SINGAPORE POLYTECHNIC _2010____ / _2011____ Semester _1__ Term Test

Module Name: _Accounts and Finance_ Course: __DCEB_______________ Year: __1FT

No. SOLUTION

Module Code: _BE8102

Section A
Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 b c b c a b c c a d

Section B
1a i. ii. iii. iv. $ 2,063.4 million $29,391.7 million $16.6 million $28,461.5 million

1b 1c 1d 1e 1f

$ 125.3 million $ 5,192.20 million $ 2951.6 million Current Ratio = $ 5,192.20 / $ 2951.6 = 1.759 Yes MD is liquid on 31/12/2006. It has enough current assets to meet its current liabilities as current ratio > 1. Debt Ratio = 15078.9 / 28461.5 = 0.5298

1g 110, 113, 123 1h 1i The trend index is increasing. It indicates that the net income of MD is increasing.

SINGAPORE POLYTECHNIC _2010____ / _2011____ Semester _1__ Term Test

Module Name: _Accounts and Finance_ Course: __DCEB_______________ Year: __1FT
No. SOLUTION

Module Code: _BE8102

Going concern assumption Financial statements are usually prepared on the assumption that the entity will continue to operate for a foreseeable future. Basis is not used if entity is being liquidated or has ceased trading. Accruals The accruals basis of accounting assumes that the costs and revenues are accounted for (accrued) as they are incurred or earned, not as money is paid or received. Revenues are matched with associated costs and expenses to determine the profit for the same accounting period. Comparability Users should be able to compare information provided by financial statements of an entitys over time in order to observe trends in its financial performance and position. They should also be to use these statements to compare and evaluate the financial performance and position of different entities. Consistency The consistency concept assumes that accounting treatment of like items is consistent from one period to the next. Substance over form This concept requires the transaction to be accounted to reflect their commercial substance rather than their legal form, should these differ. Materiality Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of those financial statements. Materiality must be judged in terms of its significance to the reporting entity.

Balance Sheet Income Statement Statement of Stockholders' Equity Statement of Cash Flows. Potential advantages may include: More funds available as investment pool is increased Losses as well as profits are shared Can be a sleeping partner inactive in running of partnership Enhanced credit standing

SINGAPORE POLYTECHNIC _2010____ / _2011____ Semester _1__ Term Test

Module Name: _Accounts and Finance_ Course: __DCEB_______________ Year: __1FT
No. SOLUTION

Module Code: _BE8102

Access to greater expertise and financial input There should be a written agreement on the terms and conditions of the partnership business to avoid future disputes. 5 $300,800 = $51,988 x Discount factor Discount factor = 5.786 Table B4 >> At 7 years, Discount rate = 5% 6 $250,200 = Annuity x Discount factor Table B2 >> Discount factor = 9.214 Annuity = $250,200 / 9.214 = $27,154.33 7a 0 = 12x 40 8x x = 40 / 4 = 10 warehouses Thomas Construction must sell 10 warehouses to incur no losses. 7b 12 = 12x 40 8x x = 52 / 4 = 13 To make a minimum profit of $12 million Thomas Construction must sell 13 warehouses