APPENDIX 1: KEY FINANCIAL RATIOS

Gross Profit Percentage = Gross Profit/Net Sales

Equity Ratio = Common Shareholders' Equity / Total Assets
Bond Interest Coverage = Operating Income / Annual Bond Interest
Preferred Dividend Coverage = Operating Income / (Bond Interest + Preferred Dividend
Requirements)
Working Capital Turnover = Net Sales / Average Working Capital
Current Ratio = Current Assets / Current Liabilities

Quick Ratio = Quick Assets / Current Liabilities

Inventory Turnover = Cost of Sales / Average Inventory

Accounts Receivable Turnover = Net Sales / Average of net Accounts Receivables
Average Collection Period = (Trade Accounts Receivable / Sales) * 365
or 365 / Accounts Receivable Turnover
Return on Assets = Operating Income / Total Average Assets
Return on Common Shareholders Equity = (Net Income – Preferred Dividend Requirement) /

Average Common Shareholders E

Return on Sales = Net Income / Net Sales
Earnings Per Share = (Net income – Preferred Div. Requirement) /
Weighted Average # of common shares
Price Earnings Ratio = Market Price of Common Share / EPS
Dividend Yield = Dividends per Share / Market Price per share
Dividend Payout Ratio = Common Dividends per Share / Earnings per Share
APPENDIX 2 - TIME VALUE TABLES
Financial Accounting
Workbook
(Version 2.1)

Tony Bell

© Tony Bell, 2022

1
Table of Contents
A Note to Instructors ............................................................................................................. 3
Module 1: Introduction to the Financial Statements .............................................................. 4
Module 2: Recording Transactions ....................................................................................... 14
Module 3: Adjusting Entries and Closing Entries ................................................................... 23
Module 4: Cash ................................................................................................................... 32
Module 5: Receivables ......................................................................................................... 37
Module 6: Inventory Purchases, Sales, Returns and Discounts .............................................. 46
Module 7: Cost of Inventory (FIFO, LIFO, Weighted Average, and Specific Identification) ...... 53
Module 8: Property, Plant and Equipment ........................................................................... 60
Module 9: Liabilities ............................................................................................................ 68
Module 10: Equity ............................................................................................................... 74
Module 11: Statement of Cash Flows ................................................................................... 79
Module 12: Ratios and Financial Statement Analysis ............................................................ 88
All Video Links ..................................................................................................................... 96

2
 Module 7: Cost of
Inventory (FIFO, LIFO,
Weighted Average, and
Specific Identification)

Module Introduction Video:

[Link]

Template Used in this Chapter’s Problems:

[Link]
entory_template.xlsx

53
7-1A – FIFO, LIFO and Weighted Average Inventory Records

Lakeshore Ltd. uses a perpetual inventory system and reports the following transactions for the
month of January:

Date Explanation Units Cost/Price

January 1 Beginning inventory 200 $25.00
January 5 Purchase 50 24.00
January 8 Purchase 110 23.00
January 15 Sale 260 50.00
January 21 Purchase 150 20.00
January 30 Sale 175 50.00

Required:
a.) Prepare inventory records using:
i. The FIFO method
ii. The LIFO method
iii. The weighted average method
b.) Under each of the methods you prepared in part a.) above, compute Sales, Cost of
Goods Sold and Gross Profit.

NOTE: Download the template from [Link]

Members Video Walkthrough:

7-1A (Part 1) [Link]
7-1A (Part 2) [Link]
7-1A (Part 3) [Link]

54
7-1B – FIFO, LIFO and Weighted Average Inventory Records

Riverside Inc. uses a perpetual inventory system and reports the following transactions for the
month of July:

Date Explanation Units Cost/Price

July 1 Beginning inventory 12 $100.00
July 4 Purchase 8 103.00
July 9 Purchase 5 104.00
July 17 Sale 23 400.00
July 21 Purchase 6 107.00
July 31 Sale 7 400.00

Required:
a.) Prepare inventory records using:
i. The FIFO method
ii. The LIFO method
iii. The weighted average method
b.) Under each of the methods you prepared in part a.) above, compute Sales, Cost of
Goods Sold and Gross Profit.

NOTE: Download the template from [Link]

Members Video Walkthrough:

7-1B (Part 1) [Link]
7-1B (Part 2) [Link]
7-1B (Part 3) [Link]

55
7-2A – FIFO, LIFO and Weighted Average Inventory Records and Entries

Aberdeen Auto Mart uses a perpetual inventory system and reports the following transactions for
the month of May for one of its products:

Date Explanation Units Cost/Price

May 1 Beginning inventory 20 $3.00
May 5 Purchase 5 3.25
May 13 Sale 22 10.00
May 20 Purchase 7 3.55
May 24 Purchase 5 3.70
May 31 Sale 13 10.00

Required:
a.) Prepare inventory records using:
i. The FIFO method
ii. The LIFO method
iii. The weighted average method
b.) Under each of the methods you prepared in part a.) above, compute Sales, Cost of
Goods Sold and Gross Profit.
c.) Prepare journal entries for May 24 and May 31 under all methods.

NOTE: Download the template from [Link]

Free Video Walkthrough:

7-2A (Part 1) [Link]
7-2A (Part 2) [Link]
7-2A (Part 3) [Link]

56
7-2B – FIFO, LIFO and Weighted Average Inventory Records and Entries

Northhills Super Save uses a perpetual inventory system and reports the following transactions
for the month of December for one of its products:

Date Explanation Units Cost/Price

December 1 Beginning inventory 6 $40.00
December 6 Purchase 4 42.00
December 11 Sale 7 100.00
December 24 Purchase 12 43.40
December 26 Purchase 5 44.00
December 31 Sale 10 100.00

Required:
a.) Prepare inventory records using:
i. The FIFO method
ii. The LIFO method
iii. The weighted average method
b.) Under each of the methods you prepared in part a.) above, compute Sales, Cost of
Goods Sold and Gross Profit.
c.) Prepare journal entries for December 26 and December 31 under all methods.

NOTE: Download the template from [Link]

Members Video Walkthrough:

7-2B (Part 1) [Link]
7-2B (Part 2) [Link]
7-2B (Part 3) [Link]

57
7-3A – Lower of Cost and Net Realizable Value

On May 3, 2024, Smith Computing (a computer retailer) purchases a tablet computer for $300,
and immediately puts the tablet on sale for $449. The tablet received poor reviews in the press,
and it does not sell. On July 1, Smith Computing discounts the tablet to $399. It still doesn’t
sell. On August 15, the tablet gets further discounted to $349, but doesn’t sell. On December 26
(Boxing Day) the tablet gets discounted to $269. The tablet sells on January 8, 2025 for its
discounted price of $269.

The company’s fiscal year end is December 31.

Required
Explain the lower of cost and net realizable value rule and record any necessary year-end
adjusting entries.

Members Video Walkthrough:

[Link]

7-3B – Lower of Cost and Net Realizable Value

On June 1, 2024, Bill’s Ski World buys a new pair of Cambria Carbon Pro skis for $600 and puts
them on sale for $999. The skis do not sell, and see price reductions as follows:
August 18 - $900
September 30 - $750
November 15 - $700
December 26 - $550

The company’s fiscal year end is December 31.

The skis finally sell on April 6, 2025 for $550.

Required
Record all entries required for the life of the skis.

Members Video Walkthrough:

[Link]

58
7-4A – Inventory Ratios

The following information relates to Orange Computer (in millions of dollars):

2028 2027 2026

Cost of goods sold $112,000 $105,000 $90,000
Inventory 2,000 1,800 800

Required:
a.) Compute inventory turnover for 2027 and 2028
b.) Compute days sales in inventory for 2027 and 2028
c.) Comment on the results from parts a.) and b.)

Members Video Walkthrough:

[Link]

7-4B – Inventory Ratios

The following information relates to Home DIY Stores (in millions of dollars):

2028 2027 2026

Cost of goods sold $54,000 $51,000 $49,000
Inventory 11,000 11,100 11,700

Required:
a.) Compute inventory turnover for 2027 and 2028
b.) Compute days sales in inventory for 2027 and 2028
c.) Comment on the results from parts a.) and b.)

Members Video Walkthrough:

[Link]

59
 Module 8: Property,
Plant and Equipment

Module Introduction Video:

[Link]

60
8-1A – Asset Cost

Frugal Bakery purchased a large oven on October 31, 2024. Costs related to the acquisition
included the following:

a.) purchase price of the oven: $32,000;

b.) the cost of delivery: $2,000;
c.) insurance on the delivery: $200;
d.) insurance on the oven for the year: $750;
e.) staff safety training to use the oven properly: $1,000
f.) installation: $1,500;
g.) damage to the walls during installation that required repair: $400

The company paid cash for the oven and all of the related costs.

Required:

The credit for each of the items above should be cash. In each case identify the account to be
debited

Members Video Walkthrough:

[Link]

61
8-1B – Asset Cost

Island Glass makes specialty doors and windows. On July 17, 2024, the company purchased a
new piece of equipment with the following costs:

a.) purchase price of the equipment: $2,500;

b.) delivery: $500;
c.) sales tax (refundable) $300;
d.) insurance on delivery: $50;
e.) installation: $300;
f.) repair of machine damaged during installation: $1,000;
g.) employee training: $800.

