Assessment Task 1: Written Questions

1. Explain the basic principles of double entry bookkeeping.

The basic principle of double entry bookkeeping is that there are always two entries for every transaction. One entry is known as a credit entry and the other a debit entry. The entries are often displayed in ‘T’ accounts.

1. Debit The Receiver, Credit The Giver

This principle is used in the case of personal accounts. When a person gives something to the organization, it becomes an inflow and therefore the person must be credit in the books of accounts. The converse of this is also true, which is why the receiver needs to be debited.

This rule is applied when the account in question is a nominal account. The capital of the company is a liability. Therefore it has a default credit balance. When you credit all incomes and gains, you increase the capital and by debiting expenses and losses, you decrease the capital. This is exactly what needs to be done for the system to stay in balance.¹

3. Explain the purpose of a general journal in accounting and give at least two examples of transactions that may be recorded in this journal.

• Asset sales

• Depreciation

5. Describe what is meant by “Fair Value” under AASB 116.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.²

3. electricity e.g. electrocution

4. harassment e.g. bullying and/or violence

Moreover, they should make sure that their cloud storage provider understands their role in ensuring data security and privacy for regulations and industry/corporate governance. This includes providing compliance services internationally as well as nationally, such as observing GDPR privacy regulations on data stored in the EU.

Even if you don’t run afoul of government regulators, a failed internal audit can severely impact public and private companies. Write regulatory compliance and governance measures into your SLAs.³

Threats to compliance with the fundamental principles may occur when a Member in Public Practice competes directly with a client or has a joint venture or similar arrangement with a major competitor of a client. A threat to objectivity or confidentiality may also be created when a Member in Public Practice performs services for clients whose interests are in conflict or the clients are in dispute with each other in relation to the matter or transaction in question.

In addition, Situations where a Member in Public Practice is asked to provide a second opinion on the application of Australian Accounting Standards, Auditing or Assurance Standards, reporting or other standards or principles to specific circumstances or transactions by or on behalf of a company or an entity that is not an existing client may create threats to compliance with the fundamental principles.

(a) address specific industry issues and consumer problems not covered by legislation;

(b) elaborate on legislation to deliver additional benefits to consumers; and/or

(c) other relevant criteria

RG 183.7 Additional requirements apply if approval of a code is sought under s962CA of the Corporations Act: see Section E. This means the code can be offered as an alternative to compliance with the requirement in s962K for financial advisers who enter into ongoing fee arrangements with retail clients to renew their clients’ agreement to pay ongoing advice fees at least every two years (opt-in requirement).

⁴

11. Explain whether financial services industry associations have to seek approval from ASIC regarding their codes of practice. Give examples of at least two financial services industry codes of practice.

2. General Insurance Code of Practice

The General Insurance Code of Practice (the Code) requires insurers, and other industry participants, who have adopted the Code to provide services to their customers in an open, fair and honest way.

• Corporations Act 2001

• Business Names Registration Act 2011

2. Direct-entry method — Enter each transaction directly into the master table.

The direct-entry method enables one to enter the transactions directly, which reflects the results of the transactions immediately. The disadvantage, however, is that control over transaction entry is significantly lighter than with the batch method because there is no means to verify each transaction entry before it is reflected in the general ledger. Errors are also more difficult to correct once they are discovered.⁵

16. Explain the difference between balance day adjustments required for accruals and balance day adjustments required for prepayments. Give an example of each.

Prepaids and accruals relate to the services and goods a company receives from its vendors for which payment has been or will be made. Prepaid expenses are the advance payments for goods and services that are to be used up in the future and are classified as an asset on the balance sheet, while expense accruals are liabilities, amounts that have been incurred but have not been paid by a period's end.

Under accrual, assume instead that the maintenance agreement still has a contractual period of February 1 through January 31 of the following year in the amount of $12,000, but requires the company to make quarterly payments at the end of each quarter totaling $3,000. At the end of the first month of service, February, the company has incurred maintenance expenses from the service benefits of the agreement. Although the payments are made on a quarterly basis, the expense must still be recognized for the services that were used for the month. The entry to record the expense at the end of February will occur as follows:

Debit Maintenance and Repairs Expense 1,000 Credit Services Payable 12,000

According to AASB1021 and AAS4, under the allocation approach, the depreciable amount of a depreciable asset must be allocated on a systematic basis over its useful life. The depreciation method applied to an asset must reflect the pattern in which the asset's future economic benefits are consumed or lost by the entity. The allocation of the depreciable amount must be recognised as an expense, except to the extent that the amount allocated is included in the carrying amount of another asset.⁶ In contrast, valuation approach is the methodology used to determine the fair market value of a business.

19. Explain why it is important for estimates of the useful lives and expected residual values of depreciable non-current assets to be reviewed annually.

Assessment Task 2: Learning and development needs analysis project

Journal entries for the year ended 30 June 2018

• The bank column of the cash receipts journal was over added by $30, but the individual receipts were correctly entered and posted.

4. Calculate the following, taking into consideration the relevant procedures set out in the company’s Financial Policy and Procedures:

At the end of June, there is a debt of $990 that has been owed for 65 days. The amount is owed by Tables and Chairs.

How would you show this on the end of year reports?

Thank you.

Sincerely,

Assessment Task 3: Learning and development activity project

Asset Cost: $30,000

Less Residual value: Nil

Depreciation (2016)

Depreciation (2017)

3. Ledger accounts for Motor Vehicle, Accumulated Depreciation of Motor Vehicle and Depreciation Expense from 1/7/2016 to 30/6/2017.

ASSETS

CURRENT ASSETS

Profit & Loss Statement

For the year ended 30/6/2018

5. Write the journal entries to record the disposal of the old delivery truck on 31 March 2018, including calculation of gain or loss. Show your calculations.

   Calculate depreciation expenses:

6. Email

Dear Assessor,

YOUR NAME

Assessment Task 4: Learning and development evaluation project

General journal entries for balance day adjustments as at 30 June 2017.

Sincerely,

MIsa

Kindest of regard,

YOUR NAME