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4 ornrx. sEF.L HERE f
Catrnmaf E -PLEASE I{OTEI
You ;nBst sign. below aL'd r.eturl ihis booklet
witlr liri Ar-s'ver Sheet-.frilure to do so may TESTCODECIz flS {S {O
resrrlt in dis{uslificstion:
IVTAY/J"JNTE2OO7
FGRI?fi ?'F zClS7 144 Sgaetdre

C'.C.P.iI Bts,gAN EXA MINATNONS COTJI\i CIL


.{DVA^N CED I,R.O FTCI JiH C Y EX.6\I'yINN ATIOI'I
z-\CCOUFITHNG

Uniitr-PaPerOtr
90 rni-n.utes
z-
f.3i_ry]]907 {Po'ri:'') ,}

.I'
i IR.ECT I o N S C A.RE, [. n-Y
itE A D it E F. D t- i[-{o \,v i N G i,) Fn-J

ln a,ddrtion .o tnis r-est booklet, you sitottldhave an answer sheet'

ienered (A), (B), (C)' (D)- Read each item you are
E,acir i',em :r ttris resihas four suggesteci 3n5ra,eis
about to an ;u,er and decide which choice is best'
the space havirlg
On 1'our find the nunrber whicir coi-respotrds io your item and shade
ar :;wer slreet,
the sample item below-
ihe sairre lt iler as the anslver you have chosen' Look at

Sarn:lc Ite r:
-trr
i):r:-llc ccst is calcuiated bY
Sample Ansrver
( ) ,- aci ling direct factory expenses to cost of materials used
(rJ) ai !in! inciirect factory e;tpenses to cost of materials used @@@ @ r
used
i.ll) su ri.racting direct factory expenses to cost of materials
'r.o cost of ma^rerials used
1l-:) su rtracting indirect factor), expenses

-iitebesta isrvertothisitemis"addrngdirectfacioryexpensestocostofmaterialsused"'soansrver -r
space ( A) tas been blackeneC'

completely and fill in ne*v


i i'you w ar t ^ro changb your answer, be Sure to erase:vour oid answer 'vour
choice .

Ifyoucannct
\fu?rcnyouaretoiritobegu.r,nrmthepageand.vorkasquickiyandascarefullyasyoucan'
car-' cc'me baci< to the harder item later'
srlswer ar itenr. omit it and go on io the next cne. You
i'cu rnay ,io any rough work in this booklet' t
i-irjs iest L cnsists of 54 items. You wiil have 90 rninutes
to answer them'
! \j,*rurnay rsesilentnon-prograrrunablecalculatorstoansit'erquestions-
mS in
SpaceS formOre answers than there are tte
Do ir<lt be;olcemeci tirat the answer sheet piOV;des
t-his tesi.

Do tjor TURF{ 'rHls 8.q.q,E:=V.Er-[1F= Xg.g= SSF-J9,1?P;I99'g"Q9":


Copyrignt O 2005 Canbbean Exarninatrcns Council'@
r\il nghts;-g5sl-ued'
,jl li) i ii iiilc,\PE.:C0l
I

i. '
i' A business should be accounted for 7. ABc corporation issued 2 {'00 ordinary, ' r rt
separately and distinctly from its owner or
shares of dtO par value at $12 cer share. In
olvners' This is knorvn as the recording the transaction. credir.; are recordeci
as
(zi) principle
objectiviry
(B) businessentityprinciple (A) ordinary share caprtal $20 000 and
('c) going concern principle
etained earnings s1 000
(D) revenue recognition principle (B) ordinary share capiial i;24 ggg
(C) ordinary share capitat $20 000 and
. share plemium $4 0()0
(D) ordinary share capiral $20 000 and
profit and loss $4 00 )

3' On January l,2006lVlarwick Ltd. issued 3 000 six perceni bonds ai


parof l{r0.
what entry should Nlarwick make to record the sale of bonds?

