FADM Mid-Term Sample Paper

Financial Accounting & Decision Making - 1

Mid Term Exam (Dubai, April - 2010)

26^th APRIL, 2010 Time: 120 Mins (Professor: Dr Ramana)

Instructions:

1. Open Book, Open notes. No Internet. Laptops & Calculators allowed.

2. Mobile phones are strictly not allowed into the classroom.

3. Please download the Answer sheet from the BB and show the necessary workings in same Answer Sheet in WORD DOCUMENT format ONLY. You are allowed to do your workings in EXCEL SHEET which later has to be copied to the WORD document (Answer sheet) with proper formatting.

4. No clarifications during the examination.

5. Mention your roll number in the beginning of your answer sheet.

6. The soft copy of the answer sheet should be uploaded under EXAMINATION content.

1. Compare and comment on the financing and investment decisions of Posco ( a Korean Company) and Tata Steel ( an Indian Company). Refer to the balance sheets attached. (Hard copy of the same will be distributed attached)

2. Following are some of the financial items($ mn) for some well known companies:

a. Yahoo for the year ending 31^st December 2009: Profit = 597 CFO = Positive 1303, Depreciation = 739, Expenses paid in advance = 137; Outstanding expenses = 21; find the missing financial item.

b. General Electric Co. (GE) for the year ending 31^st December 2009: CFI = 42997; Purchase of fixed assets = 8634; Purchase of investments in other companies = 43690. Find the missing financial item.

c. Motorola Inc. (MOT) for the year ending 31^st December 2009: Current Assets = 16032; Property, Plant, and Equipments = 2154; Total Assets =25603; Excess of Current Assets over Current Liabilities =7771; Long term liabilities = 7567. Find Equity: 9775

d. A ltd purchased 10,000 (FV = 5) shares of XYZ limited in the year 2006 at 50. Xyz limted issued 1: 2 bonus shares in 2007. During 2008 issued Rights in the ration of 1:2 at a premium of 35. During the year 2009 XYZ declared cash dividend of 150%. Find the dividend received by A ltd.

3. A ltd started business with capital of 100,000; 6% loan = 300,000; Acquired plant on lease on the following terms: lease rent = 30,000 per year for 4 years; rate of interest considered for determining lease rent=8%. Other annual transactions are as follows:

a. Purchase of goods per year =200,000 for cash;

b. Expenses per year =80,000;

c. Sales per year = 400,000 for cash.

Required: Financial statements for the first two years

4. Given below is the balance sheet of GBMA ltd.

Balance sheet as on 1st April 2008
Equity	500000	Fixed Assets	200000
5% Long Term Liabilities	100000	Investments	450000
Current liabilities (Creditors)	200000	Current Assets (cash)	150000
	800000		800000

Using the following hypothetical transactions you are required to prepare the financial statements and answer the questions at end:

a. Purchased stock of goods costing 1,000,000 by issuing shares of 10 issued at 200

b. Received advance from customers:1000,000

c. Issued 6% Convertible debentures = 5,000,000 on 1^st October

d. Sold entire stock of goods at a premium of 25% on cost. Entire sales were for cash.

e. Booked an office room in the City Centre and paid 320,000 as advance rent for two years.

f. Other expenses =5% of the sales. Fully paid during the year

g. Depreciation= 20% using RBM.

h. GMBA declared 200% dividend but no payment has been made

i. Paid 90% of the money due to the creditors and closed the account.

j. Received 95% of the money from the receivables (Debtors) and closed the account

k. Purchased laptops : 360,000 on credit. Management depreciates such assets equally over three years.

Required: Financial statements (treat interest as financing item)