Docstoc

Matching

Document Sample
Matching Powered By Docstoc
					        CAPITAL UNIVERSITY OF ECONOMICS AND BUSINESS
           EXAMINGATION OF ACCOUNTING (BACHELOR DEGREE 11)

                    SCHOOL OF ACCOUNTING (Adult School)
       Date:                        Class:                     Name                            Marks:

I. Matching (10 marks):
Listed below are technical terms in accounting.
a. Treasury stock                                    f. Flow assumption
b. Prior period adjustment                           g. Fully diluted earnings per share
c. Stock dividends                                   h. Capital lease
d. Common stock                                      i. Retained earnings
e. Publicly owned corporation                        j. Double taxation
   Each of the following statements may describe one of these technical terms. For each statement,
     indicate the term described.
1. A pattern of transferring unit costs from the inventory account to the cost flow account which may or
      may not parallel the physical flow of merchandise.
2. A major disadvantages of the corporate form of organization.
3. A corporation whose shares are traded on an organized stock exchange.
4. The class of capital stock which normally has the most voting power.
a.     The element of stockholders’ equity which is reduced by dividends.
b.     A lease agreement that results in the lessee recording ownership of an asset and a long-term liability
       to the lessor.
c.     A distribution of additional shares of capital stock that reduces retained earnings but causes no
       change in total stockholders’ equity.
8. An adjustment to the beginning balance of retained earnings to correct an error previously made in
      the measurement of net income.
9. Earnings per share computed under the assumption that all convertible securities had been converted
      into additional shares at the beginning of the current year.
10. Shares of a corporation’s stock which have been issued and then reacquired, but not canceled.


II. True and False (10 Marks)
a.     The market price of common stock are varies inversely with interest rates.
2.      For those situations not specifically covered by an official pronouncement, accountants must
        exercise professional judgement in determining the treatment that is most consistent with generally
        accepted accounting principles.
3.      Once having resigned from a professional engagement, the CPA still has professional or legal
        obligation to make disclosures.
4.      In reporting most changes in accounting principle, the cumulative effect of the change upon the
        income prior years is shown in the income statement of the year in which the change is made.
5.      When a corporation has both preferred and common stocks outstanding, book value per share is
        computed by dividing stockholders’ equity by number of both common and preferred shares
        outstanding.
6.      Deficit is accumulated losses incurred by a corporation. It is a positive amount of retained
        earnings.
7.        The concept of ethical conduct would prohibit a professional accountant from investing in the
          common stocks of any publicly owned companies.
8.        GAAP may include customary accounting practices in widespread used even if not mentioned
          specifically in official pronouncement.
9.        The Stock Dividend to be Distributed account is not a liability, because there is no obligation to
          distribute cash or any other asset.
10. A bond issue is a technique for subdividing a very large loan into a great many small, transferable
units.


III. Translate the following sentence into Chinese (30 marks)
                  b.   The claims of creditors have legal priority over the claims of owners. If a business
                       ceases operations and liquidates, creditors must be paid in full before any
                       distributions are made to the owners. The relative security of creditors’ claims,
                       however, can vary among the creditors. Sometimes the borrower pledges title to
                       specific assets as collateral for a loan. If the borrower defaults on the secured loan,
                       the creditor may foreclose upon the pledged assets.


                  c.   Objectivity in accounting has its roots in the quest for reliability. Accountants want to
                       make their economic measurements reliable and, at the same time, as relevant to
                       decision makers as possible. Where to draw the line in the trade-off between
                       reliability and relevance is one of the crucial issues in accounting theory. Accountants
                       are constantly faced with the necessity of compromising between what users of
                       financial information would like to know, and what it is possible to measure with a
                       reasonable degree of reliability.


IV. Transactions (30 marks)
 b.       Norfleet Company prepared the following condensed income statements for two successive year.


                                                              1997                  1996
 Sales                                                   1500000                 1440000
 Cost of goods sold                                        839400                 874200
 Gross profit on sales                                     660600                 565800
 Operating expenses                                        460500                 447000
 Net income                                                200100                 118800
 At end of 1996 the inventory was overstated by $40200, but the error was not discovered until after
 the accounts had been closed and financial statements prepared at the end of 1997. The balance sheet
 for the two years showed owner’s equity of $450200 at the end of 1996 and $546400 at the end of
 1997. (Norfleet is organized as a sole proprietorship and does not incur income tax expense.)