(,{) Cash Dr. St 8 000


Bonds payable Cr. $lB 000
(B) Bonds payable Dr. $ I g 00C
Cash Cr. Sl g 000

(C) Cash Dr. $300 000


Bonds payable Cr. Sj00 0C0

(D) Bonds pa-vable Dr. $300 C00


Cash Cr. $300 C00

-'l On September l, 2006, CCC Inc. acquired a $20 000 face value, E per cent bo;r.1
of EC at 104. The bonds were dated NIay I -20A6, and will marure on,A.pril 3),
201 l, with interest payable each October 3 I and Aprii 30. whar enrry
si1ouia CCC
Inc. make to record the purchase of the bonds?

(A) Invesrment inbonds Dr. $20 g00


Interest receivable Dr. S 5i3
Cash Cr. S2l 333

iB) Investmenr in bonds Dr. 52l 333


Cash Ci. $21 333

iC) Investment in bonds Dr. $21 j3_r


.Interest receivabie Ci. S 533
Cash Cr. S2"t g6C

. (D) In.zestmenr in bonds Dr. S20 CCO


Premium on bonds Dr. S I 133
Cash Cr. Sl i 333

Gil Oli TO Ti{E NE)(T P,\CE


r)l I 0 I 0 i 0,,c,\DF 20(17
..^zrilace-s,,
uto Repairs 'rollows :he revenue c?
Which of the following is TR.UE about ihe
recosn i ti,lir ;-rri irc i F, le. !!allace serv iced a car corporate form of business organisations?
i)ri ianuarv -1 l. Tlie cuslonrer picked up the
.-,eliiclc <)n I ctrruarv I anci maiied the paylnent (A) Corporations are the rnosl prevaient
tcr Wailace s A.uto R.epairs on Febiuary _5. forms of business c)rgan isaiioits.
'"\iallace 's.. r_rto Repairs .eceived the cheque (ts) Corporate businesses aie usuall,"-
+n ire'bruan 6. On rvhai daie shoulC Wallace smaller in size than partnerships.
;silognize t. :€ r€v€!rue? (c) Raising capital is more difficutt for
corporations than for sole iraders.
{ i\ i l-el .11261, 6 (D) Corporations are recognized as
tEi Fel ;uarv 5 separaie legal entities under
{C} Fel;uan. I company law.
( l]; -lair rar'.' --l i

l'lie historit:rl cost principie siaies ihai I ti_ Which o[the followine staternenis is NOT
true?
iA) ass ts shorrid be recorded initialiy at
c rst and adjusted as market value (A) Bonus shares may be issued in iieu
c langes of dividends.
1F)) irar sactions should be recorCed at (B) Bonus share issues deplete surplus
tl eir initial cost cash resources-
{6. } the owner of' a business activitv (C) Bonus share issues do not aFfect the
s rould not be incoryorated inttr the voting rights of shareholders-
b rsiness activ;ry (D) Bonus share issues may resuli in
iD) onl iransactions that are capable of larger tota I dividentjs.
h:ing expressed in monetary terms
s iould be incltrded
A partrrer who a,ssurnes unlimited liabiliti' for
i-i,rodrvili is :lassitreC in iite balance sireet as
tiie debts of the partnership is lcrorvn as a

a cr frenl asset
(i\) limited partner
tLii proi erw- piant arrd equiprnent
(B) mutualpartner
r('l an i ;iangible assct
(C) participating partner
a ltr rg-term irivestment tD) general panner

^shle_y ivla tufact'-rring i-C. receiveci nei Which oi the following would NOT be
- il;
pct-rce€ds c S4l 000 rt:r the saie ot- au
classified as a temporary investmeni?
iii vestrneni U at cost $19 5i10. This transaction
:ii,,.uld be ir ported in the incrrnle staternent
a5a
)
ir\ Three-month treasury bill
(B) idle cash in a bank current accotjni
(C) Marketable equity securities
{A i los: ol' Si 50C uncier operaiing (D) IViarketable debt securities
e..iDerrses and iosses
i.l; loss of Sl 500 urrder operaiing
e. pertses
{C: eair of 52 500 uri,ier oiher reverues
ar d _eains
(D) gair ol- 52 i00 i-inier op'erating
rr venues
_L_

Accotttrts
13. During 2006, Grant Corporation had net sales of sB00 000.
r.c"i.,.ableaveragedSE0000andinventorylevelsaveraged$40000
cent of net sales
Grant's g.orr p.ofi, ratio during "006'was 25 per
What is Crant Corporation's inventory turnover for 2006?

