DFS June 2008 Suggested Answers

vishavisha Well-KnownPosts: 218Registered
Check this out

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I look forward to agreements, disagreements and discussion

Visha

Comments

  • peugeotpeugeot Experienced Mentor Posts: 624Registered
    Hi Visha,

    Saves me a job doing those suggested answers (bonus) :thumbup:

    Can I just raise a query re your answers. Please bear in mind I have not yet seen the DFS paper.

    The elements of financial statements in section B - should these not be:

    Assets;
    Liabilities;
    Equity;
    Income; and
    Expenses.

    The income statement, balance sheet, statement of cash flows and notes are 'components' rather than 'elements'.

    Please accept my apologies if I am barking up the wrong tree as I haven't yet seen the DFS paper but the word "element" in your answer triggered the query.

    And did IAS 38 get tested as there is no reference to Intangible Assets in the answers??

    Kind regards
    Steve
  • karenvkarenv Well-Known Posts: 114Registered
    I agree with Peugeot.
    These are what I listed in my answers.
    I dont recall being questioned on IAS 38. The only place intangibles came into the paper was in the consolidated balance sheet.
  • mehmetmehmet Well-Known Posts: 113Registered
    Cheers for taking the time to do these.

    To reiterate Steve, you appear to have omitted task 1.5, which asked about intangible assets and development costs. Also, I agree with the points he makes about the elements of Financial Statements question.

    Also, I'm not sure which profit figure you are referring to when you say NP in the Interest Cover and ROE formula, but shouldn't Interest Cover use Profit Before Interest and Tax(the profit made before finance costs are serviced) and ROE use Profit for the year(after Interest and Tax, as this is the profit attributable to equity holders).

    Also, in terms of discussion, in reference to your report, which does contain well a drawn out argument, I disagree with your conclusion.
    Although risk is increasing and return is decreasing, further examination of the financial statements shows that the ROE and Interest Cover were heavily affected by the extra finance costs that arose due to the Company taking out a loan in the period. The amount of the loan taken out (£20,400, I think), is reflected by an increase in PPE of the same amount, which would appear to suggest investment in Non-current assets, which, if properly employed, will lead to increased profitability in the future. Therefore, providing she was prepared to take on the risk, an investment would have potential for good returns in the future.
    I think either conclusion (to invest or not to invest), as long as it's supported by a well thought out argument, would gain credit for this section. My main reason for stating the above is just to show that there are two angles to this argument.
  • karenvkarenv Well-Known Posts: 114Registered
    karenv wrote: »
    I agree with Peugeot.
    These are what I listed in my answers.
    I dont recall being questioned on IAS 38. The only place intangibles came into the paper was in the consolidated balance sheet.

    Oops! forgot about that question on developement costs!
  • vishavisha Well-Known Posts: 218Registered
    Peugeot

    Thank for your comment and valuable contribution.

    I stand corrected by your coments.

    The following web page may be a help interested students

    http://www.flashcardexchange.com/flashcards/list/376091
  • confused!!confused!! Well-Known Posts: 130Registered
    I also said that the elements were Assets, Liabilities, Income, expenditure and equity
  • vishavisha Well-Known Posts: 218Registered
    Mehmet

    I agree that the interest cover should be profits before interest.

    However, for the AAT exam purposes it will not make that difference which profit figure you take provided you show your understanding of the concept and how will it affect the investment/funding decisions.

    With reference to disagreeing with my conclusion is absolutely fine.

    Everybody is different and everybody has a diverse appetite for risk. I may be more cautious then you. But the Examiner will be looking at your supporting arguments to establish your understanding of the ratios.

    This what makes accounting exciting for me when two people can come to different conclusion from the same information? – Hence the market – You need a buyer who thinks the price will go up and a seller who thinks that the price will go down.

    Only in retrospect can we say what we should have done!

    I agree with your last paragraph
  • richards0l0richards0l0 New Member Posts: 13Registered
    In the journals you have 38000 as the prepayment is it not 19000 as it has only prepaid the 1 month of April?
  • confused!!confused!! Well-Known Posts: 130Registered
    Yes thought I put 19000 as well?
  • LouLou143LouLou143 Feels At Home Posts: 74Registered
    confused!! wrote: »
    Yes thought I put 19000 as well?

    Just looked at the question........yup agree 100% it should be 19000 as its a prepayment!
  • richards0l0richards0l0 New Member Posts: 13Registered
    This means you are taking 38000 out of admin expenses, this is wrong as you only need to take 1 months worth of expenses out which is 19000.
  • >Michaela<>Michaela< Feels At Home Posts: 37Registered
    I agree on the prepayment aswell.
  • NBBNBB Well-Known Posts: 125Registered
    >Michaela< wrote: »
    I agree on the prepayment aswell.

    Yep, me too!!!!
  • karenvkarenv Well-Known Posts: 114Registered
    I got 19000 as well!
  • TRO44ER1TRO44ER1 Settling In Nicely Posts: 16Registered
    Hi,
    I was wondering if you would help me with an easier way to do Accruals and Prepayments?

    Cheers Richard TRO44ER1.
  • amanda lewisamanda lewis Just Joined Posts: 1Registered
    hi i agree with you i put Assets etc for my answers also there was a question on IAS 38 cos that was the only one I could remenber!!!!
  • sebastianforbessebastianforbes Well-Known Posts: 172Registered
    hey there,

    i put the tax liability in 1.6, not 1.7 ?!!

    didn't the section 2 ratios specifically ask for 2 decimal places ?!!
  • CJPJCJPJ Just Joined Posts: 2Registered
    When trying to open the answers it says "the file cannot be found"

    Please help?!
  • vishavisha Well-Known Posts: 218Registered
    CJPJ

    post your e-mail address or PM it to me and I will e-mail it to you.

    Visha
  • CJPJCJPJ Just Joined Posts: 2Registered
    Thanks!!

    My email address is [email protected]

    :001_smile:
  • kel524ukkel524uk Feels At Home Posts: 27Registered
    visha wrote: »
    CJPJ

    post your e-mail address or PM it to me and I will e-mail it to you.

    Visha

    Hi

    Is it ok you can email me the DFS suggested answers to please, i think i mjorly messed up section 2

    [email protected]
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