Accounting Exam Sample

Topics: Balance sheet, Generally Accepted Accounting Principles, Asset Pages: 15 (2324 words) Published: November 24, 2014
Your Name:

Queen’s University School of Business
MBA Program
Financial Accounting

1.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.

3.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.

5.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.

QuestionMaximum MarksSuggested TimeGrade
12560 minutes
23060 minutes
314 20 minutes
43140 minutes
Total100180 minutes
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).

Balance SheetsDec. 31 2005Dec. 31 2004
Cash and cash equivalents$ 40,000$ 85,000
Short-term investments125,000115,000
Accounts receivable (net)415,000445,000
Prepaid expenses15,0005,000
Plant, property and equipment665,000645,000
Less: accumulated amortization(385,000)(315,000)
Total Assets$1,200,000$1,300,000

Accounts payable$ 85,000$ 70,000
Interest payable10,00015,000
Bank loan90,000130,000
Deferred taxes280,000320,000
Common stock505,000515,000
Retained earnings 230,000 250,000
Total Liabilities & Shareholders’ Equity$1,200,000$1,300,000

Income Statement
For the year ended December 31, 2005

Cost of goods sold$460,000
Selling expenses75,000
Administrative expenses125,000
Amortization expenses - plant, property & equipment170,000
Goodwill impairment30,000
Interest expense45,000
Loss on sale of equipment (net of gain)30,000
Income tax expense 35,000970,000
Net income after tax$ 25,000Question 1 (Continued)

Use this space for the cash flow statement.

Cash Flow Statement

For the year ended December 31

Cash From Operations:

Net income


Amortization expense - fixed assets


Goodwill impairment



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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