Bld agai cyl Gaol ‘Hiab open Une Faculty of Business Studies B291 Financial Accounting MTA 2018-2019 / Spring Semester 28 March 2019 [ 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 Mandatory 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 RIQ1 —Einancial Anentintinn WAQuestion 1; Explain the following: ()_Objectives/Purpose of accounting information, (i (ii) Comparability & Understandability ‘Two concepts of capital maintenance. [Marks: (8+8+8) = 24] b. Ahmed started a business on 1* January 2018 selling printers. He bought 135 Printers at a cost of $40 each at the beginning of his accounting year. On May I** 2018 he bought a further 150 printers, but the cost had risen by this stage from $40 to $55. At the accounting year end on 31* December 2018, Ahmed had 110 printers in inventory. He sold the others during the year for $75 each. Required: 1. Calculate the value of Ahmed’s inventory on 31° December 2018 using: a. FIFO b.LIFO 2. Caleulate the gross profit earned by the business under each method? [Marks: (10+10+6) = 26] a. Adnan has started as a sole trader on 1 March 2018. The following transactions and vents of trading for his first month are as follows: Date Transaction 1 He started business with capital of $270,000. 2 He purchases machinery worth $26,000 by cheque. 8 He purchases inventory on eredit for $18,000 10 He sells good for $80,000 in cash 8291 ~ nancial Aerewinting.\a wax ah12. He pays $6,000 to the supplier of the goods purchased on 8 March. This is the part of payment of the total amount due. 15 He sells goods on credit for $28,000. 24 Owner withdrew of worth $10,000 for personal use. 25 He borrows money from his friend of $200,000. 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] b, Diamond Company produces a variety of coverings for electrical wiring. On January 1, 2017 it acquired new production equipment at a cost of $500,000. The machine has an expected life of five years and an estimated salvage value of $50,000. Required: 1, Prepare a five-year depreciation schedule for the machinery under: 1.1, Straight-line method 1.2, Reducing-balance method 2- Assume that on January 1, 2020 the company disposed of machine for $300,000. Under the reducing-balance method, compute the gain or loss on disposal for financial reporting purposes. [Marks: (16 + 10) = 26) End of Questions B291 ~ Financial Arenuntine.va Dann tar