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2019 ACCTG 151G Final Exam Practice Questions
发布时间：2024-06-12
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2019 ACCTG 151G Final Exam Practice Questions
1. Describe how you can get started investing.
2. Explain what is meant when a market is described as a Bull Market.
3. Explain what is meant when a market is described as a Bear Market.
4. Describe the process of making a transaction (buying or selling a security) in the securities markets.
5. Identify four sources of investment information available to investors in New Zealand.
6. At the start of the year I invest in a share that costs $10.00. At the end of the year I receive a dividend from the company of $1.00 and when I sell the share the price has risen to $11.50. Calculate the Total Return I will have received on my investment:
7. At the start of the year I invest in a share that costs $20.00. At the end of the year I receive a dividend from the company of $5.00 but when I sell the share the price has fallen to $19.00. Calculate the Total Return I will have received on my investment:
8. The Storehouse Ltd’s financial results for the financial year ending 31 May 2018 show sales of $5,000,000 and a net profit of $750,000. The company has 1,500,000 shares issued and the directors agreed to pay a dividend equivalent to half of the profits. The shares of The Storehouse are currently selling for $5.00 per share on the NZX.
a. What is The Storehouse’s Net Profit Margin?
b. What is The Storehouse’s Return on Equity?
c. Calculate The Storehouse’s Earnings per Share (EPS).
d. Calculate The Storehouse’s Dividend Yield.
e. What is The Storehouse’s Price Earnings (P/E) ratio?
9. Challenge Corporation’s financial results for the financial year ending 31 March 2017 show sales of $1,000,000 and a net profit of $150,000. The company has 250,000 shares issued and the directors agreed to pay a dividend equivalent to two thirds of the profits. The shares of Challenge are currently selling for $3.00 per share on the NZX.
a. What is Challenge’s Net Profit Margin?
b. What is Challenge’s Return on Equity?
c. Calculate Challenge’s Earnings per Share (EPS).
d. Calculate Challenge’s Dividend Yield.
e. What is Challenge’s Price Earnings (P/E) ratio?
10. Explain what the P/E ratio means to The Storehouse or Challenge Corporation.
11. What type of investor would most likely be attracted to The Storehouse’s shares? Explain why.
12. The Storehouse provides imputation credits to its shareholders when it pays its dividends. Explain how imputation credits benefit its shareholders.
13. The Storehouse Ltd borrows money both from its bank and from the bond market. Describe what a “bond” is and how it might be valued.
14. Exactly a year ago Challenge Corporation borrowed $25,000,000 through a 7-year bond
issue. The face value (and sale price) of each bond was $1,000 and the coupon rate on each bond was 9% p.a. Interest on the bond is paid semi-annually.
a. Calculate the amount of each interest payment on the bond.
b. The current market price of each Challenge Corporation bond is $1,100.00. What does this tell you about market interest rates?
c. If I bought one of Challenge Corporation’s bonds at par when it was first issued and sold it today, what would be the approximate return on my investment?
15. Briefly explain one advantage and one disadvantage of margin trading.
16. You have now decided to become a margin trader. You have purchased 10,000 shares in
Challenge Corporation at a price of $3.00 per share. To achieve this you have used $15,000 of your own money and borrowed the rest at an interest rate of 10% p.a. Calculate the return on your investment after a year if Challenge’s share price had risen to $3.50 per share.
17. Explain the difference between an investment in Real Estate and an investment in Corporate Bonds in terms of their relative risk.
18. Describe the advantages of investing in managed funds.
19. What considerations should you take into account when selecting a managed fund to invest in?
20. Discuss why the past performance of a ‘managed fund’ may not be a sound predictor of its future performance.
21. Identify the three financial statements issued annually by most major companies in New Zealand.
22. Describe what the term “accrual accounting” means
23. Tim has decided to open a conservation themed, outdoor adventure tourist business –
Tim’s Trips. He began business on 1 June 2017. The following transactions occurred during the first month of business:
i. Tim opened a business cheque account and deposited $50,000 (being his equity) in it.
ii. He paid cash for equipment costing $9,700.
iii. He purchased some inventory (material about the environment) on credit for $7,500.
iv. He bought four weeks of advertising on the local radio station for $1,600 on credit. The advertising starts on 15 January.
v. He deposited $6,000 from cash sales into the business cheque account. The goods (being inventory) had cost $2,500.
vi. He paid insurance expense of $200 for January.
vii. Credit sales for January were $1,500 of which $1,000 were collected or subsequently received in cash during the month. The goods sold (being inventory) cost $500.
viii. He took inventory worth $500 for his personal use.
ix. He purchased a delivery vehicle for $15,000 cash, to be used for business purposes only.
x. He purchased a computer for business purposes only costing $2,000 on credit.
Required:
a. Use the accounting equation to calculate the account balances for all transactions as at 30 June 2017.
b. Prepare an Income Statement for Tim’s first month of business
c. Prepare a Balance Sheet as at, 31 January 2016 for Tim’s business.
24. Bill has decided to open a gardening business. He has had some experience helping his family with this type of work. He began business on 1 May 2018. The following transactions occurred during the first month of business:
a. Bill opened a business cheque account and deposited $15,000. This represents his opening capital.
b. His aunt lent him $10,000 at 10% annual interest. Interest will be paid quarterly.
c. He paid cash for a lawn mower costing $9,500.
d. He also purchased some other gardening equipment for $2,000, paid in cash.
e. He purchased gardening supplies on credit for $3,000.
f. Bill purchased a three-year old Toyota pickup truck for cash, costing $10,000, solely for business purposes to carry his equipment and supplies to and from job sites.
g. He bought 3 weeks of advertising on the local newspaper for $750 cash, beginning on 8 May.
h. He deposited $6,800 from cash sales into the business cheque account. The gardening supplies used to generate the cast sales cost $1,500.
i. He paid vehicle expenses of $560.
j. Credit sales for Jan were $1,900 of which $800 were collected subsequently in cash during the month. The gardening supplies used cost $300.
k. Bill withdrew $900 from the business for personal expenses.
You may ignore the income tax.
a. Use the accounting equation to calculate the unadjusted account balances for all transactions as at 31 May 2018.
b. Based on your answer to part (a) above Prepare a Balance Sheet for Bill’s Gardening Business as at 31 May 2018.
c. Based on your answer to part (a) above Prepare an Income Statement for Bill’s Gardening Business for the period ending 31 May 2018.
