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these are answers from bpp question bank im not 100% on
1) An increase in a loan made to another company classed under investing….
I thought it would have been financing?2) I found this one infuriating. There is a question in bpp book regarding statement of cash flows and they have included interest received in the operating section.?
3) Are retained earnings and fv adjustment classed as intangible assets?
4) im not sure why an undercast purchase returns day book will cause an imbalance between payables control account and payables ledger?
I will answer, but in future if you want me to answer then you should ask in the Ask the Tutor Forum.
1) You are confusing it with our company taking a loan (or repaying a loan). In that case it would be a financing activity. However, here they are giving a loan to another company, so they are investing in the other company (and the same would be the case if they were buying shares in the other company).
2) I do not have the question. However, I can only guess that they are including it in the workings for the cash generated from operations. We normally take the profit before tax but after interest, and then subtract any interest received to get the profit from operations. This is effectively part of the workings for cash generated from operations.
The actual cash receipt is then shown under investing activities.(The free lecture on statements of cash flows will help you here)
3) No – neither of them are any sort of assets!! (The fair value adjustment will increase the value of the tangible non-current assets in the Statement of financial position).
4) The total of the purchase returns book is used to make the double entry in the general/nominal ledger: Dr Payables Control; Cr Returns (or purchases).
The payables ledger is not part of the double entry, and each invoice is entered separately to the relevant suppliers account. So the fact that the day book has been added up wrongly will not affect the payables ledger.(The lectures on Books of Prime Entry explain this)
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