Map 59~ € suss test, Satu ay 1) What defines the rules or guidelines that accountants must follow when they prepare financial statements? a. Prudence b. Matching ©. ‘Transparency 4. GAAP. 2) During the year ABC Manufacturing Ltd did not purchase any new fixed assets v" and managed to produce and sell more products than the previous year. Which of the following would you expect to be shown by the ratios? a, A decline in gross profit margin b, An increase in the FA turnover rate ©. A decline in Net Asset efficiency 4. A proportional increase in debtor days 3) A successful company's major source of cash should be from... a. Financing activities b. Operating activities ©. Investing activities d. Botha andc 4) ‘What accounting term is used, to describe the reduction inthe value of goodwill ver a period of time in the accounting books? a. Depreciation ‘b. Prudence ©. Amottisation d. Matching Tht8) Retained Income is added to which part ofthe accounting statements a, Profit in the Income statement b. Liability in the Balance sheet ©. Equity in the Balance sheet 4. Assets in the Balance sheet ©) Large expenditure on fixed assets is likely to a b. ce d Reduce operating capacity Increase gross profit margins: : Bring about a decrease in asset efficiency in the Short-Term Increase the Fixed Asset turnover rate 7) Which of the following is nor true ofa (Pty) Ltd company? a b. has tobe registered withthe registrar of companies Theit dealings ae governed by the company’s memorandum and articles of association ‘The shareholder's Hablity is limited to the extent oftheir share capital Theit shares can be freely traded between thitd parties y 8) Liesurenet accounted for 5-year gym membership by recognising 75% of the total fee as income in the first year. Which accounting concepts did it violate? a, b, °, 4. Prudence and Matching | Consistency and Going Concem Historical Cost and Prudence Matching and Consistency 9) All partners in a partnership are said to be Joint ‘ad severally liable, This means that a In the event of bankruptey, they only stand to lose their original share capital ‘They are all personally liable for the debts of the Partnership RR TCE Even ‘Silent Partners’ have to contribute something to the business ‘They can not trade their share inthe partnership with a third party “Sete Rye one ene Set eyamoe, TTT10) What can we assume if the ross profit decreases from on ‘perating profit actually goes up? 4 That interest payments have increased b. That depreciation has got out of contio* & That we have enjoyed increased efficiency with expenses 4. That shareholders are withdrawing excessive dividends 1) Calculate the retained profit figure for the year if gross profit came to 56 200, Total expenses amounted 1033 100, corporate tax stood at 35% and the Company's dividend policy was 6 pay out one thitd oftheir camings after tax, a 5005 b. 10010 ce. 15015 4 8085 Sell2 340 units of prodilct A for R50 each. Sales for Product B are expected to be 25% up on last year’s igure of R267 000. What will be their total budgeted tumever? a 450750 * b. 148.250 ©. 475250 4. 183750 19) The net book value of fixed assets amounted 10214 000 as at 30 April 2001, Daring the vear ended 30% April 2002 new asses costing 73200 were purchased anda total of 91 640 was charged to the income statement as depreciation, Caleulate the NBV of fixed assets as at 30 April 2009, a 49160 : b. 159.560 ©. 287200 195 s60 Ti14) JPR Lid issued 5.000 new 2 shares atthe eu Tonl market price of R 6,20. IF they already had a share premium of 17 260, what would itbe after the is a. 21000 b. 31000 ce. 38200 d. 48200 15) Stock on hand at the end of December 2001 was 7.320 and by the end of December 2902 this hed gone up by 7 230, What effect would this have on cash. + flow for the year? a, (7230) b. 14550 © (7320) 4. (14.550) 16) Ifa commany has stock fumover rate of 8.25 and their cost of sales amount to 77 440. calculate their stock figure, a, 3.326 b 620 © 3011 4. 2320 17) ABC Ltd has fixed assets that cost 157 420 and the accumulated depreciatio: ma them comes to a total of 42 820, Calculate the fixed asset tumover rate a 813 660, a 37x nese Bee b. 19.0x eae & 52x 7x TTT18) Cost of eoodsfseld can be calculated by adding opening stock and net purchases and subtracting X. What is Net sales esscel b. Closing Stock cone c. Sales discounts d. Net purchases / 19) A Dohr Fouity rtio of 150% would represent a Debt: Total Capital Employed ratio of... a 33% b. 60% ©. 