Question1) What are financial accounting, management accounting, and finance? What are their similarities and differences?
Question2) What information does a balance sheet provide? How do accounting conventions and asset valuation affect measuring and reporting financial position?
Question3) The following events occurred during the first month of operations for XYZ Ltd., a company specialised in providing carburetors to automobile manufacturers.
Date Event
Jan. 1st: The shareholders invested £300,000 in cash, land worth £100,000 and a building worth £250,000 in exchange for common shares.
Jan. 2nd: In order to develop a research facility, XYZ acquired computer equipment for £175,000. The purchase price was paid 20% in cash and the remaining on a note.
Jan. 4th: XYZ issued an advertisement in the newspaper in order to recruit a research lab specialist. The ad will run throughout the month and will cost £1,500. The invoice was received on the 15th of the month.
Jan. 31st: The research specialist worked for the last two weeks of the month. His salary of £5,500 was paid on the last day of the month.
Jan. 31st: The company started shipping products during the last week of the month. During that period, sales amounted to £265,000, all received in cash except for £15,000 which was sold on account.
Jan. 31st: At the end of the month, XYZ received a bill from My Telecomm Ltd for its telephone, Internet and cell phone charges. The total of the invoice amounts to £750 to be paid by the end of the following month. In addition, the company paid the newspaper company for the advertisement services provided.
Jan. 31st: To ensure the survival of the company in case of an incident, the company prepaid £5,000 for an annual insurance policy with coverage starting at the beginning of the following month.
Jan. 31st: Given the success of the company, the board of directors declared and paid a dividend of £15,000.
Complete the following:
Prepare the journal entries for the current month. Do not prepare any entries for transactions that relate to the following month.