Seminar 1 Substance and functions of accounting, characteristic features and legal aspects of accounting, general accounting principles. Balance sheet in accounting, its function, system and utilization. 1) Decide whether the items below can be recognized as assets shown in the accounting system of the enterprise. Item yes/no a) Patent bought by employer, that makes possible to increase the volume of profit on 100 000 CZK b) Booked material for production of products in the amount of 20 000 CZK. c) New director of the enterprise. It is expected that he will increase net cash flows of the enterprise of 750 000 CZK during 3 years. d) Purchase of new machinery for 280 000 CZK from bank credit. The debt is payable in 3 months. e) Machinery that went through. Its value is 0 CZK. f) Parcel obtained by state. g) Car used by enterprise on the base of financial leasing contract. h) Machinery owned by enterprise with value 5 000 CZK. i) Statue bought for 95 000 CZK. j) Enterprise invested 50 000 CZK to another company. k) 10 pieces of packages at the stock with individual value 10 000 CZK. The term of usability is longer than 1 year. l) Software research made by programmer working for the enterprise. It has been already spent 280 000 CZK. The research is going to be finished in next year. m) Logo of the enterprise valuated for 300 000 CZK. n) Stocks leased by another company. 2) Identify fixed and current assets. Explain your decision. Public limited company embodies these items of assets: Item FA, CA a) Unneeded material at the stock b) Metal operative hall valued by acquired cost – 18 000 CZK c) Licence bought for 5 years d) New car in value 500 000 CZK e) Trade receivables with term of payment longer than 1 year f) Cash in bank g) Incomplete products in workroom h) Capital shares i) Software in value 70 000 CZK j) Complete products at stocks in value 250 000 CZK k) Securities held for trade l) Common stock m) Bills of exchange received by customers n) Cash o) Machinery and equipment r) Packages at the stock with individual value 10 000 CZK. The term of usability is longer than 1 year. s) Parcel bought by municipality in acquired cost 12 000 CZK t) Buildings u) Bought goods in value 105 000 CZK v) Advance payment paid to company that guarantees the delivery of goods 3) Determine the amount of total assets and divide them into fixed assets and current assets. Divide also equity and liabilities into owner’s equity and liabilities. An enterprise declares following assets and equities: Assets CZK 1. Material at the stock 100 000 2. Buildings and equipment 1 000 000 3. Trade receivables 50 000 4. Securities held for trade 200 000 5. Cash 5 000 6. Business brand name 150 000 7. Cars 500 000 8. Cash on bank accounts 200 000 Equities CZK 1. Common stock 1 065 000 2. Trade liabilities 40 000 3. Long-term bank credit 1 000 000 4. Reserve funds 100 000 CZK Total assets Fixed assets Current assets Total equities Owner’s equity Liabilities 4) Identify fixed assets, current assets, owner’s equity, liabilities, total assets and total equities. An enterprise declares following assets and equities: Assets CZK 1. 2 years term of payment bonds 500 000 2. Car 300 000 3. Incomplete products 250 000 4. Intermediate products 100 000 5. Paid operating advance payments 20 000 6. Complete products at the stock 450 000 7. Trade receivables 150 000 8. Machinery and equipment 1 200 000 9. Buildings 3 500 000 10. Bills of exchange received by customers 180 000 11. Cash on bank accounts 1 000 000 12. Cash 10 000 13. Software 290 000 14. Hardware 400 000 Equities CZK 1. Unpaid income tax 100 000 2. Reserve fund 440 000 3. Trade liabilities 300 000 4. Indiscrete economic profit 140 000 5. Long-term bank credit 860 000 6. Issued bills of exchange 300 000 7. Issued bonds 1 620 000 8. Reserves 250 000 9. Unsettled wages 570 000 10. Common stock 3 350 000 11. Received advance payments by suppliers 230 000 12. Loan by partner 50 000 13. Net profit 80 000 14. Capital funds 60 000 CZK CZK Fixed assets Owner’s equity Current assets Liabilities Total assets Total equities 5) Decide whether the items below are fixed assets, current assets, equity, liabilities, receivables from subscriptions, accrued assets, accrued liabilities. Profit of current