Professional Documents
Culture Documents
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Question 2...........................................................................................6
Question 3.........................................................................................19
Reference list....................................................................................26
Notes to Financial Statement............................................................32
..........................................................................................................33
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Question 1
Research Study
1) Companies outline
Shipping industry is one of the most influential industries in the world today as it
contributes heavily in international trade which increases economic development of
countries around the world. The 3 companies chosen for this report are involved in this
industry. They are MISC Berhad of Malaysia, GRINDROD Ltd of South Africa and
Richfield International Limited of Australia.
MISC is a subsidiary of PETRONAS and is currently the leading international
shipping line in Malaysia which provides marine repair, offshore floating facilities and
many other shipping related activities.
GRINDROD is a shipping company that was founded from an old pilgrim ship
which was sold from an auction and has established itself as one of the largest users of
the South African ports today.
Richfield International Limited was established at 1984 and it was set up to
provide services to large vessels; however it has developed to provide more services for
its customers.
(128 words)
The accounting report chosen to be analyzed for this report is the income
statement. Income statement is one of the financial reports used to provide information
regarding the profit or loss made by a company from its operations during the reporting
period (Peirson, G., & Ramsay, A., 2006). This accounting report is used to measure a
company’s performance and allows business owners’ to make decisions about their
investment in the business. It is calculated through the difference of income and
expenses to determine profit or loss of the concerned company. If the income exceeds
the expenses incurred, profit is the result. If the expenses surpass income earned during
the reporting period, then a loss is made. (110 words)
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3) Companies comparison
Referring to the income statement acquired from MISC Berhad, GRINDROD Ltd
and Richfield International Limited, there exist some similarities and differences between
each financial report of the three companies. In this report, only 3 similarities and
differences will be listed out.
First similarity which can be pointed out is that all 3 income statements seem to
follow the basic format of an income statement stated in the framework for the
preparation and presentation of financial statements, which requires income earned
during the reporting period to be consigned with the expenses incurred in the same
period. All 3 income statements conform to this basic format as each income statement
has revenue matched against expenses to calculate profit or loss earned during the
period.
Another similarity that can be found within all three income statements is the
presence of income tax imposed on the company. According to IAS 12, income tax is
enforced when a transaction affects the equity directly. In this case, the profit earned
directly affects the equity, hence must be taxed. Referring to the 3 income statements,
profit for the year for the 3 companies are found after deducting ‘taxation’ expense,
which results lower yield in profit.
The third similarity that exists is presence of ‘basic earning per share’ categories
within each income statements. This complies with IAS 1, which state that income
statement should include ‘share of the profit or loss of associates and joint ventures
accounted for using the equity method’. This indicates how much each shareholder
earns from the profit/loss that the company makes during the reporting period.
First variation among the three income statements are the different currencies
used to prepare the income statements. MISC Berhad of Malaysia uses Ringgit
Malaysia (RM), Richfield International Limited utilizes Australian Dollar ($) while
GRINDROD Ltd of South Africa employs South African Rand (R) to represent their
functional currency in the income statements. There exists differences in currencies due
to each company conducting their businesses in different countries and as stated in
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each accounting policies, each entity uses currency of main economic location. Thus, if
comparisons are made, it will be difficult as each income statement is conducted in
different functional currency. Each currency have different value, thus may lead to
imprecise analysis of company’s performance.
Another difference between the three incomes is the type of revenues earned
within the reporting period. For MISC, the company includes the gains from disposal of
ship as revenue in its financial report. Meanwhile, GRINDROD take account of interest
received and sale of ‘non-trading items’ as part of its revenue. Richfield International
Limited however, only state ‘revenue from operating activities’ as its income. This
variation will be lead to difficulty in comparison as there is apparent difference in
composition of revenue. The inconsistency in the way business generate income may
lead to unfair analysis of the business performance.
The third distinction that can be seen among the three income statements is the
type of expenses stated in the income statements. Both MISC and GRINDROD
generalize their expenses under ‘operating expenses’ and ‘general and administrative
expenses’ respectively. Richfield International Limited however has broken down its
expenses to several groups to highlight how money is spent within the company.
