Faculty of Business Studies B291 Financial Accounting MTA 2017-2018 / Second Semester 16" April 2018 Number of Exam Pages: 3 Time Allowed: 2 Hours (including this cover sheet) Instructions: I- 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 THO 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. 291 - Financial Accounting-MTA VA Page|. 2017-2018/Spring SemesterQuestion 1: a. Explain any two from the following (i) Objectives/Purpose of accounting information. (i) Two concepts of capital maintenance, Gili) Different types of financial markets. [Marks: (12412) = 24] b, Ahmed started a business on 1* January 2017 selling printers. He bought 1000 printers at a cost of $80 each at the beginning of his accounting year. On May 1* 2016 he bought a further 350 printers, but the cost had risen by this stage from $80 to $120, At the accounting year end on 31 December 2017, Ahmed had 250 printers in inventory. He sold the others during the year for $200 each, Required: Calculate the value of Ahmed’s inventory on 31% December 2017 using: a. FIFO b. LIFO & Calculate Gross profit [Marks: (10+10+6) = 26] Question 2: a. Jennie has started asa sole trader on 1 March 2018. The following transactions and events of trading for her first month are as follows: Date Transaction 1 She starts the business by depositing a cheque for $80,000 into the business bank account, 2 She purchases machinery worth $22,000 by cheque. 8 She purchases inventory on credit for $46,000. 10 She sells good for $10,000 in cash. 12 She pays $30,000 to the supplier of the goods purchased on 8 March. This is the part of payment of the total amount due 15 She sells goods on credit for $17,000. 24 She writes a cheque to withdraw $3,000 from the business. 25 She receives a business loan of $100,000. Required: 1- Post the transactions directly to the appropriate nominal ledger accounts. 2+ Prepare the trial balance as at March 31, 2018, (Marks: (18 +6 )=24] 291 ~ Financial Accounting-MTA VA Pave |2 2017-2018/Soring Semesterb. Orange Company acquired land and building for $100,000 on 1% January 2015. The land at that date comprised 20% of the total cost. At that date the estimated useful life of the building was 24 years with a residual value of $8,000. Required: 1. Assume that Orange Company has decided to recognize land and building under the cost model approach, prepare a three-year depreciation schedule for the buildings under the reducing balance method. 2. Assume that Orange Company has decided to recognize land and building under the revaluation model approach with revaluations taking place every three years. On 1% January 2018 three years later, a surveyor valued the land and building at $160,000 of which $40,000 was attributable to land. The estimated useful life and residual value of the buildings remained the same. Prepare the journal entries required to record these transactions on |” January 2018 under the reducing balance method. [Marks: (10 + 16) = 26] End of Questions R291 — Financial Arcannting-MTA VA Page 13 2017-2018/Spring Semester