Inventory accounts showed the following opening and closing balances:
1stMarch
$
31st March
$
Direct materials 7,000 7,400
Work-in-procss 9,600 13,000
Finished goods 15,000 17,500
Other expenses for the month were:
Selling expenses $4,100
General and administrative expenses $2,900
Sales for the month were $82,000
Required: 8marks
a) Prepare Manufacturing Statement for the month ending 31st March
b) Trading Account for the month.
c) Profit & Loss Statement for the same month.
a) Manufacturing statement:
Zebra Production’s Manufacturing
Statement for month ended 31st March
2014
$ $
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FNS50215 Diploma of Accounting/ FNSACC507/ 2017/ T4/ Assessment Tool

Raw materials inventory 7000
Purchases 42300
Total materials available 49300
Less: Raw Materials Inventory 7400
Cost of raw materials consumed 41900
Cost of direct labour 10000
Cost of manufacturing overhead 15000
Total Cost charged into
production
66900
Add: Work-in-Process Inventory 9600
76500
Less: Work-in-Process Inventory 13000
Cost of goods manufactured 63500
b) Trading statement:
Zebra Productions Trading Statement for
month ended 31st March 2014
$ $
Sales 82000
Less: Cost of goods sold: 63500
Gross profit from sales 18500
c) Profit and loss statement:
Zebra Productions Profit and Loss Statement for month
ended 31st March 2014
$ $
Sales 82000
Less: Cost of goods sold 63500
Gross profit from sales 18500
Less: Operating expenses 0
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FNS50215 Diploma of Accounting/ FNSACC507/ 2017/ T4/ Assessment Tool

Selling expenses 4100
General and administrative expenses 2900
Net operating profit 11500
Question 2
Zaynab Appliance uses a perpetual inventory system. For its flat-screen television sets, the 1
January inventory was three sets at $500 each. On 10 January, purchased six units at $560 each.
The company sold two units on 8 January and five units on 15 January.
Required:
Calculate the ending inventory under FIFO
Dat
e
Descripti
on
In Out Balance
Dat
e
Descriptio
n
In Out Balance
Unit
s
Cos
t
per
unit
Total $ Unit
s
Cost
per
unit
Total
$
Unit
s
Cost
per
unit
Tota
l $
1-
Jan
Inventory 3 500 1500 3 500 1500
8-
Jan
Sales 2 500 1000
0
1 500 500
10-
Jan
Purchase 6 560 3360 1 500 500
6 560 3360
15-
Jan
Sales 5 560 2800 1 500 500
1 560 560
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31-
Jan
Balance 1 500 500
1 560 560
Question 3
Materials transactions for Shiela Manufacturers Ltd. for the first week of February are
presented below.
2013 Transaction Document
Mar 10 Purchased direct materials
from Tiffini Ltd. for $350
Invoice. No. 390
12 Issued materials to
production - $250
Materials
Requisition No. 31
18 Returned faulty material to
Tiffini Ltd. - $50
Credit Note No. 42
25 Materials returned to store
from production - $25
Returned Materials
Report No. 12
Required:
Record the above transections in General Journal of Shiela Manufacturer Ltd.
Date Particulars Debit Credit
2013
Mar-
10
Direct Material a/c Dr. 350
To Tiffini Ltd 350
(Raw material has been purchased.)
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FNS50215 Diploma of Accounting/ FNSACC507/ 2017/ T4/ Assessment Tool

Mar-
12
WIP a/c Dr. 250
To Direct Material 250
(Direct material has been transferred into WIP.)
Mar-
18
Tiffinin Ltd a/c Dr. 50
To direct material return 50
(being material has been returned.)
Mar-
25
Finished goods a/c Dr. 25
To WIP a/c 25
(WIP has been transferred into Finished goods.)
Question 4
Why is inventory control so important? What are the differences between The periodic inventory
method and The perpetual inventory method
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FNS50215 Diploma of Accounting/ FNSACC507/ 2017/ T4/ Assessment Tool

Inventory control is a procedure which is a method where all the supplies of he goods are promptly
and properly issued, preserved and accounted in the best interest of an organization which handles
all the supplies of the company. inventory control system is of two types:
Perpetuity inventory control system
Periodic inventory control system
Perpetuity control system depict that the continuous track must be kept over the inventory of
an organization to maintain and manage the supplies of the company and various other activities of
the company whereas periodic inventory control system depict that the continuous track is not
requisite to kept over the inventory of an organization to maintain and manage the supplies of the
company and various other activities of the company.
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FNS50215 Diploma of Accounting/ FNSACC507/ 2017/ T4/ Assessment Tool