Course Outline

Course Title: Financial Accounting

Class: BS (A &F), BS (Commerce)
B.Com (Annual system):

Course No: BS (A&F): ACC 152

Course No: BS (Commerce): ACC 152
B.Com (Annual system): Part I, Paper VII

Course Objectives:
1. The objective of the course is to introduce the language of business and to train the
students for the preparation of financial statements.
2. To develop competence in using computerized accounting systems.
3. To teach the accounts of different forms of business organizations.
Topic
Corporation, Companies formation, recording of issue of
shares
Stock splits; right issue of shares; treasury stock ;
Sources of retained earnings; retained earnings appropriation
to dividends and reserves; concept and types reserves;
Valuation of goodwill and shares,
Liquidation of joint stock companies.
Accounting for the cash dividends, stock dividends.
IAS-33 Earnings per Share
Account for purchased stock warrants.
EPS, Basic EPS, Primary EPS, Diluted EPS, Fully Diluted
and Anti Diluted EPS
Adjust the weighted average number of common shares for
stock dividends, stock splits, and reverse splits.
Use of treasury stock method
State the major reporting and disclosure requirements for
earnings per share
Long term liabilities
Accounting Information System (AIS) an accountants perspective.
Transaction Processing, ethics, fraud and internal control
Revenue cycle, expenditure cycle purchase and cash disbursement
procedure, payroll processing and fixed asset procedures.
Conversion cycle, financial reporting and management reporting
system.
Computerized Accounting System
Elementary discussion on manual & E.D.P. accounting
How to design a chart of Account? Its types along with
practical examples.
Peachtree Complete accounting software 2006.

Section

Section A

---do---

Section B
---do-----do-----do-----do---

Section C

MODEL PAPER FOR B.COM PART 1

ANNUAL EXAMINATION SYSTEM 2009 & ONWARDS
FINANCIAL ACCOUNTING
OBJECTIVE PART

TIME ALLOWED = 30 MINUTES

INSTRUCTIONS TO CANDIDATES:

This paper comprises 30 MCQs.

Each MCQ carries 1 mark.
Please encircle the correct option only.
Cutting, overwriting and use of ink remover is not allowed.

1.
A.
B.
C.
D.

The major disadvantage of a corporation over partnership is:

Limited liability of stockholders.
Additional taxes.
Transferable ownership rights.
None of the above.

2.
A.
B.
C.
D.

In the stockholders equity section the cost of treasury stock is deducted from:
Total paid-in capital
Retained earnings.
Total shareholders equity.
Common stock in total paid-in capital.

3.
A.
B.
C.
D.

In stock splits, number of outstanding shares is

Doubled
Decreased
Increased
All of the above

4.
A.
B.
C.
D.

When Stock dividend is declared by the company, Balance sheet total is

Increased with the amount of dividend
Not affected
Decreased
None of the above

5.
A.
B.
C.
D.

Goodwill of a corporation and remuneration of its managers

Related with EPS
Not Related with EPS
Positively Related with EPS
Negatively Related with EPS

6.
A.
B.
C.
D.

While calculating Bonds value

Only Maturity value is considered
Periodic interest payments are considered
Both are considered
Both are ignored.

MAX MARKS = 30

7.
A.
B.
C.
D.

When a bond is redeemed before maturity, which of the following actions are necessary
Eliminate the carrying value of the bond at redemption
Record the cash paid
Recognize the gain or loss on redemption.
All of the above.

8.
A.
B.
C.
D.

Transaction cycles are studied because

These are easy to understand
They show relationship
Accounting is continuous
All of the above

9.
A.
B.
C.
D.

Which of the following is one of the Payroll reports?

Inventory status report
Salaries adjustment report
Payroll cheques printed report
Query vendor report

10.
A.
B.
C.
D.

Journal Entry system is a phase of

Business activities cycle
Financial cycle
Conversion cycle
Expenditure cycle

11. A documentation tool used to represent the logical elements of a system is a(n)
A.
B.
C.
D.

Programming flowchart
Entity relationship diagram
Document flowchart
Data flow diagram

12.
A.
B.
C.
D.
13.
A.
B.
C.
D.
14.

The coding system used in Peachtree for setting up vendors includes

Uppercase letters only.
Lowercase letters only.
A combination of letters and numbers.
All of the above.
When using Peachtree, dates may be entered in the following way(s):
"30107" will show as March 1, 2007.
"4" will show as March 4, 2007 (when working in March 2007).
The pop-up calendar can be used to select the correct date.
All of the above.
When recording the chart of accounts, the field you use to classify financial statement
accounts is called:
Account ID.
Account description.
Account type.
None of the above.
The Vendor Ledgers report displays the:
Accounts receivable control account.
Accounts receivable subsidiary ledger.
Accounts payable subsidiary ledger
Accounts payable control account

A.
B.
C.
D.
15.
A.
B.
C.
D.

NOTE: Only 15 MCQs (5 MCQs from each section) are provided for specimen purposes. Actual paper
will comprise 30 MCQs (10 MCQs from each section)

MODEL PAPER FOR B.COM PART 1

ANNUAL EXAMINATION SYSTEM 2009 & ONWARDS
FINANCIAL ACCOUNTING
SUBJECTIVE PART

TIME ALLOWED = 90 MINUTES

MAX MARKS = 45

INSTRUCTIONS TO CANDIDATES:

This paper comprises of 3 Sections

Attempt only one question from each section.
Each question carries 15 marks.
SECTION A (Attempt any one of two)

Question No 1:
(a) How are EPS results computed for a corporation with complex capital structure?

