Economics, Accounting & Business: Post your doubts here!

[Esme]

I've missed this thread..it's been so long !

 

[Qamar Baloch]

Masha Allah a very wonderful discussion has been taking place at this specific thread. I am really impresed. Allah bless you all who are contributing their effort to help the students. Students should remain thankful to the great people who are helping them free of cost. May Allah give me potential as well to help O/A Level Economics students at international level. Qamar Baloch.

 

[Ferwine222]

Hey guys! Anyone could help me with question 11, 21, 24, 26?
http://papers.xtremepapers.com/CIE/...AS Level/Accounting (9706)/9706_s12_qp_33.pdf

Thanks a lot guys!

 

[Paranoid Android]

http://papers.xtremepapers.com/CIE/...AS Level/Accounting (9706)/9706_w12_qp_41.pdf

can someone please tell me how to calculate the cost of capital used by the company as required in question 1, e (iii). thanks in advance!

 

[Esme]

http://papers.xtremepapers.com/CIE/...AS Level/Accounting (9706)/9706_s10_qp_32.pdf

Q28 The ans is C.
The er says the average investment is 90 000. How is it so ?

 

[student008]

http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_s10_qp_32.pdf

Q28 The ans is C.
The er says the average investment is 90 000. How is it so ?

http://warmah.com/PodCast/Accounting rate of return.pdf Check page no. 5
We always add the scrap/ residual value to the original capital investment amount, and then divide it by 2 to reach at the avg capital or avg investment amount.

Also, if there is an increase in working capital when the investment is made, we add that increase to the avg investment. (After dividing the initial investment amount).

 

[student008]

Hey guys! Anyone could help me with question 11, 21, 24, 26?
http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_s12_qp_33.pdf

Thanks a lot guys!

For q 11 we can find the purchase price by deducting the negative goodwill from the fair value of the assets acquired (We are deducting because there was NEGATIVE GOODWILL; Had their been positive goodwill, We would have added it to the fair value). This gives us the purchase price of $120,000 ($150,000-$30,000). The purchasing business has paid them $80,000 ((16000*(2+3)). Hence, to find the liabilities we deduct $80,000 from $ 120,000 which gives us $40,000 which is A.

For q 21, they have given us the opening inventory at cost price so we simply take 20% of$10000 and we arrive at the profit of the op. inv. of finished goods, we credit this as balance b/d in the provision for unrealised profit a/c. However, the closing inv. is at the transfer price so profit is included in it and to calculate the profit we do ((20/120)*$9000) which gives us $1500. We debit this as balance c/d in the provision for unrealised profit a/c. The difference gives us the amount $500 which is a decrease of $500 and we credit it as revenue in the income statement

For q24, we use the formula of fixed costs/contribution per unit. Production overheads are semi-variable costs and to find the variable amount we use the top-down method. That is change in costs/change in quantity (12000/6000)= $2/ unit (Variable Cost). Then, we can find the fixed prod. overheads by subtracting the variable amount from it. Then divide the total fixed costs by contribution per unit.


For q 26, we will be selling 118000kg, out of which we already have 8000kg, and we need to have 10000kg at the end in reserve as closing inv. Hence, 118000+8000-10000=120,000 kg. This is this amount what shall be left AFTER waste is deducted from the total purchase amount. So, to find the total purchase amount, we divide this 120000kg by 20% which is the waste percentage, we get 150,000 kgs which is our final answer D.

Hope this helps and do pray for our exams!
Cheers (Y)

 

[shahz_h]

Could any1 pleez help me out wid these questions
http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_w11_qp_33.pdf
Q.10 Ans is A
Q.13 Ans is A
Q.29 Ans is A
http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_w06_qp_3.pdf
Q.17 Ans is D
Q.18 Ans is C (hw cum?? i thought it wud b B)
http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_s09_qp_3.pdf
Q.12 Ans is C
Q.20 Ans is C
Q.27 Ans is C
Thnx in Advanc

Help me out wid these questions pleeeezz

 

[student92]

Help me out wid these questions pleeeezz

q10 when a company revalues its assets upwards, this means that its capital reserves will increse, this means that the denominator of gearing and capital employed formulas will increse, resulting in a lower valuse for both ratios
13this one is tricky
genrealy, its known that banks are veru perstimistic, therefore, we expect to take the lower value of the inventory given
so current ratio is ca/cl =2 so 60/20 =30
this means current liabilities would be in total 30 000
now, again the bank is pestimstic, so we take the higher value of the trade payables, this means 30-17 =13 000, the max amount the bank is willing to lend as a bankoverdraft
29 we assess captial investments using the profitability index, that is npv/ capital cost
the highest figure is the most favourable

