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Spring Semester 2019 Final Exam Closed Notes: INSTRUCTOR: Marios Mavrides

This document provides instructions for a final exam for a Financial and Managerial Accounting course. It lists the instructor, course details, date, and instructions for students. Students must answer 5 problems in the answer booklet worth a total of 50 points. Notes and electronic devices are not allowed during the exam. The problems cover topics like management accounting, product costing, accounting treatments, ratios, and break-even analysis.

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92 views4 pages

Spring Semester 2019 Final Exam Closed Notes: INSTRUCTOR: Marios Mavrides

This document provides instructions for a final exam for a Financial and Managerial Accounting course. It lists the instructor, course details, date, and instructions for students. Students must answer 5 problems in the answer booklet worth a total of 50 points. Notes and electronic devices are not allowed during the exam. The problems cover topics like management accounting, product costing, accounting treatments, ratios, and break-even analysis.

Uploaded by

yandave
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Spring Semester 2019

FINAL EXAM

CLOSED NOTES

INSTRUCTOR: Marios Mavrides

COURSE: Α621Y – Financial and Managerial Accounting

Distance

DATE: ….…..

STUDENT NAME: ………………………………………………..

Registration No:………….………

Please answer five problems in the answers book. Each problem is worth 10
points for a total of 50 points. Good presentation may earn extra points.

Notes, mobile phones, taplets and laptops are not allowed. A calculator is
allowed.

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1. Please answer the following independent questions

a. Explain why the management of a business needs the tools of management accounting, since
financial accounting produces plenty of information such as the financial statements? Give two
examples!
b. A business purchases a building for €2 million cash. The building has a useful life of 20 years and
will be used for the operations of the business. Explain the accounting treatment of the purchase
and the use of the building each year. Explain the accounting principle that is imposing such a
treatment. (no need for accounting entries, only explanations)
c. Explain what is liquidity for a business and why it is important. Give two examples which indicate
that liquidity is necessary for a business. Indicate which ratio is used for liquidity and explain how
it is interpreted.

2. Please answer the following questions:

a. Explain the reasons a business is performing product costing, i.e. why the business wants to
know its product cost per unit?
b. Explain how we distinguish between product cost and period cost in a manufacturing company?
What is the accounting treatment of each one?
c. Use the information below to calculate the cost of goods sold

inventories:
Beginning balance $ 30,000
Ending balance 10,000
Cost of goods manufactured 165,000

3. Please answer the following independent questions

a. Based on the professional standards developed by the Institute of Managerial Accountants,


explain how a managerial accountant can maintain his/her integrity!
b. Explain what is an accrued expense. Give an example and explain its accounting treatment with
or without numbers.
c. Explain what is an accrued revenue. Give an example and explain its accounting treatment with
or without numbers.

2
4. Smithson Floor Coverings presents the following account balances at December 31, 2018. All
accounts have normal balances.

Service revenue $ 26,000 Salaries payable $25,000


Equipment 36,000 Salaries expense 1,600
Rent expense 17,000 Cash 7,000
Common shares 24,000 Accounts receivables 3,600
Accounts payable 2,200 Interest payable 6,000
Dividends 16,100 Utilities expense 1,900

Required

a. Calculate current assets and current liabilities of the business


b. Prepare the income statement for the year 2018
c. Calculate the return on sales and the return on equity of then business and explain the
significance or those two ratios

5. Below find the after closing trial balance of Mark’s Bowling Alley at the end of 2018

MARK’S BOWLING ALLEY


After Closing Trial Balance
31 December 2018
Account Title Balance
Debit Credit
Cash $ 20,000
Accounts receivables 2,900
Office supplies 1,150
Prepaid insurance 2,700
Land 20,000
Buildings 145,000
Accumulated depreciation - buildings $ 7,000
Equipment 43,000
Accumulated depreciation - equipment 20,000
Accounts payable 4,800
Services payable 625
Salaries payable 3,800
Unearned revenue 1,900
Share capital 106,000
Retained earnings 90,625
Total $ 234,750 $ 234,750

a. Prepare the balance sheet of the business in a simple format.


b. Calculate the current ratio of the business and comment on the result!
c. Calculate the debt ratio of the business and comment on then result!

3
6. Please answer the following independent questions

a. Explain what is the contribution margin and explain its significance!


b. Explain how the contribution margin is affected by an increase in the sales price, from an
increase in fixed costs and an increase in the variable cost per unit! (each one separately)
c. What is operating leverage for a business? How would you interpret the fact that a business has
a degree of operating leverage of “4”? Which type of cost may affect the degree of operating
leverage? Explain!

7. Business ABC sells its product for $80 per unit. The variable cost per unit is $60 and the fixed cost is
$3,000 per month.

a. Calculate the break-even point of the business ABC in units and in sales and explain its
significance for the management of ABC
b. Calculate the margin of safety when the business sells 200 units and explain its significance for
management
c. The business expects to sell 200 units in September. Prepare an income statement for the month
of September using on the contribution margin method. (simple format is ok)

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