year Deferred revenues Land Deferred expenses Car Long-term bank loans Material Income tax reserves Long term deposits given Cash Bank accounts Reserve fund Deferred income Receivables from subscription Payroll Short term trade payables Work in progress Profit of previous years Shares in accounting units with substantial influence Reserves Registered capital Long term trade payables Inventory Payables to partners Accrued expenses Trade receivables Short-term deposits received Software Short-term bank loans Payables to social securities and health insurance Building 6) Divide the items below into assets (fixed and current) and ekquity and liabilities (owner’s equity, liabilities). Explain your decision. Item Assets Equities Fixed Current Owner’s equity Liabilities a) Car b) Technological line c) Building d) Inventories e) Parcel f) Goods prepared for sale g) Software h) Capital shares i) Animals j) Own products k) Cash l) Incomplete products m) Trade receivables n) Bank credits o) Cash on bank account p) Bought short-term bonds q) Trade debts r) Issued long-term bonds s) Liabilities to employees š) Liabilities to health and social institutions t) Owing income tax u) Reserves v) Computers w) Common stock x) Net profit y) Reserve funds z) Economic loss Seminar 2 Assets and liabilities, their structure and definition, assets and liabilities classes, their mutual relations. Balance sheet system, impact of economic transactions on balance sheet. 1) Complete the structure of assets and equities of the trade company. A trade company declares these items: Item CZK 1. Administrative building 3 500 000 2. Computers 400 000 3. Trade liabilities 600 000 4. Goods in the shops 100 000 5. Common stock 2 700 000 6. Trade receivables 500 000 7. Long-term bank credit 1 150 000 8. Reserve fund 550 000 9. Van 700 000 10. Cash 450 000 11. Owing wages 200 000 12. Cash on bank account 1 000 000 13. Owing income tax 50 000 14. Software 130 000 15. Capital shares 350 000 16. Short-term bank credit 650 000 17. Receivables to employees 70 000 18. Debts to financial agencies 60 000 19. Operating reserves 40 000 20. Economic profit 100 000 21. Capital funds 1 100 000 CZK CZK Fixed assets Owners’s equity Current assets Liability Total assets Total equities 2) Compile a balance sheet from these items. How much is the registered capital? All items are in thousands of CZK. Buildings 2 900, cash 170, merchandise (goods) 740, current account 240, vehicles 630, inventory 440, trade payables 780, short-term bank loans 200, long-term payables to partners 390, funds from earnings 900, profit of previous year 100. ASSETS EQUITY + LIABILITIES FIXED ASSETS EQUITY CURRENT ASSETS LIABILITIES 3) Compile a balance sheet from the items below. How much is the profit/loss of this year? All items are in thousands of CZK. Buildings 1 000, material 800, short-term bank loan 600, trade receivables 400, trade payables 900, vehicles 480, cash 20, deferred expenses 20, tax liabilities 120, machines 2 000, goods 70, bank account 250, deferred revenues 20, payroll 500, products 300, registered capital 200. ASSETS EQUITY + LIABILITIES FIXED ASSETS EQUITY CURRENT ASSETS LIABILITIES ACCRUALS ACCRUALS 4) Company SEVEN, plc. has the following balances on accounts (in thousands of CZK): Buildings 1000, computers 500, common stocks 800, trade receivables 400, trade liabilities 700, bank loans (credits) 600, cash 400, deposits on bank accounts 1 500, capital funds 300, reserves 300, long – term bonds 900, economic result ? Compile the balance sheet and calculate the amount of economic result. A The structure of assets and ekvity and liabilities (in thousand CZK) E Fixed assets Owner’s equity Current assets Liabilities Overall assets Overall equities 5) A manufacturing company shows in its accounting evidence: trade liabilities 310 000 CZK, funds created by net profit 800 000 CZK, trade receivables 300 000 CZK, buildings 3,6 mil. CZK, machinery and equipment , 1,9 mil. CZK, cash 50 000 CZK, material at the stock 220 000 CZK, short-term bank credits 950 000 CZK, unsold products 40 000 CZK, long-term financial investment 80 000 CZK, cash on the bank account 140 000 CZK, debts to employees 280 000 CZK, common stock 3,2 mil. CZK, capital funds 790 000 CZK. Compile