2015S1 Practice Final Exam Questions

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ACCT1501 Practice Exam Questions 2015S1

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QUESTION 1 (6 Marks) Bank Reconciliation

The following information is given about Nadak Co.:

1. The August 31 balance shown on the bank statement is $9,810.

2. There is a deposit in transit of $1,260 at August 31.

3. Outstanding cheques at August 31 totalled $1,890.

4. A bank charge of $40 for cheques was made to the account during August, as

shown on the bank statement. Although the company was expecting a charge,

its amount was not known until the bank statement arrived.

5. In the process of reviewing the cheques, it was determined that a cheque

issued to a supplier in payment of accounts payable of $361 had been recorded

as $631.

6. The August 31 balance in the general ledger Cash account, before

reconciliation, is $8,950.

Required:

Part A: Prepare a bank reconciliation as of August 31, 2011. (4 marks)


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Part B: Prepare any necessary adjusting journal entries. (2 marks)

Account name Debit$

Credit$


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QUESTION 2 (9 Marks) Financial Reporting Principles, Accounting Standardsand Auditing, & Sustainability Reporting

Provide short answers to the following:

1. What are generally accepted accounting principles? (2 Marks)

2. Going concern assumption is one of the key assumptions to financial reports.What is going concern assumption? Why is assumption important in thepreparation of financial statements? (4 marks)


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3. Describe Scope 1 and Scope 2 emissions and provide an example for each ofthem. (3 marks)


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QUESTION 3 Financial Statement Analysis (8 marks)

BPS Ltd, a supplier of telecommunications equipment, retails its products throughsuburban outlets. Shown below are the calculations of some of its key financial ratiosfor 2011 and 2012.

2012 2011Return on Equity 13% 12%Return on Assets 8% 9%Profit margin 20% 18%Asset turnover 0.40 0.50Days in inventory 72 days 55 daysDays in debtors 42 days 42 daysCurrent ratio 1.6 1.5Quick ratioDebt-to-Equity ratio

0.71.4

1.11.0

Return on Equity Operating Profit after Tax Shareholders' Equity

Return on Assets Operating Profit after Tax Total Assets

Financial Leverage Total Assets Total Shareholders’ Equity

Profit Margin Earnings Before Interest and Tax Sales

Asset Turnover Sales Total Assets

Days in Inventory Average Inventory x 365 COGS

Days in Debtors Average Trade Debtors x 365 Credit Sales

Current Ratio Current Assets Current Liabilities

Quick Ratio

Debt to Equity Ratio

Current Assets - Inventory Current Liabilities

Total Liabilities Total Shareholders' Equity


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Required

Analyse BPS’s profitability, asset management, liquidity and financial

structure for 2012 using the ratio information shown above.


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QUESTION 4 (15 marks) Control Accounts

Rupert Ltd maintains subsidiary ledgers for debtors and creditors. At 31 May 2014,the debtors control account has a debit balance of $50,120 and the creditors control

account has a credit balance of $30,670. An extract of totals from the special journals for the month of June 2014 is as follows:

$Credit sales 86,500Cash sales 6,100Credit purchases 93,200Cash received from debtors 67,800Cash paid to creditors 55,890Cash purchases 4,300Discount received fromcreditors

7,500

Discount allowed to debtors 3,500

Complete the debtors and creditors control accounts as they would appear in thegeneral ledger.


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QUESTION 5 ADJUSTING ENTRIES AND FINANCIAL STATEMENTS (23Marks)

The following pre-adjusted trial balance has been prepared for Sydney Company as at30 June 2014 (for the 12 months beginning on 1 July 2013):

DR

$

CR

$

Bank Overdraft 10,000

Accounts Receivable 200,000

Allowance for Doubtful Debts 1,000

Inventory 100,000

Prepaid Rent 10,000

Property, Plant and Equipment 450,000

Accumulated Depreciation - PPE 200,000

Accounts Payable 60,000

Bank loan 50,000

Contributed Capital 310,000

Retained Profit at 1 July 2013 34,000

Sales revenue 450,000

Cost of Goods Sold 265,000

Interest Expense 5,000

Wages Expenses 80,000

Rent Expense 5,000

1,115,000 1,115,000

The following information is given which may give rise to year end adjustments:

•••• Depreciation on Property, Plant and Equipment is provided for on a straight linebasis at 10% per annum, and it is assumed that it will have no salvage value.

