This document is a review of my first attempt at FAC2601 Assessment 4. Results are not shown, so it is merely a review of my attempt. However, I have thorough understanding of the work and trust that the result will be sufficient.
Dashboard / My courses / FAC2601-23-S1 / Welcome to FAC 2601 - Financial Accounting For Companies / Assessment 4
Started on Wednesday, 14 June 2023, 5:45 PM
State Finished
Completed on Wednesday, 14 June 2023, 6:22 PM
Time taken 36 mins 15 secs
Question 1
Complete
Marked out of 2.00
MULTIPLE CHOICE QUESTION ASSIGNMENT
Answer the following multiple choice questions. Indicate your choice by selecting only one option from the four options given for each
question answered.
Use the following information to answer question 1 to 2:
Maxmor Ltd is a television manufacturing company. At the beginning of the financial year ended 28 February 20.19, Maxmor Ltd started
selling all its televisions with a refund policy. If the customer is not satisfied, the television may be returned for a full refund. Sales for
the year ended 28 February 20.19 amounted to R1 500 000. At year-end on 28 February 20.19 the company’s directors reliably
estimated that based on the current year’s returns and industry patterns 5% of the television sets sold will be returned for a refund
REQUIRED:
Question 1:
Which one of the following statements are correct based on the information provided above?
1. Maxmor Ltd has only a constructive obligation to provide customers with a refund
2. Maxmor Ltd has only a legal obligation to provide customers with a refund.
3. Maxmor Ltd has both a legal and constructive obligation to provide customers with a refund.
4. Maxmor Ltd has neither a legal nor a constructive obligation to provide customers with a refund
Question 2
Complete
Marked out of 2.00
MENU
Question 2 is based on the information in Question 1
Dashboard 2:/ My courses / FAC2601-23-S1 / Welcome to FAC 2601 - Financial Accounting For Companies / Assessment 4
QUESTION
Maxmor Ltd will have to ………………………..in their financial statements for the year ended 28 February 20.19.
1. Raise a provision
2. Disclose a note for the contingent liability
3. Disclose a note for a contingent asset
4. Neither raise a provision, nor disclose a note for a contingent asset nor disclose a note for a contingent liability
Question 3
Complete
Marked out of 2.00
Use the following information to answer question 3 to 4:
Maxmor Ltd has had negative publicity due to not complying with the prices that they had promoted on the market due to price hikes
with the manufacturing parts. Due to this incident they have estimated future operating losses of R120 000.
QUESTION 3:
Which one of the following should be accounted for in the financial statements for the year ended 28 February 20.19?
1. A provision for the future loss should be raised for R120 000
2. Since this is a contingency, a note must be disclosed for a contingent liability
3. The future loss does not meet the definition of a provision and thus no provision should be made
4. A note for a contingent asset should be disclosed in the financial statements.
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller economicfactswarehouse. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.01. You're not tied to anything after your purchase.
