Professional Documents
Culture Documents
November/December 2001
ACCT101
FINANCIAL ACCOUNTING
Instructions:
1. This paper consists of two parts, Part A and Part B, printed on a total of 12 pages (for a
total of 100 marks). PLEASE CHECK BEFORE COMMENCING. This is a FINAL
paper.
2. The time allowed for this examination paper is 3 (three) hours.
3. Part A consists of 3 questions (70 marks). You are to answer ALL questions and show
ALL relevant calculations.
4. Part B consists of 15 Multiple Choice Questions (30 marks). You are to write in your
answer booklet the most appropriate answer. Each correct answer is worth 2 marks and a
penalty of marks will be applied to any incorrect answer.
Term 1 2001/2
$348,000
$ 45,000
Outflows:
Raw materials (eggs, flours, butter etc.)
Wages for part-time help
Delivery expenses
Utilities
Other expenses
$161,898
$ 54,300
$ 72,982
$ 27,320
$ 55,500
Page 2
Term 1 2001/2
(8 marks)
(8 marks)
(4 marks)
Page 3
339,126
150,000
400,000
200,000
425,166
1,514,292
1999
443,451
9,548
124,845
23,546
401,566
1,002,956
381,141
90,000
400,000
200,000
(68,185)
1,002,956
Term 1 2001/2
Furniture and
Fittings
Renovations
$
$
78,219
249,157
80,598
202,256
158,817
451,413
Plant and
equipment
$
229,144
137,849
366,993
Total
$
556,520
420,703
977,223
Acc. Depreciation
At beginning
Depreciation for year
At ending
26,073
52,939
79,012
83,052
150,471
233,523
45,829
73,399
119,227
154,954
276,809
431,763
26,073
83,052
45,829
154,954
52,146
79,805
166,105
217,890
183,315
247,766
401,566
545,460
Page 4
3.
Term 1 2001/2
Issued Capital
Authorised:
600,000 ordinary shares of $1 each
300,000 10% preference shares of $1 each
4.
2000
$
600,000
300,000
900,000
1999
$
600,000
300,000
900,000
400,000
400,000
2000
465,154
276,809
1,589
750,461
1,169,722
2,663,735
1999
134,789
154,954
10,486
345,126
513,101
1,158,456
*The lease commitments are for the next 30 years are fixed at $750,461 for 8 units. These
leases are non-cancellable and at the end of the 30 years the ownership is transferred to Beef
& Co.
The director of the company, Lee Ah Meow, felt that this set of financial statements was very
well prepared and represented what accountants called a true and fair view of the companys
operations. However, as he was preparing to bring his company for expansion into Korea, he
needed additional funds to finance this venture.
He presented his financial statements to external users but they told him that it was full of
errors. Lee Ah Meow cannot understand what went wrong. As the accountant was going to
charge him high fees for redoing his books, he came to you, a start-up consultancy company
for help.
Required:
A. Examine the financial statements and all its related notes. Highlight 5
(five) errors either in the notes, accounting policies (with reference to
GAAP and SAS) or items in financial statements to Mr. Lee.
Only discuss issues or items PRESENTED in this question and you can
assume other materials are irrelevant to this question. For each error,
identify what is wrong and state what should be done instead.
(10 marks)
(6 marks)
(4 marks)
Page 5
Term 1 2001/2
2001
$34,726
89,099
2,294
34,029
6,039
11,940
573,021
$751,148
2000
$29,282
69,099
1,938
33,111
8,363
6,049
391,212
$539,054
$98,476
2,394
7,322
172,039
$73,467
3,019
6,948
76,500
Page 6
Term 1 2001/2
Stockholders Equity
Common stock
Retained earnings
Total
359,291
111,626
$751,148
293,091
86,029
$539,054
2001
$310,223
2,820
5,042
8,392
$326,477
$110,286
57,301
49,919
42,820
10,183
6,949
$277,458
$49,019
Determinus believes there is no end to the possibility! In an ambitious move, on 1 July 2001,
he issued 5-years bonds totaling $100,000,000 to buy a fleet of Gulfstream private jets. The
stated interest rate for the bonds is 8% (interest compounded and payable yearly) and the
market rate is 6%.
With such ambitious plans, no one knows what the future holds for Determinus. His empire,
of course, may collapse anytime due to the high level of borrowings. Determinus feel quietly
confident, as he relaxes in his private small little island, drinking bubble tea and watching the
sunset.
Financial Tables
3 periods, 6%
5 periods, 6%
6 periods, 3%
10 periods, 3%
PV factor
0.8396
0.7473
0.8375
0.7441
PVA factor
2.6730
4.2124
5.4172
8.5302
FV factor
1.1910
1.3382
1.1941
1.3439
FVA factor
3.1836
5.6371
6.4684
11.4639
Required:
A. What would be the journal entries on 1 July 1998 and 31 July 1998 for the
lease property if it were an operating lease? What would the entries be if it
were a capital lease?
(4 marks)
(6 marks)
Page 7
Term 1 2001/2
Prepare the operating section of the Cash Flow Statement for the year
ended 30 June 2001. You can use either direct or indirect method.
OPTIONAL: Prepare a complete Cash Flow Statement including the cash
reconciliation for an additional 5 bonus marks. Only attempt this optional
part after you have completed all other questions in this examination.