•••• The balance in Prepaid Rent relates to the 12 month period from 1 January 2014 to31 December 2014.

•••• An ageing analysis shows that $4,000 of Accounts Receivable is estimated to beuncollectible.

•••• On 30 June 2014, the directors declared a dividend of $5,000, which theshareholders authorised. The dividend is to be paid on 15 September 2014.


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•••• It is discovered that $10,000 cash received during the year and credited to sales areactually related to services to be delivered in July 2014.

•••• $5,000 of wages relating to June 2014 have not been paid and need to be accrued.

Part A (12 Marks)

Prepare journal entries for the necessary end of period adjustments.

Account name Debit$

Credit$


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Part B (7 Marks)Prepare an Income Statement for the year ended 30 June 2014:

Part C (4 Marks) In the Balance Sheet as at 30 June 2014, what would be the closing balance ofretained profits? Show all workings.


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QUESTION 6 (15 marks) Inventory

The following information relates to inventory transactions of Promises Ltd for themonth ending 30 June 2014:

Date Cash Purchases Cash Sales Balance1 June 100 units @ $10

10 June 80 units @ $12

18 June 140 units @ $20



Promises Ltd uses FIFO (first-in-first-out) and perpetual inventory control.

Calculate the cost of goods sold based on the costs of units sold. (3 Marks)

Prepare the journal entries for inventory purchases and cost of sales for the month ofJune 2014. (12 Marks)

Date Account name Debit

$

Credit

$


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QUESTION 7 (10Marks) Noncurrent assets

On 1 July 2011, Promises Ltd purchased equipment at a cost of $150,000. Theequipment is depreciated using the reducing balance method at the rate of 40% perannum.

Prepare the journal entries for depreciation for each year 30 June 2012, 30 June 2013and 30 June 2014. (9 Marks)

Date Account name Debit$

Credit$

What is the book value of the equipment at 30 June 2014? (1 Mark)


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Question 8 Management Accounting and Cost Concepts (13.5 marks)

Part A (2 marks)

For each of the items 1-4 in the table below, indicate whether the item is a productcost or a period cost

Item Cost Classification

1. A food retailer purchases milk for resale

2. Depreciation of head office computers

3. Salaries of production line workers for a

manufacturer

4. Advertising costs to promote a manufacturer’s

products

½ mark each entry

Part B (9.5 marks)

Bandcamp Ltd manufactures guitars. In the month of January 2014, Bandcamp

Ltd recorded:

• direct labour cost of $200 000

• raw materials purchased of $400 000

• total overhead cost of $500 000.

The following information was supplied by Bandcamp Ltd’s accountant about the

opening and closing inventory:31 January

(ending)

1 January

(beginning)

Raw materials inventory $80 000 $95 000

Work in progress inventory $110 000 $60 000

Finished goods inventory $255 000 $75 000

Required:


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1. Prepare a cost of goods manufactured statement for January 2014.

2. Prepare a cost of goods sold statement for January 2014.


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Part C (2 marks)

Tree & Woods Corp., an international furniture company, manufactures and sellsfurniture of unique natural material. In 2010, the company sold all 25,000 chairs thatit produced at $200 each. Total costs amounted to $3,300,000 comprised of$1,300,000 variable costs and $2,000,000 fixed costs. In 2011, the company purchasesa new saw mill for $110,000. The useful life is estimated to be 5 years with a salvagevalue of $10,000. Each year, the same amount of depreciation expense is recorded.The usage of the new saw mill allows Tree & Woods to reduce variable costs forproducing one chair by $7. All other costs remain the same as in 2010.

What was Tree & Woods Corp.’s break-even point in number of units in 2010?


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Question 9 - MCQ practice questions

You have seen samples of MCQ in the lectures and in your quiz attempts.

2015S1 Practice Final Exam Questions

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