The company paid cash for the equipment and all of the related costs.

Required:

The credit for each of the items above should be cash. In each case identify the account to be
debited

Members Video Walkthrough:

[Link]

62
8-2A – Depreciation – Partial Year, All Methods

On March 31, 2024, Kemp Co. purchased a new vehicle for $25,000. The vehicle had an
expected useful life of five years, and an expected residual value of $5,000. The company
expected that in those five years, the vehicle would be driven for 100,000 kilometers based on
the following schedule:

2024 – 10,000 kilometers

2025 – 20,000 kilometers
2026 – 25,000 kilometers
2027 – 22,000 kilometers
2028 – 18,000 kilometers
2029 – 5,000 kilometers

Required:
Assuming a December 31 fiscal year-end, prepare a depreciation schedule for the life of the asset
using:
a.) Straight-line depreciation
b.) Units-of-production depreciation
c.) Double-declining-balance depreciation

Free Video Walkthrough:

8-2A (Part 1) [Link]
8-2A (Part 2) [Link]
8-2A (Part 3) [Link]

63
8-2B – Depreciation – Partial Year, All Methods

On July 1, 2024, Payton Inc. purchased a new piece of equipment for $500,000. The equipment
had an expected useful life of four years, and an expected residual value of $100,000. The
company expected that in those four years, the machine would produce 40,000 units based on the
following schedule:

2024 – 3,000 units

2025 – 11,000 units
2026 – 12,000 units
2027 – 10,000 units
2028 – 4,000 units

Required:
Assuming a December 31 fiscal year-end, prepare a depreciation schedule for the life of the asset
using:
a.) Straight-line depreciation
b.) Units-of-production depreciation
c.) Double-declining-balance depreciation

Members Video Walkthrough:

[Link]

64
8-3A – Disposing of Depreciable Assets at a Gain or Loss

Bill’s Towing purchased a new tow truck on April 1, 2024 for $110,000 cash. The company
expects to keep the tow truck for 10 years, after which time it plans to sell the truck for $10,000.
The company’s accountant wishes to use straight-line depreciation. Bill’s Towing has a fiscal
year end of December 31. On October 1, 2025, Bill sells the truck for $106,000 cash.

Required:
a.) Record all relevant entries for the truck.
b.) Assume that instead of $106,000, Bill had received $75,000 for the truck – re-record
the sale journal entry given this new sale price.

Free Video Walkthrough:

[Link]

8-3B – Disposing of Depreciable Assets at a Gain or Loss

Gaby’s Family Restaurant purchases a new stove on July 1, 2024. The company pays $8,000
cash. Gaby expects the stove to be useful for 5 years after which time she expects to sell it for
$2,000. The company has a December 31 fiscal-year end and would like to use straight-line
depreciation. On October 31, 2025, Gaby sells the stove for $7,600 cash.

Required:
a.) Record all relevant journal entries for the life of the stove.
b.) Assume that instead of $7,600, Gaby sold the stove for $3,000. Re-record the sale
journal entry given this new sale price.

Members Video Walkthrough:

[Link]

65
8-4A – Disposing of Depreciable Assets at a Gain or Loss – various depreciation methods

On July 1, 2024, Table Co. purchased a new piece of equipment for $150,000. The equipment
had an expected useful life of five years, and an expected residual value of $30,000. The
company expected that in those five years, the machine would operate for 2,000 hours.

The company has a fiscal year end of December 31.

On September 30, 2026, the company sells the equipment for $100,000.

The machine actually operated for the following hours:

2024 – 200 hours
2025 – 500 hours
2026 – 400 hours

Required:
Fill in the following table:

Straight Line Units of Production Double D. Balance

2024 Depreciation exp

2025 Depreciation exp

2026 Depreciation exp

Accumulated Dep’n
on Date of Sale
Gain/Loss on Sale

Members Video Walkthrough:

[Link]

66
8-4B – Disposing of Depreciable Assets at a Gain or Loss – various depreciation methods

On April 1, 2024, Stool Co. purchased a new vehicle for $45,000. The vehicle had an expected
useful life of six years, and an expected residual value of $9,000. The company expected that in
those six years, the vehicle would be driven for 150,000 kilometers.

The company has a fiscal year end of December 31.

On July 1, 2026, the company sells the vehicle for $28,000.

The vehicle was actually driven for the following kilometers each year:
2024 – 10,000 kilometers
2025 – 20,000 kilometers
2026 – 15,000 kilometers

Required:
Fill in the following table:

Straight Line Units of Production Double D. Balance

2024 Depreciation exp

2025 Depreciation exp

2026 Depreciation exp

Accumulated Dep’n
on Date of sale
Gain/Loss on Sale

Members Video Walkthrough:

[Link]

67
 Module 9: Liabilities

Module Introduction Video:

[Link]

Template Used this Chapter:

[Link]

68
9-1A – Short-Term Note Payable

On September 1, 2024, Taylor Inc. borrowed $30,000 and signed a note promising to pay back
the principal plus 6% (annual) interest after nine months. The company’s fiscal-year end is
January 31.

Required:
Assuming the company makes the repayment as agreed, record all journal entries and
adjustments required for the note.

Members Video Walkthrough:

[Link]

9-1B – Short-Term Note Payable

On May 31, 2024, Anderson Co. borrowed $100,000 and signed a note promising to pay back
the principal plus 2.4% (annual) interest after eight months. The company’s fiscal-year end is
November 30.

Required:
Assuming the company makes the repayment as agreed, record all journal entries and
adjustments required for the note.

Members Video Walkthrough:

[Link]

69
9-2A – Warranties

Long Corporation sells computer systems for $2,000 each. During 2024 the company sells 200
systems to customers. The company provides a 1-year manufacturer’s warranty. The company
has estimated that it will experience warranty claims of approximately $100 per unit.

Required:

a.) Record the year-end adjustment for warranties needed on December 31, 2024.
b.) On January 15, 2025 a warranty claim comes in costing the company $500 cash. Record
the adjustment required for this situation.
c.) What is a contingent liability? Does a warranty fit this definition?

Members Video Walkthrough:

[Link]

9-2B – Warranties

Short Corporation sells air conditioning units for $1,000 each. During 2024 the company sells
100 systems to customers. The company provides a 1-year manufacturer’s warranty. The
company has estimated that it will experience warranty claims of approximately $100 per unit.

Required:

a.) Record the year-end adjustment for warranties needed on December 31, 2024.
b.) On January 25, 2025 a warranty claim comes in costing the company $200 cash. Record
the adjustment required for this situation.

Members Video Walkthrough:

[Link]

70
9-3A – Bond Issued at a Discount

On February 1, 2024, Tinger Inc. issues a $100,000 10-year 5% bond. The market rate of interest
is 6%. Because the market rate is higher than the bond rate, the bonds issue at a discount. The
bond quote is: 92.561. The bonds pay interest semi-annually on February 1 and August 1. The
company’s fiscal-year end is September 30.

Required

a.) Prepare a bond amortization schedule for the issuance and the first two interest periods.
b.) Record the journal entry required on:
i. The issuance of the bond. (February 1, 2024)
ii. The first interest payment. (August 1, 2024)
iii. The company’s fiscal year-end. (September 30, 2024)
iv. The second interest payment. (February 1, 2025)

NOTE: Download the template from [Link]

Free Video Walkthrough:

[Link]

9-3B – Bond Issued at a Discount

On November 1, 2024, Terry Co. issues a $1,000,000 5-year 3% bond. The market rate of
interest is 5%. Because the market rate is higher than the bond rate, the bonds issue at a
discount. The bond quote is: 91.248. The bonds pay interest semi-annually on May 1 and
November 1. The company’s fiscal-year end is May 31.

Required

a.) Prepare a bond amortization schedule for the issuance and the first two interest periods.
b.) Record the journal entry required on:
i. The issuance of the bond. (November 1, 2024)
ii. The first interest payment. (May 1, 2025)
iii. The company’s fiscal year-end. (May 31, 2025)
iv. The second interest payment. (November 1, 2025)

NOTE: Download the template from [Link]

Members Video Walkthrough:

[Link]

71
9-4A – Bond Issued at a Premium

On April 30, 2024, Smokey Inc. issues a $10,000,000 10-year 7% bond. The market rate of
interest is 6%. Because the market rate is lower than the bond rate, the bonds issue at a
premium. The bond quote is: 107.439. The bonds pay interest semi-annually on October 31 and
April 30. The company’s fiscal-year end is December 31.

Required

a.) Prepare a bond amortization schedule for the issuance and the first two interest periods.
b.) Record the journal entry required on:
i. The issuance of the bond. (April 30, 2024)
ii. The first interest payment. (October 31, 2024)
iii. The company’s fiscal year-end. (December 31, 2024)
iv. The second interest payment. (April 30, 2025)

NOTE: Download the template from [Link]

Free Video Walkthrough:

[Link]

9-4B – Bond Issued at a Premium

On January 31, 2024, Bandit Inc. issues a $100,000 10-year 5% bond. The market rate of interest
is 4.5%. Because the market rate is lower than the bond rate, the bonds issue at a premium. The
bond quote is: 103.991. The bonds pay interest semi-annually on January 31 and July 31. The
company’s fiscal-year end is December 31.

