Please help with this Acctouning 1A question. Really confused!! (1 Viewer)

[jeann2014]

A $10 000 payment was made to accounts payable, as a result:
Select one:
a. an asset decreased and an expense decreased
b. an asset decreased and a liability decreased
c. an asset decreased and an expense increased
d. a liability decreased and an expense increased

I thought an asset would increase and another asset decrease, but it not there

 

[jeann2014]

Red Shoes Ltd has gone bankrupt and will not pay $10 000 to XYZ. XYZ has accounts receivable of $12 million and an allowance for doubtful debts of $500 000. XYZ does not adjust the accounts for the $10 000 that will not be paid by Red Shoes Ltd. Which of the following statements is true about the balance sheet of XYZ?

Select one:
a. total assets are overstated
b. total assets are understated
c. net accounts receivable is correctly stated
d. none of the above

And this ^ I am thinking a.

 

[Chronost]

It's B
Asset decreased and a liability decreased.

The normal journal entry for this would be
Debit Accounts payable 10,000
Credit Cash at bank(or cash whatever you want to call it) 10,000

You're paying off a liability, which is money you owe to someone else, therefore you use your cash to pay off someone. Thus cash decreases, as designated by the credit on the asset, and you decrease accounts payable because you're paying it off, and you're lowering the amount that you owe to someone after you pay that $10,000. Thus to decrease a liability you debit it because by nature a liability is a credit, so to decrease would be to debit it.

Hope you understand my explanation, if you need more clarification just ask.

 

[jeann2014]

At 1 July 2010, Epsilon Pty Ltd had 100 items of inventory which had cost $50 each. During the year ended 30 June 2011, it purchased 1500 items at a cost of $50 each. Of these, 200 were returned to the supplier as they were damaged. During the year, 1200 items were sold for $80 each, but 50 were returned by customers. Overhead expenses during the year amounted to $15 000.

What was Epsilon Pty Ltd's cost of goods sold for the year?
Select one:
a. $47 500
b. $57 500
c. $60 000
d. $62 500

HARDEST Q IVE EVER DONE HELP :'(

 

[Chronost]

Red Shoes Ltd has gone bankrupt and will not pay $10 000 to XYZ. XYZ has accounts receivable of $12 million and an allowance for doubtful debts of $500 000. XYZ does not adjust the accounts for the $10 000 that will not be paid by Red Shoes Ltd. Which of the following statements is true about the balance sheet of XYZ?

Select one:
a. total assets are overstated
b. total assets are understated
c. net accounts receivable is correctly stated
d. none of the above

And this ^ I am thinking a.

It's either A or D.It's annoying because it states they have not written it off, which means nothing has been done basically. Even if you were to write it off if you do it by allowance method it would be

Debit Allowance for Doubtful Debts 10,000
Credit Account's recievable 10,000

By this journal, your total assets wouldn't change as a allowance for doubtful debts is an asset contra account. However if you were to do balance day adjustments your balance sheet would state a lower total asset amount.

It could be A because since you haven't written off anything you technically haven't decreased Accounts Recievable which is overstated currently(however the allowance for doubtful debts would offset it in terms of total assets depending how you look at it)

I would still go for D, but A could be it depending how the lecturer looks at it.

At 1 July 2010, Epsilon Pty Ltd had 100 items of inventory which had cost $50 each. During the year ended 30 June 2011, it purchased 1500 items at a cost of $50 each. Of these, 200 were returned to the supplier as they were damaged. During the year, 1200 items were sold for $80 each, but 50 were returned by customers. Overhead expenses during the year amounted to $15 000.

What was Epsilon Pty Ltd's cost of goods sold for the year?
Select one:
a. $47 500
b. $57 500
c. $60 000
d. $62 500

HARDEST Q IVE EVER DONE HELP :'(

So easy, you just need to ignore a bunch of things they added in the question

Just look at the inventory sold, they sold 1200-50 returned by customer so, 1150

The cost is $50 per inventory so:
1150x50= 57500

You dont need to know the expenses or the actual stock they hold etc...trick question

 

[jeann2014]

Thanks
Aghhh so hard whether to choose A or D since I thought it would overstate assets since you haven't reduced your accounts receivable?

Which of the following is NOT true of a sound system of internal control?
Select one:
a. implementation of controls involves costs
b. a sound system of internal control is the responsibility of management
c. all errors and irregularities should be eliminated
d. a sound system of internal control is fundamental to the production of reliable financial reports

 

[nerdasdasd]

Thanks
Aghhh so hard whether to choose A or D since I thought it would overstate assets since you haven't reduced your accounts receivable?

Which of the following is NOT true of a sound system of internal control?
Select one:
a. implementation of controls involves costs
b. a sound system of internal control is the responsibility of management
c. all errors and irregularities should be eliminated
d. a sound system of internal control is fundamental to the production of reliable financial reports

B or C ... Hmm. I am learning more towards C.

By a process of elimination...

Internal controls do require cost .... Errors should definitely be eliminated (not sure if all though) and if internal controls are strong, then financial reports are reliable.

 

[Chronost]

B or C ... Hmm. I am learning more towards C.

By a process of elimination...

Internal controls do require cost .... Errors should definitely be eliminated (not sure if all though) and if internal controls are strong, then financial reports are reliable.

Na,sound internal controls are the responsbility of managment definitely.

C would be the most correct answer as a limitation of internal controls is that not all misakes can be eliminated due to the human error.