June 2008

June 2008 - SURNAME OF CANDIDATE: FIRST NAME OF CANDIDATE:...

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Page 1 of 27 SURNAME OF CANDIDATE: FIRST NAME OF CANDIDATE: STUDENT ID: SIGNATURE: SCHOOL OF ACCOUNTING ACCT 1511: Accounting and Financial Management 1B FINAL EXAMINATION Semester 1, 2008 Time Allowed: 3 Hours Reading Time: 10 minutes Total Number of Questions: 9 Total Number of Pages 33 Answer ALL questions. The questions are NOT of equal value. Answers to Questions 1 to 8 must be written in ink on the lines or in spaces provided in this Booklet . Question 9 (multiple choice questions) must be answered on the separate Generalised Answer Sheet provided using a 2B pencil. This is a Closed Book examination. Candidates may NOT bring their own calculators. Print your student number and name on top right hand corner and sign. This paper is NOT to be retained by the candidate. Official Use Only Q Mark 1 2 3 4 5 6 7 8 Total (/75)
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Page 2 of 27 QUESTION 1 (6 MARKS): ACCRUAL ACCOUNTING Redrum Ltd. purchased a desktop computer for business use. The purchase price was $3,000. The company has a policy of depreciating all computers over their useful life of 3 years using the straight-line method with no residual value. Required: (a) Construct a three year-end schedule of the historical cost, depreciation expense, accumulated depreciation and carrying value of the desktop computer. (3 marks) Year Historical cost Depreciation expense Accumulated depreciation Carrying value 1 2 3 DO NOT WRITE OUTSIDE THE BOX PROVIDED (b) How do the concepts of “cost”, “asset” and “expense” relate to the desktop computer? (3 marks). DO NOT WRITE OUTSIDE THE BOX PROVIDED
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Page 3 of 27 QUESTION 2 (24 MARKS): STATEMENT OF CASH FLOWS The following information relates to Tonny Ltd.: Income Statement for the year-ended 30 June 2007 ($'000) Sales revenue 4800 Gain from sale of land 180 Gain from sale of office equipment 120 Total revenue 5100 less Expenses: Cost of goods sold 2200 Bad debts expense 30 Insurance expense 20 Interest expense 40 Other expenses 1400 3690 Profit before income tax 1410 less Income tax expense 490 Profit after tax 920 Additional information (dollar amounts expressed in full units): 1. The office equipment sold had been originally purchased by Tonny Ltd. three years ago at a cost of $300,000. Carrying amount of equipment sold was $160,000. 2. Land that was sold had a carrying amount of $200,000. 3. Land with an original value of $240,000 was revalued to $290,000. 4. An interim dividend was paid during the year. 5. Ignore the effect of revaluation activity on the accumulated depreciation account.
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Page 4 of 27 QUESTION 2 (CONT.): STATEMENT OF CASH FLOWS Comparative Balance Sheets 30 June 2007 ($’000) 30 June 2006 ($’000) Current Assets Cash 193 240 Accounts receivable 400 470 Allowance for doubtful debts (50) (47) Inventory 420 380 Prepaid insurance 30 40 Non-Current Assets Land 605 620 Buildings 1205 840 Accum. depn. – buildings (390) (310) Trucks 215 215 Accum. depn. – trucks (80) (40) Office equipment 610 400 Accum. depn. – office equipment
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June 2008 - SURNAME OF CANDIDATE: FIRST NAME OF CANDIDATE:...

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