- Closed Book Duration 2 Hours _ Answer possible questions in the Question paper itself. Section 1: a 1: Girele the appropriate choice 14 questions 2.5 marks each = 35 45 = 40marks 1. Iftotal liabilities decreased by $4,000, then é SS erieny: ‘must have decreased by $4,000. 1 say imst have decreased by $4,000, or stockholders equity mus have increased by assets and stockholders ety each A. assets must have increased by $4,000 nO 2. ‘The sale of an asset on credit at its book value a. increases assets and lia bb. decreases assets and liabilities. leaves total assets unchanged, \-E decreases assets and increases liabilities. 3. Comstock Company provided consulting services and billed the client $2,500. As a result of this event assets remained unchanged. bye asses increased by $2,500. 2 equity increased by $2,500 Both b and c. ‘Two of the major characteristics that make accounting information useful are Relevance and Faithful representation. Verifiability and timeliness. e. Comparability and flexibility. 4. Understandability and consistency. 5, Ifa company has overdrawn its cash & bank balance, then fa,_its cash & bank account will show a debit balance, ‘cash & bank account will show a eredit balance, the cash & bank account debits will exceed the cash account credits 4. iteannot be detected by observing the balance of the cash & bank account.: 6. The following data is avaiable fr BOX Corporation le Deve Common stock, par $10 authorized 30000 shares) Sa0d,or ‘Treasury stock (at cost $15 per share) y $1,200 ‘Based on the data, how many shares of common stock are oustanding? Be 30,000. 20,000, & 29.920. @ 19920. 7. The Harris Company purchased a computer for $3,000 on December 1. I is estimated that annual depreciation on the computer wil be $600. If financial statements ae 10 be ‘Prepared on December 31, the company should make the following adjusting entry. ‘debit Depreciation Expense, $600; credit Accumulated Depreciation, $600 ‘debit Depreciation Expense, $50; credit Accumulated Depreciation, $50. 'G. debit Depreciation Expense, $2,400; credit Aceumulated Depreciation, $2,400. 4d. debit Office Equipment, $3,000; credit Accumulated Depreciation, $3,000, 8 Which of the following show the proper effect of a stock split and a stock dividend? Tem ‘Stock Split ‘Stock Dividend a. Total contributed capital Increase Tnerease (7b. Total retained eamings Decrease Decrease ‘e. Total par value (common) Decrease Increase © Par value per share Decrease No change 9, In order for accounting information to be relevant, it must eee ae ‘c. not be reported to the public. d. be used by a lot of different firms. 10, The normal balance of any account isthe ‘a, left side. right side. I ich increases ht coun ‘d._side which decreases that account.& Regn. No. 1. A law firm received $2,000 cash for legal services to be rendered i re x for les es in the future. The full aneunt was eredied wth abity acount Una Service Reve he le services have been rendered atthe end ofthe accountng period ingen eeageiocene inting period and no adjusting. is a. expemes tobe overstated. b. net income to be overstated. liabilities to be understated. \ @ revenues tobe understated. 12. Treasury Stock is a(n) contra asset account, _/». retained earnings account. asset account. contra stockholders’ equity account. 13. On June 30", Hasina Designs received a payment of Rs 7,410, after a discount of 5% from a customer for services the firm provided during the prior accounting period. How will this payment affect net income for June? a. Income/Revenue will increase by Rs 7410 _/- >. Tncome/Revenue will increase by Rs 7,300 \ __&. Net Profit will increase by 7,800 @ None of the above 14, When an expenditure to repair an existing asset extends the useful life ofthe asset, the cost should be ‘2, Classified as a revenue expense because it will result in increase revenue oe (B) Expensed in the period in which repair was done Added to the accumulated deprecation 4, None of the above 15, State (inthe space provided) whether each situation is a prepaid expense (PE), unearned revenue (UR), accrued revenue (AR) or an accrued expense (AE). 5 marks ‘a. Unrecorded interest on savings instruments is $245. YA. _b, Legal fees of $1,000 were collected in advance. By year end 60 percent were “Gone: Property taxes that have been incured but that have no yet en pa or ‘amount to $300 __ 4. Prepaid insurance had a $500 balance prior to adjustment, By year end, 40 percent was sill unexpired. Page No. 03Regn. No. Section 2 Question 1 20 marks, Following are financial items of a merchandising business Matrix Lid, 1 Cash: 15000, “Accounts Receivables: 42000, iguipment. 125000, Inventory: 33000, Accounts Payables: 24000, ‘114% Debentures: 110000, ‘Common Stock: 67000, Retained Earnings: 21000, Investment in 9% Expenses Payable: 28000, Government Bond: 35000, ii, Pollowing are the transactions during the year: + Borrowed another 30,000 on along term basis Interest expense for the year: 13,000. Sil due at yearend. Inventory purchased: 400000 but on credit Sales: 500000. 