Financial and Managerial Accounting
Prof. dr. Véronique Weets
Assistant Filip Sans
Master of Management Your name:

Your marks: /20 Written Exam
/300
Part 1: Theory & Understanding
/150
Open Questions
/50

Solve the following questions. Do not use more than the allowed space. Write legibly. Note that marks will be subtracted for irrelevant information and incorrect information. Major mistakes can lead to zero points on the question even if there is also correct information included in the answer. Correct answer
10 points
Total questions
5 questions
Total maximum
50 points Give the sequence that correctly summarizes the accounting process.

Explain how the value of the account “inventory” is determined?

What accounting principle leads to the technique of depreciating property, plant and equipment?

What are equivalent units and when/why do we use equivalent units ?

What is a CVP graph ? Draw one and indicate the most important points.

True/False
/50
Indicate whether the following statements are True (T) or False (F). Correct answer
5 points
Incorrect answer
-5 points
No answer
No points
Total questions
10 questions
Total maximum
50 points Answers: Use this table for your final answers. Write legibly. Question
Total
Answer

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Marks

Use this table for your draft answers. The accounting equation only represents the relationship between assets and liabilities
T
F
The general public generally does not see a company’s trial balance
T
F
In cash-basis accounting, revenue is recognized when cash is received and expenses are recognized when they are paid
T
F
The debit total and the credit total in the income statement columns of the work sheet should equal each other
T
F
The accounting cycle for a merchandising company begins with the purchase of inventory
T
F
Managerial accounting’s focus is to provide information for internal planning and control
T
F
The starting point of the budgeting process is to predict operating income for the upcoming period
T
F
With increased competition, managers need more accurate estimates of product costs to set prices and to identify the most profitable products
T
F
When materials are requisitioned for a job, the materials inventory account is debited
T
F
Overallocated overhead occurs when the manufacturing overhead allocated to work in process inventory is less than the amount actually incurred
T
F Multiple Choice
/50
Indicate which of the following statements is correct. Correct answer
5 points
Incorrect answer
-2 points
No answer
No points
Total questions
10 questions
Total maximum
50 points
Answers:

Use this table for your final answers. Question
Total
Answer

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Marks

The Ragun Cajun Bar and Grill, Inc. has been a popular restaurant in Beaumont, Texas. With no insurance, a recent hurricane has left the business with large losses due to a damaged building and lost business income. Which of the following concepts or principles of accounting will be of the greatest concern to Ragun Cajun's auditors?
:
a. Reliability concept
b. Entity concept
c. Stable monetary unit concept
d. Going- concern concept
e. More than one answer is correct
f. None of the above You can compare and evaluate business performance from year-to year by analysing which financial statements ?
a. Statement of retained earnings and balance sheet
b. Income statement and statement of retained earnings
c. Balance sheet and income statement
d. All financial statements may be used
e. More than one answer is correct
f. None of the above Accountants firs record transactions in the
a. Trial balance
b. Chart of accounts
c. Ledger
d. Journal
e. More than one answer is correct
f. None of the above Which of the following journal entries would be recorded if a business received cash of $1,000 on account for services performed at an earlier date?

a.
Service revenue 1,000

Accounts receivable 1,000 b.
Cash1,000

1,000

Accounts receivable 1,000 c.
Cash

1,000

Service revenue 1,000 d.
Accounts receivable 1,000

Service revenue 1,000  A debit to a(n)____________account is required in the adjusting process for depreciation
a. Asset
b. Deferred revenue
c. Expense
d. Unearned expense
e. More than one answer is correct
f. None of the above ‘ When is a gain on disposal of an asset recorded?
a. A gain is recorded when the asset is sold for a price less than the asset’s net book value
b. A gain is recorded when the asset is sold for a price greater than the asset’s net book value
c. A gain is recorded when accumulated depreciation is less than the cash received
d. A gain is recorded when the asset’s residual value is less than the cash received
e. More than one answer is correct
f. None of the above ’ Which statement is correct ?
a. Financial accounting uses the cash basis to record transactions
b. Both management accounting and financial accounting use the accrual basis to record transactions
c. Management accounting uses the cash basis to record transactions
d. Management accounting uses the cash basis and financial accounting uses the accrual basis to record transactions
e. More than one answer is correct
f. None of the above

“ Which of the following statements is correct if total fixed costs decrease while the sales price per unit and variable costs per unit remain constant ?
a. The breakeven point increases
b. The breakeven point decreases
c. The contribution margin increases
d. The contribution margin decreases
e. More than one answer is correct
f. None of the above ” Joint costs must be allocated using the
a. physical-units method
b. relative sales value method
c. both methods are possible
d. joint costs are inseparable and therefore cannot be allocated
e. More than one answer is correct
f. None of the above • In activity-based costing, which of the following describes how the activity allocation rate is computed?
a. The estimated total indirect cost of the activity divided by the estimated total quantity of cost allocation base
b. The estimated quantity of allocation base less the estimated total indirect cost of the activity
c. The estimated quantity of allocation base divided by the estimated total indirect cost of the activity
d. The estimated quantity of allocation base times the estimated total indirect cost of the activity
e. More than one answer is correct
f. None of the above Part 2: Exercises
/150
Open Questions
/90
Solve the following exercises. Do not use more than the allowed space. Write legibly. Correct answer
30 points
Total questions
3 questions
Total maximum
90 points
Estimated total time
60 minutes
Estimated time per question
20 minutes A restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include 0.60 euro of ingredients, 0.15 euro of variable overhead (electricity to run the oven) and 0.80 euro of direct labour for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labour assigns 0.90 euro of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge 1.80 euro per loaf. a) What is the unit cost of making the bread in-house (use absorption costing)?
b) Based upon your computations, should the restaurant bake the bread in-house or buy from the local bakery? Why?
Show all your computations.

