FINANCIAL ACCOUNTING FOR BUSINESS (CUAC 111)-PRACTICE QUESTIONS 2016
Question 1
The assets and liabilities of Glamorous Travel Service at 30 April 2010 and its revenue and expenses for the same year are listed below. The capital of the owner, Adam Kufa, was $240000 on May 1 2009, the beginning of the current year.
$
Accounts payable 36600
Accounts receivable 94050
Cash 159150
Fees earned 789600
Land 240000
Miscellaneous expenses 38850
Office expenses 189000
Supplies 10050
Wages expense 395100
Required:
For the current year ended 30 April 2010, prepare the following statements for Glamourous Travel Service:
a) The statement of profit or loss and other comprehensive income
b) The statement of changes in owner’s equity
c) The statement of financial position
Question 2
Below is the summary of cashflows for Glamourous Travel Service for the year ended 30 April 2010:
$
Cash Receipts
Cash received from customers 753000
Cash received from additional investment of owner 150 000
Cash Payments
Cash paid for expenses 630 000
Cash paid for land 240 000
Cash paid to owner for personal use 90 000
The cash balance as of May 1, 2009 was $216150
Required:
For the current year ended 30 April 2010, prepare the statement of cashflows for Glamourous Travel Service:
Question 3
a) Discuss the role of financial accounting in the business of your choice [15]
b) State the accounting equation and define each of the elements in the equation [5]
Question 4
The following trial balance has been prepared by an inexperienced bookkeeper.
Trial balance for the year ended 31 May 2010
DR ($) / CR ($)Sales / 138078
Purchases / 82350
Carriage / 5144
Drawings / 7800
Rent, rates and insurance / 6622
Postage and stationery / 3001
Advertising / 1330
Salaries and wages / 26420
Bad debts / 877
Allowance for credit losses / 130
Accounts receivable / 12120
Accounts payable / 6471
Cash in hand / 177
Cash at bank / 1002
Inventory / 11927
Equipment at cost / 58000
Accumulated depreciation-equipment / 19000
Capital / 53091
357993 / 75547
Required:
a) Prepare a corrected trial balance as at 31 May 2010 [20]
b) Discuss briefly the importance of a trial balance in financial accounting [5]
Question 5
A summary of Blessed Hope Sports Club’s cash book is shown below:
Cash Book Summary for Blessed Hope Sports Club
DEBITS / $Balance at 01/01/15 / 2800
Collections at matches / 8600
profit from sale of refreshments / 11000
CREDITS / $
Purchase of equipment / 600
Rent for pitch / 2400
Printing and stationery / 100
Secretary's expenses / 160
Repairs to equipment / 140
Groundsman's wages / 8000
Miscellaneous expenses / 120
Balance at 31 /12/15 / 10880
Additional information:
i) At 1 January 2015 equipment was valued at $3000
ii) Depreciate all equipment by 10 percent for the year 2015
iii) As at 31 December 2015, rent paid in advance was $600
iv) As at 31 December 2015, there was $40 owing for printing
Required:
a) Prepare the income and expenditure account for Blessed Hope Sports Club for the year ended 31 December 2015 [10]
b) Prepare the statement of financial position as at 31 December 2015 [10]
Total [20 marks]
Question 6
a) With reference to examples examine the role of any five (5) accounting concepts in the analysis of accounting transactions and the preparation of financial statements. [15]
Question 7
Annatoria and Bethany are in partnership sharing profits and losses in the ratio 3:2. Under the terms of the partnership agreement, the partners are entitled to interest on capital at 5 percent per annum and Bethany is entitled to a salary of $45000. Interest is charged on drawings at 5 percent per annum and the amounts of interest are given below. No interest is charged or allowed on current accounts.
The partners’ capitals as at 1 July 2015 were as follows:
Annatoria $300000
Bethany $100000
The net trading profit of the firm before dealing with partners’ interest or Bethany’s salary for the year ended 30 June 2016 was $258000. Interest on drawings for the year amounted to Annatoria $4000 and Bethany $3000
At 1 July 2015, there was a credit balance of $12800 on Bethany’s current account, while Annatoria’s current account was a debit of $5000. Drawings for the year to 30 June 2016 amounted to $120000 for Annatoria and $150000 for Bethany.
Required:
Prepare, for the year ended 30 June 2016;
a) The profit and loss appropriation account [12]
b) The partners’ current accounts [8]
Question 8
You are to study the following summarised financial statements for two furniture shops and then attempt the questions that follow.
Summarised Financial Statements
Xi / Yuang$ / $
Statements of profit or loss
Sales / 555000 / 750000
Cost of sales / (240000) / (330000)
Gross Profit / 315000 / 420000
Expenses / (215000) / (270000)
Net Profit / 100000 / 150000
Statements of financial Position
Non-current assets / 10000 / 70000
Current assets / 210000 / 182500
Current liabilities / (104000) / (100500)
Net assets / 116000 / 152000
Financed By:
Capitals: Balance at start of year / 76000 / 72000
Net profit / 100000 / 150000
Drawings / (60000) / (70000)
Total Capital / 116000 / 152000
Required:
a) Calculate the following ratios for both Xi and Yuang:
i) Gross profit to sales ratio [4]
ii) Net profit to sales ratio [4]
iii) Expenses as a percentage of sales [4]
iv) Current ratio [4]
b) Drawing upon all your knowledge of financial accounting, comment upon the differences and similarities of the ratios of Xi and Yuang. [5]
c) State any four limitations of ratio analysis in comparing the performance of different companies. [4]
Question 9
Discuss how the definition of accounting has changed over time [10]
Question 10
Identify six stakeholders of a business of your choice and discuss their accounting information needs. [18]
Question 11
Distinguish between financial accounting and management accounting [6]
Question 12
Identify books of accounts used to record each of the following:
· Cash sales
· Credit sales
· Credit purchases
· Cash purchases [4]
Question 13
Identify the source documents from which information is obtained pertaining to the following transactions:
· Cash sales
· Credit sales
· Credit purchases
· Cash purchases [4]