VCE ACCOUNTING UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS CHAPTER 2 – BALANCE SHEETS

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Student50

Task 2B Classified Balance Sheets a) Define the following terms and give an example of each from the information provided. Current Assets

Define 1 mark

Assets that will be turned into cash and/or used up by the business within the next 12 months

Example 1 mark Cash at bank

1 + 1 = 2 marks

Non-Current Liabilities

Define 1 mark

Obligations of the business that are due for payment after the next 12 months.

Example 1 mark Mortgage

1 + 1 = 2 marks b) With reference to a qualitative characteristic of accounting, explain why items are classified in

the Balance Sheet.

Explanation Identify 1 mark

Relevance Define 1 mark

All information which influences the decision-making of the firm should be included in the financial reports.

Relate 1 mark

In this case, classifying the items in the Balance Sheet assist the firm in its decision-making.

For example, the firm can see which Liabilities are due for payment within 12 months and those beyond 12 months, enabling it to prioritise payments.

3 marks

VCE ACCOUNTING UNIT 3 – RECORDING AND REPORTING FOR A TRADING BUSINESS CHAPTER 2 – BALANCE SHEETS

© Michael Allison Author’s express permission required for external or professional use

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c) Prepare a Classified Balance Sheet for the business as at 30 September 2015.

Ray’s Radios: Balance Sheet as at 30 September 2015 $ $ $ $

Current Assets Current Liabilities

Cash at bank 1300 Tax bill 700

Debtors 1800 Creditors 3800

Stock 31000 34100 Loan – GUD Money 6000 10500

Non-Current Assets Non-Current Liabilities

Fixtures and fittings 35000 Mortgage 80000

Vehicles 80000 Loan – GUD Money 26000 106000

Computer equipment 18400 133400

Owner’s Equity

Capital 51000

TOTAL ASSETS 167500 TOTAL EQUITIES 167500

18 marks Marks:

1 mark for each figure and total

Total /25 marks