A real estate consulting firm specializes in advising companies on potential new plant sites. The company uses a job order costing system with a predetermined indirect cost allocation rate, computed as a percentage of direct labour costs. At the beginning of 2011, the following budget for the year was prepared: Direct labour hours (professionals) 15,000 hours
Direct labour costs (professionals) 2,550,000 euro
Office rent 280,000 euro
Support staff salaries 950,000 euro
Utilities 400,000 euro

Texaco, Inc., is inviting several consultants to bid for work. The company estimates that this job will require 260 direct labour hours. 1. Compute the company’s (a) hourly direct labour cost rate (rounded to 2 decimals) and (b) indirect cost allocation rate (rounded to the nearest whole %)
2. Compute the predicted cost of the Texaco job (rounded to 2 decimals).
3. If the company wants to earn a profit that equals 45% of the job’s cost, how much should she bid for the Texaco job? (rounded to 2 decimals) Show all your computations.

Boonen, Inc. carries an inventory of high quality bicycles. The company uses a perpetual inventory system. The sales price of each bicycle is 1,350 euro.
We obtained the following info for the month September: Date Item Quantity Unit Cost (in euro)
Sep. 1 Balance 5 610
Sep. 6 Sale 3
Sep. 8 Purchase 10 660
Sep. 17 Sale 4
Sep. 30 Sale 2 Prepare a perpetual inventory record according to the FIFO, LIFO and weighted average cost methods. Indicate each time the amount that should be reported as cost of goods sold. All amounts should be rounded to 2 decimals.
Show all your computations.

Multiple Choice
/60
Indicate which of the following statements is correct. Correct answer
12 points
Incorrect answer
- 3 points
No answer
No points
Total questions
5 questions
Total maximum
60 points
Estimated total time
30 minutes
Estimated time per question
6 minutes Answers: Use this table for your final answers.
Question

Answer

Marks

Job cost records yielded the following information: Job n°
Date
Started
Date
Finished
Date
Sold
Total Cost of job at Nov 30
1
Oct 21
Nov 16
Nov 17
4,750
2
Oct 29
Nov 21
Nov 26
10,700
3
Nov 03
Dec 11
Dec 13
3,500
4
Nov 07
Nov 29
Dec 01
5,250

What is the value of the Finished Goods Inventory at November 30? a. 15,450
b. 18,950
c. 3,500
d. 5,250
e. none of the above.  A company issued common stock to an inventor in exchange for a patent with a market value of 45,000 euro. In addition, the company received cash both for 10,000 shares of its 15 euro par preferred stock at par value and for 12,000 shares of its no-par common stock at 20 euro per share.

The total paid-in capital created by these transactions is: a. 390,000 euro
b. 45,000 euro
c. 435,000 euro
d. 150,000 euro
e. none of the above.
The following data were obtained for 2012, unless mentioned otherwise: Accounts payable 500 Accounts receivable, net
Cash 300 Dec 31, 2012 300
Inventories Dec 31, 2011 100 Dec 31, 2012 400 Cost of goods sold 1,500 Dec 31, 2011 300 Short-term investments 400
Net sales revenue 2,800 Other current assets 200
Long-term assets 500 Other current liabilities 500
Long-term liabilities 200 Compute for 2012:
1) the acid-test ratio; and
2) the days sales in average receivables.
Round 1) to the nearest percentage and 2) to the nearest number of days. a. 100% and 26 days
b. 125% and 39 days
c. 150% and 26 days
d. 200% and 39 days
e. none of the above On January 1, 2010, Toys, Inc., issued 200,000 euro of 6%, 4-year bonds payable at 102. Toys has extra cash and wishes to retire the bonds payable on January 1, 2011, immediately after making the second semi-annual interest payment. To retire the bonds, Toys pays the market price of 96.
The carrying amount of the bonds payable on the retirement date is: a. 200,000
b. 201,000
c. 203,000
d. 204,000
e. none of the above At the beginning of 2011, company ABC purchased a used airplane for 64,000,000 euro. The company expects the plane to remain useful for 5 years (6 million miles) and to have a residual value of 6,000,000 euro. ABC expects the plane to be flown 1.5 million miles the first year and 1.4 million miles the second year.
ABC’s second-year depreciation of the plane using the double-declining-balance method is:

a. 15,360,000 euro
b. 25,600,000 euro
c. 13,920,000 euro
d. 23,200,000 euro
e. none of the above