(534 words)
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4) Ding, Entwistle & Stolowy (2007) wrote that “in a globalized business
world, it is often necessary to compare companies across national
boundaries”. Discuss this statement based on the case study you have
just completed.
The statement above has certain truth in it. Yes, in this modern time, the world is
becoming more globalized with the aid of open international trade policy and the internet.
However, it is sometimes unfair to compare performance of companies across national
boundaries as there are many factors that can affect its performance during a reporting
period. Such factors can be different accounting policies applied to each company as
they are situated at different countries, hence follow different regulations. Referring to
case study earlier, MISC of Malaysia follows MASB, Richfield International Limited of
Australia adheres to AASB while GRINDROD of South Africa complies with the
regulations set by IFRS.
However, comparisons across national borders also bring several benefits to the
companies of the same industry. By comparing performances internationally,
competition is induced indirectly among companies. Competition is seen as a benefit as
each company may want to perform better than its rival by incurring less expenses or
earning more revenue in its income statement produced annually. This form of
competition is seen as beneficial as it inspires companies to perform better in the next
reporting period.
(234 words)
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Question 2
A - L = OE
34,000 - 15,100 = 18,900 (Initial Capital)
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Date Particular Debit Credit
20X3 $ $
April 6 Vehicle expense 250
Cash at bank 250
Paid for vehicle expense
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Date Particular Debit Credit
20X3 $ $
April 27 Vehicle expenses 190
Cash at bank 190
Paid cash for vehicle expense
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(c) Prepare a chart of accounts
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(d) Post the general journal entries to the ledger
2,720 2,720
Telephone no.150
Date Particulars Amount Date Particulars Amount
20X3 $ 20X3 $
April 2 Cash at bank 600 April 30 Closing balance 600
600 600
10
Mower and equipment no.160
Date Particulars Amount Date Particulars Amount
20X3 $ 20X3 $
April 1 Capital 5,000 April 30 Closing balance 5,000
5,000 5,000
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Drawings no.310
Date Particulars Amount Date Particulars Amount
20X3 $ 20X3 $
April 17 Cash at bank 2,000 April 30 Closing balance 2,000
2,000 2,000
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Telephone expense no. 530
Date Particulars Amount Date Particulars Amount
20X3 $ 20X3 $
April 2 Cash at bank 100 April 30 Closing balance 100
100 100
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(e) Prepare a trial balance as at 30 April 20X3
Tim Redmond
Trial Balance as at 30 April 20X3
Particular Account No. Debit Credit
Cash at bank 100 5,230
Accounts receivable 130 1,520
Telephone 150 600
Mowers and equipment 160 5,000
Motor vehicle 170 20,000
Accounts payable 200 150
Loans 250 13,740
Capital 300 18,900
Drawings 310 2,000
Fees revenue 400 2,740
Vehicle expense 500 440
Interest expense 510 140
Advertising expense 520 500
Telephone expense 530 100
Total 35,530 35,530
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(f) Prepare an income statement, statement of changes in equity and a cash flow
statement for the month ended 30 April 20X3 and a balance sheet as at 30 April 20X3.
Less expenses
Vehicle 440
Interest 140
Advertising 500
Telephone 100 (1,180)
Net Profit 1,560
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Tim Redmond’s Mowing Service
Cash Flow Statement for the period ended 30 April 20X4
Cash flow from operations $ $
Cash inflow from customer 3,220
Cash outflow on expenses (1,040)
Cash outflow on accounts payable (950)
Net cash flow from operations 1,230
Cash flow from investing
Cash outflow on telephone (600)
Cash flow from financings
Cash inflow from capital 7,000
Cash outflow from loans (260)
Cash outflow from drawings (2,000)
Cash outflow on interest (140)
Net cash flow from financing 4,600
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Tim Redmond’s Mowing Service
Balance Sheet as at 30 April 20X3
$ $
Current assets
Cash at bank 5,230
Accounts receivable 1,520
Non-current assets
Telephone 600
Mowers and equipment 5,000
Motor vehicle 20,000
32,350
Current liabilities
Accounts payable 150
Non-current liabilities
Loans 13,740
Owner’s equity
Tim Redmond, Capital 18,460
32,350
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(B) On 1 April, Tim Redmond contributed mower and equipment and a motor
vehicle. Explain how Tim valued these (word limit = 200 words).
