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COURSE CODE: ACC311
COURSE TITLE: INTERMEDIATE FINANCIAL ACCOUNTING I
CREDIT UNIT: 3
TIME ALLOWED: 2 HOURS 30 MINUTES
Instructions:
QUESTION ONE
Goodwill Electricals Nigeria Plc is an Electrical Components assembly outfit with authorised and issued share capital of ₦200 million, made up of 400 million ordinary shares of 50 kobo each. The following is the company’s trial balance as at 30 April 2014:
Dr Cr
₦’000 ₦’000
Freehold land 25,000
Short-term deposits 50,000
Sundry debtors 60,820
Cash and bank 50,862
Furniture and fittings- cost 44,720
Accumulated depreciation 11,180
Machinery and equipment- cost 164,000
Accumulated depreciation 32,800
Stock at 1 May 2013 20,000
Sundry creditors 39,420
Bank overdraft 25,000
Wages 87,000
Postages and telephone 2,100
General expenses 6,060
Bad debts written-off 560
Auditors’ remuneration 2,000
Distribution expenses 2,000
Insurance 2,060
Bank interest paid and received 6,000 5,000
Electricity 3,800
Salaries (including directors remuneration N2m) 76,850
Rates 1,580
Purchases 182,388
Turnover 520,000
Dividends (interim) 48,000
Profit and loss account 2,400
Share capital 200,000
835,800 835,800
The following adjustments are necessary for the year ended 30/4/2014:
You are required to prepare the profit and loss account for the year ended 30th April, 2014 and balance sheet as at 30th April, 2014 in a form suitable for publication. Notes to the accounts are not required but you should show your workings.
QUESTION TWO
From the following information, compute consequential loss claim:
Financial year ended 31 December 2006 with turnover of ₦200,000.
Fire takes place 1 June- 1November.
Period of indemnity is 6 months
Net profit ₦12,000; plus insured charges ₦24,000
Sum insured ₦36,300
Uninsured standing charges ₦2,000
Standing turnover; that is, corresponding months (1 June – 1 November 2006 is ₦75,000).
Turnover in the period of interruption is ₦22,500.
Annual turnover for twelve months preceding the fire (1 June – 3 May 2007) is ₦220,000.
Increase in cost of working ₦4,000, during the period of interruption (with a saving of insured standing charges N1,500).
Reduced turnover avoided, through increase in cost of working ₦10,000 (that is) but for this expenditure, the turnover after the fire would have been only ₦12,500.
Owing to reserves acceptance to the insurer, the “special” circumstances clause stipulates for:
(ii) Increase of rate of gross profit by 2%.
You are required to compute the consequential loss claim. Show your workings.
QUESTION THREE
Exotic Furniture Nig. Ltd recorded the following transactions in the first week of January 2009:
You are required to prepare extracts of the income statement and balance sheet of the company for the year ended 31 December, 2009, on the assumption that financial statements are prepared under (a) the accrual basis and (b) the cash basis accounting.
QUESTION FOUR
a. According to the International Accounting Standard Board framework, define qualitative characteristic and mention the principal qualitative characteristics.
b. Define the term ‘accounting policies’.
c. with reference to accounting policies, explain how stock is recognised in the financial statement.
QUESTION FIVE
What are the limitations to the usefulness of ratios?
QUESTION SIX
According to the provision of Section 359(6) of the Companies and Allied Matters Act, Cap, C20 LFN, discuss the responsibilities of the Audit Committee.
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You can now use you matric number to login as your username and password in a lowercase.
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