Required

a.) Prepare a bond amortization schedule for the issuance and the first two interest periods.
b.) Record the journal entry required on:
i. The issuance of the bond. (January 31, 2024)
ii. The first interest payment. (July 31, 2024)
iii. The company’s fiscal year-end. (December 31, 2024)
iv. The second interest payment. (July 31, 2025)

NOTE: Download the template from [Link]

Members Video Walkthrough:

[Link]

72
9-5A – Computing Bond Issue Price

On November 30, 2024, Jones Inc. issues a $5,000,000 20-year 7% bond. The market rate of
interest is 6%.

Required

a.) Compute the issue price of the bond.

b.) Compute the bond quote.

Members Video Walkthrough:

[Link]

9-5B – Computing Bond Issue Price

On July 31, 2024, Birthday Store Co. issues a $1,000,000 10-year 5% bond. The market rate of
interest is 5.5%.

Required

a.) Compute the issue price of the bond.

b.) Compute the bond quote.

Members Video Walkthrough:

[Link]

73
 Module 10: Equity
Module Introduction Video:

[Link]

74
10-1A – Equity transactions, Statement of Changes in Shareholders’ Equity
The December 31, 2023 shareholders’ equity section of Bossman Inc.’s balance sheet is shown
below:

Preferred shares, $10 non-cumulative, 500 issued $50,000

Common shares, 20,000 issued 200,000
Retained earnings 750,000
Total shareholders’ equity $1,000,000

The following equity transactions occurred during 2024:

Jan 31 Issued 5,000 common shares for $12 each.

May 14 Issued 100 preferred shares in exchange for equipment with a fair value of
$90,000.
July 1 Declared the regular cash dividend on preferred shares.
July 15 Paid the regular cash dividend on preferred shares.
August 7 Declared and issued a 20% stock dividend on common shares at a time when the
market price was $13 per share.

Required:
a.) Journalize the transactions above.
b.) Assuming net income for the year was $125,000, prepare the statement of changes of
shareholders’ equity for the year ended December 31, 2024.

Free Video Walkthrough:

[Link]

75
10-1B – Equity transactions, Statement of Changes in Shareholders’ Equity
The December 31, 2023 shareholders’ equity section of Kamala Co.’s balance sheet is shown
below:

Preferred shares, $2 cumulative, 1,000 issued $25,000

Common shares, 10,000 issued 150,000
Retained earnings 200,000
Total shareholders’ equity $375,000

The following equity transactions occurred during 2024:

Jan 15 Issued 1,000 common shares for a piece of land with a fair value of $16,000.
Mar 21 Issued 100 preferred shares for $3000 cash.
August 1 Declared the regular cash dividend on preferred shares.
August 10 Paid the regular cash dividend on preferred shares.
November 8 Declared and issued a 10% stock dividend on common shares at a time when the
market price was $18 per share.

Required:
a.) Journalize the transactions above.
b.) Assuming net income for the year was $50,000, prepare the statement of changes of
shareholders’ equity for the year ended December 31, 2024.

Members Video Walkthrough:

[Link]

76
10-2A – Equity section analysis
The December 31, 2024 shareholders’ equity section of Hart Inc.’s balance sheet is shown
below:

Preferred shares, $6 non-cumulative, 1,500 issued $75,000

Common shares, 1,000,000 authorized, 40,000 issued 80,000
Retained earnings 120,000
Total shareholders’ equity $275,000

Required:
a.) How much were the preferred shares issued for?
b.) How much were the common shares issued for?
c.) What does authorized mean as it relates to common shares?
d.) What does the term “non-cumulative” mean in relation to preferred shares?
e.) What amount must the preferred shareholders receive before common shareholders can
be paid a dividend?
f.) Assume the company declared and paid the preferred dividend and also paid a dividend
of $2 per common share. Journalize the transaction.

Members Video Walkthrough:

[Link]

77
10-2B – Equity section analysis
The December 31, 2024 shareholders’ equity section of Hart Inc.’s balance sheet is shown
below:

Preferred shares, $2 cumulative, 2,500 issued $250,000

Common shares, 10,000,000 authorized, 10,000 issued 500,000
Retained earnings 300,000
Total shareholders’ equity $1,050,000

Required:
a.) How much were the preferred shares issued for?
b.) How much were the common shares issued for?
c.) What does authorized mean as it relates to common shares?
d.) What does the term “cumulative” mean in relation to preferred shares?
e.) What amount must the preferred shareholders receive before common shareholders can
be paid a dividend?
f.) Assume the company has not paid any dividends in 2023 or 2024. On January 15, 2025
the company wishes to pay common shareholders a dividend of $1 per share. How much
must they pay preferred shareholders at that time? Record the journal entry for both the
preferred and common dividends.

Members Video Walkthrough:

[Link]

78
 Module 11: Statement of
Cash Flows

Module Introduction Video:

[Link]

Template Used in Problem:

[Link]
xlsx

79
11-1A – Basic Cash Flow Statement
The financial statements of Bait and Tackle are presented below:

Bait and Tackle

Balance Sheet
As at December 31
2024 2023
Cash $39,000 $24,000
Accounts receivable 64,000 50,000
Inventory 58,000 88,000
Equipment 325,000 250,000
Accumulated depreciation (92,000) (125,000)
Total assets $394,000 $287,000

Accounts payable $32,000 $40,000

Income taxes payable 10,000 11,000
Bank loan payable 20,000 0
Common shares 60,000 50,000
Retained earnings 272,000 186,000
Total liabilities and shareholders’ equity $394,000 $287,000

Bait and Tackle

Income Statement
For the Year Ended December 31, 2024
Sales $635,000
Cost of goods sold 320,000
Gross profit 315,000
Operating expenses 135,000
Operating income 180,000
Interest expense 1,000
Income before taxes 179,000
Income taxes 43,000
Net income $136,000

Additional information:
1.) Operating expenses are composed of: Depreciation $12,000; Salaries $50,000; Loss on Sale of Equipment
$9,000; other operating expenses $64,000.
2.) Other operating expenses are cash expenses.
3.) Equipment was purchased during the year for $135,000 cash.
4.) Equipment was sold for cash during the year. The original cost of the equipment was $60,000, and the
accumulated depreciation was $45,000.
5.) Dividends were declared and paid during the year.

Required:
Prepare a cash flow statement using the direct method or indirect method or both (depending on what your instructor
assigns).

NOTE: Download the template from [Link]

Free Video Walkthrough:

11-1A (Part 1) [Link]
11-1A (Part 2) [Link]
11-1A (Part 3) [Link]

80
11-1B – Basic Cash Flow Statement

The financial statements of Safety First are presented below:

Safety First
Balance Sheet
As at December 31
2024 2023
Cash $2,600 $500
Accounts receivable 500 800
Inventory 2,500 2,300
Equipment 21,000 17,000
Accumulated depreciation (3,800) (3,000)
Total assets $22,800 $17,600

Accounts payable $200 $600

Income taxes payable 400 300
Bank loan payable 2,000 0
Common shares 200 100
Retained earnings 20,000 16,600
Total liabilities and shareholders’ equity $22,800 $17,600

Safety First
Income Statement
For the Year Ended December 31, 2024
Sales $51,000
Cost of goods sold 29,000
Gross profit 22,000
Operating expenses 15,000
Operating income 7,000
Interest expense 100
Income before taxes 6,900
Income taxes 2,000
Net income $4,900

Additional information:
1.) Operating expenses are composed of: Depreciation $1,800; Salaries $12,000; Loss on Sale of Equipment
$400; other operating expenses $800.
2.) Other operating expenses are cash expenses.
3.) Equipment was purchased during the year for $7,000 cash.
4.) Equipment was sold for cash during the year. The original cost of the equipment was $3,000, and the
accumulated depreciation was $1,000.
5.) Dividends were declared and paid during the year.

Required:
Prepare a cash flow statement using the direct method or indirect method or both (depending on what your instructor
assigns).
NOTE: Download the template from [Link]

Members Video Walkthrough:

[Link]

81
11-2A –Cash Flow Statement

The financial statements of Simmons Inc. are presented below:

Simmons Inc.
Balance Sheet
As at May 31
2024 2023
Cash $37,000 $35,000
Accounts receivable 14,000 9,000
Inventory 18,000 15,000
Prepaid insurance 2,000 6,000
Building and equipment 92,000 77,000
Accumulated depreciation (31,000) (19,000)
Total assets $132,000 $123,000

Accounts payable $18,000 $30,000

Salaries payable 4,000 6,000
Income taxes payable 3,000 4,000
Bank loan payable 30,000 10,000
Common shares 6,000 3,000
Retained earnings 71,000 70,000
Total liabilities and shareholders’ equity $132,000 $123,000

Simmons Inc.
Income Statement
For the Year Ended May 31, 2024
Sales $425,000
Cost of goods sold 186,000
Gross profit 239,000
Operating expenses 188,000
Operating income 51,000
Interest expense 2,000
Income before taxes 49,000
Income taxes 10,000
Net income $39,000

Additional information:
1.) Operating expenses are composed of: Depreciation $21,000; Salaries $134,000; Gain on Sale of Equipment
$6,000; other operating expenses $39,000.
2.) Prepaid insurance is related to the other operating expenses.
3.) Equipment was purchased during the year for $32,000 cash.
4.) Equipment was sold for cash during the year. The original cost of the equipment was $17,000, and the
accumulated depreciation was $9,000.
5.) Dividends were declared and paid during the year.