(192 words)
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Question 3
(a) Record the above transactions and events in the general journal of
Brisbane Traders. Use the perpetual inventory method of recording
inventory.
(i)
Brisbane Traders
General Journal
Date Particular Debit Credit
20X3 $ $
April 1 Cash at bank 100,000
Inventory 300,000
Capital 400,000
M. Voss started business with
cash and inventory as capital
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Date Particular Debit Credit
20X3 $ $
April 15 Accounts payable 75,000
Cash at bank 68,182
GST payable 6,818
Paid full amount owing to
Queensland Wholesalers
Ltd plus 10% GST
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Date Particular Debit Credit
20X3 $ $
April 28 Accounts receivable 40,000
Sales revenue 36,363
GST payable 3,637
Credit sale to M. Pike
Cost of goods sold 23,000
Inventory 23,000
Cost of price goods sold on credit
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(ii) Also complete the General Journal Entries using the periodic stock
system. Do not transfer the information in the COGS account.
Brisbane Traders
General Journal
Date Particular Debit Credit
20X3 $ $
April 1 Cash at bank 100,000
Purchases 300,000
Capital 400,000
M. Voss started business with
cash and inventory as capital
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Date Particular Debit Credit
20X3 $ $
April 15 Accounts payable 75,000
Cash at bank 68,182
GST payable 6,818
Paid full amount owing to
Queensland Wholesalers
Ltd plus 10% GST
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(B) Peirson & Ramsay (2006), Chapter 6, Problem 10: Sloan and Co.
Retailers - Part (b) only.
(b) Show the income statement of Sloan & Co. for the month ended of April
20X7 using the perpetual and periodic inventory methods.
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(i) Periodic inventory method
Sloan & Co.
Income Statement for the month ended 30 April 20X7
Income $ $
Sales Revenue 54,000
Less: Sales returns (6,000)
Net sales revenue 48,000
Add: Discount received from suppliers 600
48,600
Less: Cost of goods sold
Inventory 1 April 20X7 60,000
Add: Purchases 30,000
Less: Purchases returns (1,500)
Less: Closing inventory 30 April 20X7 (57,000) (31,500)
Gross Profit 17,100
Less: Discount received from customers (900)
Net profit 16,200
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Reference list
Ding Y., Entwistle, G.M. & Stolowy, H. (2007), Identifying and Coping with Balance
Sheet Differences: A Comparative Analysis of U.S., Chinese, and French Oil and
Gas Firms Using the “Statement of Financial Structure” Issues in Accounting
Education, Vol. 22, No 4: 591-606.
GRINDROD Ltd (2005). GRINDROD Ltd Annual Report, Income Statement. Retrieved
on Monday, August 25th, 2008 from http://www.grindrod.co.za/about_history.aspx
GRINDROD Ltd (2005). GRINDROD Ltd Annual Report, Income Statement. Retrieved
on Monday, August 25th, 2008 from
http://grindrod.investoreports.com/grindrod_ar_2007/downloads/grindrod_ar_200
7.pdf?PHPSESSID=ca7f4850734895c79c5eaf78b21ddaa2
MISC Berhad (2008). MISC Berhad Annual Report, Income Statement. Retrieved on
Monday, August 25th, 2008 from
http://www.misc.com.my/pressroom_factsheet.php
MISC Berhad (2008). MISC Berhad Annual Report, Income Statement. Retrieved on
Monday, August 25th, 2008 from
http://www.misc.com.my/misc/pdf/annual_pdf_xrnjog.pdf
Peirson, G., & Ramsay, A., (2006), Financial Accounting: An Introduction (4th ed.),
Pearson Prentice Hall, Australia.
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Richfield International Limited (2008). Richfield International Limited Annual Report,
Income Statement. Retrieved on Monday, August 25th, 2008 from
http://www.richfield.com.sg/index2.htm
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Appendix
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Richfield International Limited Income Statement in 2007
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MISC Berhad Income Statement for 2007
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GRINDROD Ltd Income Statement for 2007
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Notes to Financial Statement
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