Generally Accepted Accounting Principles and Subject Matter Expert
Alpha Corporation hires a subject matter expert at a salary of Rs 5,000 per month including benefits. The subject matter expert is non-billable and is expected to help engineers with resolving their technical queries as well as assist them in development of new technology. The subject matter expert was hired on 1st of February and today is 1st of March of the same year. You have just paid him his salary. What accounts will this transaction impact?
Answer : Engineers cash account increases and company balance decreases . In terms of accounting head : (DR) Salary account (L) (CR) operating expense account ( Bank) (A) Bravo Corporation borrows Rs 1,000,000 on 1st Jan 2013 from a bank for corporate expenses. As per the terms of the agreement, Bravo Corporation will need to pay the bank $1,728,000 at the end of three years. Today is 1st of Jan 2014 and Bravo Corporation is preparing its Income Statement. What will be the value of Interest Expense that figures in the Income Statement?
Answer : As the accounting year would be 1st Jan – 31st dec 2013 and this being the first year ,and interest amount would be divided proportionally for 3 years hence income statement would be as follows . Baro Corporation. Income statement (1st Jan to 31st Dec 2013) Interest expense 242666
Charlie Corporation is in the business of development of software and as a result most of its engineers use PCs provided by the company for their work. During the past year, it sold 2 old PCs and bought 3 new PCs for its engineers. Each old PC sold was Rs 1000 and each new PC was bought for Rs 2000. The PCs were sold for cash and were purchased for cash. Owing to this transaction, how much should Charlie Corporation’s Fixed Asset account change for this year? You may ignore depreciation.
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Answer : Engineers cash account increases and company balance decreases . In terms of accounting head : (DR) Salary account (L) (CR) operating expense account ( Bank) (A) Bravo Corporation borrows Rs 1,000,000 on 1st Jan 2013 from a bank for corporate expenses. As per the terms of the agreement, Bravo Corporation will need to pay the bank $1,728,000 at the end of three years. Today is 1st of Jan 2014 and Bravo Corporation is preparing its Income Statement. What will be the value of Interest Expense that figures in the Income Statement?
Answer : As the accounting year would be 1st Jan – 31st dec 2013 and this being the first year ,and interest amount would be divided proportionally for 3 years hence income statement would be as follows . Baro Corporation. Income statement (1st Jan to 31st Dec 2013) Interest expense 242666
Charlie Corporation is in the business of development of software and as a result most of its engineers use PCs provided by the company for their work. During the past year, it sold 2 old PCs and bought 3 new PCs for its engineers. Each old PC sold was Rs 1000 and each new PC was bought for Rs 2000. The PCs were sold for cash and were purchased for cash. Owing to this transaction, how much should Charlie Corporation’s Fixed Asset account change for this year? You may ignore depreciation.
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