Final Examination Semester 2 / Year 2012

Transcription

1 Final Examination Semester 2 / Year 2012 COURSE : FINANCIAL STATEMENT ANALYSIS I COURSE CODE : ACCT2143 TIME : 2 1/2 HOURS DEPARTMENT : FINANCE AND ACCOUNTING LECTURER : LIM CHIN CHIN Student s ID : Batch No. : Notes to candidates: 1) The question paper consists of 5 pages and 2 Sections. 2) Section A consists of 3 questions and Section B consists of 2 questions. 3) Answer all questions. 4) Return the question paper with your answer booklet.

2 Section A (50%) Answer all the questions 1. State the four (4) factors that affecting the computation of depreciation. (4 marks) 2. International Accounting Standard Board (IASB) s Framework sets out the concepts and principles underlying the preparation of financial statements which acts as a guideline for development of International Accounting Standards (IASs). What are the definitions for the following terms by the Framework? a) Asset b) Liability c) Equity d) Income e) Expense (20 marks) 3. There are two (2) groups of users which are internal users and external users that require the financial statement information for making decisions. Required: a) State two (2) examples of internal users and three (3) examples of external users (10 marks) b) Identify one type of decision for each example of the users mentioned in (a) above in using the financial statement. (16 marks) 1/5

3 Section B (50%) Answer all the questions 1. On 1 January 2011, Twilight Corporation set up two (2) outlets, Starlight and Moonlight in Malaysia. One of the outlets located in Butterworth (Starlight) and the other in Miri (Moonlight). Two (2) vehicles were bought for each outlet on 1 January 2011 for delivery purposes. At the end of first accounting year, the financial information for both the outlets is as follows: Statement of Comprehensive Income for the year end 31 st December 2011 Starlight Moonlight RM RM Gross Profit 75,000 75,000 Less : Operating Expenses Salaries and wages 22,000 22,000 Depreciation on motor vehicles 27,200 32,800 Other expenses 6,000 6,000 Net Profit 19,800 14,200 Statement of Financial Position as at 31 st December 2011 Starlight Moonlight Non Current Assets RM RM Motor vehicles 146, ,000 (-) Accumulated depreciation 27,200 32, , ,200 Current Assets Debtors 42,000 30,000 Cash at bank 105, , , ,000 Total Assets 265, ,200 Liabilities Hire purchase loan 146, ,000 Equity Capital 100, ,000 Retained earnings 19,800 14, , ,200 Total Liability and Equity 265, ,200 2/5

4 Additional information related to its noncurrent assets as at 31 st December 2011 are: Purchase Accumulated Scrap Cost Depreciation Value Depreciation method Starlight RM RM RM Lorry 1 82,000 15,400 5,000 Straight Line Lorry 2 64,000 11,800 5,000 Straight Line 146,000 27,200 Moonlight Truck 1 96,000 19,200 10,000 Reducing Balance Truck 2 68,000 13,600 10,000 Reducing Balance 164,000 32,800 The accountant at Twilight faces difficulty in comparing the performance and financial position between the two outlets due to inconsistency depreciation methods applied. In order to make the comparison possible, you, as the Accounts Manager at Miri outlet are requested to amend your financial statements by applying straight line method to all the delivery vehicles with an estimated 5 years useful life. Required: a) Draw up the revised financial statements for outlet at Miri, if Straight Line depreciation method is implemented. (17 marks) b) Compare and comment the performance and financial position of the outlets after the change of depreciation method in (a). (8 marks) 3/5

5 2. The following financial statements were reported by File Creation for year ended 31 December File Creation Statement of Comprehensive Income for the year ended 31 Dec 2010 $ Revenue 92,000 Cost of sales (55,000) Gross Profit 37,000 Add : Gain on disposal of equipment ,400 Less : Operating expense Salaries and wages 10,000 Rent 2,500 Electricity expenses 800 Depreciation on equipment 9,500 General expense 100 Motor expenses ,400 Operating profit 14,000 Interest expense (220) Profit before tax 13,780 Taxation (1,780) Profit for the year 12,000 File Creation Statement of Financial Position as at 31 December $ $ Non Current Assets Equipment 100,000 95,000 (-) Accumulated depreciation (45,000) (37,500) 55,000 57,500 Current Assets Inventories 4,100 5,200 Debtors 64,200 58,700 Cash at bank 40,900 61, , ,000 Total Assets 164, ,500 Shareholders' Equity Share capital 100, ,000 Share premium reserve 2,000 3,000 Retained earnings 17,740 27, , ,540 4/5

6 Non Current Liabilities Loan 20,000 15,000 Current Liabilities Creditors 23,800 15,880 Taxation Dividends ,460 16,960 Total Equity and Liabilities 164, ,500 Additional information for the year: a) An old equipment bought in 2007 for $30,000, has an accumulated depreciation of $17,000 was sold for $13,400. b) A new equipment amounting $25,000 was acquired. c) The management declared a dividend for shareholders at $2,200. d) 20,000 ordinary shares with $1 par were issued at a premium of 5 cents per share. Required: Prepare the cash flow statement for File Creation for the year ended 31 December (25 marks) 000 5/5