Queen’s University School of Business
SAMPLE FINAL EXAMINATION
Answer all questions in the spaces provided throughout this examination booklet. Do not exceed the space limitations provided and keep in mind that good answers are not necessarily long answers. Plan your answers to use the space available wisely. 2.
Please print or write neatly in pen or pencil.
If you have any problems (or think there is an error in a question), make a reasonable assumption, state what your assumption is, and proceed with your answer. Any assumption that is reasonable and does not contradict a fact given in the problem will be considered acceptable. 4.
The use of standard abbreviations is acceptable.
You are allowed to bring a copy of your course notes and both workbooks [“Finance and Accounting Workbook” and “Financial Accounting – Problems with Solutions”] to the exam with you. You are also allowed to use a calculator and your Q-T card but not a laptop computer. 6.
If you remove the staple from this examination booklet, make sure that the pages are returned to their proper numerical order when you hand in your exam.
Question 1 Cash Flow Statement (25 marks)
The following abbreviated financial statements show the income earned by ABC Limited during 2005 and their financial position at the start and end of the year. During the year, ABC bought some of its common stock on the open market for $130,000; these stocks had originally been sold for $95,000. During the year, the company sold two pieces of old equipment. One piece of equipment originally cost $125,000, had accumulated amortization of $70,000 and was sold for $15,000. The other piece of equipment was originally acquired for $55,000, had a net book value of $25,000 and was sold for a $10,000 gain. Required: Prepare a cash flow statement for 2005 (use the space provided on the following page).
Dec. 31 2005
Dec. 31 2004
Cash and cash equivalents
Accounts receivable (net)
Plant, property and equipment
Less: accumulated amortization
Total Liabilities & Shareholders’ Equity
For the year ended December 31, 2005
Cost of goods sold
Amortization expenses - plant, property & equipment
Loss on sale of equipment (net of gain)
Income tax expense
Net income after tax
$ 25,000Question 1 (Continued)
Use this space for the cash flow statement.
Cash Flow Statement
For the year ended December 31
Cash From Operations:
Amortization expense - fixed assets
Loss on sale (net)
Working Capital Changes
+ / - Change in accounts receivable
+ / - Change in inventory
+ / - Change in prepaid expenses
+ / - Change in accounts payable
+ / - Change in interest payable
+ / - Change in deferred taxes
Cash from Operating...
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