Required:
Prepare a cash flow statement using the direct method or indirect method or both (depending on what your instructor
assigns).
NOTE: Download the template from [Link]

Members Video Walkthrough:

[Link]

82
11-2B –Cash Flow Statement
The financial statements of Kimmel Inc. are presented below:
Kimmel Inc.
Balance Sheet
As at July 31
2024 2023
Cash $104,000 $123,000
Accounts receivable 78,000 84,000
Inventory 409,000 368,000
Prepaid insurance 15,000 12,000
Building and equipment 704,000 684,000
Accumulated depreciation (219,000) (215,000)
Total assets $1,091,000 $1,056,000

Accounts payable $42,000 $51,000

Salaries payable 20,000 13,000
Income taxes payable 8,000 7,000
Bank loan payable 140,000 200,000
Common shares 70,000 61,000
Retained earnings 811,000 724,000
Total liabilities and shareholders’ equity $1,091,000 $1,056,000

Kimmel Inc.
Income Statement
For the Year Ended July 31, 2024
Sales $931,000
Cost of goods sold 483,000
Gross profit 448,000
Operating expenses 268,000
Operating income 180,000
Interest expense 15,000
Income before taxes 165,000
Income taxes 40,000
Net income $125,000

Additional information:
1.) Operating expenses are composed of: Depreciation $35,000; Salaries $155,000; Loss on Sale of Equipment
$4,000; other operating expenses $74,000.
2.) Prepaid insurance is related to the other operating expenses.
3.) Equipment was purchased during the year for $74,000 cash.
4.) Equipment was sold for cash during the year. The original cost of the equipment was $54,000, and the
accumulated depreciation was $31,000.
5.) Dividends were declared and paid during the year.

Required:
Prepare a cash flow statement using the direct method or indirect method or both (depending on what your instructor
assigns).
NOTE: Download the template from [Link]

Members Video Walkthrough:

[Link]

83
11-3A –Cash Flow Statement
The financial statements of Vita Cleanse Inc. are presented below:
Vita Cleanse Inc.
Balance Sheet
As at June 30
2024 2023
Cash $326,000 $385,000
Accounts receivable 120,000 148,000
Inventory 1,325,000 1,105,000
Prepaid insurance 15,000 20,000
Building and equipment 1,591,000 1,659,000
Accumulated depreciation (900,000) (942,000)
Total assets $2,275,000 $2,375,000

Accounts payable $75,000 $88,000

Salaries payable 25,000 19,000
Dividends payable 4,000 6,000
Income taxes payable 15,000 18,000
Bank loan payable 1,500,000 1,700,000
Common shares 75,000 50,000
Retained earnings 783,000 494,000
Total liabilities and shareholders’ equity $2,477,000 $2,375,000

Vita Cleanse Inc.

Income Statement
For the Year Ended June 30, 2024
Sales $3,650,000
Cost of goods sold 2,140,000
Gross profit 1,510,000
Operating expenses 925,000
Operating income 585,000
Interest expense 143,000
Income before taxes 442,000
Income taxes 115,000
Net income $327,000

Additional information:
1.) Operating expenses are composed of: Depreciation $238,000; Salaries $588,000; Loss on Sale of
Equipment $23,000; other operating expenses $76,000.
2.) Prepaid insurance is related to the other operating expenses.
3.) Equipment was purchased during the year for $276,000 cash.
4.) Equipment was sold for cash during the year. The original cost of the equipment was $344,000, and the
accumulated depreciation was $280,000.
5.) Dividends were declared and paid during the year.

Required:
Prepare a cash flow statement using the direct method or indirect method or both (depending on what your instructor
assigns).
NOTE: Download the template from [Link]

Members Video Walkthrough:

[Link]

84
11-3B –Cash Flow Statement
The financial statements of CGP Inc. are presented below:

CGP Inc.
Balance Sheet
As at April 30
2024 2023
Cash $58,500 $18,000
Accounts receivable 40,000 32,000
Inventory 41,000 37,000
Prepaid insurance 1,000 1,200
Building and equipment 67,000 88,000
Accumulated depreciation (31,000) (35,000)
Total assets $176,500 $141,200

Accounts payable $20,000 $18,000

Salaries payable 3,000 5,000
Dividends payable 1,000 500
Income taxes payable 800 2,000
Bank loan payable 25,000 0
Common shares 7,000 5,000
Retained earnings 119,700 110,700
Total liabilities and shareholders’ equity $176,500 $141,200

CGP Inc.
Income Statement
For the Year Ended April 30, 2024
Sales $125,000
Cost of goods sold 48,000
Gross profit 77,000
Operating expenses 58,000
Operating income 19,000
Interest expense 1,500
Income before taxes 17,500
Income taxes 4,500
Net income $13,000

Additional information:
1.) Operating expenses are composed of: Depreciation $8,000; Salaries $41,000; Gain on Sale of Equipment
$7,000; other operating expenses $16,000.
2.) Prepaid insurance is related to the other operating expenses.
3.) Equipment was purchased during the year for $10,000 cash.
4.) Equipment was sold for cash during the year. The original cost of the equipment was $31,000, and the
accumulated depreciation was $12,000.
5.) Dividends were declared and paid during the year.

Required:
Prepare a cash flow statement using the direct method or indirect method or both (depending on what your instructor
assigns).

NOTE: Download the template from [Link]

Members Video Walkthrough:

[Link]

85
11-4A –Cash Flow Statement – Challenging Problem

The financial statements of Brady Inc. are presented below:

Brady Inc.
Balance Sheet
As at September 30
2024 2023
Cash $600 $2,000
Accounts receivable 14,000 6,000
Inventory 48,000 24,000
Prepaid insurance 1,000 1,500
Building and equipment 45,500 48,000
Accumulated depreciation (9,000) (7,000)
Total assets $100,100 $74,500

Accounts payable $13,000 $9,000

Salaries payable 3,000 2,000
Dividends payable 600 500
Interest payable 800 100
Unearned revenues 6,000 4,000
Income taxes payable 100 300
Bank loan payable 20,000 4,000
Common shares 1,500 1,000
Retained earnings 55,100 53,600
Total liabilities and shareholders’ equity $100,100 $74,500

Brady Inc.
Income Statement
For the Year Ended September 30, 2024
Sales $108,000
Cost of goods sold 54,000
Gross profit 54,000
Operating expenses 48,000
Operating income 6,000
Interest expense 1,500
Income before taxes 4,500
Income taxes 1,000
Net income $3,500

Additional information:
1.) Operating expenses are composed of: Depreciation $8,000; Salaries $36,000; Loss on Sale of Equipment $1,000; other
operating expenses $3,000.
2.) Prepaid insurance is related to the other operating expenses.
3.) Equipment was purchased during the year for $7,500 cash.
4.) Equipment was sold for cash during the year.
5.) Dividends were declared and paid during the year.
6.) Unearned revenues are collected from customers.
7.) Paid off $2,000 of long-term note and issued a new note for cash.

Required:
Prepare a cash flow statement using the direct method or indirect method or both (depending on what your instructor assigns).

NOTE: Download the template from [Link]

Members Video Walkthrough:

[Link]

86
11-4B –Cash Flow Statement – Challenging Problem

The financial statements of Wilson Inc. are presented below:

Wilson Inc.
Balance Sheet
As at October 31
2024 2023
Cash $821,000 $580,000
Accounts receivable 375,000 350,000
Inventory 850,000 880,000
Prepaid insurance 30,000 38,000
Building and equipment 3,512,000 3,400,000
Accumulated depreciation (1,940,000) (1,800,000)
Total assets $3,648,000 $3,448,000

Accounts payable $450,000 $500,000

Salaries payable 100,000 120,000
Dividends payable 65,000 50,000
Interest payable 25,000 15,000
Unearned revenues 200,000 180,000
Income taxes payable 40,000 25,000
Bank loan payable 1,400,000 1,100,000
Common shares 90,000 50,000
Retained earnings 1,278,000 1,408,000
Total liabilities and shareholders’ equity $3,648,000 $3,448,000

Wilson Inc.
Income Statement
For the Year Ended October 31, 2024
Sales $1,500,000
Cost of goods sold 580,000
Gross profit 920,000
Operating expenses 680,000
Operating income 240,000
Interest expense 85,000
Income before taxes 155,500
Income taxes 35,000
Net income $120,000

Additional information:
1.) Operating expenses are composed of: Depreciation $200,000; Salaries $420,000; Gain on Sale of Equipment $15,000;
other operating expenses $75,000.
2.) Prepaid insurance is related to the other operating expenses.
3.) Equipment was purchased during the year for $200,000 cash.
4.) Equipment was sold for cash during the year.
5.) Dividends were declared and paid during the year.
6.) Unearned revenues are collected from customers.
7.) Paid off $100,000 of bank loan and signed a new loan for additional cash.

