Description

Financial Accounting
Dec 2024 Examination
PLEASE NOTE: This assignment is application based, you have to apply what you have
learnt in this subject into real life scenario. You will find most of the information through
internet search and the remaining from your common sense. None of the answers appear
directly in the textbook chapters but are based on the content in the chapter
Q1. ABC Traders began their business operations on July 1st, 2023. The following
transactions were recorded during the first month: [10 Marks]
1. July 1: Owner invested 50,000 in the business bank account.
2. July 3: Purchased office furniture for 8,000 on credit from XYZ Suppliers.
3. July 5: Paid rent for the month, 3,000, by check.
4. July 7: Purchased inventory worth 10,000, paying 60% in cash and the rest on credit.
5. July 10: Made sales of 12,000, of which 7,000 was received in cash and the rest on
credit.
6. July 15: Paid 5,000 to XYZ Suppliers for the credit purchase made on July 3rd.
7. July 20: Received 3,000 from debtors for the credit sale made on July 10th.
8. July 25: Paid salaries of 2,500 in cash.
9. July 28: Returned 500 worth of office furniture to XYZ Suppliers due to a defect.
10. July 31: Paid utility bills for the month amounting to 800 by cash.
Questions:
1. Prepare the journal entries for all the above transactions for the month of July.Post the
above journal entries to the relevant ledger accounts (Cash, Bank, Sales, Purchases,
Debtors, Creditors, Furniture, Rent, Salaries, etc.).After posting the entries to the ledger,
prepare a trial balance for ABC Traders as of July 31st, 2023. (10 Marks)
Ans 1.
Introduction
Financial accounting is an essential function in any business organization, serving as a
systematic process of recording, classifying, and summarizing financial transactions to provide
an accurate financial position. This practice ensures compliance with accounting standards and
transparency in financial reporting. The case of ABC Traders highlights the importance of
financial accounting in real-life scenarios, where accurate journal entries, ledger postings, and
trial balance preparation are critical for effective decision-making. The following document
provides a detailed analysis of the transactions recorded by ABC Traders during their first
month of operations in July 2023. It includes journal entries, ledger postings, and a trial balance
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Q2(A) ALPHA Ltd., a mid-sized manufacturing company, is preparing to expand its
operations internationally. As part of this expansion, the company needs to ensure its
financial statements are compliant with both domestic and international accounting
standards. ALPHA Ltd. has been following Indian GAAP but is now considering adopting
International Financial Reporting Standards (IFRS) and Indian Accounting Standards
(Ind AS) due to its international ambitions.
The management of ALPHA Ltd. is faced with several decisions:
1. Current Accounting Policies: The company follows traditional Indian GAAP which
may not align with the new standards they are considering. They need to understand the
implications of transitioning to Ind AS and IFRS.
2. Implementation Strategy: They are also looking for a structured approach to
implement Ind AS and integrate IFRS into their financial reporting system.
Question:
1. Identify and explain the meaning and objectives of accounting standards that ALPHA
Ltd. should consider in transitioning from Indian GAAP to Ind AS and IFRS. Discuss the
significance of setting accounting standards in the context of ALPHA Ltd.’s international
expansion. (5 Marks)
Ans 1.
Introduction
Accounting standards are critical frameworks designed to standardize financial reporting and
ensure consistency, transparency, and comparability of financial statements across organizations
and jurisdictions. For ALPHA Ltd., transitioning from Indian GAAP to Ind AS and IFRS
represents a strategic move to align its financial reporting with global practices, ensuring
compliance and fostering trust among international stakeholders. This alignment is essential for
Q2(B) Refring to the above case:
How would adopting Ind AS and IFRS benefit the company? Outline the key steps in the
roadmap for implementing Ind AS in India and how ALPHA Ltd. can align its financial
reporting with these standards. (5 Marks)
Ans 2B.
Introduction
Adopting Ind AS and IFRS offers numerous benefits for companies like ALPHA Ltd.,
particularly as they expand internationally. These standards enhance financial transparency,
global comparability, and stakeholder confidence. Transitioning to these frameworks ensures
compliance with international expectations, fostering stronger relationships with global
investors and partners. This document explores the advantages of adopting these standards and