the balance sheet. A Balance sheet P Overall assets Overall equities 6) A trade company reports these assets and equities: buildings 2,9 mil. CZK, cash 70 000 CZK, merchandise in shops 740 000 CZK, cash on bank account 140 000 CZK, cars 640 000 CZK, inventory (internal equipment of building) 440 000 CZK, trade debts 790 000 CZK, short-term bank credits 190 000 CZK, long-term loan acquired by employee 300 000 CZK, funds crated by net profit 800 000 CZK, economic result achieved in previous accounting period 100 000 CZK, common stocks? Determine the structure of assets and equities. Calculate the amount of common stocks. A The structure of assets and equities (in thousand CZK) E Fixed assets Owner’s equity - - - - - - Current assets Liabilities - - - - - - Overall assets Overall equities Seminar 3 Costs and revenues of accounting unit as part of profit and loss statement and related accounting procedures. 1) Fulfil the table, decide whether it is cost or revenue and explain how all transaction influence the economic result of the enterprise. Item C/R Impact on economic result Impact on assets Impact on equities 1. Revenues from sale of merchandise 2. Decrease of merchandise sold 3. Supplier’s invoice bill for repairs 4. Consumption of material 5. Invoice bill for consumption of energy 6. Travel costs 7. Revenues from sale of services 8. Recognized wages for employees 9. Representation costs 10. Revenues from sale of material 11. Paid credit interests 12. Bank fees for organizing the account 13. Revenues from sale of long-term property 14. Revenues from financial investment 15. Cashed interests from account 16. Deficits and damages 17. Cashed fees 18. Paid fees 19. Securities sold 2) Fulfill costs and revenues and calculate the economic result. A trade company realized the following transactions connected with costs and revenues: Economic transactions CZK 1. Sale of merchandise to customers 165 000 2. Bank put interests from long-term investment to account 15 000 3. The products sold 130 000 4. Revenues from capital shares 20 000 5. Paid interests from short-term credit 18 000 6. Wasted material from production received at stock 3 000 7. Consumption of office needs 2 000 8. Extraordinary costs 5 000 9. Road tax 30 000 10. Incomplete products in workrooms 80 000 11. Consumption of wages 30 000 12. Consumption of material in production 40 000 13. Increase of incomplete products at stock 50 000 14. Extraordinary revenues 10 000 Costs CZK Revenues CZK Overall costs Overall revenues Economic result 3) Fulfill the name of assets and equities, which will be changed including mark +/- to the table. As a type of change give A- C+, A+R+, etc., for example. A company showed following economic transactions: Economic transaction Impact on assets Impact on equities Change type 1. Sale of goods on invoice bill 2. Invoice bill for consumption of energy 3. Decrease of goods sold 4. Liability out of date was charged 5. Cashed interests from account 6. Paid banking fees 4) Calculate earnings before interests and taxes (EBIT) and earnings after taxes (EAT). AKA company was founded at the beginning of year 2016 and during this year the following transactions have been realized: 1) Revenues from sales of products 2 627,5 2) Consumption of material and energy 600 3) Personal costs 300 4) Depreciation 900 5) Consumption of services 400 6) Another operating costs 12,5 7) Income tax 67,5. 8) Overall operating costs achieved 2 212,5 and a part of products in value 100 stayed incomplete to the date of financial statements compilation. 5) Decide whether the items below are costs or revenues, assets or liabilities or equity and write down where they belong in profit and loss statement – only costs and revenues (gross profit – includes total revenues and cost of sales; operating costs and revenues – includes salaries, rents, utilities, depreciation, advertising costs, administrative costs; financial costs and revenues; non-operating costs and revenues – extraordinary activity). Case Cost/revenue/A/L/E Category of P/LS Other operating revenues Social security expenses Other financial revenues Services (which were ordered by the company) Sold securities and ownership interests Wages and salaries Reserves Revenues from sold