40% > F d. 25% etal 20) If stock was expected to rise in direct proportion to Cost of Sales, then calculate the missing figure (to the nearest whole rand) YearT Year 2 | Cost of Sales 89.600 ~ 104205 eee ‘Stock Tia 7 L* I a, 8827 b. 8940 ©, 9.004 d. 9271 Questions 21 to 35 (inclusive) will be based on the following income statement and balance sheet, as provided on the following page: +41Tener a Income Statement VIE 28 Feb 2003 Sales 157,000 Cost of Sales 72,220 Gross Profit 84,780 Expenses 45,930 General & Admin Sales & Marketing Staff Costs Depreciation L460 Operating Profit 38,850 Interest Paid 250 Profit Before Tax 38,600 Taxation 15,440 Earnings after Tax 23,160, Dividend 11,880 Retained Earnings 17,580 Balance Sheet Capital Employed 28 Feb 2003 Ordinary Shares 600 Share Premium - Retained Eamings | 36,970 Total Equity > 37,570 L-T Debt 30,000 67,570, Employment of Capital Fixed Assets 46,950 Ace Depreciation 14,590 32,400 Current Assets 40,420 Stock 4,630 Debtors 28,560 “Gash 7,230. Current Liabilities 5,250 Creditors 1,230 Bank Overdraft 4,020 Net Curenit’Assets 85,170 Net Assets 67,570 [YE 28 Feb 2000 300,006 172,320 127,680 73,290 28 Feb 2004 125,360 30,000 155,360 » 8360 166,900 31,180 135,870 TT4 21) What was the value of accumulated depreciation in the 2002 balance sheet, (prior to the first year shown here) a. 14,590 b. 31,180 & 4,590 ' 4. 10,000 ) 7 72) Ite cost of equity is 25% and the cost of dS is 189% and the tax tate is 30%, what is the WACC for the 1 year (2003) a. 21.89% b. 21.50% ©. 22.56% d. 19.49% 23) When looking at the cash flow statement, what are your changes in Working capital balances for the 2nd year (2004), a = 12,736 b. +12,756 c + 4,964 a. ~ 4,964 24) The cash flow for the year 2004 was: a. ~ 10,656. b. + 10.656 c ~ 7,446 d+ 7,446 * : ' What was the price per share? 26) If we wanted to have the same equity to debt ratio for the second year, as we had in the frst year. Ifthe total equity remains as is shown in the 2004 balance sheet, by how much could we inerease the debt? a R95,360 b. 7570 ©. 50,128 d. R70,108 27) What is the Fixed asset turnover rate for the 2™ year, and is it better or worse that the previous year? a 1.85 worse b. 18; better ©. 2.25 worse @ 2.2; better TITnema eThoauacage number of days that we hold Stock for in the second yeiit is; a. 29.6 day. b. 8.1 days © 17.0 days d. 24,2 days 29) What is the self finding gap portion of the cash Conversion cycle, for the 2 year? a. 22.9 days b. 36.3 days &. 19.9 days 4. 31.4 days y a. 523% ; better b. 18.6% ; worse & 113%; worse } 25.2%; worse 31) Tin'the 3" year (2005) Thad earning after tax of R42,500, given the dividend Policy, what do you presume the dividend payout would be? ca a. R42,500 b. R10,625 ©. R21,250 d. R15,790 : 32) Looking et he cash flow, which activity consuined the most amount of cash? a. Investing activity » b. Financing activity ©. Sharcholder activity da Operations activity ©. 15.75 days 35.2 days 74) fw Took at the sales and marketing expense. What Percentage is it of total expenses in the 2™ year, has that inereased or decreased asa percentage of total expenses from the previous year? a. 27.5% ; increase b. 27.5% 3 decrease ©. 20.5% ; increase d. 20.5% 5 decrease TW35) Focusing on the cash flow, what was the ‘otal for the shareholder activity? a. R87,390 b. 55,810 ©. -R15,390 d. RS6,210 36) In which way could we improve the working capital turnover rate? a. Therease stock b. Reduce stock ©. Reduce creditors d. Reduce Sales 31) Ifa company has @ dividend policy Of paying 15% of caming after tax, as Gividend. What would their Dividend cover be? a 15.0 times b. 85.0 times c, 6.7 times 4. 83.3 times a b. 240 cents © 14 cents 4. Can't say for sure, 39) Ifthe eapitel employed of & company amounts to R75,000. We know that the Fixed assets are R28,000 and that Current Assele we 71,500. What is the value of the net assets? a. R99,500 b. R75,000 ©. R71,500 4. Not enough information given 40) What would the effect of an increase in the tax rate do to the WACC%, for a Company that has 40% debt and 60% equity? a. Reduce the WACC% d. Increase the WACC% ¢. Have No Effect on the WACC% 4. Impossible to say without the exact numbers, THT