UNIVERSITY OF DEVELOPMENT ALTERNATIVE (UODA)

Faculty of Business Administration, MBA & EMBA Program

Midterm Examination, September - December, 2017
Financial Accounting
Batch: 45

Total: 30 Marks Time 1 hour 30 minutes

Section A

Define the following 5 (five) terms: 5*2=10

Accounting, internal users, debit, liability, owners’ equity, ledger

Section B

Answer the following 2(two) questions: 2*5=10

(a) Explain the reasons for the decrease and increase in owner’s equity.

(b) Classify each cost item asset, liability or owner’s equity.

1. Purchased computer terminals for $20,000 from Digital Equipment on account.

2. Paid $4,000 cash for May rent on storage space.
3. Received $15,000 cash from customers for contracts billed in April.
4. Provided computer services to Fisher Construction Company for $3,000 cash.
5. Paid Northern States Power Co. $11,000 cash for energy usage in May.
6. Brandon invested an additional $32,000 in the business.
7. Paid Digital Equipment for the terminals purchased in (1) above.
8. Incurred advertising expense for May of $1,200 on account.
(c) Identify and explain the main users of accounting data.

Section C

Answer any 1 (one) of the following:

1*10=10

a. Barone’s Repair Shop was started on May 1 by Nancy Barone. A summary of May
transactions is presented below.
1. Invested $10,000 cash to start the repair shop.
2. Purchased equipment for $5,000 cash.
3. Paid $400 cash for May office rent.
4. Paid $500 cash for supplies.
5. Incurred $250 of advertising costs in the Beacon News on account.
6. Received $5,100 in cash from customers for repair service.
7. Withdrew $1,000 cash for personal use.
8. Paid part-time employee salaries $2,000.
9. Paid utility bills $140.
10. Provided repair service on account to customers $750.
11. Collected cash of $120 for services billed in transaction (10).
Instructions
(a) Prepare a tabular analysis of the transactions, using the following column headings: Cash,
Accounts Receivable, Supplies, Equipment,Accounts Payable,N. Barone, Capital;N. Barone,
Drawings; Revenues, and Expenses.

b. Jane Kent is a licensed CPA. During the first month of operations of her business, the following events
and transactions occurred.
May 1 Kent invested $25,000 cash.
2 Hired a secretary-receptionist at a salary of $2,000 per month.
3 Purchased $2,500 of supplies on account from Read Supply Company.
7 Paid office rent of $900 cash for the month.
11 Completed a tax assignment and billed client $2,100 for services provided.
12 Received $3,500 advance on a management consulting engagement.
17 Received cash of $1,200 for services completed for H. Arnold Co.
31 Paid secretary-receptionist $2,000 salary for the month.
31 Paid 40% of balance due Read Supply Company.
Jane uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies,
No. 201 Accounts Payable, No. 205 Unearned Revenue, No. 301 Jane Kent, Capital; No. 400 Service
Revenue, No. 726 Salaries Expense, and No. 729 Rent Expense.

Instructions
(a) Journalize the transactions.
(b) Post to the ledger accounts.
 UNIVERSITY OF DEVELOPMENT ALTERNATIVE (UODA)
Faculty of Business Administration, MBA & EMBA Program
Midterm Examination, September - December, 2017
Corporate Finance
Batch: 44

Total: 30 Marks Time 1 hour 30 minutes

Section A

Define the following 5 (five) terms: 5*2=10

Corporate finance, agency problem, annuity, corporation, bond, sole proprietorship

Section B

Answer the following 2(two) questions: 2*5=10

(a) Explain different forms of business organization.

(b) You decide to begin saving toward the purchase of a new car in five years. If you put $1,000 at the end
of each of the next 5 years in a savings account paying 6 percent compounded annually, how much will
you accumulate after 5 years? What would be the ending amount if the payments were made at the
beginning of each year?

(c) Explain the characteristics of bond.

Section C

Answer any 1 (one) of the following:

1*10=10

a.1. Calculate the value of the bond if Company S has issued a bond having face value of $100,000 carrying
coupon rate of 9% to be paid semiannually and maturing in 10 years. The market interest rate is 8%.
2. Suppose a 10-year, 10%, semiannual coupon bond with a par value of $1,000 is currently selling for $1,135.90,
producing a nominal yield to maturity of 8%. Calculate the coupon rate.

b. 1. You decide to begin saving toward the purchase of a new car in five years. If you put $1,000 at
the end of each of the next 5 years in a savings account paying 6 percent compounded annually, how much
will you accumulate after 5 years?
2. Mention the differences between ordinary annuity and annuity due.