Financial Reporting (Cma1c)

NOV 2021
Question Paper No: U/1937

Course Code: 1935325/
2035322
TITLE OF THE COURSE: FINANCIAL REPORTING (CMA1C)
Time: 3 Hours Maximum Marks-100
Section A (10×2=20)
Answer ALL the questions
1. What are the primary objectives of financial reporting?
2. What is factoring of Accounts Receivables?
3. How to report Income from discontinued operations?
4. Explain the difference between Operating and Financing Lease.
5. What are the components of Comprehensive Income?
6. Explain the equation for Balance Sheet.
7. What kind of cashflows are these – a) Dividends paid; b) Dividends received
8. What are the primary financial statements to be reported in Annual Report of a company
in US?
9. What is Integrated Reporting?
10. Find the effective cost of discount – 2/15, Net 45.
Section B (5×7=35)
Answer ALL the questions (Internal Choice)
11. a. Enlist all the components of Statement of Comprehensive Income with detailed
description.
Or
b. Explain in detail the different capitals central to the concept of Integrated
Reporting(IR).
12. a. Explain the difference in the format of direct method and indirect method of Cashflow
statement.
Or
b. Write the format of Income Statement as per US GAAP
13. a. Collections Company reports the following information for its most recent fiscal year,
before adjustments:
a. Sales: $581,500
b. Beginning Accounts Receivable Balance: $32,500
c. Sales Returns and Allowances: $9,500
d. Ending Accounts Receivable Balance: $34,400
e. Allowance for Doubtful Accounts: $2,100 (credit balance)
As per the Company’s policies, 10% of year end accounts receivables are to be
provisioned. If the company uses the percentage-of-receivables basis to estimate bad
debts,
- Calculate bad debts
- Journalize the appropriate year-end adjusting entry.
Or
b. Inventor Inc uses LIFO method for inventory costing. As per the company’s books,
Original cost of the inventory item is below both Replacement Cost and net
Realizable value. The net realizable value less normal profit margin is below the
original cost. What should be the value of inventory?
14. a. Bell Retail Company sells antique replica trunks to customers all over the world. Bell's
inventory records show the following.
Qty(unit
s) Cost($)
Beg Inventory 200 1055
Purchases
03/06/19 170 1062
18/09/19 190 1070
10/12/19 160 1076
Bell sells 470 units this year. Find the COGS using FIFO and LIFO methods if Bell uses
Perpetual system of inventory accounting.
Or
b. Using the sum-of-the-years' digits method of depreciation, calculate the depreciation
for all the years. Historical cost of the asset is $200,000. Salvage value of the asset is
$20,000. Useful life is 5 years.
15. a. Big Seller Co. sells a TV and Speaker combination for $510 dollars. The TV is
delivered immediately, and the speakers are shipped to the customer later that week. The
TV sells alone for $380 dollars, and the speakers sell alone for $190 dollars. How much
revenue should Big Seller Co. recognize from the TV when sold as part of the combo?
Or
b. Bertram Company had a balance of $100,000 in Retained Earnings at the beginning of
the year and $125,000 at the end of the year. Net income for this time period was
$40,000. Bertram’s Statement of Financial Position indicated that Dividends Payable had
decreased by $5,000 throughout the year, despite the fact that both cash dividends and a
stock dividend were declared. The amount of the stock dividend was $8,000. When
preparing its Statement of Cash Flows for the year, what is the cash paid out as
Dividends?
Section C (3×15=45)
Answer ALL the questions
(Question number 16 is compulsory)
16. Information for Cash-N-Carry is shown below:
Accounts payable relate to the purchase of inventory.

$60,000 of long-term investments were sold for $52,500.
Cash dividends of $45,000 were declared and paid in 2015.
Prepare the statement of cash flows using (a) Direct Method (b) Indirect method.
17. a. Identify the type of cashflows and prepare journal entries for the below transactions:
i. Company declares $500,000 as dividends
ii. Company buys office furniture for $60,000
iii. Company sells products worth $1,000,000 and collects 70% of Sales
iv. Company issues bonds worth $2,000,000
v. Company avails legal services and pays $450,000
Or
b. Company RALCO Inc. sells products worth $500,000 in 2019. As all the customers
are trustworthy, RALCO has agreed for a payment term of 5/10, NET 60 with all of
them. Please create journal entries for below transactions using Sales at gross and
Sales at net methods
a. Sales transaction
b. Cash collected within discount period
c. Cash collected after discount period
18. a. Explain in detail the revenue recognition principles.

Or
b. Profits Corp. is using an ERP software which due to some technical error is listing the
accounts in alphabetical order instead of producing an income statement. As the chief
accountant, you are requested to solve this problem.
Administrative expenses $ 2,15,000

Cost of goods sold $ 4,08,500
Income taxes $ 54,900
Loss on inventory write-down (nonrecurring) $ 13,000
Gain on foreign currency transactions $ 19,500
Loss from discontinued operations $ 30,000
Sales $ 9,45,000
Selling expenses $ 1,45,000
Address the below concerns:

a) Prepare Income Statement as per GAAP method
b) Calculate the impact to Retained earnings account if $20,000 are declared as
dividends

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NOV 2021

Question Paper No: U/1937

Accounts payable relate to the purchase of inventory.

18. a. Explain in detail the revenue recognition principles.

Administrative expenses $ 2,15,000

Address the below concerns:

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