goods Other operating expenses Revenues from securities Extraordinary expenses Health insurance Consumption of material Interest revenues Bank account fees Cost of goods sold Inventory (stock) Revenues from own products and services Revenues from disposals of fixed assets Software Consumption of energy Other social expenses Interest expenses Depreciation of machinery Extraordinary revenues Reserve Fund 6) Compile a profit/loss statement from these items. How much is the profit/loss of current accounting period? Corporation income tax in the Czech Republic is 19%. All items are in thousands of CZK. Interest revenues 55, other operating costs 75, depreciation of fixed assets 105, interest costs 10, revenues from own products 1180, wages 210, received dividends 25, services (accepted invoice) 110, revenues from goods sold 100, extraordinary costs 15, extraordinary revenues 45, consumption of material 420, cost of goods sold 60. Profit and loss statement Thousands of CZK Gross profit Operating Costs and Revenues Total Operating Profit (EBIT) Financial Costs and Revenues Earnings before Tax (EBT) Non-operating Costs and Revenues Total Sum of Costs and Revenues Tax 19% Net Income 7) Compile a profit/loss statement from these items. How much is the profit/loss of current accounting period? Corporation income tax in the Czech Republic is 19%. Revenues from sales of securities 110, cost of goods sold 410, wages 500, depreciation of fixed assets 60, sold securities 18, revenues from goods 1590, revenues from other long-term financial assets 60, other operating costs 60, interest revenues 10, social security costs 180, other financial costs 2, extraordinary revenues 50, advertising costs 50, office equipment costs 120, rent 70, administrative costs 40, benefits for employees 20, online marketing 10, utilities costs 15. Profit and loss statement Thousands of CZK Gross profit Operating Costs and Revenues Total Operating Profit (EBIT) Financial Costs and Revenues Earnings before Tax (EBT) Non-operating Costs and Revenues Total Sum of Costs and Revenues Tax 19% Net Income Seminar 4 Methodical parts of accounting, account and account system, chart of accounts and outline of accounts, accounting documents, account books, accounting control system. 1) Record the following transactions into the accounts, calculate turnovers and final balance: 0. Opening balance 100 1. Increase 50 2. Decrease 80 3. Increase 200 Cash Bank credit 2) Decide which way of charging is correct and explain why. Task a): Cashing of customer’s invoice bill on bank account. Bank account Trade receivables 1) 200 1) 200 Bank account Trade receivables 2) 200 2) 200 Task b): Payment of trade liabilities from bank account. Bank account Trade liabilities 1) 300 1) 300 Bank account Trade liabilities 2) 300 2) 300 Task c): Purchase of material on supplier’s invoice bill Material at stock Trade liabilities 1) 400 1) 400 Material at stock Trade liabilities 2) 400 2) 400 Task d): Payment of trade liabilities directly from bank credit. Bank credit Trade liabilities 1) 500 1) 500 Bank credit Trade liabilities 2) 500 2) 500 3) Choose the names of accounts, record opening balances on accounts Cash (OB 15 000 CZK) and Material at stock (OB 120 000 CZK). Charge all transactions, close the accounts and calculate economic result. A machinery producer realized following transactions during accounting period: Accounting transaction CZK 1. Drawn invoice bill for customers for realized repairs 220 000 2. Consumed material 100 000 3. Supplier’s invoice bill for consumed electricity 2 000 4. Consumed wages 48 000 5. Payment of leasing annuity in cash 10 000 Economic result = = profit/loss 4) Choose suitable accounts, charge all transactions, close accounts, compile the trial balance and the balance sheet, if the company files material in segmentation on metal plates (opening balance was 200 000 CZK), metallurgical profiles (OB 200 000 CZK) and raw material (OB 150 000 CZK). A trade company declares these opening balances at the beginning of accounting period: Machinery 1 mil. CZK, material at stock 550 000 CZK, cash 280 000 CZK, trade receivables 100 000 CZK, common stocks 1,4 mil. CZK, trade liabilities 220 000 CZK and bank credits 310 000 CZK. During the accounting