Canadian International Matriculation Programme
Sunway College
FINANCIAL ACCOUNTING PRINCIPLES
(BAT4M)
FINAL EXAMINATION
Date: 30 May 2012
Time: 8:30 a.m. – 10:30 a.m.
Length: 2 hours
Lecturer: Ms Rehnu Marimuthu
Please read the following instructions carefully before you begin the examination:
1. This exam paper has 7 printed pages (including cover page).
2. The examination is worth 30% of your final mark.
3. The examination consists of three parts.
PARTS
A
B
C
CONTENT
Multiple Choice Questions
(Knowledge & Understanding)
Thinking & Application
Communication
Total
MARKS
20
70
10
100
4. Answer Part A on the MCQ answer sheet provided. Part B and C should be answered in the
answer booklet provided. Please hand in the MCQ answer sheet, answer booklet and exam paper
before leaving the examination hall. Ensure that you write your name on the answer sheet and the
answer booklet.
5. Answers must be written in standard English format for an academic audience.
6. Only paper-based dictionaries are permitted.
7. Answers must be written in black or blue pen only.
PART A: MULTIPLE CHOICE QUESTIONS (K/U)
-----------------------------------
Please shade the correct answer on the answer sheet provided.
(20 Marks)
-----Page 4
PART B: THINKING & APPLICATION
-----------------------------------
Question 1
Richie operates Richie Rich Company. The trial balance of Richie Rich Company has the
following accounts at its year-end, December 31, 2009:
($)
Accounts Payable
46,660
Accounts Receivable
32,350
Accumulated Depreciation – Building
25,340
Accumulated Depreciation – Office Equipment
15,400
Advertising Expense
15,930
Allowance for Doubtful Accounts
1,294
Bad Debts Expense
944
Bank
25,500
Building
102,640
Depreciation Expense – Building
1,740
Depreciation Expense – Office Equipment
4,400
Insurance Expense
5,700
Interest Expense
5,880
Interest Revenue
7,056
Merchandise Inventory
17,100
Office Equipment
71,640
Purchases
428,820
Purchase Discounts
15,700
Purchase Returns and Allowances
12,300
Richie, Capital
113,000
Richie, Drawings
9,000
Salaries Expense
43,200
Salaries Payable
1,840
Sales
542,194
Sales Discounts
2,500
Sales Returns and Allowances
7,190
Utilities Expense
6,250
Other additional information:
1. Merchandise inventory on December 31, 2009, is $22,220.
2. Salaries expense is 50% selling and 50% administrative.
3. Insurance expense is 60% selling and 40% administrative.
4. Depreciation on building, depreciation on office equipment and utilities expense are
administrative expenses.
5. Advertising expense is a selling expense.
6. Richie Rich Company uses a periodic inventory system.
Instructions:
a) Prepare the multiple-step income statement for the year ended 31 December 2009.
(30 marks)
-----Page 5
Question 2
The balance sheet of Cluster Company shown below does not balance.
CLUSTER COMPANY
Balance Sheet as at December 31, 2010
Assets
Cash
Accounts Receivable
Supplies
Unearned Revenue
Equipment
Liabilities
Accounts Payable
Owner’s Equity
Cluster, Capital
6,700
400
1,200
3,018
15,000
26,318
1,510
18,390
19,900
Each of the listed accounts has a normal balance per the general ledger. An examination of
the ledger and journal reveals the following errors:
1. A cash purchase of equipment for $693 was posted as a debit to Equipment for $693
and credit to Accounts Payable for $639.
2. A cash purchase of supplies for $700 was journalised and posted as a debit to
Supplies for $70 and a credit to Cash for $70.
3. A debit posting for salaries for $900 was made twice.
4. A debit posting to accounts receivable for $500 was omitted.
5. A payment to accounts payable for $491 was credited to Cash for $491 and debited to
Accounts Receivable for $419.
6. The withdrawal of $110 cash for Cluster’s personal use was debited to Office
Expense for $110 and credited to Cash $110.
Instructions:
a) Prepare a correct balance sheet.
(23 marks)
-----Page 6
Question 3
Muffin Ltd had a beginning inventory of 200 units at a cost of $12 per unit on 1 August.
During the month, the following purchases and sales were made.
Purchases
August 4
250 units at $13
August 15
350 units at $15
August 28
200 units at $14
August
August
August
August
Sales
7
150 units
11
100 units
17
300 units
24
200 units
Muffin Ltd uses a periodic inventory system.
Instructions:
a) Determine ending inventory and cost of goods sold under (i) average cost, (ii) FIFO,
and (iii) LIFO.
(17 marks)
(10 marks)
PART C: COMMUNICATION
-----------------------------------
1) What is the difference between accrued revenues and unearned revenues?
(2 marks)
2) A classmate is considering dropping his accounting class because he cannot
understand the rules of debits and credits. In your opinion, can the student be
successful in the course without an understanding of the rules of debits and credits?
(4 marks)
3) FIFO and LIFO are two different costing methods. Both methods report cost of goods
sold, ending inventory, net income and income tax expense differently in the period of
inflation. Explain the differences of both methods.
(4 marks)