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# HELLENIC OPEN UNIVERSITY

## SCHOOL OF SOCIAL SCIENCES

MASTER IN BUSINESS ADMINISTRATION (MBA)

## Programme: Master in Business Administration ()

Module: Financial Management & Accounting (MBA51)
Sub-Module: Financial Accounting
Academic Year: 2013-14

## 1st Written Assignment (WA1)

Subject 1 (30%)

Conservatism (prudence) has been one of the traditional accounting concepts. It was
considered so important that various regulatory bodies (such as IASB and FASB) had
identified conservatism as one the qualitative characteristics that accounting information
should posses in order to be considered useful to the users of financial statements. Critically
discuss the arguments in favor and against the conservatism principle and describe its
current status within the financial reporting framework.

(At least 3 different academic references Do not exceed 500 words Avoid plagiarism)

Subject 2 (30%)

. A firm acquired in 1/1/2010 a piece of equipment for 10,000 while the installation costs
were 2,000. The useful life of the equipment was estimated to be 12 years and its residual
value was expected to be insignificant. Assuming that the firms fiscal year coincides with the
calendar year calculate the annual depreciation charge for year 2015 assuming that in
1/1/2015 the management of the firm estimated that the remaining useful life of the asset is
3 years and that the residual value of the equipment is 3,000. Throughout the useful life of
the asset the firm employs the straight line- method for the calculation of the annual
depreciation charges.

. A firm acquired in 1/6/2010 a piece of equipment for 40,000. The useful life of the
Equipment was estimated to be 4 years and the residual value was expected to be 2,500.
Assuming that the firms fiscal year coincides with the calendar year:
1. Calculate the annual depreciation charge for the last year of the assets useful life
assuming that the firm employs the straight-line depreciation method.
2. Calculate the annual depreciation charge for the third year of the assets useful life
assuming that the firm employs the double declining balance depreciation method.

III. A firm acquired a bus in 1/1/2012 for 60,000. The useful life of the asset, expressed in
kilometers, is 300,000 kilometers and its residual value 2,000. Assuming that the firm
adopts the units production method for the calculation of annual depreciation charges,
calculate the annual depreciation for year 2012 and 2013. In year 2012 the bus covered
120,000 kilometers, while the bus was not used in 2013 (nil kilometers).

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HELLENIC OPEN UNIVERSITY
SCHOOL OF SOCIAL SCIENCES
MASTER IN BUSINESS ADMINISTRATION (MBA)

Subject 3 (20%)

The November 30, 2012, trial balance of commercial company New Sales is provided
below:

Accounts
Equipment 200,000
Accumulated depreciation of equipment 20,000
Inventory 50,000
Accounts receivable 300,000
Accounts payable 240,000
Notes payable 80,000
Notes receivable 70,000
Cash 150,000
Rents 80,000
Wages 200,000
Income from extraordinary activities 10,000
Insurance expenses 80,000
Stock Capital ?
Retained Earnings 100,000
Revenue 200,000
Deposits 20,000

During December 2012, you should take into account the following information:
1. Purchase of merchandise of a total value of 60,000 (50% on account and 50% accepting
a 6-months note payable).
2. Cash payments of 80,000 to employees for salaries. This amount includes the wages
(20,000) due to employees as of 15, January 2013.
3. Purchase of Hellenic Telecommunications Organization S.A. stocks, as a long-term
investment, for 10,000 by cash.
4. Credit sales of 135,000 and cash sales of 175,000.
5. Purchase of equipment on credit from Kawasaki Heavy Industries for 15,000. Also, the
firm paid 1,000 for installation costs of the equipment. The equipment wasnt
operational until January 15, 2013.
6. Sale of old equipment (fully depreciated) for 1,000. The buyer agreed to sign a 2-
months note. Note that the acquisition cost of the old equipment was 2,000.
7. Part of merchandise bought in December was found to be defective and was returned to
the seller. The account payable was thereby reduced by 10,000.
8. Issuance of a check of 12,000 for a partial payment of a liability.
9. Issuance of capital stock of 150,000 in exchange for cash.
10. Calculate the depreciation of the equipment. The depreciation rate for 2012 was 12%.

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HELLENIC OPEN UNIVERSITY
SCHOOL OF SOCIAL SCIENCES
MASTER IN BUSINESS ADMINISTRATION (MBA)

REQUIRED
a. Calculate the Stock Capital and prepare the trial balance of November 30, 2012.
b. Post the journal entries for December 2012.
c. Post the general ledger entries for December 2012.
d. Prepare the trial balance of December 31, 2012. The ending Inventory was 40,000.

Subject 4 (20%)

Using the information from subject 3.c prepare the balance sheet and the Income Statement
for December 31, 2012, taking into account that the ending Inventory was 40,000.

No journal entries are needed. You should follow the basic structure of the Balance Sheet
and the multiple steps Income Statement.

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HELLENIC OPEN UNIVERSITY
SCHOOL OF SOCIAL SCIENCES
MASTER IN BUSINESS ADMINISTRATION (MBA)

Assignment guidelines

It is important that the coursework reflects your knowledge rather than it being simply
an accumulation of information.
The assignment should be well structured and easy to read.
The assignment should clearly present all aspects and perspectives of the subject area,
i.e.:
o efficiently develop all necessary elements
o refer to actual case studies or statistics if that is required
o present reasonable arguments
o leave out irrelevant material
All questions are compulsory. Subject 1 of the assignment, including possible diagrams,
tables, references etc., should not exceed 500 words. For every additional 100 words
there will be a penalty of 0.5 points.
Each question accounts for a percentage of the total mark. This is clearly marked at the
beginning of each question.
The assignment is due on 10 November 2013. Please note that no assignment will be
acceptable after that date as the electronic submission system automatically locks at
23:55 of the last day of submission.
You should submit your assignment through http://study.eap.gr using your username
and password.
You may use any of the following file formats:
o Rich Text Format (*.rtf).
o Microsoft Word 97-2003 (*.doc).
o Microsoft Word Open XML (*.docx)
Other document formats or read only file formats such as Portable Document Format
(*.pdf) are not acceptable file formats for submission of your assignment.
Please pay attention to the proper naming of your assignment. The file of your
assignment should be named as follows: Surname-Initial-WAnumber-YourClass. For
example, if your name is Peter Drucker, you are sending in your 3rd assignment, and you
are in ATH1 Class, then you should name your file as: Drucker-P-WA3-ATH1.
Assignments that fail to comply with this requirement will receive a lower evaluation in
the presentation grade.
Copying in terms of cheating is not acceptable in any form. Copying large parts or
whole paragraphs of text found in any of the sources used in this assignment (printed
books, academic articles, or electronic media of any kind) is totally unacceptable. It is
considered as plagiarism and leads to severe penalisation for the student(s) involved.
Students should cite all sources from which they take data, ideas or words, whether
quoted directly or paraphrased.
Good luck!!