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I found this answer in the forum:
No need to incorporate 900 at the beginning because in order to calculate allowance for receivables you start with your gross unprovided receivables. The confusion is maybe coming from Y Co – its receivable is 1,600 and the company provided 60% for this receivable – since the specific provision is made (1,600×0.6=960), there is no need to do a general provision as well (on the remaining amount (1,600-960=640) . So in order to calculate allowance for receivables in the statement of financial position you should start with your gross unprovided receivables (62,900) – receivable written off (2,000) – receivables for which specific provision was made – (1,600) and on this amount you calculate general provision. Total provision will be equal to specific provision + general provision.
The question is not asking about the movement in the allowance, but if it did then you would start with what is already in the books (900) and would compare it to what the company should have (6,890) – difference should be charged to the income statement.I had the same question…. Then, I suppose that was a mistake in the answer given.
Correct answer is 990,000Thank you. I thougt that besides the purchaser is registered for sales tax, as he was the ultimate consumer, he should suffer the tax.
Hello,
Yes, you are rigth! I finally understood it. In fact it is very simple… I think I just needed a brake to think more clearly.
Many thanks for your help. It has been very useful.I found this through internet. Someone arrived to the same conclusion ?¿
He wrote:
The correct answer in the book is A, which at a glance might seem obvious, but here is my problem. Both items are included in cost of sales, so you take the £50k out of purchases and the £10k out of closing inventory, this will reduce your costs by £40k and therefore increase your Gross profit by £40k. Fine.But when you apply the £10k charge to the income statement for purchases the net proifit difference comes out at £30k not £50k, below I give two quick P&L examples
Inc Errors Corrections
Sales 750,000 Sales 750,000
Opening Inventory 40,000 Open Inv 40,000
Purchases 450,000 Purchases 400,000 (non-current asset taken out)
Closing inventory (30,000) Closing Inv (20,000) (stationery taken out)Cost of Sales 460,000 COS 420,000
Gross Profit 260,000 GP 300,000Wages 100,000 Wages 100,000
Admin Exps 25,000 Admin Exps 25,000
Depreciation 15,000 Depn 15,000
Stationery 10,000Net Profit 120,000 Net Profit 150,000 – £30,000 DIFFERENCE NOT £50
Is it me or am I missing the point!!!! Help!!!!!
Sorry, thinking about it I am still confused…
By Including the stationery expense as closing inventory by mistake, we are reducing the cost of sales, so the impact of 50000 expenses is reduced by 10000. Therefore the effect on gross profit is “understated by 40,000”. I understand that. But, in relation to the net profit, the fact of not including the stationery expense is that we are not reducing the net profit, but we should. Therefore it can not be understated by 10000 more. I understand that it would be understated by 10000 less than the gross profit, as we have not deduct this expense.
If net profit is equal to gross profit less expenses…. That means that the net profit should be the gross profit, which is understated by 40000, less expenses by 10000. So the net profit, I understand, that is understated by 30000, not by 50000.
What I am doing wrongly?Thank you Anna157! I finally found the syllabus for 2012 and 2013 and there is no difference. Thank you very much for your help and good luck! 🙂
Hello,
I may be also sitting for F2 in June. I have the BPP text and revision kit for December 2012. Do you think I can use it? or it would be better to buy another “updated” book? I am trying to compare the syllabus between 2012 and 2013, but I can not get the updated syllabus for 2013.
Many thanks in advance for your help
Hello, I have the same question. I have BPP F3 materials, book and revision kit. Do you think I can use that one for the June 2013 paper?
many thanks in advance! 🙂Many thanks for your answer gromit. I understand the diffetrence between life cycle costing and tradictional costing. But I still do not understand then why in the definition of life cycle costing they mention that life cycle costing tracks and acummulates costs and revenues attrubutable to the entire product’s life. They mention costs and revenues not, just costs.
Thanks in advance,Hello,
I have a question in relation with Life Cycle costing. I hope you could clarify something. The question is 13.3 BBP Revision Kit>
Which of the following statements descibes life cycle costing?
I am not sure about the following two options>
B. the profiling of cost over a product’s development, prodcution life and dismantling period.
C. the profiling of cost and revenues over a prodcut’s developement, prodcution life and dismantling period.I would say that option C is the correct one, but in the book it seems that the correct answer is B (they say that life cycle costing looks at cost only but over the prodcut’s life cycle)
And my question is… what about revenues? the definition of life cycle costing in the BPP book says that it tracks and accumulates the costs and revenues attributable to the product over the full life cycle, which may last for many years.
Could you please help me with this?
Thank you very much in advance
