116 Accounting: Business Reporting for Decision Making
Spinnaker Pty Ltd
Balance sheet as at 30 June 2016
Current assets
Cash
Accounts receivable
Inventory$3 400
13 600
6 120
23 120
Non-current assets
Equipment 48 960
Total assets 72 080
Current liabilities
Accounts payable 6 800
Non-current liabilities
Loan 17 000
Total liabilities 23 800
Net assets $48 280
Shareholders’ equity
Share capital
Retained earnings34 000
14 280
Total shareholders’ equity $48 280Comprehension questions
3.5 You are a friend of Lucy Lu who is thinking about starting a business to sell
her handmade quilts. Advise Lucy on the four factors that should be considered
before deciding what form of business structure to operate under. LO1, 2, 3, 4, 5, 63.6 Explain with examples the major differences between a company limited by
shares (such as JB Hi-Fi Ltd) and a proprietary company (such as Coconut
Plantations Pty Ltd). LO6, 73.7 What are two major advantages and disadvantages of a company structure?
Provide an illustration with a company listed on the ASX (such as JB Hi-Fi Ltd,
CSL Ltd, BHP Billiton Ltd). LO83.8 Illustrate with an example the difference in the format of the equity section
of the balance sheet between a sole trader, partnership and company. LO2, 4, 6, 11
3.9 Another relatively widespread business structure is a trust. What are the two main
forms of trusts in Australia? What are the tax issues associated with family trusts? LO9, 10
3.10 Illustrate with an example how sole traders and partners are taxed in Australia.
What are the advantages or disadvantages compared to paying company tax? LO2, 3, 4, 5
3.11 What does the term ‘mutual agency’ refer to in the context of partnerships? Provide
an example where ‘mutual agency’ could be both an advantage and disadvantage
for a partnership. LO4, 53.12 Go to the Australian Taxation Office website at http://www.ato.gov.au and provide a
definition of each of the following: LO6
a. PAYG
b. CGT
c. GST
d. TFN
e. WET