Accounting- Unit 4 AOS 1 SAC Questions with Correct Answers

Accounting- Unit 4 AOS 1 SAC

What is an ethical implication of a high bad debt estimation? - answer- it overstates
expenses
- it understates assets
- inaccurate report

When do you recognise GST for accrued expenses? - answer- at the point where cash
exchanges hands (Invoice)

How does accrual basis uphold balance day adjustments? - answerIncurs expenses
and earns revenue REGARDLESS OF WHEN CASH EXCHANGES HANDS

Depreciation expense financial limitations? - answerIt is not 100% accurate, showed by
a loss/profit on disposal

Selling bad debts for the sake of it? - answer- financially more bad debts
- ethically inaccurate, misleading reports

When checking whether to increas expenses. - answerCheck other industries

$70 prepayment of a $100 + GST item ? - answerBank Dr 70, Unearned Sales Revenue
Cr 70

$100 prepayment of a $100 + GST item ? - answerBank Dr 100, Unearned Sales
Revenue Cr 100

$102 prepayment of a $100 + GST item ? - answerBank Dr 102, Unearned Sales
Revenue Cr 100, GST Cr 2

At 30 January, there was 4000 of Accrued Revenue and a business prepays $48000 for
the next year + GST. Why? - answerBank Dr 52800, Accrued Rent Revenue Cr 4000,
GST Cr 4000, Unearned Rent Revenue

You record the earned revenue on BALANCE DAY
You adjust the balance later

Doubtful Debts and QC's/Assumptions CONS - answer- It is an estimate and cannot be
verified by a Source Document
- May be biased/inaccurate (more favourable light)
- Breaches verifiability

Doubtful Debts and QC's/Assumptions PROS - answer- not reporting is less accurate