Required:
Prepare a cash flow statement using the direct method or indirect method or both (depending on what your instructor assigns).

NOTE: Download the template from [Link]

Members Video Walkthrough:

[Link]

87
 Module 12: Ratios and
Financial Statement
Analysis

Module Introduction Video:

[Link]

88
 Common Financial Ratios
Liquidity
Current Ratio Current Assets
Current Liabilities
Acid-Test Ratio Cash + Short-term investments + Net current receivables
Current liabilities
Turnover
Inventory Turnover Cost of goods sold
Average inventory
Days’ sales in inventory 365 days d
Inventory turnover
Accounts receivable Net credit sales d
turnover Average net accounts receivable
Collection period 365 days d
Accounts receivable turnover
Long-Term Debt Paying Ability
Debt ratio Total liabilities
Total assets
Times-interest-earned Income from operations
Interest expense
Profitability
Gross profit percentage Gross profit
Net sales
Return on sales Net income
Net sales
Return on assets Net income + Interest expense
Average total assets
Return on equity Net income – Preferred dividends
Average common shareholders’ equity
Earnings per share Net income – Preferred dividends d
Average number of common shares outstanding
Stock Market Performance
Price/earnings ratio Market price per common share
Earnings per share
Dividend yield Dividends per share
Market price per share

89
12-1A – Horizontal Analysis

Below is a comparative income statement for Elky Co.:

Elky Co.
Income Statement
For the years ended December 31
2024 2023
Sales $168,000 $151,000
Cost of goods sold 90,000 78,000
Gross profit 78,000 73,000
Operating expenses 32,000 30,000
Operating income 46,000 43,000
Interest expense 2,000 3,000
Income before taxes 44,000 40,000
Income taxes 11,000 10,000
Net income $33,000 $30,000

Required:

a.) Prepare a horizontal analysis for the company calculating the change and percentage
change of each line item from one year to the next. (Round your answers to the nearest
tenth of a percent, ie 0.13578  13.6%)
b.) Which item/items in your analysis would you wish to investigate? Why?

Free Video Walkthrough:

[Link]

90
12-1B – Horizontal Analysis

Below is a comparative income statement for Dwan Inc.:

Dwan Inc.
Income Statement
For the years ended July 31
2024 2023
Sales $580,000 $415,000
Cost of goods sold 285,000 205,000
Gross profit 295,000 210,000
Operating expenses 140,000 80,000
Operating income 155,000 130,000
Interest expense 6,000 5,000
Income before taxes 149,000 125,000
Income taxes 24,000 20,000
Net income $125,000 $105,000

Required:

a.) Prepare a horizontal analysis for the company calculating the change and percentage
change of each line item from one year to the next. (Round your answers to the nearest
tenth of a percent, ie 0.13578  13.6%)
b.) Which item/items in your analysis would you wish to investigate? Why?

Members Video Walkthrough:

[Link]

91
12-2A – Vertical Analysis
Harpreet Gill is concerned about his company’s financial performance and financial position. He has obtained the
financial statements of his largest competitor, Hossain Inc. and notes that the company is over ten times larger than
his, so it is making the numbers difficult to compare.

Below is condensed financial information from Hossain Inc. and Gill Inc.:

Hossain Inc. and Gill Inc.

Income Statements
For the years ended August 31, 2024
Hossain Gill
Sales $5,000,000 $400,000
Cost of goods sold 2,100,000 120,000
Gross profit 2,900,000 280,000
Operating expenses 2,200,000 130,000
Operating income 700,000 150,000
Interest expense 60,000 10,000
Income before taxes 640,000 140,000
Income taxes 150,000 30,000
Net income $490,000 $110,000

Hossain Inc. and Gill Inc.

Balance Sheets
As at August 31, 2024
Hossain Gill
Current assets $1,000,000 $75,000
Long-term assets 3,000,000 175,000
Total assets $4,000,000 $250,000

Current liabilities $500,000 $60,000

Long-term liabilities 1,500,000 120,000
Total liabilities 2,000,000 180,000
Shareholders’ equity 2,000,000 70,000
Total liabilities and shareholders’ equity $4,000,000 $250,000

Required:
a.) Prepare a vertical analysis for the companies calculating the relative percentages of each item in the
financial statements. (Round your answers to the nearest tenth of a percent, ie 0.13578  13.6%)
b.) Comment on the common-sized income statements of the companies (prepared in part a.).
c.) Comment on the common-sized balance sheets of the companies (prepared in part a.).

Free Video Walkthrough:

92
12-2B – Vertical Analysis

Siracusa Inc. and Arment Co. are competing technology retailers.

Below is condensed financial information from the companies:

Siracusa Inc. and Arment Co.

Income Statements
For the years ended December 31, 2024
Siracusa Arment
Sales $1,000,000 $250,000
Cost of goods sold 300,000 110,000
Gross profit 700,000 140,000
Operating expenses 450,000 60,000
Operating income 250,000 80,000
Interest expense 10,000 5,000
Income before taxes 240,000 75,000
Income taxes 75,000 20,000
Net income $165,000 $55,000

Siracusa Inc. and Arment Inc.

Balance Sheets
As at December 31, 2024
Siracusa Arment
Current assets $225,000 $50,000
Long-term assets 775,000 250,000
Total assets $1,000,000 $300,000

Current liabilities $200,000 $20,000

Long-term liabilities 450,000 100,000
Total liabilities 650,000 120,000
Shareholders’ equity 350,000 180,000
Total liabilities and shareholders’ equity $1,000,000 $300,000

Required:
a.) Prepare a vertical analysis for the companies calculating the relative percentages of each
item in the financial statements. (Round your answers to the nearest tenth of a percent, ie
0.13578  13.6%)
b.) Comment on the common-sized income statements of the companies (prepared in part a.).
c.) Comment on the common-sized balance sheets of the companies (prepared in part a.).

Members Video Walkthrough:

[Link]

93
12-3A – Ratio Analysis

Below are the financial statements of Squirrel Co.

Squirrel Co.
Income Statement
For the Year Ended November 30
2024 2023
Sales, net $3,600,000 $3,900,000
Cost of goods sold 1,500,000 1,600,000
Gross profit 2,100,000 2,300,000
Operating expenses 1,600,000 2,000,000
Operating income 500,000 300,000
Interest expense 200,000 150,000
Income before taxes 300,000 150,000
Income taxes 85,000 40,000
Net income $215,000 $110,000

Squirrel Co.
Balance Sheet
As at November 30
2024 2023 2022
Cash $150,000 $53,000 $125,000
Accounts receivable, net 140,000 80,000 55,000
Inventory 450,000 350,000 300,000
Prepaid insurance 35,000 20,000 25,000
Total current assets 775,000 503,000 505,000
Property, plant and equipment, net 600,000 550,000 400,000
Total assets $1,375,000 $1,053,000 $905,000

Accounts payable $350,000 $185,000 $160,000

Salaries payable 37,000 50,000 35,000
Total current liabilities 387,000 235,000 195,000
Bank loan payable 550,000 500,000 450,000
Total liabilities 937,000 735,000 645,000
Preferred shares $20 (1,000 shares all years) 150,000 150,000 150,000
Common shares (50,000 shares all years) 100,000 100,000 100,000
Retained earnings 188,000 93,000 10,000
Total shareholders’ equity 438,000 343,000 260,000
Total liabilities and shareholders’ equity $1,375,000 $1,053,000 905,000

Additional information:
2024 2023 2022
Market price per share $150 $50 $35
Dividends per share $2.00 $1.00 $0.50

Required:
a.) For 2023 and 2024, compute all “Common Financial Ratios” from the beginning of this module. For each
ratio note whether it is getting Better (B) or Worse (W).
b.) Comment on the financial performance and position of the company.

Free Video Walkthrough:

[Link]

94
12-3B – Ratio Analysis

Below are the financial statements of Moose Co.

Moose Co.
Income Statement
For the Year Ended May 31
2024 2023
Sales, net $2,100,000 $1,600,000
Cost of goods sold 900,000 650,000
Gross profit 1,200,000 950,000
Operating expenses 700,000 525,000
Operating income 500,000 425,000
Interest expense 25,000 20,000
Income before taxes 475,000 405,000
Income taxes 120,000 100,000
Net income $355,000 $305,000

Moose Co.
Balance Sheet
As at May 31
2024 2023 2022
Cash $175,000 $220,000 $155,000
Accounts receivable, net 61,000 150,000 100,000
Inventory 525,000 450,000 400,000
Prepaid insurance 40,000 35,000 50,000
Total current assets 801,000 855,000 705,000
Property, plant and equipment, net 950,000 703,000 750,000
Total assets $1,751,000 $1,558,000 $1,455,000

Accounts payable $25,000 $175,000 $160,000

Salaries payable 40,000 30,000 60,000
Unearned revenues 90,000 140,000 125,000
Total current liabilities 155,000 345,000 345,000
Bank loan payable 660,000 500,000 600,000
Total liabilities 815,000 845,000 945,000
Preferred shares $4 (500 shares all years) 50,000 50,000 50,000
Common shares (10,000 shares all years) 150,000 150,000 150,000
Retained earnings 736,000 513,000 310,000
Total shareholders’ equity 936,000 713,000 510,000
Total liabilities and shareholders’ equity $1,751,000 $1,558,000 $1,455,000

Additional information:
2024 2023 2022
Market price per share $200 $190 $160
Dividends per share $13.00 $12.00 $10.00

Required:
a.) For 2023 and 2024, compute all “Common Financial Ratios” from the beginning of this module. For each
ratio note whether it is getting Better (B) or Worse (W).
b.) Comment on the financial performance and position of the company.

