ACC100 Introduction to Accounting For Contributed Capital Asisgnment
Cash Revenues
Accounts Payable Wages Payable Accounts receivable
$30,000 99,000 9,000 1,000 1,000
Prepaid Rent $2,000 Expenses 54,000 Equipment 40,000 Loan Payable 4,000
Inventories
Motor Vehicles (net) Cash
Prepaid insurance Fuel supplies Accounts receivable
$125,000 75,000 35,000 1,500 9,000 10,000
Plant & equipment (net) Accounts payable Salaries payable
Loan Payable Contributed capital Retained profits
$200, 000 25,000
2,500 160,000 155, 000
Prepare a fully classified balance sheet for the business as at 31 December 2016.
1. Explain why the penalties were imposed
2. Referring to APES 110 standards (available on Moodle), which sections should have applied to your three mentioned examples?
3. Were the penalties imposed by the accounting bodies sufficient?
Answers:
George St. Hair Dressing
|
Income statement | |
|
For the year ended 31 December 2016 | |
|
Particulars |
Amount ($) |
|
Revenues |
99000.00 |
|
Total Revenues (A) |
99000.00 |
|
Expenses |
54000.00 |
|
Total Expenses (B) |
54000.00 |
|
Net Profit (A-B) |
45000.00 |
|
Balance Sheet | |||
|
As at 31 December 2016 | |||
|
Particulars |
Amount ($) | ||
|
Non-current Assets | |||
|
Equipment |
40000.00 | ||
|
Total Non-current Assets (A) |
40000.00 | ||
|
Current Assets | |||
|
Cash |
30000.00 | ||
|
Accounts Receivable |
1000.00 | ||
|
Prepaid Rent |
2000.00 | ||
|
Total Current Assets (B) |
33000.00 | ||
|
Total Assets (A+B) |
73000.00 | ||
|
Non-current Liabilities | |||
|
Loan Payable |
4000.00 | ||
|
Total Non-current liabilities (A) |
4000.00 | ||
|
Current Liabilities | |||
|
Accounts payable |
9000.00 | ||
|
Wages Payable |
1000.00 | ||
|
Total Current Liabilities (B) |
10000.00 | ||
|
Total Liabilities (A+B) |
14000.00 | ||
|
Net Assets |
59000.00 | ||
|
Equity |
59000.00 | ||
|
Total Equity |
59000.00 | ||
The total amount of assets is $ 73,000.
Assets = Liabilities + Owner&Equity
Where,
Assets = $ 73,000
Liabilities = $ 14,000
So,
$ 73,000 = $ 14, 000 + Owner’s Equity
Owner Equity = $ 59, 000
|
Regional Farm Equipment Pty. Ltd | |||
|
As at 31 December 2016 | |||
|
Particulars |
Amount ($) | ||
|
Current Assets | |||
|
Cash |
35000.00 | ||
|
Accounts Receivable |
10000.00 | ||
|
Prepaid Insurance |
1500.00 | ||
|
Fuel Supplies |
9000.00 | ||
|
Inventories |
125000.00 | ||
|
Total Current Assets (A) |
180500.00 | ||
|
Non-Current Assets | |||
|
Motor Vehicles (net) |
75000.00 | ||
|
Plant and Equipment (net) |
200000.00 | ||
|
Total Non-Current Assets (B) |
275000.00 | ||
|
Total Assets (A+B) |
455500.00 | ||
|
Current Liabilities | |||
|
Accounts payable |
25000.00 | ||
|
Salaries Payable |
2500.00 | ||
|
Loan Payable |
32000.00 | ||
|
Total Current Liabilities (A) |
59500.00 | ||
|
Non-current Liabilities | |||
|
Loan Payable |
128000.00 | ||
|
Total Non-current liabilities (B) |
128000.00 | ||
|
Total Liabilities (A+B) |
187500.00 | ||
|
Net Assets |
268000.00 | ||
|
Equity | |||
|
Contributed Capital |
155000.00 | ||
|
Retained Earnings |
113000.00 | ||
|
Total Equity |
268000.00 | ||
Working Notes:
Assets = Liabilities + Owner Equity
Where,
Assets = $ 4, 55,500
Liabilities = $ 1, 87, 500
So,
$ 4, 55, 500 = $ 1, 87, 500 + Owner’s Equity
Owner Equity = $ 2, 68, 000
Owner Equity is the total of contributed capital and retained earnings
Where,
Contributed Capital = $ 1, 55, 000
Retained Earnings is computed as below:
Owner Equity = Contributed Capital + Retained Earnings
$ 2, 68, 000 = $ 1, 55, 000 + Retained Earnings
Retained Earnings = $ 1, 13, 000
3. AEPS 110 describes about the ethical code of conduct for professional accountants. Member is obligated to comply with the professional standards and ethical frameworks at the time of providing professional services in an honorary capacity (Chartered Accountants, 2017).
Every member has to perform duties with due care, he has to be straightforward and honest while giving his opinion, he shall not be bias towards his duties, he should maintain professional knowledge and skills while discharging his duties and has to act diligently as per prescribed standards. Further he has to respect the confidentiality of the information gathered from their clients and lastly he should be comply with the laws and regulations and avoid any circumstances which will cause disrepute to the profession (CPA, 2017).
Thus, if the member does not comply with the ethical requirements then the heavy penalties and fines will imposed on the member and can also resulted into forfeiture of their membership.
Three Examples are shown below which has caused breach of ethical frameworks by the members:
Brent Owen Kennerley CA [13 April 2017].
In this case, Member is a guilty of:
- Breaching the code of ethics (Section 130) and/or
- High degree of negligence in professional capacity which has caused profession into disrepute and the member will be unfit to practice as an accountant.
Penalty: Member has censured under rule 13.40 (k) of NZICA rules for causing of disrepute to the profession.
Costs: According to rule 13.42 of NZICA rules, Disciplinary tribunal has imposed costs of $ 40, 116 on the member.
Matthew Ronald William Harris ACA [29 March 2017]
In this case, member has offered accounting services to public without holding a Certificate of practice which is against the rule 10.2 of NZICA rules further in capacity as a director or shareholder he also gained financial benefits from the entity by providing accounting services (Section 200 of APES 110 standards).
Fine: $ 4,000 + $ 2,525 were imposed on the member.
Wayne Andrew banks CA [9 November 2016]
In this case, member is a guilty of improper observance of professional care, skills or competence because member has consented the SEC matters without admission which means it has committed an act which is resulted into discredit upon Chartered accountants and the profession of accountancy (Section 130 of APES 110 standards).
Penalty $ 13, 390 were imposed on the member.
Yes, the penalties imposed on the member by the accounting bodies were sufficient.
References
CPA Australia 2017, Outcome of disciplinary hearings, viewed on 22 May 2017 from < https://www.cpaaustralia.com.au/about-us/member-conduct-and-discipline/outcome-of-disciplinary-hearings>.
Chartered Accountants 2017, Home, viewed on 22 May 2017 from < https://www.charteredaccountantsanz.com/about-us/complaints/decisions-register>.
APESB 2017, APES 110 Code of ethics for professional accountants, viewed on 22 May 2017 from < https://www.apesb.org.au/uploads/standards/apesb_standards/standard1.pdf>.
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