(A) 7.5 times per Year


(B) l0 times Per Year
(C) l5 times Per Yea!-
(D) l6 times Per Year

it {. St Charles conipany reporied rhe follorving assets and liabilities or

its 2006 balance sheei:

I
I

Assets {.iabilities I

Cash $ 5000 Accounts paYable

Accourrts receivable s24 300 Utilities payable

Inventory s29 s00 V/ases payable

Office supPlies (stationery) $ 340 Salaries paYable

lvl arketable securities .$22 500 irlote payable (due in I 3 rnonths)

What is St Charles Company's quick ratio for


2006 (rounded to tlvo decimal placesi?

(A) C.70 trmes


tF) 1.07 times
(C) i.35 iimes
@) i.49 times

G{l ON TO
-ili : N 11.iT l,ji i,: i3
-.(rlr:Lrarri' re'itorteci net illcolne oi li The lollorvine inf.rrmatign iryaS a'''ailai:,le f'rr
-r'or
rt sales rf 5'f':(l C0{.}. artd e'./eraq.e iri ay'arc Cornorat ion 2(rCt.
:i4ij0 0()0 i'iir 2C)05 iL'hat is
.--Otttpi,nr'S LrSrCentag€ ie:Uin Crn Sale:, 5200 t)CC
t00:? Beginning invehtoT' $ 7i 0C0
Transpor-tatlon 6r,rt $ I 000 11

n l 'r-'urcirases $ 35 000
'., 1 ir .15 Sales.commissions $ lt) 000
i_
A:_ Znciing inventory S 3(.i tl00
iDr ir - s,,
\'ri hat u'as l"la]'aro Corporatioll':. ccitii ':: i
qcoCs sold for 2006?
.i\i Dc,:err.; ,er .l i . li)(.,o. rhe end c,f iis i'isca!
i ellr. iire: rcc0untiilq r(]cclrds of Bermuda (.q) $125000
Lqrl!l[:-lll\ itc,,.r,ecj 1i1 g flil i0u, i n s (B) sl 28 000
(c) $136 000
:-ales icre rue Si I 30 00(.). all on credit terms (D) S145 000
,,::. li1lr;r 3ncr. it r cioubtlul accoLlnts. balance on
.l z:ir ita' l l. 20C6. $7{)0 credit
ir- C cO l1 il tS eceivable. balance on December 18. Cln ii4a;- 25, 2006, Hindustan Cor-npan1' -s.rld
.ll.l0 15. $38 5()0 200 C00 gallons of coconut oil to l-evet
. Companv at $4.50 per gallon Cn i\4ay 3{t-
i;"'iiat il,-i rnr','.. ill Bernruda icrmpanl' record
li 2006. 150 000 gallons vsere delivered aiid the
as [riro deb expense for 2005 if the comPanv remaining 50 000 gallons 11's1g clsli"'qred on
itnl:teil :he exrlense to be i Per cent of
r:Si September 30- 2006- Payment terrns \vere:
lota! ;cc() rnts receivaL'le at December i !. 50 per cent due on l"lay 2-5. 2006. and the
:006'j balance due on SePtember 30' 2006-
Hindustan Compan1"5 ftscal vear end is J une
(A) 30. Hindustan Company uses the accrual
{Bi basis of accounting- Ho"v much retenue
:i;- 70ii snouid the company report in its Ilnanciai
| | tr Sr.l(){.1 siaternent for the period ending j une -1{}- 2000?

(A) $0
(B) $450 000
(c) s675 000
(D) $900 000
-6-
interest from a
|g. TIre Sherwin Companl, $911grved $7 500 21 |Q per cerlt
adj usting errtrics
local ban k on Septembe r I . 2005. wlr ich ths fel16\ 'ing
slrou|dbemadeonthebooksofSherwinatDecember3l.2005?

