Introductory Financial © UNIVERSITY OF LEEDS Accounting
Module Title: Introductory Financial © UNIVERSITY OF LEEDS
Leeds University Business School Semester One 2020/2021
- There are 7 pages to this exam.
- There will be 48 hours to complete this exam. We anticipate that this exam should take students approximately 2-3 hours to complete.
- This exam paper contains three
- Answer all three
- If there is a word limit for the question, then it is noted at the end of the question.
- There are 100 marks available in total. The number of marks for each question is shown.
- It is recommended that you allow a minimum of 30 minutes to upload/submit your work.
The deadline date for this assessment is 14:00:00 on Saturday 16th January 2021 (UK time).
An electronic copy of your completed answers must be submitted to the exam submission area within the module resource on the Blackboard MINERVA website no later than the date and time stated above.
Faxed, emailed or hard copies of your exam answers will not be accepted.
Late submissions will not be accepted.
Failure to meet this deadline will result in you being marked as absent from this assessment.
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You are required to adhere to the word limit specified and state an accurate word count on the cover page of your assignment. Your declared word count must be accurate, and should not mislead. Making a fraudulent statement concerning the work submitted for assessment could be considered academic malpractice and investigated as such. If the amount of work submitted is higher than that specified by the word limit or that declared on your word count, this may be reflected in the mark awarded and noted through individual feedback given to you Question 1
You are helping Agned Ltd to prepare their accounts for the year ended 31 December 20X3. The following Trial Balance has been provided:
|Inventories at 1 January 20X3||545|
|Share capital: £1 shares||1,500|
|8% debenture loans repayable 20X8||1,200|
|Retained profits at 1 January 20X3||190|
|Printing and stationery||750|
|Provision for doubtful debts||40|
|Wages and salaries||890|
|Cash at bank||51|
|Rent and rates||320|
|Loan interest paid||48|
|Property at cost||3,000|
|Property accumulated depreciation at 1 January 20X3||90|
|Fixtures and fittings at cost||1,500|
|Fixtures and fittings accumulated depreciation at 1 January 20X3||600|
|Plant and machinery at cost||2,800|
|Plant and machinery accumulated depreciation at 1 January 20X3||1,264|
The following additional information is now available:
- Closing inventory at 31 December 20X3 was £910,000.
- The rent and rates expense includes a rent payment of £144,000 for the period 1 April 20X3 to 31 March 20X4. iii. An electricity invoice for the 3 months ended 31 January 20X4 for £18,000 was received on 2nd January 20X4.
- Bad debts of £30,000 are to be written off.
- The provision for doubtful debts is to be adjusted to be 5% of trade receivables, after writing off bad debts.
- Depreciation is to be charged for the year as follows:
- Property 2% per annum straight-line
- Fixtures and fittings 20% per annum straight-line
- Plant and machinery 25% per annum reducing balance vii. The second instalment of the loan interest on debentures is outstanding at the year end.
viii. Corporation tax due to the tax authorities of £615,000 is to be accounted for.
- Prepare an income statement for Agned Ltd for the year ended 31 December 20X3, and a statement of financial position (balance sheet) at that date, using all the information available. (The statements need not be in a form suitable for publication but should follow good presentation formats).
- Identify and explain two differences between the financial statements of a sole proprietor and the financial statements of a limited company. (Word count guidance:
300 – 400 words).
(Total 41 marks)
The financial statements of Mog plc for 20X4 and 20X3 are as follows:
Income Statements for Mog plc for the periods ended 31 December 20X4 and 20X3
Cost of sales
Finance costs (878) (1,008)
|Profit before tax||2,160||3,242|
Profit after tax
Dividends proposed and paid
- Administrative expenses includes:
£000 £000 Depreciation 2,670 4,495
Directors remuneration 450 380
Auditors fees 150 130
- Interest paid is analysed as follows:
Interest payable on bank loan 878 1,008
Statements of Financial Position for Mog plc as at 31 December 20X4 and 20X3
ASSETS £000 £000
Non-current assets (net book value)
Land and buildings 11,600 11,600
Plant and machinery 7,820 10,490
Inventory 4,320 7,800
Trade receivables 12,100 7,100
Bank 5,480 4,402
TOTAL ASSETS 41,320 41,392
EQUITY AND LIABILITIES
Equity share capital (£0.50 ordinary shares) 3,000 3,000
Share premium 900 900
Retained earnings 15,720 14,292
TOTAL EQUITY AND LIABILITIES
- Using ten key ratios of your choice, analyse and discuss the financial performance of Mog Plc as an investment prospect during the two years of 20X3 and 20X4. (Ratios should be rounded to one decimal place). (Word count guidance: 500 – 600 words).
- Identify two pieces of information, other than the information contained in the financial statements of Mog Plc, which would enable you to prepare a more thorough analysis of the company’s performance. For each additional piece of information, explain why it would be useful for your analysis. (Word count guidance: 200 – 250 words).
(Total 36 marks)
The Cash Flow Statement for Manadi Plc for the year ended 31 December 20X8 is as follows:
|Cash flows from operating activities|
|Cash generated from operations (see note below)||1,036|
|Finance costs paid||(80)|
Net cash from operating activities
|Cash flows from investing activities|
|Purchase of property, plant and equipment||(524)|
|Proceeds from sales of property, plant and equipment||80|
Net cash used in investing activities (404)
|Cash flows from financing activities|
|Issue of long-term interest-bearing borrowings||400|
|Net increase in cash and cash equivalents||376|
|Cash and cash equivalents at start of period||160|
Net cash used in financing activities 120
Cash and cash equivalents at end of period
Note: Reconciliation of profit before tax to cash generated from operations
|Profit before tax||640|
|Loss on sale of property, plant and equipment||24|
|Decrease in inventories (£496m – £480m)||16|
|Increase in trade and other receivables (£584m – £320m)||(264)|
|Increase in payables (£824m – £624m)||200|
Cash generated from operations 1,036 Required:
- Analyse the statement of cash flows of Manadi plc for the year ended 31 December
20X8 and discuss the company’s cash management over the year. (Word count guidance: 400 – 500 words).
- Explain the purpose of a statement of cash flows and discuss why a statement of cash flows is useful for a business. (Word count guidance: 300 – 400 words).
(Total 23 marks)