period the following transactions have been realized: Transactions CZK 1. Sale of metal plates on invoice bill 20 000 2. Decrease of metal plates sold at stock 14 000 3. Purchase of metal plates on invoice bill 10 000 4. Purchase of metallurgical profiles on invoice bill 30 000 5. Customer gave back defective metal places 5 000 6. Returned metal places were inserted into stock 4 000 7. Sale of raw material on invoice bill 40 000 8. Decrease of raw material sold at stock 32 000 Trial balance (thousand CZK) Opening balance Turnover Final balance Account’s name DS CS DS CS DS CS Machinery Material at stock Trade receivables Bank accounts Common stocks Trade liabilities Bank credits Costs Revenues Total A Balance sheet (in thousand CZK) E Fixed assets Owner’s equity - - Current assets - - Liabilities - - - - Overall assets Overall equities 5) Choose necessary accounts, charge all transactions, close the accounts, compile trial balance, calculate the economic result and compile final balance sheet. Public limited company declares following balances on its accounts (in thousand CZK): buildings 1 300, machinery 590, equipment 100, material at stock 200, cash 60, bank accounts 50, trade liabilities 200, common stock 2 100. During this accounting period the following transactions have been realized: Economic transaction CZK 1. Bank paid supplier’s invoice bill from bank account 40 000 2. Consumed material 60 000 3. The rest of trade liabilities paid directly from bank credit 4. Subscriber’s invoice bill for realized services 290 000 5. Employees’ wages 40 000 6. Supplier’s invoice bill for repairs 10 000 7. Payment of owed wages from cashbox 40 000 8. Cashing of subscriber’s invoice bill on bank account Trial balance (thousand CZK) Opening balance Turnover Final balance Account’s name DS CS DS CS DS CS Total Economic result = = profit/loss A Final balance sheet (in thousand CZK) E Fixed assets Owner’s equity - - - - Current assets Liabilities - - - - - Overall assets Overall equities Seminar 5 Inventory accounting methods, its valuation, inventorying and analytical evidence. Specific accounting techniques concerning internally produced inventory. Strange cases of inventory accounting at the end of accounting period. 1) Charge OB and charge all transactions. The following are opening balances on chosen accounts of enterprise. The enterprise is VAT payer and uses way A of inventories charging. Account CZK Cash 11000 Bank account 256 390 Material at stock 142 341 During the accounting period the following transactions have been realized: Accounting transaction CZK 1. Purchase of material on invoice bill - VAT 21 % - total 126 000 26 460 152 460 2. Purchase of material for cash - VAT 21 % - total 8 200 1 722 9 922 3. Transportation costs for material from operation 1 paid from bank account - VAT 21 % - total 900 189 1 089 4. Taking of material (paid in cash) to stock .................. 5. Consumed material 86 570 6. Payment of invoice bill for material from bank account .................. 7. Taking of material (bought on invoice bill) to stock .................. 2) Add the amounts and charge all transactions. OB on account Material at stock is 100 000 CZK. Inventories are charged by way A. The following transactions have been realized: Transaction CZK 1. Consumption of material 35 000 2. Deficit of material (in norm) 3 000 3. Deficit of material (exceeding norm) 6 000 4 Deficit ordered for payment to responsible person ................. 5. Order payment for deficit in cash ................. 3) Add the amounts and charge all transactions. The following accounting transactions connected with acquisition of material from abroad have been realized: Transaction CZK 1. Supplier’s invoice bill for material from abroad 300 000 2. Unified entry: - duty - VAT 21 % 20 000 ................. 3. Supplier’s invoice bill for transportation - VAT 21 % 8 165 ................. 4 Taking of material into stock ................. 4) Charge the purchase and consumption of material. Use method FIFO and weighted arithmetical average for valuation of consumed material. Compare the amounts. Company Litostrov bought material in three deliveries in this turn: 1. delivery 120 kg for 100 CZK/kg 2. delivery 60 kg for 95 CZK/kg 3. delivery 70 kg for 105 CZK/kg 200 kg were consumed in production. 