(A) Interest expense Dr' S7-5C

Interest PaYable Cr. $750

(B) Cash Dr' S25C


Interest PaYable Cr $2-s0

(C) Interest expense Dr' 5250


lnterest PaYable Cr. 5250

( D) Interest exPense Dr. 525(i


Note Pa-v-able Cr $250

on January l, 2005, Irf ary Srnith purchased a $24 000 car, makin-q a $4 00{
20
,down payment and 6,e119rving the rest on a 4-year note at 8 per cent' Sh'
agrees to make annual pavments of $6 038'47 starting January
l' 2C06
The journal entry to record the payment on January l, 2006 is

(A) ' Note PaYable Dr. 56 038.07


Cash Cr. $6 038-07

(B) Interest exPense Dr. $l 600.00


Note PaYable Dr. $4 433.41
Cash Cr. 56 038.0?

(C) Interest exPense Dr. $l 920.00


Note PaYable Dr- $4 I 13.47
Cash Cr' $6 038-07

(D) lnterest expense Dr. $ 483.08


Note PaYable Dr. $5 555.39
Cash Cr. $6 038.07

(rr) (rN TO THF, i iEXT PAGg


-1-
:) Cenerallv,rccepredaccoun^ti-rrgpnncipiesa,-e ltgms 24 - 25 re fer to tbe follorving
rnfcrmatton-
.
{A-) a ;et of rules recognizeci as a guicie TheGordonCorporationwasincorporatedon
ior financial repoiiing ianuai-y I ,2005, with the iollou'ing authonzed
( B i trr tirs derivecl from the lavrs of nature capital:
lunci si:ltuie
ia) ru es estabiisbe.J by the depariment .i0,C00 ordinary shares at par value of S2C
oi inland revenue of a ccuntry per share
it') tir: grridelines ihat accouniants use 5000 six per cent preference shares at a pa-i-
io solve ethicai di!.emmas value of $25 per share

On February l,
2005, Gordon Inc issued
:- intenral ci irtrois are uscd in a business to 20 000 ordinary shares for a iotal of
$i 000 000 and 4 000 preference shares ai
iA,1 eil rance the accuracy and reliabiliiy $30pershare. OnJuiy l5,2005.theremaimng
-''f its accouniing records and io I 00(l preference shares were issued at S40
rrevent fiaud each.
(3) Pr rduce correct financial statenents
ind derer employee dishonesty 24 . On July 15, 2005 the paid-in capital in excess
'eguartl
iC) sa the business assets and of par (share premium) account should be
:nhance iire accuracY and
e liability of accounting recorcis iAi debited with S20 000
tL)) es abiish responsibility and conduct (B) credited with S22 500
nclependent checks on emoioyee (C) debited.,vith $7 500
--erfornrance (D) credited rvith S 15 000

25 . The iralance sheet at Decernber 3l, 2005


2, Havins ihr sarne persor] responsible for the should report total paid-in capital of
crderiir*e, p r-v-ing a;rci receiving of goods
(.A] S 542 500
{,q.i is r l exanrple of segregation of duties (B) S 925 000
{3i is a good exampie of ho-'v io {C) $i 160000
;rfeguard tire compan!'s asseis ( Di S I 130 000

il---; rnr ieases thc pOiential fOr er;ors and


r-aud
tlJ) re: uit.s in greater organisational
fficiency
-3
The follor.ving iniormation was extracterj from ?o St Kitts Company ciiscovers lhat equipmenr
the books of Harewood Greens Inc.: purchased three years earlie- for $600 000
rvill not last as long as orgir ally estimared.
(iross profit 576 COC The finn is deprcciating the e luipment at the
Administrative expenses S lE 400 rate of SEO 000 per year wi h an estimatetl
Interest revenue S 4000 salvage value of $.+0 000. Ner,v esrimates
Depreciation S 3 200 indicate that the equipment u ill last a total of
Interest expense S 4800 five years with no salvage va ue. How much
Dividends paid S l0 000 should the St Kitts Coml any record as
Corporation tax rate l-\ per ceni depreciation expense in year tbui-?

