{NTI International University a FINAL Examination Paper (COVER PAGE) May 2016 Programme Bachelor of Accountancy (Hons) Bachelor of Financial Planning (Hons) Course 7 ACC2202: Financial Accounting 2 Date of Examination —: 21 July 2016 Time i 0900 — 1210 Reading Time : _ 10 minutes Duration : 3 Hours 10 minutes Special Instructions ‘This paper consists of TWO (2) sections. Answer ALL questions in SECTION A and any TWO (2) {questions in SECTION B in the answer booklet provided. Materials permitted Nil Materials provided 7 Nil Examiner(s) : Mohd Hafiz Mohamad Zahari He Moderator : Annie Wang, Mary Mathews, Christine Gan This paper consists of 7 printed pages, including the cover page.ACC2202 (F)/ Page | of 6 INTI INTERNATIONAL UNIVERSITY BACHELOR OF ACCOUNTANCY (HONS) PROGRAMME BACHELOR OF FINANCIAL PLANNING (HONS) PROGRAMME, ACC2202: FINANCIAL ACCOUNTING 2 FINAL EXAMINATION: MAY 2016 SESSION This paper consists of TWO (2) sections. Answer ALL questions in SECTION A and any ‘TWO 2) questions in SECTION B in the answer booklet provided. SECTION A: Answer THREE (3) compulsory questions. Question 1 Itis important that financial reporting be subject to rules and regulations. The rules and regulations. which apply are commonly referred to as the ‘regulatory framework’. Requirements: a) Explain the need for regulation in the context of financial reporting, (8 marks) b) Describe FOUR accounting concepts which underline the preparation of accounts and give an example of the application of each. (12 marks) Total: 20 marks Question 2 Bush, Home and Wilson share pr as at 30 April 2014 was as follow: and losses in the ratios 4:1:3 respectively. Their trial balance Dr cI RM RM | Sales 334,618 Returns inwards 10,200 Purchases 196,239 Carriage inward Stock 30 April 2013 Discounts allowed 190) Salaries and wages 4 HH 54,117 Bad debis 7 7 1,620 Provision for doubiful debts 30 April 2013 | 950 General expenses 1,017 Business rates 2,900 Postage ‘845ACC2202 (F) / Page 2 of 6 ‘Computers at cost 8,400 Office equipment at cost 5,700 Provisions for depreciation at 30 April 2013: ‘Computers 3,600 Office equipment 2,900 Creditors 36,480 Debtors 51,320 Cash at bank 3,214 Drawings: Bush 39,000 Home 16,000, Wilson 28,000 ‘Current accounts: Bush 3,940 Home 207 Wilson 9,618 Capital accounts: Bush 60,000 Home 10,000 Wilson 30,000 494,106 [494,106 | ‘The following notes are relevant at 30 April 2014: i, ii, iii, iv. vy. vie vii. Requirement Interest on Dra Stock 30 April 2014, RM 74.223. Business rates in advance RM 200; Stock of postage stamps RM 68, Increase provision for doubtful debts to RM 1,400. Salaries: Home RM 18,000; Wilson RM 14,000. Not yet recorded. ngs: Bush RM 300; Home RM 200; Wilson RM 240, Interest on Capitals at 8 per cent. Depreciate Computers RM 2,800; Office equipment RM 1,100. Draw up a set of financial statement for the year ending 30 April 2014. Question 3 ‘Total: 20 marks The following information has been extracted from the books of account of Billing ple as at 30 June 2014: Administration expenses Cash at bank and in hand Cash received on sale of fittings Corporation tax (over-provision for the previous year) Deferred taxation Depreciation on fixtures, fittings, toots and equipment (1 July 2013) Dr RM'000 242 157 Cr RM?000 10 60 132ACC2202 (F)/ Page 3 of 6 Distribution costs 55 Factory closure costs 30 Fixtures, fittings, tools and equipment at cost 340 Profit and loss account (at 1 July 2013) 40 Purchase of equipment 60 Purchases of goods for resale 855 Sales (net of VAT) 1,500 Share capital (500,000 authorised, issued and fully paid ordinary shares of RM 1 each) 500 Stock (at 1 July 2013) 70 ‘Trade creditors 64 ‘Trade debtors 500 ___ RM 2,309 RM 2,309 Additional information: iii, ‘The company was incorporated in 2008, ‘The stock at 30 June 2014 (valued at the lower of cost or net realisable value) was estimated to be worth RM 100,000, Fixtures, fittings, tools and equipment all related to administrative expenses. Depreciation is charged on them at arate of 20 por cent per annum on cost. A full year’s depreciation is charged in the year of acquisition, but