(5)

(b) Star Corp. reports following stockholders equity on December 31, 19A:
Common Stock Rs.1 par, 150,000 shares authorized,
100,000 shares outstanding
Paid-in capital in excess of Par
Retained Earnings

Rs. 100,000
Rs. 700,000
Rs. 1,026,000

It completed the following transactions related to stockholders equity in the year 19B:
Jan. 10
Mar.02
Mar.31
Oct.11
Nov.25
Dec.06
Dec.31

Purchased 20,000 shares of its own stock at Rs.12 cash per share.
Directors declared Rs.1.25 per share cash dividend to the stockholders of
Corp. recorded at March 15.
Paid the dividend declared on March 02.
Sold 12,000 of its treasury stock at Rs.15 cash per share.
Sold 8,000 of its treasury stock at Rs.10.50 cash per share.
Directors declared Rs.2.50 per share cash dividend payable on January 05,
19C to the December 12 shareholders of record.
Corp. reported Rs.241,000 net income for the current year, which is still to
be closed.

Required: Prepare Journal Entries and Stockholders Equity Section of Balance sheet from the
foregoing information.
(07+03)
Question No 2:
(a) What are the reasons of declaring a stock dividend? How small and large stock dividends are
recorded?
(06)
(b) Quick Solutions Inc. issued 100,000 common shares on January 01, 2006. Further 25,000 shares
were sold in the market on April 15, 2006. Company declared a 20% stock dividend on November
01, 2006.
Capital structure includes 6% preferred stock (non-cumulative and non-participating), Rs. 50 par,
1,000 shares outstanding.
Net income for 2006 was Rs. 1.25 million. No cash dividends were declared during the year.
Required: Calculate EPS from the above data.

(09)

SECTION B (Attempt any one of two)

Question No 3: - (a) Define and distinguish between Data Flow Diagram, Entity Relationship Diagram and
Flow Charts. Give at least two examples of ERD and DFD.
(10)
(b) On March 16, 2002, when market interest rate was 8%, Chris Company issued 7% 1,000 bonds having
Par Rs.1,000 each (maturity date is March 15, 2017). Interest was to be paid on each March 15 and
September 15. Company uses straight-line amortization for bonds premium or discount.
Required: Pass necessary journal entries for 2002.

(05)

Question No 4: - (a) The Phillip Inc. is engaged in manufacturing. When materials are ordered, a duplicate
of the purchase order is sent to the receiving department. When the materials are received, the receiving
clerk records the receipt on the copy of the order, which is then sent to the accounting department to
support the entry to accounts payable and material purchases. The materials are then taken to stores, where
the quantity is entered on bin cards.
Required: (i) Identify any deficiency in the above mentioned procedures.
(ii) Recommend changes in the procedures to correct each weakness.

(08)

(b) Mehmood Textile Ltd issued Rs.600,000, 11% 5 years bond on 01-01-2005 for Rs.550,000. Interest is
payable semiannually on 30th June and 31st December of each year, Company uses the straight line
method to amortize bond premium or discount.
Required:
Calculate the amount of interest that will be expensed on 30th June & 31st December 2005.
Calculate the carrying value of bond on 30-06-2006.
(05+02)
SECTION C (Attempt any one of two)
Question No 5: Devise a coding scheme using block and sequential codes for the following chart of
accounts for Digital Camera distributors:
(15)
Taxes Payable
Cash
Notes Payable
Accounts Receivable
Bonds Payable
Office supplies Inventory
Common shares
Prepaid insurance
Share Premium
Inventory
Retained Earnings
Marketable Securities
Sales
Delivery Van
Sales Returns
Accumulated Depreciation-Delivery Van
Dividend Income
Plant
Cost of Goods Sold
Accumulated Depreciation-Plant
Wages Expense
Furniture and Fixtures
Utility Expense
Accumulated Depreciation-Furniture & Fixtures
Supplies Expense
Building
Insurance Expense
Accumulated Depreciation-Building
Depreciation Expense
Land
Advertising Expense
Accounts Payable
Fuel Expense
Wages Payable
Interest Expense
Question No 6: With respect to inventory module of Peachtree Accounting Software answer the following
questions?
Which inventory system Peachtree uses?
How to set up an inventory item?
How to record an inventory adjustment?
What are the inventory reports it generates (List any three)?

(2)
(6)
(4)
(3)