DIN: RUW-SNT-T-035

E XAMINATION Q UESTION B OOKLET RN: 04

ED: 18/02/2016

EXAM: FINAL EXAM

INVIGILATOR: _-------------------------------

COLLEGE OF: COLLEGE OF BUSINESS AND FINANCIAL SCIENCES

STUDENT’S NAME:
STUDENT ID: _

COURSE TITLE: FINANCIAL ACCOUNTING I COURSE CODE: BUS 215

SECTION: I DATE: 8 JULY 21

TIME: 24HRS MAX MARKS: 100

I MPORTANT I NSTRUCTIONS

 You will not be permitted to leave the examination hall until at least half an hour has elapsed from the
start of the examination

 If you have a question or require assistance, kindly raise your hand and wait for the invigilator to come
to you

 All examination questions must be answered in ink

 Programmable calculators are not allowed in the examination hall

 You are not permitted to have any unauthorised materials (mobile phones, iPods, headsets etc.) during
the examination

 Cheating or an attempt to cheat may lead to annulment of that examination and you will be subject to a
severe penalty

 All answered sheets and question papers must be given to the invigilator at the end of the examination

TOTAL
QUESTIONS 1 2 3 4 5 6 7 8 9 10
MARKS
MAXIMUM
35 65
MARKS

MARKS
OBTAINED
TOTAL MARKS IN WORDS: _

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 DIN: RUW-SNT-T-035
E XAMINATION Q UESTION B OOKLET RN: 04
ED: 18/02/2016

SIGNATURE OF INSTRUCTOR: _

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 Answer all questions

BUS 215 – Final Exam

1) Ethics Case:

Maha Al-Safi is the assistant chief accountant at Board Company, a manufacturer of computer chips
and mobile phones. The company at present has total sales of $20 million. It is the end of the first
quarter of the year. Maha is quickly trying to prepare a trial balance so that the quarterly financial
statements can be prepared and submitted to management and the regulatory agencies. The total
credit in the trial balance exceeds the debits by $1,000. In order to meet the 4 p.m. deadline, Maha
decides to force the debits and credits to be equal by adding the difference of $1,000 to the
Equipment account. She chose Equipment because it is one of the larger account balances and
percentage wise it will be the least misstated. Maha “plugs” the difference! She believes that the
difference will not affect anyone’s decisions. She wishes that she had another few days to find the
error but realizes that the financial statements are already late.
Instructions
a) Who are the stakeholders in this situation? (10 points)
b) What are the ethical issues involved in this case? (10 points)
c) What are Maha’s alternatives? (15 points)

Answer:

Answer(a): Stakeholders- Are the persons who are directly or indirectly related to the company.
There are internal and external stakeholders.

Internal stakeholders- Those are within the organization, examples; Shareholders, creditors,
employees, managers etc.

External stakeholders- Those are outside the organization, examples; Public, society, Government.

Answer(2): Ethical issue involved - Ethics are the moral values and principles.

In this question, Maha is taking undue advantage of her designation. She is deliberately doing
accounting mistake just to meet the deadline. She is doing window dressing in the accounts so the
accounts look good. She is not following the accounting rules and principles. Her accounting mistake
will effect the financial statements.
Answer(3): Maha’s alternatives: Are as following-

• She should have had word with her manager about the issue and the deadline, firstly, she should
have completed the work by deadline but if she could not then she should have requested to her
manager or concerned person to give some relaxation or grace period.

• Now when the financial statements have been made, she should rectify the accounting errors and
make the proper adjustments in the balance sheet to show the correct picture of financial
transaction.

2) Financial Reporting and Analysis Case:

Go to the Address: http://www.annualreports.com/
AND from Annual Reports.com Homepage, click on “Browse Reports”, choose “by Alphabet”,
and pick a letter. Select a particular company and Click on its most recent Annual Report (or 10-K
report) of the company which you have selected.
Follow the instructions below.
Instructions
a) State the name of the company and briefly explain the nature of its operations. (10 points)

name of the company : Apple

operations: Apple Inc. is a global technology corporation based in the United States that specializes in
consumer devices, software, and online services. Apple is the world's most valuable corporation and
the world's largest technology company by sales (totaling $274.5 billion in 2020). Apple is the fourth-
largest PC vendor by unit sales and the fourth-largest smartphone maker in the world as of 2021. Along
with Amazon, Google, Microsoft, and Facebook, it is one of the Big Five American information
technology corporations.
Steve Jobs, Steve Wozniak, and Ronald Wayne formed Apple in 1976 to build and market Wozniak's
Apple I personal computer. Jobs and Wozniak formed Apple Computer, Inc. in 1977, and the company's
computers, particularly the Apple II, soon became popular. They went public in 1980 and were a
financial success right away. Apple released numerous computers with revolutionary graphical user
interfaces throughout the following few years, including the first Macintosh, which was launched with
the highly acclaimed commercial "1984". However, issues arose as a result of the company's high prices
and restricted application library, as well as power conflicts among management. In 1985, Wozniak and
Jobs left ways amicably, with Jobs resigning to start NeXT and bringing with him some Apple
coworkers.
 b) Using its consolidated financial statements and related-information, identify the items that
may result in adjusting entries for prepayments. (15 points)

a. Accrued revenue

b. Unearned revenues

c. Accrued expenses

d. Accrued expenses or prepaid expenses

e. Prepaid expenses

The amount of payment deferrals (existing and completed) and financing granted with public
guarantees given at a Group level, broken down by segment, as of December 31, 2020 are as follows:

c) Using its consolidated financial statements and related-information, identify the items that
may result in adjusting entries for accruals. (15 points)

 Shareholders’ equity:.
 Retained earnings.

Except as described in Part II, Item 8 of this Form 10-K in the Notes to Consolidated Financial
Statements in Note 10, “Commitments and Contingencies” under the heading “Contingencies,”in the
opinion of management, there was not at least a reasonable possibility the Company may have
incurred a material loss, or a material loss greater than a recorded accrual, concerning loss
contingencies for asserted legal and other claims, including matters related to infringement of
intellectual property rights

d) Using its most recent consolidated Income statement as well as those for the last four years;
calculate the company’s percentage of net income to net sales. (Please make sure to attach a
copy of the reports when posting your work). (15 points)

Net Income
Year 2019 2018 2017 2016
Net income 55,256 59,531 48,351 45,687
Net sale 260,174 265,595 229,234 215,639
PROFIT MARGIN 21.24% 22.41% 21.09% 21.19%
Attachment

e) Comment on any trend in the above percentage. (10 points)

As we

Apple's gross profit margin decreased in 2017 (21.09%), increased again in 2018 (22.41%), then decreased
again in 2019 (22.41%).

Apple's gross profit margin for fiscal years ending September 2016 to 2019 averaged 208,825/970,743
and equalled to 21.5%