The net income afi.er iaxes was (A) $ 80 000


(A) (B) S 136 667

(B)
St 8 760
$24 440
(c) s 160 00c
(c) $29 640
(D) Sl80 000
(D) $34 840

30 The follor.vrng iniormatiou rva i extracted Fom


27 ,qt December 31,2006, Emily and Emiie are the financial recorcis of i_ lue M[ountain
partners with capital balances of $200 000 Company for the period endin I December 3I .
and $120 000 respectively, and they share 2006. Assume that ail amor nts are pre-tax
profits and losses in the ratio of 2: l On this and the finn is subject to a i0 per cent tar.
date, Gaynor invests S 100 000 caslr for a one- rate.
fifth interest in the new partnership. The
partners agree that goodwill will be recorded Interest expense .5 230 C00
on'the date of admission of Gaynor. Ths toial Rent e;tpense :; 190 {)tiC
goodwill after the admission of Gaynor is Flood damage to facrliries i! 27C 00C
Revenues 52 lOd0D(j
(A) SB0 000 Salaries and wages :l; .150 0ij0
{B) Sr 3 000 r\dvertising e/rpenses S 215 Ctli.r
(c) $16 000
rD) sr0 000
!'/hai is Biue I'lountain Ccrmpen-y' s ilci
:i) vrntage Sports Club was formed in f,)ecember iucome for the period enciins Decernlte r i i .
Z00i During irs Iirst year of operation the 2006?
ciub received $10 000 as part payment for
100 three-year membership subscripticns at (A) 5j 374,i00
;r pr-ice of $50 per year, starting in January (B) $ 561 500
.1006, Vintage Sports Club is certain that the (c) s 305 000
35 0C0 balance of membership fecs will be (D) SiOeo000
coilected in December 2407 .

Assuining that the club prepares its financial


siatements on an accn-ral basis, irolv much
ievenue should be recoEnized in its 2005
inccme statemeni?

sc
s 5000
$i0 000
srs 000

CO OtJ TO THE i:3)(T ir.j.Lll:


:j.:iiz,. Cornpafir,, o\vi'ls a rnanuiaciuring Fialt 33 iSelmont Company reported net income for
ir: Lil-. :ria. On Decernber j I - 2Ci)6. tire piaii 2005 oi St50 000. The compan-v reported
ir;rd e bobk ve.iue oi lli C00 000 anr-i a'-r depreciation expense of l!7 500 and
e:;iiir:, leC laii rnarxet value of'57 000 li0ii amortization of 52 500. The company also
l-ite 'r)v€ifrilrcnt of Libei-ia iras cleari'r' i'eported a gain on the sale of equipment oi
ii,.iici ,:C that it wiil takeovei- ihe piairi ciu;ing 53 500. Baded only on this infbrmation, ihe
ti.e c, :nirrq 1'ear and rvili reimburse ileiize companli will report cash flow from its
i',::rr'-- rrr\ (br oniy /-!0 Der cent cf the plr-.ni's <,'peraiions of
e:,iinr: ieci market vrrlue.
(A) s154000
iiat ,s tite arnr-runi oI the gair.i
V.. r-r1 lcss that (B) Sl 56 500
Deliz. Ccrrnpan-y rvill recop.nize in its l0[)ti (c) 5160 000
inrint iai siaterne nis? ( D) S163 500

i',: S :)
( :, 'ahe MAiOR disadvantage oi' traditiorrai
X ltl'.) 0{-)(i
iL'i :B I [i(iO cO(r trnancial siatements is their emphasis orr
( i-)) :$4 2rJ0 00(i
(A) hisioricalcost
its) long-ierm growth
l;i oi', paringthe f inauciai staiernents fci' (C) short-ierm profltability
{ D)
Si l '-rcia CoinDanv. tire comDany s relevance
accQ' tltilnt- discovei-eci the Follt-r"'''iilI
I r' ll',r', at i,'rrr reeard i lt g crti':t i nq.e rrc ies :

