Week 2 Tutorial Activities PDF

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In class activities for week 2 Term 2 2021...

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Week 2 – In Class Activities Exercise 2.2 Prepare a statement of Changes in Equity for the month ended 31 August 2019 JONES’ MOWER REPAIRS PTY LIMITED Income Statement for the month ended 31 August 2019 INCOME Services income

$5 000

EXPENSES Rent expense Wages expense

$1 500 1 200

Electricity expense Supplies used

250 750 3 700

PROFIT

$1 300

JONES’ MOWER REPAIRS PTY LIMITED Balance Sheet as at 31 August 2019 ASSETS Cash at bank Supplies Equipment TOTAL ASSETS LIABILITIES Accounts payable Loan payable TOTAL LIABILITIES

$20 950 1 350 24 000 $46 300

$— 10 000 10 000

NET ASSETS

$36 300

EQUITY Share Capital Retained Earning TOTAL EQUITY

$35 000 1 300 $36 300

GST Revision: 1. What does GST stand for?

Goods and services tax 2. To which account should you post GST relating to revenue? GST collected/payable – Liabilities 3. To which account should you post GST relating to asset purchases and expenses? GST paid/recievable - Assets 4. What type of account is GST Receivable? Assets 5. What type of account is GST Payable? Liabilities 6. How do I calculate how much GST is included in a "GST inclusive" invoice? Divide GST inclusive cost by 11 7. How do I add GST to an invoice which is "GST exclusive"? Multpily the amount exclusive of GST by 1.1 8. I have a GST inclusive invoice of $770.00. How much is the GST component? $70 9. I have just registered for GST. How much would the new amount of a $500 invoice be? $550 10. Which financial statement contains GST account totals? Restatement of income statement and balance sheet of the preceding period

Group Discussion Company structure and terminology: 1.

What are some of the advantages of incorporating a business as a proprietary company?

2.Broad source of capital 3 . Ownership rights are represented by transferable shares 4.2. Continuity of existence 5 . Indefinite life and continue to exist even if the shareholders change 6.3. Potential income tax savings 

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. Saving on income tax that flows to the shareholders 8.4. Limited liability 9 . Responsible for its own actions and liabilities. Creditors have claims only against 10. company assets not against the shareholders personal assets. 

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Broad source of capital (ownership rights are represented by transferable shares Continuity of existence (indefinite life & continue to exist if the shareholders change Potential income tax savings (saving on income tax that flows to the shareholders) Limited liability (Responsible for its own action & liabilities. Creditors have claim only against company assets not the shareholders personal assets

11.

What would be a major disadvantage of incorporating a business? - Greater govt regulations (subject to much greater degree of control and supervision) - Separation of ownership and management (managers may operate companies for their own benefit rather than for the shareholders benefit

12.

What is a Dividend and what types of Dividends are there? the distribution of some of a company's earnings to a class of its shareholders, as determined by the company's board of directors     

13.

Cash dividend. Stock dividend. Property dividend. Scrip dividend. Liquidating dividend.

What is a Reserve? Name a common type of Reserve that may appear in a company’s accounts. profits that have been appropriated for a particular purpose capital reserves, revenue reserves, statutory reserves, realized reserves, unrealized reserves...