Below is a draft balance sheet which Circular’s accountant is planning to fill i
ID: 2814626 • Letter: B
Question
Below is a draft balance sheet which Circular’s accountant is planning to fill in. Where would she put the following items?
a) A bank overdraft, repayable on demand
b) Twelve tonnes of pizza dough
c) A bank loan, repayable in five years
d) Invoices for payable from a supplier of garlic and tomato paste
e) Taxes for the current year payable in nine months’ time
f) An oven and two delivery bikes
g) A bill (unpaid) for pizzas delivered to a Christmas party
h) An order to purchase plant and equipment
Note that this is not a question on double-entry accounting. You simply need to tell me whether each item should be on the balance sheet and if yes where.
Balance Sheet
CURRENT ASSETS
Cash
Accounts Receivable
Inventory
LONG-TERM ASSETS
Plant and Machinery
CURRENT LIABILITIES
Bank Overdraft
Accounts Payable
Tax Payable
Dividends Payable
Other Payable
LONG TERM LIABILITIES
Bank Loan
NET ASSETS
SHAREHOLDERS’ EQUITY
Common Stock
Retained Earnings
TOTAL LIABILITIES AND EQUITY
CURRENT ASSETS
Cash
Accounts Receivable
Inventory
LONG-TERM ASSETS
Plant and Machinery
CURRENT LIABILITIES
Bank Overdraft
Accounts Payable
Tax Payable
Dividends Payable
Other Payable
LONG TERM LIABILITIES
Bank Loan
NET ASSETS
SHAREHOLDERS’ EQUITY
Common Stock
Retained Earnings
TOTAL LIABILITIES AND EQUITY
Explanation / Answer
Following items will be shown in the balance sheet by the accountant under following categories;
Items
Head in the balance sheet
Account Title
a) A bank overdraft, repayable on demand
Current liabilities
Bank overdraft
b) Twelve tonnes of pizza dough
Current Assets
Inventory
c) A bank loan, repayable in five years
Long-term liabilities
Bank Loan
d) Invoices for payable from a supplier of garlic and tomato paste
Current liabilities
Accounts payable
e) Taxes for the current year payable in nine months’ time
Current liabilities
Tax payable
f) An oven and two delivery bikes
Long-term assets
Plant and machinery
g) A bill (unpaid) for pizzas delivered to a Christmas party
Current assets
Accounts Receivable
h) An order to purchase plant and equipment
No recording
No Recording
Items
Head in the balance sheet
Account Title
a) A bank overdraft, repayable on demand
Current liabilities
Bank overdraft
b) Twelve tonnes of pizza dough
Current Assets
Inventory
c) A bank loan, repayable in five years
Long-term liabilities
Bank Loan
d) Invoices for payable from a supplier of garlic and tomato paste
Current liabilities
Accounts payable
e) Taxes for the current year payable in nine months’ time
Current liabilities
Tax payable
f) An oven and two delivery bikes
Long-term assets
Plant and machinery
g) A bill (unpaid) for pizzas delivered to a Christmas party
Current assets
Accounts Receivable
h) An order to purchase plant and equipment
No recording
No Recording
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