FIN611 Advanced Financial Accounting Assignment No.2 Fall Semester 2013

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FIN611 Advanced Financial Accounting Assignment No.2 Fall Semester 2013


SEMESTER FALL 2012
ADVANCED FINANCIAL ACCOUNTING (FIN611)
ASSIGNMENT NO. 02
DUE DATE: 21ST JANUARY 2013
MARKS: 25
TOPIC TO BE TESTED:
• Accounting Policies, Changes in Accounting Estimates, & Errors (IAS – 8)
LEARNING OBJECTIVES:
• To develop an understanding about the correct treatment of errors as per IAS-8, found in financial statements.
ASSIGNMENT QUESTION:
When the financial statement of Local Industries Ltd. for the year ended December 31, 2012 was being prepared, it was discovered that due to arithmetical errors, inventories at December 31, 2011 were understated by Rs. 30,000.
Following are the extracts from financial statement before the correction of error.
Income Statement
Particulars
Dec. 31, 2012
Dec. 31, 2011
Rs.
Rs.
Sales
424,000
310,000
Less: Cost of sales
(300,000)
(204,000)
Gross Profit
124,000
106,000
Less: Operating expenses
(30,000)
(16,000)
Net Profit
94,000
90,000
Statement of Retained Earnings
Particulars
Dec. 31,
2012
Dec. 31,
2011
Rs. Rs.
Retained earnings at the beginning 164,000 84,000
Net profit for the year 94,000 90,000
Dividend paid (16,000) (10,000)
Retained Earnings at the end 242,000 164,000
Note: Paid-up capital of the company is Rs. 24,000
Required:
Prepare the following financial statements for the years 2011 and 2012 after
correcting the above mentioned error.
1. Income Statement; 07 Marks
2. Statement of Retained Earnings; & 07 Marks
3. Statement of Changes in Owners’ Equity. 08 Marks
(NOTE: 03 MARKS FOR GOOD FORMATTING AND PRESENTATION)
IMPORTANT:
24 hours extra / grace period after the due date is usually available to overcome
uploading difficulties. This extra time should only be used to meet the
emergencies and above mentioned due dates should always be treated as final
to avoid any inconvenience.
IMPORTANT INSTRUCTIONS/ SOLUTION GUIDELINES/ SPECIAL
INSTRUCTIONS
• Take help from internet for collecting the information and in depth
study of IAS-8 is also required to attempt the successful assignment.
• Carefully watch Lecture # 29 and 30 and consult the relevant material
from handouts along with recommended books.
• Attempt the assignment by yourself and it will be entertained positively.
OTHER IMPORTANT INSTRUCTIONS:
DEADLINE:
• Make sure to upload the solution file before the due date on VULMS.
• Any submission made via email after the due date will not be accepted.
FORMATTING GUIDELINES:
• Use the font style “Times New Roman” or “Arial” and font size “12”.
• It is advised to compose your document in MS-Word format.
• You may also compose your assignment in Open Office format.
• Use black and blue font colors only.
REFERENCING GUIDELINES:
• Use APA style for referencing and citation. For guidance search “APA reference style” in Google and read various website containing information for better understanding or visit APA REFERENCE STYLE: Table of Contents
RULES FOR MARKING
Please note that your assignment will not be graded or graded as Zero (0), if:
• It is submitted after the due date.
• The file you uploaded does not open or is corrupt.
• It is in any format other than MS-Word or Open Office; e.g. Excel, PowerPoint, PDF etc.
• It is cheated or copied from other students, internet, books, journals etc.
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