5) Trade company ALUFIX trades with rivets. At the beginning of accounting period it had 20 kg of aluminum rivets at stock. The acquisition costs were 900 CZK/kg. During the accounting period another rivets have been bought: Date Kg CZK/1 kg 2.9. 48 1 000,- 5.9. 32 1 050,- After these purchases 60 kg of rivets have been sold for 1 300 CZK/kg. Tasks: 1. Valuate the goods sold, find out the final balance on account 112 – Material at stock, using for valuation: a) FIFO b) Weighted arithmetical average 2. The company wants to show the lowest profit. Which valuation method should be used? 6) Add the amounts and charge the transactions. The following transactions connected with products have been realized: Transaction CZK 1. Transfer of products from production to stock in own costs - 2 000 pieces for CZK 100,- ................. 2. Customer’s invoice bill for sale of products – 50 pieces for 200 CZK - VAT 21 % ................. ................. 3. Decrease of products sold ................. 7) Calculate all necessary amounts, and charge all transactions. Accounting unit (VAT payer) issued an invoice bill for sale of products – the selling price was 100 000 CZK, VAT 21 %, consumer tax was 380 %. Provision to agent was paid in cash – 4 % of goods value. 8) Calculate the amounts and charge all transactions by ways A and B. Accounting unit is VAT payer. A company showed following accounting transactions at the end of accounting period: Accounting transactions CZK 1. Supplier’s invoice bill for purchase of material - VAT 21 % 2 000 ................. 2. Material was not transported to the date of financial statements compilation ................. 3. In next accounting period: Material was transported ................. Seminar 6 Financial accounts, their structure and importance, cash, cash in transit, bank accounts. 1) Write opening balances of accounts, charge the operations and close the accounts. For individual accounts, indicate whether this is an active, passive, cost or revenue account. The cash register is 250 thousand CZK. The opening balance of the employee account is 60 thousand CZK. By the end of the shift, the following payments were made: Transaction CZK 1. Payment of wages in cash 60 000 2. Payment of purchased office supplies 2 000 3. Revenues from sales of goods 75 000 4. Travel expenses 4 200 2) Write opening balances of accounts, charge the operations and close the accounts. For individual accounts, indicate whether this is an active, passive, cost or revenue account. Compile the balance sheet. Limited Liability Company has a registered capital of 400 000 CZK in the form of money on a bank account. During the period, these economic operations took place: Transaction CZK 1. Cash withdrawal from the bank account to the cashier 60 000 2. Billing of the cash withdrawal (bank statement) 3. The company received a short-term loan from the bank 300 000 4. The bank loan was added to the bank account (bank statement) 5. Installment of the loan (bank statement) 40 000 6. Loan reduction (statement of loan account) A Balance sheet (in thousand CZK) E Fixed assets Owner’s equity - Current assets Liabilities - - - Overall assets Overall equities Seminar 7 Accounting techniques concerning long-term (fixed) assets of accounting unit. Classification of long-term (fixed) assets, ways of their acquisition. Basic procedures of accounting of assets acquisition and depiction during their lifetime. Methods of long-term (fixed) assets depreciation (accounting perspective). Seminar 8 Characteristic of clearing relations. Accounting procedures concerning receivables and liabilities from business relationships. Seminar 9 Accounting concerning equity of accounting unit. Changes in equity, capital funds, profit funds, accumulated profit or outstanding loss from previous years and loss/profit from this accounting period. Seminar 10 Accounting concerning long-term borrowed capital and reserves. Obligation emission and long-term bank credits. Seminar 11 Compilation of closing accounting statements – balance sheet, profit and loss statement, Notes to the financial statements, cash flow statement and equity changes statement. Seminar 12 Revision Seminar 13 Revision