35 Operating a.ctivities inc lude


i /i probable loss of- 5i53 0C{J '-rn zt

larvsuii tlrat tite cornpa;jlr' s (,4) acquisiiion of long-term assets


anoineys believe rviii be settlei fbi- (B) a ilelv issue of ordinary shares
s40 cOc {C) iong-term fesewings oian enterprise
it li reusrrr:abi-v pr-rssible loss oi-.S l{j 0i}0 {D) cash receipts flrom sale of goods
cr:r a la'.vsuit thai Ilte comp;:*-'.''-;
ariiLr!-neL'S beiieve rviii b.: ciroplreci
vVhich of ttre fbllowing should be disclosed in
\-','hri ai:ror-rlrt sirrlulC St i-ucia Col-'pair1' a summary- of significant accountins policies?
i,:crr!tlize in its balance sheti for tiiese
c,-riitir gert,:ies? (A) Schedule of fixed asseis
{B) Amount for cumulative er'fect of
{:'ii 1;tO 0il{} change in accounting PrinciPles
t2i li.l0 il0i) (C) Minority interest claim
(il l 551 rj-00 (D) Valuation basis iolloweci
(rit ii{:J t,}00
- l[] -
37. If Stephens Inc issues 6 000 ordinary shares 33. The MAJOR effecr of co npurerization in
of $5 par value for S90 000, financial accounting is incr :aseC

(A) ordinary share capital rvill be credited (A) speed


for$90 000 (B) employment
(B) (share
paid-in capital in excess of par (C) fraud
premium) will be credited for (D) seburity
$30000
(C) paid-in capital in excess of par (share
premium) will be credited for
s60 000
(D) cash rvill be debited fbr $30 000

items 3a - 40 refer- to the following infcrmarior.

ln a basket transaction on July 1 , 2005, Rogans Organs Inc acquired a parcel of lanci to:.ether
with a building for a total of $a50 000. Separately, the land had a fair market va ue of
$200 000 and the building had a fair market valuc of $400 000. In order to use the prr::e6y,
Iand improvements in the amount of $20 000 and renovations to the building at a cost c F$90
000 were incurred. The building was occupieci on September l, 2005.

39. The amount that should be recoi-ded in the 4'0. The amount that should be recrrrdcd in tne
lanci account is building account is

(A) sl50 000 (A) $300 000


(B) Sr70 000 (B) 5390000
(c) $200 000 (c) s410 000
(D) $220 000 (D) S.r90 000

J1. SahrrnCompanvhasadepreciableassetthat 42 The inventor,v- oi Sinr; Co Li,.i ai


cost 5300 000. The company decided to December 3 i, 2006. is vai:ed ai S30 il00
switch from straight line depreciation to The inventory valuation in, ludeci ,iar-nagei
reducing.balance at 20 per cent a'r ihe goods at iheir initial cost ci'.51 .tt)t,t l}e
beginningofthethirdyear. Intheprioryears damageci goods will be repr ireo at a cost oi
the company depreciated the asset based on $ 120 and sold for $500. The rorrect ';aluaiion
a salvage value of S20 000 and a seven-year of inventory that should app. ar in tae reccrds
useful life. Using the reducing balance of Sims Co. X,td at Decernbl r- -31 . 30(,1n. rs
method, the depreciation expense io be
charged in year three is iAi S I 230
(B) S78 980
(A) S'10000 {C) :b^79500
(B) S4l r 6rl iD) 580 000
(c) s44 000
(D) 563 000
-ll
Which of the foilowingstatements relatingto
,\.r:lrt'r c ,ci ilalrtrain toi mcd a pilr-rilitship rviiir
a co-operative is FALSE?
cr1;il.aii rrnti-ibl:iit.rils .tf S5C rJ{)0:r;rci S 120 0(}0
,"r,r".,, ,el'''. l'lre partnership ag;eelr'ent ci:iis lrrlembers can transfer their shares
19ll9''vs: \r..,
fbr prt'lrr aird l':sses to be 'jivide6 o5
oil the local stock exchange'
(B) The surPlus can be allocated in the
" 5l I 0()t') salaiY for Bainrain
form of Patronage refunci'
" lj pei ceci returll cl'l caPlial (C) lt is controlled by rnembers who have
,:c'rntribut,:d by each Pai-tnei
equal voting rights
" ilalance divide<J eqtrally betr'r'een ihe (il) It is based on values o[ selt--help'
9ariners equality and equitY.

li the :lrol:it icr ilie )ieai was i'i5'01)0'


