Management Accounts

FA – Mar/July 2020 – L1 – SA – Q8 – Regulatory Environment of Accounting

Differences between financial accounts and management accounts

Question

Which of the following sentences does NOT explain the distinction between financial accounts and management accounts?
A. Financial accounts are primarily for external users and management accounts are primarily for internal users
B. Financial accounts are normally prepared annually while management accounts are prepared monthly
C. Financial accounts are more accurate than management accounts
D. Financial accounts are audited by external auditors whereas management accounts are audited by internal auditors
E. Unlike financial accounts, management accounts are used for rendering returns to tax authorities

Answer

Find Related Questions by Tags, levels, etc.

Tags: External Auditors, Financial Accounts, Management Accounts
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: MAR/JULY 2020

FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts

Explanation of the importance of management accounts and correction of errors in a trial balance using journal entries and suspense account.

Question

a) The owner of Aspen Enterprise, as part of advice to a newly appointed Accountant, said that she should focus on the preparation of the year-end Financial Statements and not the preparation of Management Accounts.

Required:
Explain to the owner of Aspen Enterprise why Management Accounts is important.
(10 marks)

b) The trial balance of Naana Akyeaa failed to agree. The credit exceeded the debit by GHȼ5,760. The difference was placed in a suspense account. After a review, the following errors were discovered:

The total of the purchase account was undercast by GHȼ2,000.
Cash sales of GHȼ2,470 were recorded by debiting sales with GHȼ2,470 and crediting cash with GHȼ6,430.
Mr. Samson, whose debt was the subject of a specific provision for bad debt, paid his debt of GHȼ1,080 in full. The only entry made for this transaction was to credit receivables with GHȼ1,080.
An invoice for rates for GHȼ2,250 was found behind the bookkeeper’s desk. The invoice had not been accounted for.
The total of the sales returns day book was overcast by GHȼ1,280.
Discounts received of GHȼ840 was recorded by crediting receivables and debiting discounts received.
A new piece of machinery valued at GHȼ24,300 was written off to repairs in error. The depreciation policy of Naana Akyeaa is to depreciate machinery by 10% on a straight-line basis. The sole trader charges a full year’s depreciation in the year of purchase and none in the year of sale.

Required:
i) Prepare journal entries, with the appropriate narratives, necessary to correct the above errors.
(6 marks)
ii) Prepare a Suspense Account.
(4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Correction of Errors, Journal Entries, Management Accounts, Suspense account
Level: Level 1

Topic: Preparation of Partnership accounts
Series: APR 2022

FA – Mar/July 2020 – L1 – SA – Q8 – Regulatory Environment of Accounting

Differences between financial accounts and management accounts

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: External Auditors, Financial Accounts, Management Accounts
Level: Level 1

Topic: Regulatory Environment of Accounting
Series: MAR/JULY 2020

FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts

Explanation of the importance of management accounts and correction of errors in a trial balance using journal entries and suspense account.

Question

Required:
Explain to the owner of Aspen Enterprise why Management Accounts is important.
(10 marks)

The total of the purchase account was undercast by GHȼ2,000.
Cash sales of GHȼ2,470 were recorded by debiting sales with GHȼ2,470 and crediting cash with GHȼ6,430.
Mr. Samson, whose debt was the subject of a specific provision for bad debt, paid his debt of GHȼ1,080 in full. The only entry made for this transaction was to credit receivables with GHȼ1,080.
An invoice for rates for GHȼ2,250 was found behind the bookkeeper’s desk. The invoice had not been accounted for.
The total of the sales returns day book was overcast by GHȼ1,280.
Discounts received of GHȼ840 was recorded by crediting receivables and debiting discounts received.
A new piece of machinery valued at GHȼ24,300 was written off to repairs in error. The depreciation policy of Naana Akyeaa is to depreciate machinery by 10% on a straight-line basis. The sole trader charges a full year’s depreciation in the year of purchase and none in the year of sale.

Required:
i) Prepare journal entries, with the appropriate narratives, necessary to correct the above errors.
(6 marks)
ii) Prepare a Suspense Account.
(4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Correction of Errors, Journal Entries, Management Accounts, Suspense account
Level: Level 1

Topic: Preparation of Partnership accounts
Series: APR 2022

Question Tag: Management Accounts

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FA – Mar/July 2020 – L1 – SA – Q8 – Regulatory Environment of Accounting

Differences between financial accounts and management accounts

FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts

Explanation of the importance of management accounts and correction of errors in a trial balance using journal entries and suspense account.

FA – Mar/July 2020 – L1 – SA – Q8 – Regulatory Environment of Accounting

Differences between financial accounts and management accounts

FA – April 2022 – L1 – Q1 – Preparation of Partnership accounts

Explanation of the importance of management accounts and correction of errors in a trial balance using journal entries and suspense account.

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