Page 8
(5 marks)
(5 marks)
(10 marks)
(5 bonus
marks)
Term 1 2001/2
Jurassic Bones uses the periodic inventory system. The inventory account balances at the
beginning and end of the year were $58,000 and $45,000 respectively. Selling,
administration and finance expenses totaled $13,000 during the year and Sales Revenue
for the year amounted to $327,000. Jurassic Bones made a gross profit of $53,000. What
is the amount of net purchases made during the year?
A. $261,000
B. $287,000
C. $305,000
D. $310,000
E. $314,000
2.
3.
4.
The following data are a summary of selected transactions that occurred during the
financial year ended June 2000 for Celestial Travel: (a) Tour Fees receipts of $92,000
were collected during the year. However, $21,000 of this amount was still in the form of
customer deposits as at 30 June 2000, (b) Cash payments of $45,000 were made for
expenses during the year. $6,000 of this amount has not been consumed during the year.
Expenses owing but not yet paid amount to $4,000, and (c) Depreciation expense for
office equipment was $3,200. What is the accrual profit of Celestial Travel for the year?
A. $20,800
B. $24,000
C. $24,800
D. $47,000
E. None of the above
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Term 1 2001/2
5.
The following will occur if an adjusting entry to record accrued wages is NOT made:
A. Both expenses and liabilities will be understated
B. Both expenses and liabilities will be overstated
C. Expenses will be understated, but liabilities will be overstated
D. Expenses will be overstated, but liabilities will be understated
E. It depends on how the original transaction is recorded
6.
Why do companies include more than one year of balance sheet, profit and loss
statement, and cash-flow statement in annual reports?
A.
B.
C.
D.
E.
Companies do so to show that they are voluntarily disclosing more information than
necessary for the benefits of statement users.
Doing so allows management of companies to change the amounts that were
reported in previous years statements, where necessary.
As stakeholders of companies become more informed, they would like to have a
higher degree of disclosure in annual reports so that they can make better decisions
with regards to appointments of directors and auditors.
Doing so provides users of financial statements with a reference point for
determining changes in a companys financial position and performance.
To assist readers in establishing long term trends on the financial performance and
position of the company.
7.
After preparing its profit and loss statement for this year, the accountant of KS Trading
Pte. Ltd. discovered the following errors: The beginning inventory of the previous year
was understated by $25,000 and the ending inventory for the previous year was however,
overstated by $25,000. If these were the only errors, the net profit for this year will be:
A. Understated by $25,000
B. Overstated by $25,000
C. Understated by $50,000
D. Overstated by $50,000
E. None of the above
8.
Page 10
9.
Term 1 2001/2
The total shareholders equity will be smaller at the end of a financial year than
its beginning balance if:
A.
B.
C.
D.
E.
10. A business borrowed $1,000,000 on 1 July 2000. The terms of the loan required that the
loan be repaid by 5 equal installments of $200,000 each on 30 June each year beginning
2001. In addition, interest at the rate of 8% per annum would be charged and would be
payable monthly at the end of each month. The loan amount would be shown in the
balance sheet of the business as at 31 December 2001 as:
A. Long-Term Loan $1,000,000
B. Long-Term Loan $800,000
C. Long-Term Loan $600,000
D. Long-Term Loan $600,000, and Loan Payable under Current Liability $200,000
E. Long-Term Loan $800,000, and Loan Payable under Current Liability $200,000
11. Lion Eyes Ltd. leased a building from JTC for a period of eight years, beginning 20X1.
It refurbished the building extensively at a cost $750,000 on 1/7/X3, with an estimated
life of 5 years. What is the straight-line depreciation expense for the refurbished portion
of the building for the year ended 31/12/20X4?
A. $150,000
B. $93,750
C. $75,000
D. 46,875
E. None of the above
12. The primary objective of financial accounting is to:
A. Record the transactions of a business organization.
B. Provide information to help in decision-making.
C. Determine the value of a business organization.
D. Provide business organizations with a systematic means of bookkeeping.
E. Determine the taxable income of business organizations.
13. If a company does not capitalize the cost of improving the drainage system for the
purpose of alleviating the flooding of its compound, then:
A. Assets will be overstated
B. Assets will be understated
C. Expenses will be understated
D. Profit will be overstated
E. None of the above
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Term 1 2001/2
14. ABC Company recorded the following transactions related to accounts receivable and
uncollectible accounts for the financial year ending 30 June 2001: On 1 July 2000,
Provision for Bad Debts account had a $1,000 credit balance. In September 2000, $4,800
of account receivable was written off. In March 2001, $2,050 of accounts receivable
previously written off were received by the company. If the bad debt expense for the
year is $4,750, what is the ending balance of the Provision for Bad Debts account?
A. $8,500
B. $4,750
C. $3,000
D. $3,100
E. $1,000
15. The transactions carried out by Scientific Singapore Inc during the year caused an
increase in the following: Accounts receivable $44,250, short-term investments $30,000,
inventory $15,461 and bonds $25,000; and a decrease in the following: accounts payable
$13,261, motor vehicles $15,620, prepaid expense $1,500 and notes receivable $3,630. If
10,000 $1 par value shares were issued during the year at par, and dividends of $6,850
were paid, what was the net income for the year?
A. $68,872
B. $97,910
C. $40,732
D. $63,490
E. none of the above
End of Part B (30 marks)
END OF ACCT101 Financial Accounting Term 1 2001/2002 Examination
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