Reference no: EM132567663

COMR2008 Principles of Accounting -Laureate International Universities

Learning Outcome

a) Explain the use of accounting information and identify ethical issues in accounting

b) Explain the accounting cycle and apply double entry accounting principles to process transactions

Part A
Question 1 - Ethics in Accounting

As the accountant of Breathless Company, Sandra discovered a misstatement that will overstate net profit in this year's financial statements. These misleading financial statements will appear in the company's annual report which will be issued to banks, creditors and other stakeholders. Sandra communicated to her manager, Jerry McNabb, about this misstatement. Jerry said, "Hey! What they don't know won't hurt them so we don't need to fix and disclose this misstatement. Just don't make such a mistake again." She agreed with Jerry because she feared her job might be at stake, provided the current COVID-19 situation. She was also afraid that the upper-level management was actively considering cost reductions by laying off some staff, which might include her too.

Sandra came across certain financial information particularly related to costing that she believes will assist one of her friends, Adam, who is planning to supply goods Breathless Company. After all, Sandra is a good friend and considers helping Adam a virtue. She sees no harm in this because it will benefit the company and her friend. She provides the information to Adam without taking consent from the concerned authority in the company.

Sandra has been working in Breathless Company since 2015. She has been doing great in bookkeeping, lending, and financial planning. Considering her performance, she has recently been appointed as an internal auditor of Breathless Company, reporting directly to the audit committee.

Required:
Identify and describe the ethical issues present in the above scenario, and relate them to the facts of the case.

Question 2 - Recording Transactions

Carz Company has following transactions from the March 2020. Record them in General Journal. Include narrations. Carz Company is registered for GST.

Date Transactions
1/3 Repaired cars for $4000 plus GST. The customer paid full amount through EFTPOS.
5/3 Paid a one-year insurance in advance of $6000 including GST.
6/3 Purchased equipment and machinery for $19000 plus GST. Paid $10000 upfront with remaining due in six months.
12/6 Purchased tyres from Toyota on credit for $90 000 plus GST.
27/3 The owners withdrew $5 000 from the business for personal use.
28/3 Paid electricity bill of $2 500 including GST for the previous month.
29/3 A customer paid previously owing amount of $1 850.
30/3 Made a final settlement payment of $7 000 on a previously obtained bank loan.

Question 3 - Adjusting Entries

Johns Co. uses the following worksheet.

Required:
Complete the above worksheet considering the additional information available at the end of the month:
Office supplies on hand were worth $980.
Depreciation on office equipment was $180.
Prepaid insurance expired by $120.
Depreciation on building was $500.
Employees worked for the month had unpaid salaries of $4,100.
Revenue not received from services provided $1,800.

Attachment:- Principles of Accounting.rar