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Financial Asset and Dividend Guide

Current assets are expected to be received within one year, whereas non-current assets are expected beyond one year. Distributing dividends decreases retained profits, as does operating at a loss. Dividends are not considered an expense and do not affect profits, but are located in shareholders' equity. Inventory and accounts receivable are classified as current assets since they can be converted to cash within one year.

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148 views2 pages

Financial Asset and Dividend Guide

Current assets are expected to be received within one year, whereas non-current assets are expected beyond one year. Distributing dividends decreases retained profits, as does operating at a loss. Dividends are not considered an expense and do not affect profits, but are located in shareholders' equity. Inventory and accounts receivable are classified as current assets since they can be converted to cash within one year.

Uploaded by

jenny kim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Tutorial Questions

DQ 2.2
Current assets consist of cash and other assets that are expected to be received within one
year of the balance sheet date, whereas non-current assets are expected to be received past
the year of the balance sheet date.

DQ 2.5
The distribution of dividends in the form of cash or stock decrease retained profits. Retained
profits decrease also when a company experiences an operating loss.

DQ 2.9
Stock and cash dividends that are distributed amongst the shareholders are not considered an
expense, as expense and revenue is used to calculate the profit, and dividends do not affect
profits at all. It is located in a separate section of the ‘Shareholder’s equity’, which shows the
amount that owners have invested into businesses.

DQ 2.10
Inventory is regarded as a current asset as the business as it includes raw materials and
finished goods that can be converted into cash within one year or less, unless stated otherwise.
Similarly, accounts receivable are outstanding balances with customers resulting from the sale
of products or services that are recoverable within one year, and therefore, it is classified as
current assets.

P 2.8
1)
Revenue Accounts receivable
Accounts receivable Cash
Cash Confectionery sales
Confectionery sales Ticket revenue
Ticket revenue $112060

Expenses Accounts payable


Accounts payable Advertising expense
Advertising expense Cost of confectionery sold
Cost of confectionery sold Electricity expense
Electricity expense Loan payable
Loan payable Rent expense
Rent expense $140480

Net income ($28420)

2
Particulars Amount (in $)

Retained earnings as of 1 Jan 2022 59270

Net income as of 31 Dec 2022 (28420)

Retained earnings as of 31 Dec 2022 30850

Assets Liabilities
Current Assets Accounts payable $13910
Accounts receivable $13450 Advertising expense $42780
Confectionery Sales $12300 Cost of Confectionery
Cash $4610 sold $10500
Total current assets $30360 Electricity expense $5090
Loans payable $35000
Property, land and Rent expense $33200
equipment Total Liabilities $140480
Furniture and fittings $34000
Inventory $18000 Shareholder’s equity
Land and buildings $60000 Retained Profits $59720
Projection equipment $41000 Share Capital $60000
Property, land and $153000 Total Shareholder’s
equipment-net equity $119720
Total Liabilities and
Total Assets $183360 Shareholder’s equity $260200

P 2.13
1. 200000*0.4=80000
2. 160000
3. (9000)
4. 12000
5. 40000
Total revenue= $283000

P 2.16
1. (21000)
2. 0
3. (6000)
4. (800)
5. 0- purchasing land is an investment not an expense
Total expense= $27800

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