2QUESTION 1: 15 x 1 = 15 MARKS Place a circle around the letter which corresponds to the most appropriate answer. 1.1Fantastic Fan Pty Ltd purchased second-hand equipment for its operations for $30,000. The equipment was worth $40,000. Applying the cost principle, how much should the equipment be recorded in Fantastic Fan’s statement of financial position?
1.2If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operations will normally be:
1.3Compared with companies that expense costs, firms that capitalize costs can be expected to report:
1.4 Rivercraft Ltd paid an interim dividend of 7 cents per ordinary share on the 1stDecember 2013. On the 1stDecember 2013 the company’s share register noted that there were 5,000,000 ordinary shares listed. Due to a share buyback of ordinary shares in May 2014, there existed only 4,800,000 ordinary shares as at 30thJune 2014. What would be the General Journal entry at the end of the financial year, on 30thJune 2014 to close the interim dividend account? A DR: Interim Dividend $350,000 CR: Cash at Bank $350,000 B DR: Retained Profits $336,000 CR: Interim Dividend $336,000 C DR: Interim Dividend $336,000 CR: Cash at Bank $336,000 D DR: Retained Profits $350,000 CR: Interim Dividend $350,000