no depreciation is charged in the year of disposal. During the year to 30 June 2014, the company purchased RM 60,000 of equipment. It also sold some fittings (which had originally cost RM 20,000) for RM 3,000 and for which depreciation of RM 15,000 had been set aside, ‘The corporation tax based on the profits for the year at a rate of 35 per cent is estimated to be RM 100,000. A transfer of RM 40,000 is to be made to the deferred taxation account. ‘The company proposes to pay a dividend of 20 cent per ordinary share. ‘The standard rate of income tax is 30 per cent. Requirements: In so far as the information permits, prepare Billinge ple’s statement of comprehen income for the year to 30 June 2014, and a statement of financial position as at that date in accordance with the Companies Acts and appropriate accounting standards, Total: 20 marksACC2202 (F)/ Page 4 of 6 SECTION answer any TWO (2) questions. Question 4 Blunt, Dodds and Fuller are in partnership. They shared profits in the ratio 1:3:2, It is decided to admit Baxter. [tis agreed that goodwill is worth RM 60,000, but that this is not to be brought into the business records. Baxter will bring RM 24,000 cash into the business for capital, The new profit sharing ratio is to be Blunt 4: Dodds 5: Fuller 2: Baxter 1 ‘The statement of financial position before Baxter was introduced was as follows: RM Assets (other than in cash) 66,000 Cash 1,200 67,200 Creditors (8.400) 58,800 Capitals: Blunt 14,000 Dodds 24,400 Fuller 20,400 58,800 Required: a) Show the entries in the capital accounts of Blunt, Dodds, Fuller and Baxter, the accounts to be in columnar form. (12. marks) b) Draw the statement of financial position after Baxter has been introduced. (8 marks) Total: 20 marks Question 5 Byron Beasley Limited manufactures components for the motor vehicle industry. The following isa summary of some of its accounting ratios as at 31 December 2011 and 31 December 2012. 2012 2011 Current ratio 1.7: 1 13:1 Quick ratio 08:1 1st Stock wmover | 63 days [59 days Debtors’ ratio [63 days | 52 days Creditors’ 78 days | 71 days Interest cover i 7 timesACC2202 (F) / Page $ of 6 Required: a) State the formulae which will have been used to calculate each ratio. ( marks) b) Explain the meaning and purpose of these ratios, (12 marks) ©) Calculate and explain the cash operating cycle, (2 marks) Total: 20 marks Question 6 ‘The following information has been extracted from the books of Nimmo Limited for the year to 31 December 2014: Statement of comprehensive income for year to 31 December 2013 2014 RM,000 = RM’000 Profit before taxation 9,500 20,400 Taxation (3,200) (5.200) Profit after taxation 6,300 15,200 Dividends: Preference (paid) (100) (100) Ordinary: interim (paid) (1,000) (2,000) final (proposed) (3,000) (6,000) Retained profit for the year 2,200 7100 Statement of financial position as at 31 December 2013 2014 RM‘000—- RM’000 Property, plant and equipment Plant, machinery and equipment, at cost 17,600 23,900 Less Accumulated depreciation (9,500) (10,750) 8,100 13,150 Current assets Stocks 5,000 15,000 ‘Trade debtors 8,600 26,700 Prepayments 300 400 Cash at bank and in hand 600 = 14,500 42,100 Current liabilities Bank overdraft - (16,200) Trade creditors (6,000) (10,000)Accruals Taxation Dividends Share capital Ordinary shares of RMI each 10% preference shares of RMI each Profit and loss account Loans 15% debenture stack Additional information: ACC2202 (F)/ Page 6 of 6 (800) (1,000) (3,200) (5,200) G,000) (6,000) 13,000) 38,400) 9,600 16,854 5,000 5,000 1,000 1,000 3,000 10,100 9,000 16,100 600 150 9,600 16,850 i. The directors are extremely concerned about the large bank overdraft as at 31 December 2014 and they attribute this mainly to the inerease in trade debtors as a result of alleged poor credit control. ii, During the year to 31 December 2014, fixed assets originally costing RM 5,500,000 were sold for RM 1,000,000. The accumulated depreciation on these assets as at 31 December 2013 was RM 3,800,000. Requirement Prepare a cash flow statement for the year to 31 December 2014, Total: 20 marks “THE END-