[,ralma :l's shaie rviilbe ri,'ilson Ltd acquires the business cI
t' Ricardo, a sole proprietorship. by issuing
(irt :sl75oi) 7 000 ordinary shares at $ l0 each' The book
(ts) s24C',J0 vaiue ofthe net assets acquired total $40 000'
(C') s:4 Br)(l The fair valtre of the net assets total $50 000'
( i; ) S25 9'J0 lrr recording the acquisition of D' Ricardo'
VYilson ComPanY should

jl+ 'i;ngc- i-td acquireci the net sssets of Wings


-ihe net asseis of (A) increase its assets bY S 0 000
,,,'d i i, gl"s fcrr 5420 00{l' (3) record goodwill of $20 000
-l-irnec
ho.,'. u rrrarket value trl-$-i70 000 and record goodwill of $30 000
-111g
[212'nce 5iteet
{C)
;., irr-,i-,i value ,:t 5600 00't) iU increase its assests bY $70 000
.t.'Tar, :q i,tcl wcrulei sho'-v ttrtalgoo'irvili'-ri-

i;''i :' t) 40
dl {) L)n January 2'2001'the accounts of John D
(il) s s0 000 Taylor rvere destroyed by fire' His 2006
diary
((-') slE0000 showed ,1',. fellewing information relating to
The
i.l.) ) $210 0tl0 iris accounts receiveable and sales:
iiccounts receivable balance at January '
i
for the year
2006, was $65 220; credit sales
Sism' i,t,l invested 56CC ii(X) iil rriarketalrie iotaled S50 000 and total cash received
on
s.lur';.i"s in 2005' During 2007 tne mxiket accounts receivable was $44 000; three
securities tiuctualscl $strveci-r accounts receivable rvere writien tt[f
vltiue .rt- tl.rese as
value irt
Sl00 )0() and $60C 000 The market uncollectible totaling 57 50'
i tr'i-s
ihe ei tlof 200l was 5650 000 Sigma
balan .e sheet at Decernber i I ' 20(j7' shorri'j The amount that should appear in
the balance
sheet for accounts receivable ai
silow rnarketal-tle securitres as December
31, 2006 is
(/\) $ 5() 000
(3) si00000 {A) s49220
(c) s60() c00 (B) s59 470
(',)) Ssi'i CCO
{c) s70 470
iDi s7l ?20
al
7.
^"<

-i2
49 .[n preparing a statement ofcasir flows, which 52. A contineent gain which is unlikely to occur
of the following transactions would be willbe
considered an investing activitY?
(A) recorded in the balance sheet anci
(A) Sale of equiPment income Stateli:ent
(B) Sale of merchandise (B) disclosed by a rote in the financiai
(C) Declaration of a cash dividend statements
(D) Issuance of a note PaYable (C) recorded in the talance sheet but noi
in the income statemeni
(D) omifted from the financial statemenis
50. Wh ich of the fetlswing ,.p."s"nts th"
CORRECT orderof pa','ment in a iiquidation?
53. A receiver is appointed )y a conrpanv lo
(A) Unsecured creditors, preference
slrareholders. ordinaiY share- (A) place values r)n i'ssets ttr be liquidatec
holders (B) watch over tl e proceedings of
(B) Preference shareholders, ordinary liquidation
shareholders, unsecured cred itors (c) sell all assets ard pa;r all debts
(C) Preferenceshareholders,unsecured (D) sell assets again;t which a particulai
cred itors, orC inary s hareho lciers loan is secur< d
(D) Unsecured creditors, ordinar-v
shareholders, Preference share-
holders 54. In assessing the operati rg sticcess ci a flrin
fo:- a given period of- i nle. THF-EE ti::eiul
ratios are
{t Wirich of the following is NOT an objective
of financial reporting? (A) current ratia. qui.:'t rati,l anli
deflens ive int, :rual ratic
(A) To provide information that will (B) debt ratio. inter:si ccver and dei;i tc
increase the value of the comPanY equiry ratio
(B) To provide information in assessing (C) inventory iLtrn"ver i'3ti!r. scctrunts
future cash flows i'eceivable periri,J. accouilts
(C) To provide intbrmation that is useful payable peri, ii
for making investment and credit (D) earnings per shi ie. protit mai'gin an.l
decisions ieturn Lrn lls: 3is
(D) To provide information about the
resources of the fi rm and the
claims against those resources

[F,Yoi-i FINISHBEFORETTME ISCAJLLED"CHECKI(O{jB.}VORI.IL.-.N TIJ-ISTEST