AFC1000

[|ll|lll|]

Anyone done past exams for AFC1000?
I believe MC answers aren't given for 2009 Sem 1 exam.

Would be great if everyone could share their answers here!

Edit: Agree with answers in following post!

[Reckoner]

1. C
2. D
3. B
4. A
5. C
6. C
7. A
8. A
9. C
10. A
11. B
12. C

I think anyway haha. What did you get?

[|ll|lll|]

Some MC questions I'd like confirmation:

1. Collection of an Account Receivable will:
a) Increase total assets and increase total O.E
b) Have no effect on total assets, but will increase total O.E
c) Decrease both total assets and total liabilities
d) Have no effect on total assets, liabilities or O.E

2. The following type of entities would be identified as reporting entities:
a) Partnerships
b) Family trusts
c) Small proprietary companies
d) None of the above

[Furbob]

Some MC questions I'd like confirmation:

1. Collection of an Account Receivable will:
a) Increase total assets and increase total O.E
b) Have no effect on total assets, but will increase total O.E
c) Decrease both total assets and total liabilities
d) Have no effect on total assets, liabilities or O.E

2. The following type of entities would be identified as reporting entities:
a) Partnerships
b) Family trusts
c) Small proprietary companies
d) None of the above

for Q1 I'd say (d)
since cash increases but accounts receivable decreases, having an asset increase and decrease by a same amount, hence no effect on the overall equation

for Q2 I'd say (c) ... or (d) (okay I think its d)
since they might have a small number of shareholders who might be interested in the business's performance (therefore request financial reports) but small proprietary companues are not obliged to prepare reports (from what BTC2210 taught me) so maybe (d)?

*large companies must prepare financial reports

[|ll|lll|]

Thanks Furbob! I share the same views too

Here's a few more questions:
1. If at the end of the financial year, two months' interest is owing to the firm from the bank, the effect on the accounting equation is:
a) an asset increased and another asset decreased
b) a liability increased and another liability decreased
c) an asset decreased and a liability decreased
d) an asset increased and owners' equity increased

2. Given the following transactions, what is the profit for the period?
- Paid $20 000 of accounts payable
- Received $100 from accounts receivable
- Purchased inventory on credit $200 000
- Made credit sale of $700 000 (COGS = $450 000)
- $10 000 of prepayments expired during the month
a) $120 000
b) $240 000
c) $250 000
d) None of the above
This looks like a red herring to me

3. Calculate COGS given:
Net sales revenue = $300 000
Profit on Sale of Equipment = $10 000
Depn Expense = $50 000
Gross profit = $130 000
a) $170 000
b) $110 000
c) $240 000
d) Cannot be calculated based on information given
I reckon Net Sales Rev - COGS + Profit on Sale of Equipment - Depn Exp = Gross profit
So, COGS = 300k +10k - 50k - 130k = 130k?

Ok, I think I exhausted all my MC questions

[Furbob]

Thanks Furbob! I share the same views too

Here's a few more questions:
1. If at the end of the financial year, two months' interest is owing to the firm from the bank, the effect on the accounting equation is:
a) an asset increased and another asset decreased
b) a liability increased and another liability decreased
c) an asset decreased and a liability decreased
d) an asset increased and owners' equity increased

2. Given the following transactions, what is the profit for the period?
- Paid $20 000 of accounts payable
- Received $100 from accounts receivable
- Purchased inventory on credit $200 000
- Made credit sale of $700 000 (COGS = $450 000)
- $10 000 of prepayments expired during the month
a) $120 000
b) $240 000
c) $250 000
d) None of the above
This looks like a red herring to me

for Q2 they're just trying to spite you by throwing in unnecessary details but just remember that profit = revenue - expenses

so revenue = 700,000 less COGS of 450,000
gross profit = 250,000

less other expenses of 10,000

the prepayment expired therefore it is written off as an expense

net profit = 240,000, so (b)

for Q1
the interest owing is treated as interest receivable (an asset) and that amount received from the bank will be written off as revenue for that particular period

so increase in assets and owners equity (from an increase in revenue)

[Furbob]

anyone mind explaining the MC answer to Q2, 6 and 8? :\

[Reckoner]

^Is this for the 2009 sem 1 exam?
If so:

2. The $225 are the costs that go into producing the product (or the direct costs). But to get the total cost we have to allocate some of the overhead, with the cost driver being hours of labour. 475,000/20,000 gives us the cost per hour of $23.75. And one product uses 27 hours, giving overhead allocation of $641.25 to each product. Add on the direct costs of the product and we get $866.25, hence D.

6. This basically involves identifying which of the cash flows are operating. The only inflow that is operating is rent received, and the only operating outflow is rent expense. The others are investing or financing. So if we receive 2000 and pay 3000, our net cash flow from operating is -1,000; hence C. The opening balance that they give you is irrelevant, because we are looking at net cash flow, not a balance.   

8. Think A=L+OE. If assets increase, either L or OE has to increase (or another asset decrease). Our assets increase by 200,000+140,000=340,000; our liabilities increase by 140,000+120,000=260,000; and our OE has increased by 40,000-100,000=-60,000. So plugging that into out equation gives:
340,000=260,000-60,000 + Profit     
Profit=140,000 hence A. This is the value what we need to add on make the equation hold true. 

[Furbob]

yeah got it, I included dividends as an operating outflow so that was my derp

also I knew how to do 8 but just computing errors jdkskjal

thanks!

[dinosaur93]

Indicate which of the following cannot occur during an accounting period?
a. OE and Liabilities increase
b. net profit earned and cash decreased
c. liabilities and OE increased and asset decreased
d. OE decrease and asset increase
e. More than one of the above

Im thinking d?

[Cappuccinos]

Indicate which of the following cannot occur during an accounting period?
a. OE and Liabilities increase
b. net profit earned and cash decreased
c. liabilities and OE increased and asset decreased
d. OE decrease and asset increase
e. More than one of the above

Im thinking d?

I think it's e, I don't think any of them can happen because they put the accounting equation (A = OE + L) out of balance

E.g Assets = 450000, OE = 130,000, Liabilities = 320000
     450000 = 130,000 + 320,000

a) Increase OE, Increase L (say by 1000)
          450000 = 130,000(+1000)  + 320,000(+1000)
          450000 =/= 140,000 + 330,000

b) Net profit (increase rev --> increase OE), decrease cash (decrease assets)
          450000(-1000)= 130,000(+1000)  + 320000
          440000  =/= 140,000 + 320000

So on and so forth?

Edit:can't calculate