 

[student92]

17 its d, because, when a debenture is redeemed at premium, the share capital can be utilised, there is no reduction from the retained earnings
the bank account would decrease by 110, while the 100 current liability of the debentures would be altogather removed
18 they are using the average of the interest payments
i dont know why, but thats how they are doing it

 

[Esme]

http://warmah.com/PodCast/Accounting rate of return.pdf Check page no. 5
We always add the scrap/ residual value to the original capital investment amount, and then divide it by 2 to reach at the avg capital or avg investment amount.

Also, if there is an increase in working capital when the investment is made, we add that increase to the avg investment. (After dividing the initial investment amount).

Thanks a lot

 

[starlight123]

can anybody halp me with capital reduction how to do it and how to do mcq questions of it? thnks

 

[shahz_h]

q10 when a company revalues its assets upwards, this means that its capital reserves will increse, this means that the denominator of gearing and capital employed formulas will increse, resulting in a lower valuse for both ratios
13this one is tricky
genrealy, its known that banks are veru perstimistic, therefore, we expect to take the lower value of the inventory given
so current ratio is ca/cl =2 so 60/20 =30
this means current liabilities would be in total 30 000
now, again the bank is pestimstic, so we take the higher value of the trade payables, this means 30-17 =13 000, the max amount the bank is willing to lend as a bankoverdraft
29 we assess captial investments using the profitability index, that is npv/ capital cost
the highest figure is the most favourable

17 its d, because, when a debenture is redeemed at premium, the share capital can be utilised, there is no reduction from the retained earnings
the bank account would decrease by 110, while the 100 current liability of the debentures would be altogather removed
18 they are using the average of the interest payments
i dont know why, but thats how they are doing it

Thnxxx alott

 

[shahz_h]

http://papers.xtremepapers.com/CIE/... AS Level/Accounting (9706)/9706_s09_qp_3.pdf
Cud any1 pleez tell me how to do Q.12& 27
Answrs is C for both

 

[abbey789]

http://papers.xtremepapers.com/CIE/... AS Level/Accounting (9706)/9706_w04_qp_3.pdf
Question 21 answer is C HOW?

 

[abbey789]

http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_s09_qp_3.pdf
Cud any1 pleez tell me how to do Q.12& 27
Answrs is C for both

Question 12

Total sales could have been SP+C/S =$550
No O/S
So for $1 Purchase is sold for $550/$450
So the actual cost of C/S= 50/ ($550/$450)
So GP= 500-(450-40.909)= 90909

Question 7

The total material used= 1.5 kg. Cost is $10
So 1.5 will cost $15 remaining 0.5 is sold for $2 scrap
Sp 15-1=14

 

[shahz_h]

Question 12

Total sales could have been SP+C/S =$550
No O/S
So for $1 Purchase is sold for $550/$450
So the actual cost of C/S= 50/ ($550/$450)
So GP= 500-(450-40.909)= 90909

Question 7

The total material used= 1.5 kg. Cost is $10
So 1.5 will cost $15 remaining 0.5 is sold for $2 scrap
Sp 15-1=14

Thnkss!

 

[abbey789]

ANSWERS
http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_w11_qp_33.pdf
Q.10 Ans is A- because with increase in value of non current assets the value of capital employed rises, thus with more capital and same profit the ROCE decreases, and for gearing the NCA causes risk of the decrease as its asset is increasing.
Q.13 Ans is A
Q.29 Ans is A (take out the ratio of investment to NPV the least will maximize the NPV and so on)
http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_w06_qp_3.pdf
Q.17 Ans is D ( debenture premium reduced from the share premium account which is 10000 and the retained profit remains the same)
Q.18 Ans is C (hw cum?? i thought it wud b B) (because it is a bond the interest rate are equally divided)
http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Accounting (9706)/9706_s09_qp_3.pdf
Q.12 Ans is C (already explained above)
Q.20 Ans is C ( it is a 30 day period, covert it into 60 days and then add 50%, gives 240K)
Q.27 Ans is C (already)

 

[Esme]

I'm so sorry .... I would have really liked to help but unfortunately I've got no time on me...

 

[abbey789]

http://papers.xtremepapers.com/CIE/... AS Level/Accounting (9706)/9706_w04_qp_3.pdf
Question 21 answer is C HOW?