Appendix 1
Questions
The questions are arranged by the chapter that contains the relevant tools and
techniques, so that readers can check their understanding after they have read each
chapter. The questions rely on knowledge gained from a reading of that chapter and
knowledge gained from the previous chapters. Attempting these questions will
help the reader to understand how accountants produce information needed by
non-accounting managers. An understanding of accounting tools and techniques
is important in using the results of these tools and techniques for decision-making.
Appendix 2 contains answers for all the questions.
Questions for Chapter 6
6.1 Kazam Services begins the month with capital of £200,000 and the following
assets and liabilities:
Assets Liabilities
Fixed assets £500,000 Bank overdraft £35,000
Debtors £125,000 Creditors £90,000
Long-term loan £300,000The following transactions took place in the accounting records of the business
during the last month:
Take out long-term loan for new building £150,000.
Receive £45,000 from debtors.
Pay £30,000 to creditors.
Invoice customers for £70,000 for services carried out.
Pay salaries £15,000.
Pay various office expenses £5,000.In addition, depreciation of £20,000 is to be provided for the period.
žProduce a schedule of transactions under appropriate headings for each account.
žTotal each account and produce a Profit and Loss account and Balance Sheet.