Members Video Walkthrough:

[Link]

95
 York University AP/ADMS 2500 3.00
Introduction to Financial Accounting
Final Exam for Fall 2019
Time: 3 hours Regular Exam ‐ Version A Questions: 50

Instructions:
1. Submit: Both the pink mark sense sheet and the exam paper will be collected in final exams.
Ensure your name is on all documents. Marks will be deducted if you do not turn in this exam
paper. Record your name and ID# here:

LAST NAME, NAME: ______________________________________________

Student ID #: _____________________________
Circle your Section: A B C D E F G

2. Mark Sense Sheet:

• Record your name and student number and answer all questions on the computer mark
sense sheet provided with an HB (soft lead) pencil. Bring several pencils in case one
breaks. The computer will not recognize ink or hard lead pencils
• Test Form is 'A' and Code is your Section (in the left column)
• Fill in the bubbles for your name and student number in pencil (your phone number is not
required). Leave the last column of the student number BLANK
• If you change an answer, use a high quality eraser to completely remove the previous
mark. If the computer senses two answers to a question, only the first scanned will be
recognized.
• DO NOT UNSTAPLE YOUR EXAM BOOKLET/QUESTION PAPER.

3. Exam Aids:
• Only calculators without alphanumeric programmable memories are allowed. It is
strongly suggested you bring a couple of cheap 4 function calculators to the exam in case
one fails. Be prepared to be challenged by invigilators if you bring a “fancy” calculator.
• Compact foreign language/English dictionaries may be used. However, these will be
examined by invigilators. If there are any loose pages or handwriting in the dictionary, it
will be seized and you will be charged with academic dishonesty. No electronic
dictionaries are allowed.
• TURN OFF YOUR PHONE AND PLACE IT AWAY FROM YOU (not in your pocket)
• In 2500, invigilators answer no questions of interpretation. They will pass along
questions regarding possible errors/typos/missing data to the professors. If you believe a
question contains an error and do not receive a response, make a detailed note on the back
of your pink mark sense sheet and submit it with your paper.

Note – there are blank pages for your rough work found at the end of the exam.
DO NOT UNSTAPLE YOUR EXAM BOOKLET.
ADMS 2500 Final Exam, Fall 2019 © York University Page 1 – Reg A
 Questions 1- 45 are based on the following information
(Cash flow statement and Financial Statement Analysis questions)
The income statement for the year ended November 30, 2019, LeDark Corp.
contains the following information:

LeDark Corp.
Income Statement
Year Ended November 30, 2019
Revenue $ 250,000
Cost of goods sold $ (135,000)
Office Supplies Expense $ (12,000)
Advertising Expense $ (45,000)
Amortization Expense $ (40,000)
Results of Sale of equipment $ 7,000
Interest Expense $ (3,000)
Income Tax Expense $ (7,000)
Profit $ 15,000

LeDark Corp. comparative balance sheet at November 30, 2019

2019 2018
Cash $ 5,000 $ 7,000
Accounts Receivable $ 7,000 $ 15,000
Inventory $ 10,500 $ 9,000
Office Supplies $ 10,000 $ 5,000
Equipment $ 222,000 $ 225,000
Accumulated Depreciation ‐ equipment $(150,000) $ (115,000)
Total Assets $ 104,500 $ 146,000

Accounts Payable $ 5,000 $ 13,000

Advertising Payable $ 3,500 $ 2,000
Income taxes payable $ 2,000 $ 8,000
Dividends Payable $ ‐ $ 6,000
Long‐term Notes Payable $ 70,000 $ 100,000
Common shares $ 12,000 $ 15,000
Retained Earnings $ 12,000 $ 2,000
Total Liabilities & Shareholders' Equity $ 104,500 $ 146,000

Additional Information:
1 Equipment that cost $50,000 was sold for a certain amount in cash
2 New equipment was purchased during the year for $47,000
3 Dividends declared in 2019 totalled $5,000
Dividends are treated as financing activities

Please prepare both an Indirect and Direct Cash Flow Statement to answer the questions below.

ADMS 2500 Final Exam, Fall 2019 © York University Page 3 – Reg A
 This page is left blank for your calculations

ADMS 2500 Final Exam, Fall 2019 © York University Page 4 – Reg A
 Choose the best answer for each of the following 50 questions. There is only one best answer
for each question (2 marks each question).

Questions 1-13 are for the Cash Flow statement prepared using the indirect method.

Q1 What is the Total adjustment to reconcile profit to net cash provided by operations?
A) $ 22,000
B) $ 30,000
C) $ 38,000
D) $ 15,500
E) none of the above

Q2 What is the Net cash generated or (used) by Investing activities?

A) $ 28,500
B) $ 9,000
C) $ 5,000
D) $ 45,000
E) none of the above

Q3 What is the Net Cash generated or (used) by Financing activities?

A) $ (30,000)
B) $ (44,000)
C) $ (33,000)
D) $ (36,000)
E) none of the above

Q4 By how much has the change in Inventory generated or (used) cash?

A) $ 70,000
B) $ 1,500
C) $ (1,500)
D) $ (70,000)
E) none of the above

Q5 By how much has the change in Interest Payable generated or (used) cash?
A) $ (1,500)
B) $ 3,000
C) $ (3,000)
D) $ 1,500
E) none of the above

Q6 By how much has the change in Office Supplies generated or (used) cash?
A) $ 5,000
B) $ 0
C) $ (5,000)
D) $ (10,000)
E) none of the above

ADMS 2500 Final Exam, Fall 2019 © York University Page 5 – Reg A
Q7 By how much has the change in Income Tax Payable generated or (used) cash?
A) $ (7,000)
B) $ (6,000)
C) $ 2,000
D) $ 7,000
E) none of the above
Q8 What is the Net Cash provided or (used) by Operations?
A) $ 37,000
B) $ 30,000
C) $ 50,000
D) $ 45,500
E) none of the above

Q9 By how much have the changes in Working Capital generated or (used) cash?
A) $ (5,000)
B) $ 6,500
C) $ (11,000)
D) $ (6,000)
E) none of the above

Q10 By how much has the change in Accounts Payable generated or (used) cash?
A) $ (8,000)
B) $ 8,000
C) $ 10,500
D) $ 9,000
E) none of the above

Q11 By how much has the change in Accounts Receivables generated or (used) cash?
A) $ (8,000)
B) $ (3,500)
C) $ 3,500
D) $ 8,000
E) none of the above
Q12 By how much has the change in Advertising Payable generated or (used) cash?
A) $ 1,500
B) $ (3,500)
C) $ (1,500)
D) $ 3,500
E) none of the above
Q13 By how much has the change in Dividends Payable generated or (used) cash?
A) $ (41,500)
B) $ (6,000)
C) $ 6,000
D) $ 41,500
E) none of the above
This is the end of Indirect Method cash flow statement questions.

ADMS 2500 Final Exam, Fall 2019 © York University Page 6 – Reg A
 This page is left blank for your calculations

ADMS 2500 Final Exam, Fall 2019 © York University Page 7 – Reg A
Questions 14-26 are for the Cash Flow statement prepared using the direct method
Q14 What was the total (payment) collection of Cash Dividends?
A) $ (6,000)
B) $ (5,000)
C) $ (11,000)
D) $ (2,500)
E) none of the above

Q15 What was the total Cash collection (payment) from customers?
A) $ 250,000
B) $ (135,000)
C) $ 258,000
D) $ 242,000
E) none of the above
Q16 What is the total Cash collection (payment) to suppliers?
A) $ 135,000
B) $ (144,500)
C) $ 136,500
D) $ (136,500)
E) none of the above

Q17 What is the total Cash (payment) collection for Advertising expenses?
A) $ (40,000)
B) $ 40,000
C) $ (1,500)
D) $ (43,500)
E) none of the above

Q18 What is the total cash collection (payment) for interest?

A) $ (3,000)
B) $ 3,000
C) $ (1,500)
D) $ 1,500
E) none of the above

Q19 What is the total Cash collection (payment) for Income Taxes?
A) $ 13,000
B) $ 7,000
C) $ (13,000)
D) $ (7,000)
E) none of the above

Q20 What is the total cash collection (payment) for rent expense?
A) $ (11,000)
B) $ 12,000
C) $ (12,000)
D) $ 11,000
E) none of the above
ADMS 2500 Final Exam, Fall 2019 © York University Page 8 – Reg A
Q21 What is the total Cash collection (payment) for Office Supplies Expense?
A) $ (17,000)
B) $ 15,000
C) $ 17,000
D) $ (15,000)
E) none of the above

Q22 What where the proceeds of the sale of the machinery?

