Q2: QR Limited operates a chemical process that produces four different products Q, R, S and T from the input of one raw material plus water. Budget information for the forthcoming financial year is as follows: (£000) Raw materials cost 268 Initial processing cost 464 Additional Output in litres processing cost (£000) Product Sales (£1000) 400000 768 160 90000 232 128 5000 32 9000 240 8 The company policy is to apportion the costs prior to the split-off point on a method based on net sales value. Currently, the intention is to sell product S without further processing but to process the other three products after the split-off point. However, it has been proposed that an alternative strategy would be to sell all four products at the split-off point without further processing. If this were done the selling prices obtainable would be as follows: Per litre (£) 1.28 1.60 6.40 20.00 You are required: a. to prepare budgeted profit statement showing the profit or loss for each product, and in total, if the current intention is proceeded with: b. to show the profit or loss by product, and in total, if the alternative strategy were to be adopted; c. To recommend what should be done and why, assuming that there is no more profitable alternative use for the plant. O R ST
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
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