      Instructions (8 marks):
     a.     Compute the corrected net income figure for 1996 and 1997.
     b.     Compute the gross profit amounts and the gross profit percentages for each year based on
            corrected data.
     c.     What correction, if any, should be made in the amounts of the company’s owner’s equity at the
            end of 1996 and at the end of 1997?


 d.       Shown below are selected transactions of St. Claire Vineyards for the year ended December 31,
        1997:
        Jan. 19       Issued capital stock to Martin DiBello in exchange for fair market value of the real
                      estate. Two firms hired to appraise the land have different opinions as to the fair
                      value of the real estate. DiBello, however, agrees to accept 10,000 shares of $1 par
                      value capital stock as a fair exchange. St Claire’s tock is widely traded and quoted at
                      $18 per share on a national stock exchange on this date.
        June 10       At their June meeting, the board of directors declared a dividend of 10 cent, payable
                      on July 15, to owners of the corporation’s 200000 outstanding shares of capital
                      stock.
        July 15       Paid dividend declared on June 10.
        Dec. 10       At their December meeting, the board of directors declared a dividend of 15 cents
                      per share, payable on January 15 of the following year. No capital stock had been
                      issued since the January 15 transaction.
        Dec. 31       Recorded income tax expense for the three months ended December 31, 1997,
                      $49300. These taxes will be paid on January 15, 1998. (Income taxes for the first
                      nine months of 1997 have already been recorded and paid.)
        Dec. 31       Close the income summary account at the end of a profitable period. Net income
                      $295000.
        Dec. 31       Close the Dividends account.
      Instructions (17 marks):
                  b.    Prepare journal entries to record the above transactions.
        b. Assume the balance sheet of St. Claire Vineyards at December 31, 1996, reported retained
        earnings of $1215000. Compute the amount of retained earnings to be reported in the
        corporation’s balance sheet at December 31, 1997. Show computation.


 b.     The net income of Carriage Trade Clothiers amounted to $2550000 for the current year. (5 marks)
         1.   Compute the amount of earnings per share assuming that the shares of capital stock
              outstanding throughout the year consist of:
              b.       300000 shares of $10 par value common stock and no preferred stock.
              c.       200000 shares of 9%, $100 par value preferred stock and 300000 shares of $10 par
                       value common stock. The preferred stock has a call price of $105 per share.
         2.   Is the earnings-per-share figure computed in part a (2) considered to be primary or fully
              diluted?


V. Show below is a summary of the transactions affecting the stockholders’
equity of Granite Hills Corporation during the current year:
      Prior period adjustment (net of income tax benefit)                                            $(70000)
      Issuance of common stock: 10000 shares of $10 par value capital stock at $64                     640000
      per share
      Declaration and distribution of 5% stock dividend (6000 shares, market price
      $60 per share)                                                                                 (360000)
      Purchased 1000 shares of treasury stock at $56                                                  (56000)
      Reissued 500 shares of treasury stock at a price of $62 per share,
                                                                                                        31000
    Net income                                                                                         530000
    Cash dividends declared ($1 per share)                                                           (125500)
Instruction:
a.    Compute the following amounts: Total dollar amount of common stock at the end of the period,
      total dollar amount of additional paid-in capital from all sources and retained earnings at the end of
      the period. (6 marks)
                  b.    Prepare a statement of stockholders’ equity for the year. The beginning balance of
                    related accounts are listed below: (8 marks)
     Balances, January 1, 1997
      Description                                                $
      Capital stock ($10 pr value)                             1,100,000
      Additional paid-in capital                               1,800,000
      Retained earnings                                          900,000
      Treasury stock                                                   0
      Total stockholder’s equity                               3,800,000


VI. Listed below are six transactions affecting the operations Midwest Mining &
Manufacturing Co. during the year.
a.    Traded-in an old automobile for a new one. Received a trade-in allowance that exceeded the old
      car’s book value and its income tax basis. Most of the purchase price of the new car was paid in
      cash.
b.    For financial purposes, the company decided to use a accelerated depreciation method for assets
      acquired in the current year. In the past, the company had used the straight-line method. (Different
      depreciation methods are used for income tax purposes.)
c.    Sold old equipment for cash at a price below book value, but above tax basis..
d.    Purchased plant assets for cash.
e.    Due to a change in production methods, many pieces of equipment became idle. Decided this
      equipment had been impaired, and wrote it down to scrap value. (No reduction may be taken for
      income tax purposed until this equipment actually is sold or scrapped.)
f.    The cost of coal removed from a mine is recorded by debiting Inventory and crediting Accumulated
      Depletion.    (The coal has not yet been sold.)
Instruction:
Indicate the immediate effects of each transaction or adjusting entries upon the financial measurements
in the four headings listed below, use the code letters, I for increase, D for decrease and NE for no
effect. (6 marks)
Transactions         Current ratio        Net income          Taxable income             Net cash flow
1
          CAPITAL UNIVERSITY OF ECONOMICS AND BUSINESS
           EXAMINGATION OF ACCOUNTING (BACHELOR DEGREE 11)

              SCHOOL OF ACCOUNTING (Adult School)

Summary of Marks
  I     II     III          IV        V     VI      VII   VIII   Total Marks


                                    Answers sheet
Date:                  Class:                Name                  No:

I.
      1       2    3            4     5      6       7     8      9      10



II.
      1       2    3            4     5      6       7     8      9      10



III.
1.




2.
IV.
1.
a.



b.
     Gross profit amounts:
     1996
     1997

     Gross profit percentages:
     1996
     1997

c.
     Owner’s equity:
      1996:
      1997:

a. a.
   Jan. 19



     June 10



     July 15



     Dec. 10



 Dec. 31



Dec. 31



Dec. 31
b.
3.
          a.
               1.
               2.
     b.