A) $ 50,000
B) $ 52,000
C) $ (49,000)
D) $ 3,333
E) none of the above

Q23 What is the Accumulated Depreciation on machinery sold?

A) $ 35,000
B) $ 5,000
C) $ 68,000
D) $ 95,000
E) none of the above

Q24 What is the net carrying amount for the machinery that was sold?
A) $ 50,000
B) $ 40,000
C) $ 10,000
D) $ 45,000
E) none of the above

Q25 What is the total Cash (payment) collection of long term notes payable?
A) $ (30,000)
B) $ 30,000
C) $ 100,000
D) $ 70,000
E) none of the above

Q26 What is the total Cash (payment) collection of shares issued/bought back?
A) $ (14,000)
B) $ 8,000
C) $ (3,000)
D) $ 3,000
E) none of the above

This is the end of the Cash Flow Statement questions.

ADMS 2500 Final Exam, Fall 2019 © York University Page 9 – Reg A
 This page is left blank for your calculations

ADMS 2500 Final Exam, Fall 2019 © York University Page 10 – Reg A
 Questions 27-45 are for the Financial Statements Analysis

LeDark Corp. Calculation of ratios for 2019 and 2018

Please round numbers to fit 2 decimal places in all questions (in % questions a 0.12 is
presented as 12%, so a 0.124 is rounded as 12% and a 0.125 is rounded as 13%)

Q27 The operating Income at November 2019 was:

A). Equal or below $ 15,000
B). Between $ 15,000 and 30,000
C). Between $ 30,001 and $ 37,000
D). Equal or above 37,001
E). Not enough data provided to calculate it

Q28 Return on Common Equity at November 2019 was:

A). Equal or below 23%
B). Between 24% and 47%
C). Between 48% and 83%
D). Equal or above 84%
E). Not enough data provided to calculate it

Q29 The current ratio at November 2019 was:

A). Equal or below 2.31
B). Between 2.32 and 4.63
C). Between 4.64 and 9.29
D). Equal or above 9.30
E). Not enough data provided to calculate it

Q30 The accounts receivable turnover at November 2019 was:

A). Equal or below 8.72
B). Between 8.73 and 17.45
C). Between 17.46 and 34.91
D). Equal or above 34.92
E). Not enough data provided to calculate it

Q31 Total return on assets at November 2019 was:

A). Equal or below 5%
B). Between 6% and 10%
C). Between 11% and 19%
D). Equal or above 20%
E). Not enough data provided to calculate it

Q32 The average collection period of sales at November 2019 was:

A). Equal or below 3 days
B). Between 4 and 7 days
C). Between 8 and 15 days
D). Equal or above 16 days
E). Not enough data provided to calculate it

ADMS 2500 Final Exam, Fall 2019 © York University Page 11 – Reg A
Q33 The working capital turnover at November 2019 was:
A). Equal or below 3.43
B). Between 3.44 and 7.87
C). Between 7.88 and 10.88
D). Equal or above 10.89
E). Not enough data provided to calculate it

Q34 The equity ratio at November 2019 was:

A). Equal or below 0.08
B). Between 0.09 and 0.13
C). Between 0.14 and 0.16
D). Equal or above 0.17
E). Not enough data provided to calculate it

Q35 The interest coverage at November 2019 was:

A). Equal or below 4.49
B). Between 4.50 and 8.99
C). Between 9.00 and 18.00
D). Equal or above 18.01
E). Not enough data provided to calculate it

Q36 The quick ratio at November 2019 was:

A). Equal or below 0.13
B). Between 0.14 and 0.56
C). Between 0.57 and 1.14
D). Equal or above 1.15
E). Not enough data provided to calculate it

Q37 The inventory turnover at November 2019 was:

A). Equal or below 11.36
B). Between 11.37 and 13.73
C). Between 13.74 and 15.79
D). Equal or above 15.80
E). Not enough data provided to calculate it

Q38 Total return on sales at November 2019 was:

A). Equal or below 2%
B). Between 3% and 5%
C). Between 6% and 12%
D). Equal or above 13%
E). Not enough data provided to calculate it

Q39 Return on Common Equity at November 2018 was:

A). Equal or below 20%
B). Between 21% and 41%
C). Between 42% and 83%
D). Equal or above 84%
E). Not enough data provided to calculate it
ADMS 2500 Final Exam, Fall 2019 © York University Page 12 – Reg A
 Q40 The current ratio at November 2018 was:
A). Equal or below 2.31
B). Between 2.32 and 4.63
C). Between 4.64 and 9.29
D). Equal or above 9.30
E). Not enough data provided to calculate it

Q41 The average collection period of sales at November 2018 was:

A). Equal or below 3 days
B). Between 4 and 8 days
C). Between 8 and 15 days
D). Equal or above 16 days
E). Not enough data provided to calculate it

Q42 The equity ratio at November 2018 was:

A). Equal or below 0.11
B). Between 0.12 and 0.13
C). Between 0.14 and 0.16
D). Equal or above 0.17
E). Not enough data provided to calculate it

Q43 The interest coverage at November 2018 was:

A). Equal or below 4.49
B). Between 4.50 and 8.99
C). Between 9.00 and 18.00
D). Equal or above 18.01
E). Not enough data provided to calculate it

Q44 The quick ratio at November 2018 was:

A). Equal or below 0.01
B). Between 0.01 and 0.03
C). Between 0.04 and 0.11
D). Equal or above 0.12
E). Not enough data provided to calculate it

Q45 When performing a liquidity analysis, which are the ratios to consider?
A). ROE, ROA and ROS
B). Current ratio, AR turnover and Average collection period
C). Current ratio, Working Capital turnover and Average collection period
D). Current ratio, Quick ratio and Interest Coverage
E). Quick ratio, Working Capital turnover and Average collection period

This is the end of the Financial Statement Analysis.

The remaining questions are independent and unrelated to the previous ones.
ADMS 2500 Final Exam, Fall 2019 © York University Page 13 – Reg A
 46) The qualitative characteristic that best refers to the confidence that financial statement users
have that the statements are free of material error or misrepresentation is:
A) objectivity
B) understandability
C) reliability
D) relevance
E) None of the other alternatives are correct

47) A set of rules of professional conduct that governs the behaviour of accountants in the
performance of their work is called
A) generally accepted accounting principles (GAAP)
B) the Accounting Act
C) the Sarbanes-Oxley Act
D) a code of ethics
E) None of the other alternatives are correct

48) Three foundations underpinning financial reporting and transparency are the conceptual
foundations, the technical foundations and
A) the professional foundations
B) the Board of Directors foundations
C) the audit foundations
D) The theoretical foundations
E) None of the other alternatives are correct

49) Business depend on accounting systems to

A) Manage all the sales with point of sales equipment
B) Keep track and collect all outstanding receivables at any point in time
C) Set up accounting policies and records
D) Convert large amount of transactions into useful data to manage the organization
E) None of the other alternatives are correct

50) You are the Chief Financial Officer of XYZ Corporation. You receive shares of XYZ as part of
your compensation each year and you sell these shares and use the proceeds from the sale to pay
for nursing home care for your mother. You have just learned that XYZ Corporation has lost its
major customer and know that sales for the year will be sharply impacted. Because reported net
income will be below the expectations of market analysts, you know that when the news of the
loss of the customer becomes public, the market price of XYZ Corporation shares will drop. If
you sell your shares of XYZ before the news becomes public you are
A) Exercising due care in taking care of your money
B) Contributing to an efficient capital market by acting rationally upon all available information
C) Engaging in insider trading and acting unethically
D) Sending a signal to the market
E) None of the other alternatives are correct

This is the end of the exam – good luck! Have a good Winter Break!
ADMS 2500 Final Exam, Fall 2019 © York University Page 14 – Reg A
 York University AP/ADMS 2500 3.00
Introduction to Financial Accounting
Final Exam for Fall 2019
Time: 3 hours Regular Exam ‐ Version B Questions: 50

Instructions:
1. Submit: Both the pink mark sense sheet and the exam paper will be collected in final exams.
Ensure your name is on all documents. Marks will be deducted if you do not turn in this exam
paper. Record your name and ID# here:

LAST NAME, NAME: ______________________________________________

Student ID #: _____________________________
Circle your Section: A B C D E F G

2. Mark Sense Sheet:

• Record your name and student number and answer all questions on the computer mark
sense sheet provided with an HB (soft lead) pencil. Bring several pencils in case one
breaks. The computer will not recognize ink or hard lead pencils
• Test Form is 'B' and Code is your Section (in the left column)
• Fill in the bubbles for your name and student number in pencil (your phone number is not
required). Leave the last column of the student number BLANK
• If you change an answer, use a high quality eraser to completely remove the previous
mark. If the computer senses two answers to a question, only the first scanned will be
recognized.
• DO NOT UNSTAPLE YOUR EXAM BOOKLET/QUESTION PAPER.

