Balance Sheet and Decision Making Question Essay

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DEAKIN UNIVERSITY
FACULTY OF BUSINESS AND LAW School of Accounting, Economics and Finance

SEMESTER TWO 2008
Unit Code: Unit Name: Writing Time: Reading Time: MAA103 Accounting for Decision Making 3 hours 15 minutes

This examination is CLOSED BOOK. Instructions for Candidates: 1. This paper carries 70 marks. (This is 70% of your total assessment in this unit). 2. ALL QUESTIONS MUST BE ANSWERED. Materials authorised for this examination must be in accordance with Deakin University policy. Question
1 2 3 4 5 6 7 8 Total

Possible
4 12 8 13 7 15 5 6 70

Actual

MAA103 – Accounting for Decision Making

Question 1 – There are 4 parts to this question ([3X1] + 1 = 4 marks)
i) a. b. c. d. Management decision making is critical to business success as: all businesses aim to make a profit all businesses work with limited resources decisions can always be reversed none of the above

ii) Which of the following best describes a decentralised organisational structure? a. A centralised structure is one that never delegates decision making authority to all levels of management b. The more power that is delegated downward, the more centralised an entity becomes c. Managers lower down in an entity are given greater power and are held responsible for their actions d. Managers lower down in the entity are not held responsible for their actions

iii) a. b. c. d.

Short term planning is often referred to as: tactical planning strategic planning operational planning both a & c

iv) List 2 examples of responsibility centres: 1. ____________________________________________________________________

2. ____________________________________________________________________

Semester2, 2008

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MAA103 – Accounting for Decision Making

Question 2 – This question has 3 parts (7+2+3= 12 marks)
Olympia Smith, a recent Deakin graduate, commenced her own business providing accounting and bookkeeping services. She commenced trading as “Gold Medal Accounts” (GMA) and has opened a bank account in this name. During the month of November 2008 the following transactions have occurred: 1 2 3 4 6 8 9 10 13 15 21 23 30 30 Olympia contributed $80,000 cash into the business bank account. The business purchased computer hardware and software totalling $7,500 from Kelly’s Computers on 60 day credit terms. Paid $900 cash at Abbeys Auctions for office furniture. Gold Medal Accounts established new offices in Box Hill and paid rent for the month of November of $1,200. Paid $700 for advertising in the local newspaper. The business received cash of $1,500 for services provided to its first client, Silver Scissors Hair Salon. The business paid $840 cash for office supplies. Gold Medal Accounts invoiced World Records Ltd $2,400 for accounting services provided. Paid wages of $200 for a part-time office assistant. The business invoiced Bronzed Solariums $750 for bookkeeping services. World Records Ltd paid their account in full. Olympia paid $200 deposit from the business bank account for her holiday to China. Paid $5,000 part payment to Kelly’s Computers for the computer hardware and software. As at the end of the month $500 of office supplies has been used up.

Required:
a. Analyse and record each transaction in the transaction analysis table provided. b. Prepare an Income Statement for Gold Medal Accounts in the space provided. c. Prepare a Balance Sheet for Gold Medal Accounts in the space provided.

Semester2, 2008

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MAA103 – Accounting for Decision Making

(a) Date

Transaction Analysis Table for Gold Medal Accounts ASSETS LIABILITIES OWNERS’ EQUITY

Semester2, 2008

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MAA103 – Accounting for Decision Making

(b)

Gold Medal Accounts Income Statement for period ended 30 November 2008 $

$

(c)

Assets

$

Gold Medal Accounts Balance Sheet as at 30 November 2008 $ Liabilities

$

$

Owners’ Equity

Semester2, 2008

Page 5 of 20

MAA103 – Accounting for…