Ms.

Patcharin Wipanurat - 1803060022

Week 1 Check Your Knowledge Questions/Answers

# Question Answer

1 Indicate the accounting principles

applicable:

a) Mr Stamford is an owner of a
restaurant and an apartment for Business Entity Assumption
rent, as well as, a business
consultant. He prepares separate
financial statements for each of the
business.
b) M Magazine Corp received Revenue Recognition Principle
member subscription fees for 1
year in advance. The company
regards that transaction as a
liability called “unearned
subscriptions”
c) PTT PLC bought office supplies for Expense Recognition Principle
less than 500 baht and recorded it
as an expense under
“miscellaneous expense”
d) A land plot was bought by a Measurement Principle
company 15 years ago for 200,000
baht now valued at 3,000,000 baht;
it is still recorded at book value of
200,000 baht on the company’s
account.
2 CP ALL PLC has a large number of Business Entity Assumption
shareholders. Based on which
accounting principle are transactions of
CP ALL PLC recorded as a separate
account from the individuals owning the
shares.

3 What are the 3 key financial statements 1) Income statement - to show the
that companies must prepare? Briefly company’s performance (net income)
# Question
explain their objectives.
4 What are the key activity types in which
the cash flow statement is structured?
5 Accounts in financial statements are
sorted in a certain way. How are they
organized? What determines such
order?
6 Identify how each transaction affects
financial statements:
 Received cash for stock issued
 Bought inventory on credit
 Sold products on credit
 Collected money owed by debtors
 Repaid debts to creditors
Answer
over a period
2) Balance Sheet – to show the
company’s financial position (assets,
liabilities, and equity)
3) Statement of cash flows – to identifies
cash inflow and cash outflow from
different activities such as operating,
financing, and investing
Operating, financing, and investing
 Accounts in Financial statements are
organized by the major type which are assets,
liabilities and equity.
 Assets are broken down into current and
noncurrent (or long-term). Assets are listed
from top to bottom in order of
decreasing liquidity, i.e., how quickly they can
be converted to cash.
 Liabilities are listed in order of expected
payment. Obligations expected to be satisfied
within one year are current liabilities.
Noncurrent liabilities include bonds payable
and the portion of long-term debt such as loans
maturing in period longer than a year.
 Received cash for stock issued
(Asset- Cash increase, Equity
increase)
 Bought inventory on credit
(Asset - Inventory increase, Liability –
A/P increase)
 Sold products on credit
(Asset – A/R increase, Revenue
increase)
 Collected money owed by debtors
(Asset – Cash increase, A/R
# Question
7 How do partnerships differ from limited
partnerships?
8 Stamp Co., Ltd. Has 1,000,000 baht of
registered capital. What is the minimum
paid-up capital required by law?
Answer
decrease)
 Repaid debts to creditors
(Asset – Cash decrease, Liability –
A/P decrease)
Partnership has more risk due to
unlimited loss, but limited partnerships
are liable limited loss.
25% of registered capital. So that would
be 250,000 Baht