V. (14 marks)
a.         (6 marks)
1.         Total amount of common stock at the end of the period:

2.         Total additional paid-in capital from all sources:

3.         Retained earnings at the end of the period:


b. (8 marks)            THE GRNITE HILLS CORPORATION
                          Statement of Stockholders’ Equity
                             For the Year Ended December 31, 1997
Capital stock:
  Common stock:                                                        $

  Additional paid-in capital:
        From issuance of common stock
        From stock dividend
        From treasury stock transactions
  Total paid-in capital                                                 $
Retained earnings, December 31, 1997
Subtotal                                                               $
Less: Treasury stock
Total stockholder’s equity                                             $

VI. (6         marks)
Transaction         Current ratio    Net income      Taxable income   Net cash flow
s
           1
           2
           3
           4
           5
6
                        Answers for exam (1) :

I.   (10 marks)
1      2     3      4        5     6      7      8   9   10
f      j     e      d        i     h      c      b   g   a



II. (10 marks)
1      2     3      4        5     6      7      8   9   10
F      T     F      T        F     F      F      T   T   T



III. (30 marks)
1. (15 marks)
     债权人的求偿权在法律上优先于所有者的求偿权。如果企业停止
经营进行清算,在对所有者进行分配之前,必须对债权人全额清偿。
然而债权人求偿权能否得到保障,在各债权人之间也有所区别。有
时借款人将特定资产的产权作为贷款的抵押品进行抵押。如果对担
保贷款拖欠不还,债权人可以取消抵押资产的赎回权。
2. (15 marks)
     会计处理的客观性源于对可靠性的追求。会计人员希望使经济计
量更为可靠,同时,又尽可能对决策者相关。对可靠性和相关性进
行权衡,界限应画在什么地方,是会计理论中的难题之一。在财务
信息的使用者想要了解的情况和能够以一定的可靠程度计量的财务
信息二者之间,会计人员常常需要采取折中的方法加以解决。



IV. (30 marks)
1. (8 marks)
 a.
   Net income:
   1996: $118800 - $40200 = $78600
   1997: $200100+$40200 = $240300
a. Gross profit amounts:
    1996: $565800 - $40200 = $485400
    1997: $660600 + $40200 = $700800
    Gross profit percentage:
   1996: $485400÷$1440000 = 337.4%
   1997: $700800÷$1500000 = 46.7%
b. Owner’s equity:
   1996: $450200 - $40200=$410000
   1997: $546400


2.
   a.
    Dr. Land                                      180000
          Cr. Common Stock                               10000
              Additional Paid-in Capital: Common Stock 170000
   June 10
    Dr. Dividends                                  20000
            Cr. Dividends Payable                         20000
   July 15
    Dr. Dividends Payable                          20000
            Cr. Cash                                       20000
   Dec. 10
    Dr. Dividends                                  30000
            Cr. Dividends Payable                         30000
    Dec. 31
      Dr. Income Tax Expense                       49300
           Cr. Accrued Income Tax Payable                 49300
    Dec. 31
      Dr. Income Summary                         295000
           Cr. Dividends                                 295000
    Dec. 31
    $0.1×200000+$0.15×200000=$50000
      Dr. Retained Earnings                        50000
           Cr. Dividends                                  50000
b. Retained earnings computation:
   Beginning balance, Jan. 1, 1997         1215000
   Add: Net income                          295000
   Less: Dividend paid                     - 50000
   Ending balance, Dec. 31, 1997          1460000
3. (5 marks)
   a.
       1. 2550000÷300000=$8.5/per share
       2. (2550000 – 200000×100×9%)÷300000=$2.5/per share
   b. Primary earnings per share
V. (14 marks)
a.   6 marks:
1.   Total dollar amount of common stock at the end of the period:
         $1100000+$100000+$60000=$1260000
2.   Total dollar amount of additional paid-in capital from all
     sources:
3.       $1800000+$540000+300000+3000=$2643000
     Retained earnings at the end of the period:
         $900000-$70000+$530000-$125500-$360000=$874500

A
                  THE GRNITE HILLS CORPORATION
                    Statement of Stockholders’ Equity
                  For the Year Ended December 31, 1997
Capital stock:
Common stock: $10 par value, 126000 shares issued,             $1260000
125500 shares outstanding,
Additional paid-in capital:
From issuance of common stock                                    2340000
From stock dividend                                               300000
From treasury stock transactions                                     3000
Total paid-in capital                                          $3903000
Retained earnings, December 31, 1996                              874500
Subtotal                                                       $4777500
Less: Treasury stock                                              (28000)
Total stockholder’s equity                                     $ 4749500

VI. (6   marks)
Transaction   Current ratio   Net income   Taxable income   Net cash flow
s
     1              I              D              I               I
     2             NE              D             NE              NE
     3              D              NE            NE               D
     4              D              I             NE               D
     5             NE              D             NE              NE
     6              I              NE            NE              NE

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:5
posted:11/8/2012
language:Unknown
pages:12