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The subsidiary company of Group XY has purchased £150,00 worth of goods its parent company. However the goods purchased have yet to arrive at the subsidiary at the end of the financial year 20X4, meaning there is

a disagreement in the current account balances between the parent and subsidiary.

With Group XY looking to produce its CSOFP for the end of the financial year, which of the following statements are true in relation to accounting for this disagreement? Select ALL that apply.

Options:

The adjustments to resolve this disagreement, need to be accelerated, so they can be included in the consolidation of assets for the CSOFP for 20X4

£150,000 worth of inventory will be debited into the subsidiary's inventory account

As the goods have not reached the subsidiary by the end of the financial year 20X4, they will be included in the CSOFPfor the next financial year

£150,000 worth of inventory will be credited into the subsidiary's inventory account

£150,000 will be debited to the payables account of the parent company

£150,000 will be credited to the payables account of the subsidiary company

£150,000 will be credited into the receivables account of the parent company

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Question 2

Which of the following does the phrase 'events after the reporting period' refer to?

Options:

Material events which occur between the statement of financial position date and the date on which the financial statements are approved

Material events which occur after the release of the statement of financial position

Material events which occur before the statement of financial position date

Material events which occur between the income statement date and the statement of financial position date

Question 3

Which THREE of the following matters should an entity consider when determining the credit terms granted to a customer?

Options:

Typical credit terms operating within the industry

Risk of non-payment

Selling price of the goods being sold to the customer

Bargaining power of the customer

Number of suppliers

Discount offered by suppliers for early payment

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