40% were for cash, Cost of goods sold: 75% of Sales Paid to suppliers: 10% of their dues Paid Production costs 1,44,000, Selling General & Administrative expenses 30,000. Interest earned forthe year on investment in Govt. Bond still due, Ignore Taxes & dividends. ‘You are required to answer the questions given below. Work out the multistep Income statement & Classified Balance Sheet made inthe table provided. Workings: hele yor, Jom “Bee “Amount CSolutions - 20 marks 1. How much was the cost of materials consumed (supplies expenses) during the period? 31S0c0 - \f* cco Z3loce -Tout Non Current Liabilities... SESE SS & Toval Cusrent Assets Gal Non Caen Assets © Working Capita $3f225 —————————— PageneQ 22 marks On January 1", 2012, Ci Equity ston ofthe Bete Some Tuctions Ltd. gave the following details ofits Stock holder's ‘Shareholders Fund: ae Preferred stock, Rs 100 par value Common stock, Rs 5 par value ane Additional paid in capital on Preferred stock 24,500 Additional paid in capital on Common stock 58.700 Total Contributed capital Retained Earnings Total Stockholder Equity During the year, following transactions were recorded. ‘* Issued 1800 shares of common stock at Rs 24 per share for consideration other than cash ina merger. ‘+ Converted 450 shares of preferred stock to common stock. Conversion ratio agreed at 2:1, ie. 2 shares of common stock for each preferred share. ‘+ Net income earned during the period Rs 59750. '* Issued 10% stock dividend post the preferred stock conversion as given above. Market value of shares being Rs 25 per share. ‘+ Paid Rs 6 per share dividend on preferred stock and Re 1 per share dividend on common k outstanding during the year. Sought back 500 shares of common stock and held as treasury atthe given market price Foreign currency translation adjustments during the year Rs $5,000.Soo [ibibo |25\534 | So00 [(veso, Solution ‘Stock holder's Equity section of the Balance Sheet as at.31.0% 26% 6 marks Amounts) | Amount (RS) ‘Desails fowdrded copie 22, 120 eae _ ee a velne, q78e0 ppertered See UsSe0 ae fu, “sos oulbtonding ices Posh in eapitet, commen shoe \er7e0 ize $0 2gis 3 [Coase es 585 S84 sso00 643see- |W~ Regn. No. lee ‘8 questions of 2 marks each = 16 marks \ 1 What was the rate per share for conversion of Preferred stock to Common stock? 1:2 How much was the total eash dividends paid on the following: 2308 Preferred Stock ....B LU Common Stock 3. What was the total Comprehensive income of the Company for the year? & ss 44. How much was the Contributed capital ofthe company atthe end? B38) 5° How much was the Additional paid in capital credited, due tothe stock dividend issued? “6: How many shares were oustanding for payment of dividend in cash at the end or 13588 (ess anid \ At ind 4 yor, 1508 ve : pen amaion | Ute byvode) 478 Ce as Sai, ci {J Hlow sch was Total Shareelder Eat atthe end Pieces eee ots Tr etQuestion 3 6 questions 3 marks each = 18 marks Tncome Statement and Balance Sheet are given for three years for an Indian Corporate, 2010 | 201 12 Income Statement (§ m) = ‘Revenues 4804 | 6oai | 99a Cost of Goods Sold_ 2749| 3497] 4118 Gross Profit 2055 | 2544 | 2876 Selling and marketing expenses 251 366 Administrative expenses a 497 “Total operating expenses 595 863 | Operating profit 1460 2013 Other income (expenses) 28 1S. Finance income 181 382 Profit before income taxes 1609 2410 Tncome tax expense 356 on Profit after tax a 133 “i116 Attibutable to: Minority Interest 0 of eee [ Equity holders ofthe company 1313] 1499 | 1716 [Net profit, 1313| 1499] 1716 Balance Sheet (§ m) ‘Aseets zoo | 211 | 2012 Cash and Equivalents 26983737] 4047 ‘Available-for-sale financial asets Sol 5 6 “Tavestments in certificate of deposits a FA esas 778 | 1083 1156 STII Revexoce 17] 270] 368 Derivative financial instruments 21 eee 133 300) Page No. 10. $294 + 16 - dev = seqLiabilities and equit le Account payables CER r= Derivative financial instruments | 0 0 9 Current income tax liabilities 161 | 143 | 207 ‘Tax on dividend 0 of 0} Client deposits 2 5 3 ‘Unearmed revenue 118 [116107 Employee benefit obligations 29) [31 | aoa Provisions is) |isatea0 | ae her current lisbiliies 380 [asi] 482 ‘Total current liabilities 710 | 816 | 937 Non-current liabilities Deferred income tax liabilities % 0 2 ‘Non-current isilites i3]ee ta | oa Employee benefit obligations 38 | 38 0 Total liabilities 787 |__ 888 | 961 Equity ‘Share capital «| al ‘Share premium 694 [ 702] 703 Retained earings 4611 5204 | 6509 Other components of equi | @| 70 ‘Minority interest 0 [Total equity 3361] 612 | 6576 ‘otal liabilities and equity 6148] 7010 | 7537 Use the data above for answering the following questions. «A If depreciation expense in 2012 is 195 Sm, what is the amount of Property Plant &Equipment (PPE) purchased in 2012? \2-What isthe amount of evidends paid in 20122 BRAM NING ui E22,k | (i) nemo 1 Se What is the increase in the outstanding (dues) from customers? Jer ote. MGB.E..B68. 5.If prepaid assets worth 52 $m is used up during 201 1, what are the total amount of prepayments for that year? 6 The cash and equivalents balance increased by 1039 $m during 2011. How imiich of that was due to liquidation of financial assets and certificate of deposits? (eh BAN ‘That's it... You are done! —$<—$—$—$—=—<—<—<—<—— treet