2A A, 28 t/a £82 ogiaoll cael Gaotalt Faculty of Business Studies B291 Financial Accounting MTA 2015-2016 / Second Semester 21" April, 2016 Thursday Number of Exam Pages: 3 Time Allowed: 2 Hours | (including this cover sheet) Instructions: 1+ Read each question carefully and make sure that you understand it before you begin to answer it. Take about 10 minutes to look through all the questions on the exam and do the ones you are most comfortable with first 2+ This exam consists of TWO Compulsory Questions; each question carries 50% of the marks 3+ Programmable and financial calculators are not permitted or to share, or pass them between each other in an examination. Also, you are not permitted to use calculators with word processing capabilities 4+ In questions that require calculations, credit will be given for showing your workings.Question 11 Part i, Part B Ahmed The IASB Framework lists a number of different measurement bases which are employed in different degrees and in varying combinations in financial statements, Discuss these bases. Explain the capital maintenance concept and how it is used. Discuss two different approaches that may be used for the determination of profit in capital maintenance concept, Ahmed as a sole trader has started a business buying and selling second-hand cars. According to the financial statements on January 1, 2015 his net assets were $100,000 and on December 31, 2015 they were $160,000. There have been no issues or withdrawals of share capital during the year. The rate of inflation, as measured by the retail price index, is 10%, whereas the specific rate of price increase for this type of ears in which he deals is 15%, Compute the trader's profit using the 2 capital maintenance approaches discussed above. [Marks: (12 + 12 + 12) = 36] started a business on 1 January 2015 selling printers. He bought 210 printers at a cost of $80 each at the beginning of his accounting year. On May 1* 2015 he bought a further 300 printers, , but the cost had risen by this stage from $80 to $110, At the accounting year end on 31" December 2015, Ahmed had 120 printers in inventory. He sold the others during the year for $120 each. Required: Calculate the value of Ahmed's inventory on 31% December 2014 using: a. FIFO b. LIFO (Marks: (747) = 14] 8291 Financial Accounting Daca lr ARIE ste fenmnns‘Question Part Mr. John has started business as a trader on 1 January, 2016. The following transactions and events of trading for his first month are as follows: Date Transaction 1 Started the business by introducing $400,000 into the business bank account, 2 Rentis paid by cheque $16,000 for the month 8 Mr. John paid $100,000 in cash for a van. 10 Mr. John purchased goods costing $36,000 on credit from Adam (invoice no Adam123). 12 Mr. John sold goods for $20,000 in cash. 15 Mr. John sold goods for $35,000 on credit to Jack (invoice no Jack001) 24 Mr. John paid the amount, taking advantage of a 10% settlement discount with respect to invoice no. Adam 123. 25 Jack paid to Mr, John, taking advantage of a 8% settlement discount with respect to invoice no. jack001 Required: 1- Enter the above transactions into an appropriate cash book. 2- Post the transactions directly to the appropriate nominal ledger accounts. 3- Prepare the trial balance as at January 30, 2016. [Marks: (10 + 10+ 6) = 26] Part B A business buys a delivery van for $8000 on 1* January 2012. Its estimated useful life in the business is 4 years, after which it will be sold for an estimated residual value of $2000, Require Prepares tables showing the carrying amounts brought down and carried down and the depreciation expense for each of the four years of useful life using: 1. a. Straight line method of depreciation b. Reducing balance depreciation 2. Assume a business disposed of a delivery van on 1% January 2014 for $5000, Calculate the loss/gain on the disposal under straight line and also reducing balance method. [Marks: (8 + 8 +8) = 24] End of Questions