NATIONAL OPEN UNIVERSITY OF NIGERIA
14/16 AHMADU BELLO WAY, VICTORIA ISLAND, LAGOS
SCHOOL OF MANAGEMENT SCIENCES
MARCH 2014 EXAMINATION
Course Code: ACC311 Credit Unit: 3
Course Title: Intermediate Financial Accounting I
Time Allowed: 3 hours
Instruction:
Attempt question one and any three questions of your choice. Question one carries 25 marks while others carry 15 marks each. Present your answer in coherent and orderly manner.
QUESTIONS
Metro Cast Plc is a manufacturing company. Its trial balance as at 30 April, 2008, is as follows:
Dr Cr
₦’000 ₦’000
Goodwill 500
Land and building 15,950
Plant and machinery 68,880
Furniture & fittings 44,530
Accumulated depreciation:
Land and building 2,700
Plant and machinery 51,350
Furniture and fittings 33,500
Investment – quoted 2,370
Unquoted 3,020
Ordinary share capital @ 50k/share 63,000
General reserve 500
Profit and loss account 750
Provision for deferred tax 3,040
Stocks- raw material 10,800
Work-in-progress 9,780
Finished goods 11,530
Sales 73,470
Rent received 170
Investment income 800
Other interest received 600
Profit on sale of plant 3,600
Purchase of raw materials 28,620
External charges on raw materials 180
Wages and salaries 9,060
Pension cost on employees 1,220
Depreciation charge for the year:
Land and building 410
Plant & machinery 5,940
Furniture and fittings 3,250
Rent, rates and insurance 3,900
Power and lighting 6,940
Distribution expenses 2,660
Audit fees 320
Sundry expenses 400
Interest paid on bank overdraft 200
Bills of exchange payable 100
Trade creditors 12,850
Other creditors 2,060
Company income tax brought forward 3,080
Creditors due after one year:
6% debenture 2004 – 2020 5,550
Others 680
Rationalization cost 2,070
Prepayments 2,410
Bank balance 9,210
Trade debtors 13,560
Other debtors 90
257,800 257,800
The following additional information are also relevant: ₦’000
- Stocks at 30 April 2008 – raw materials 12,810
- Work-in-progress 11,050
- Finished goods 12,580
- During the year, additions to fixed assets were as follows:
Plant & machinery 8,530
Furniture & fittings 780
Disposals were made as follows:
Plant & machinery- at cost (Acc. Depreciation ₦2,670,000) 3,020
Furniture & fittings- at cost (Acc. Depreciation ₦910,000) 1,250
- Proposed dividend is 6 kobo per share.
- Provision in the accounts for company income tax of ₦2,400,000 and capital gains tax on sale of plant of ₦450,000 is made.
- Under-provision for company income tax in respect of year ended 30/4/07 was ₦250,000.
- Included in salaries and wages are directors’ fees of ₦5 million and executive directors’ salaries of ₦2.5 million.
You are required to prepare the profit and loss account for the year ended 30 April 2008 and balance sheet as at that date in a form suitable for publication in line with CAMA, 2004 for Excel Plc. Show all workings.
- What are those issues that affect the information relating to financial position of an
entity?
- Mention five (5) non-financial institutions you know.
- Outline the various users of financial statements and their information need.
- According to the International Accounting Standard Board framework, define qualitative characteristic and mention the principal qualitative characteristics.
- Define the term ‘accounting policies’.
- Accounting to accounting policies, how is stock recognized in the financial statement.
- Exotic Furniture Nig. Ltd recorded the following transactions in the first week of January 2009:
- Rented an office space in Port Harcourt for ₦1 million per annum and paid ₦5 million, being rent for five years demanded by the landlord.
- Bought office equipment for ₦240,000 on credit from Modern Business machines Ltd. The expected useful life of the equipment is four years.
- Received cheque of ₦3 million from Rivers State Polytechnic, Bori, being final payment for sales made to the Institution in 2007.
- Sold furniture items on credit to a local government in Rivers State for ₦4 million. The local government did not pay until the following year.
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.
- Outline the purposes the International Accounting Standard Board framework is expected to serve.
Contact me to get your Exam Summary for this course.
