On 1 July 2003 Kanga Consultants Ltd Completes a Contract

question 3

Multiple Choice

On 1 July 2003 Kanga Consultants Ltd completes a contract to provide advice on the installation of a networked computer system to a company in the US.The client pays the fee of US$500,000 into Kanga Consultants' US bank account on that date.The bank pays interest of 8 per cent annually on 30 June.The exchange rate information is: What journal entries are required in Kanga Consultants Ltd's books for 1 July 2003 and 30 June 2004 in accordance with AASB 1012 (rounded to the nearest whole $A) ?

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Definitions:

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Variable Costing

An accounting method that includes only variable production costs (materials, labor, and variable overhead) in product cost calculations, excluding fixed overhead.

Absorption Costing

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Income Statement

A financial statement showing the revenue, expenses, and profit or loss of a company over a specific period.