3. Exam Aids:
• Only calculators without alphanumeric programmable memories are allowed. It is
strongly suggested you bring a couple of cheap 4 function calculators to the exam in case
one fails. Be prepared to be challenged by invigilators if you bring a “fancy” calculator.
• Compact foreign language/English dictionaries may be used. However, these will be
examined by invigilators. If there are any loose pages or handwriting in the dictionary, it
will be seized and you will be charged with academic dishonesty. No electronic
dictionaries are allowed.
• TURN OFF YOUR PHONE AND PLACE IT AWAY FROM YOU (not in your pocket)
• In 2500, invigilators answer no questions of interpretation. They will pass along
questions regarding possible errors/typos/missing data to the professors. If you believe a
question contains an error and do not receive a response, make a detailed note on the back
of your pink mark sense sheet and submit it with your paper.

Note – there are blank pages for your rough work found at the end of the exam.
DO NOT UNSTAPLE YOUR EXAM BOOKLET.
ADMS 2500 Final Exam, Fall 2019 © York University Page 1 – Reg B
 Questions 1- 45 are based on the following information
(Cash flow statement and Financial Statement Analysis questions)
The income statement for the year ended November 30, 2019, LeBlue Corp.
contains the following information:

LeBlue Corp.
Income Statement
Year Ended November 30, 2019
Revenue $ 250,000
Cost of goods sold $ (135,000)
Office Supplies Expense $ (12,000)
Advertising Expense $ (45,000)
Amortization Expense $ (40,000)
Results of Sale of equipment $ 7,000
Interest Expense $ (3,000)
Income Tax Expense $ (7,000)
Profit $ 15,000

LeBlue Corp.
Balance Sheet
As of November 30, 2019

2019 2018
Cash $ 7,000 $ 5,000
Accounts Receivable $ 15,000 $ 7,000
Inventory $ 7,500 $ 12,000
Office Supplies $ 5,000 $ 10,000
Equipment $ 225,000 $ 225,000
Accumulated Depreciation ‐ equipment $(149,000) $ (115,000)
Total Assets $ 110,500 $ 144,000

Accounts Payable $ 5,000 $ 13,000

Advertising Payable $ 7,000 $ ‐
Income taxes payable $ 3,500 $ 8,000
Dividends Payable $ ‐ $ 6,000
Long‐term Notes Payable $ 70,000 $ 100,000
Common shares $ 15,000 $ 15,000
Retained Earnings $ 10,000 $ 2,000
Total Liabilities & Shareholders' Equity $ 110,500 $ 144,000

Additional Information:
1 Equipment that cost $50,000 was sold for a certain amount in cash
2 New equipment was purchased during the year for $50,000
3 Dividends declared in 2019 totalled $7,000
Dividends are treated as financing activities

Please prepare both an Indirect and Direct Cash Flow Statement to answer the questions below.
ADMS 2500 Final Exam, Fall 2019 © York University Page 3 – Reg B
 This page is left blank for your calculations

ADMS 2500 Final Exam, Fall 2019 © York University Page 4 – Reg B
 Choose the best answer for each of the following 50 questions. There is only one best answer
for each question (2 marks each question).

Questions 1-13 are for the Cash Flow statement prepared using the indirect method.

Q1 What is the Total adjustment to reconcile profit to net cash provided by operations?
A) $ 29,000
B) $ 21,000
C) $ 31,000
D) $ 27,000
E) none of the above

Q2 What is the Net cash generated or (used) by Investing activities?

A) $ 46,000
B) $ (3,000)
C) $ 1,000
D) $ 41,000
E) none of the above

Q3 What is the Net Cash generated or (used) by Financing activities?

A) $ 30,000
B) $ (43,000)
C) $ (30,000)
D) $ (36,000)
E) none of the above

Q4 By how much has the change in Inventory has generated or (used) cash?
A) $ 65,500
B) $ (4,500)
C) $ 4,500
D) $ (65,500)
E) none of the above

Q5 By how much has the change in Interest Payable has generated or (used) cash?
A) $ (7,000)
B) $ 3,000
C) $ (3,000)
D) $ 7,000
E) none of the above

Q6 By how much has the change in Office Supplies has generated or (used) cash?
A) $ 5,000
B) $ 10,000
C) $ (10,000)
D) $ (5,000)
E) none of the above

ADMS 2500 Final Exam, Fall 2019 © York University Page 5 – Reg B
Q7 By how much has the change in Income Tax Payable has generated or (used) cash?
A) $ (7,000)
B) $ (4,500)
C) $ 4,500
D) $ 7,000
E) none of the above
Q8 What is the Net Cash provided or (used) by Operations?
A) $ 44,000
B) $ 37,000
C) $ 47,000
D) $ 49,500
E) none of the above

Q9 By how much have the changes in Working Capital generated or (used) cash?
A) $ (11,000)
B) $ (3,500)
C) $ (4,000)
D) $ 7,000
E) none of the above
Q10 By how much has the change in Accounts Payable generated or (used) cash?
A) $ (8,000)
B) $ 8,000
C) $ 7,500
D) $ 12,000
E) none of the above

Q11 By how much has the change in Accounts Receivables generated or (used) cash?
A) $ 8,000
B) $ (7,000)
C) $ 7,000
D) $ (8,000)
E) none of the above

Q12 By how much has the change in Advertising Payable generated or (used) cash?
A) $ 7,000
B) $ (7,000)
C) $ 4,000
D) $ (4,000)
E) none of the above

Q13 By how much has the change in Dividends Payable generated or (used) cash?
A) $ (33,500)
B) $ (6,000)
C) $ 6,000
D) $ 33,500
E) none of the above

This is the end of Indirect Method cash flow statement questions.

ADMS 2500 Final Exam, Fall 2019 © York University Page 6 – Reg B
 This page is left blank for your calculations

ADMS 2500 Final Exam, Fall 2019 © York University Page 7 – Reg B
Questions 14-26 are for the Cash Flow statement prepared using the direct method
Q14 What was the total (payment) collection of Cash Dividends?
A) $ (6,000)
B) $ (7,000)
C) $ (13,000)
D) $ (3,500)
E) none of the above

Q15 What was the total Cash collection (payment) from customers?
A) $ 250,000
B) $ (135,000)
C) $ 242,000
D) $ 258,000
E) none of the above

Q16 What is the total Cash collection (payment) to suppliers?

A) $ 135,000
B) $ (138,500)
C) $ 130,500
D) $ (130,500)
E) none of the above

Q17 What is the total Cash (payment) collection for Advertising expenses?
A) $ (40,000)
B) $ 40,000
C) $ (4,500)
D) $ (38,000)
E) none of the above

Q18 What is the total cash collection (payment) for interest?

A) $ (3,000)
B) $ 3,000
C) $ (1,500)
D) $ 1,500
E) none of the above

Q19 What is the total Cash collection (payment) for Income Taxes?
A) $ 11,500
B) $ 7,000
C) $ (11,500)
D) $ (7,000)
E) none of the above

Q20 What is the total cash collection (payment) for rent expense?
A) $ (13,000)
B) $ 12,000
C) $ (12,000)
D) $ 13,000
E) none of the above
ADMS 2500 Final Exam, Fall 2019 © York University Page 8 – Reg B
Q21 What is the total Cash collection (payment) for Office Supplies Expense?
A) $ (7,000)
B) $ (5,000)
C) $ 7,000
D) $ 5,000
E) none of the above

Q22 What were the proceeds of the sale of the machinery?

A) $ 50,000
B) $ 51,000
C) $ (48,000)
D) $ 3,333
E) none of the above

Q23 What is the Accumulated Depreciation on machinery sold?

A) $ 34,000
B) $ 6,000
C) $ 67,000
D) $ 94,000
E) none of the above

Q24 What is the net carrying amount for the machinery that was sold?
A) $ 50,000
B) $ 40,000
C) $ 10,000
D) $ 44,000
E) none of the above

Q25 What is the total Cash (payment) collection of long term notes payable?
A) $ (30,000)
B) $ 30,000
C) $ 100,000
D) $ 70,000
E) none of the above

Q26 What is the total Cash (payment) collection of shares issued/bought back?
A) $ (13,000)
B) $ 13,000
C) $ 0
D) $ 3,000
E) none of the above

This is the end of the Cash Flow Statement questions.

ADMS 2500 Final Exam, Fall 2019 © York University Page 9 – Reg B
 This page is left blank for your calculations

ADMS 2500 Final Exam, Fall 2019 © York University Page 10 – Reg B
 Questions 27-45 are for the Financial Statements Analysis

LeBlue Corp. Calculation of ratios for 2019 and 2018

Please round numbers to fit 2 decimal places in all questions (in % questions a 0.12 is
presented as 12%, so a 0.124 is rounded as 12% and a 0.125 is rounded as 13%)

Q27 The operating Income at November 2019 was:

A). Equal or below $ 7,000
B). Between $ 7,000 and 14,000
C). Between $ 14,001 and $ 29,000
D). Equal or above 29,001
E). Not enough data provided to calculate it

Q28 Return on Common Equity at November 2019 was:

A). Equal or below 23%
B). Between 24% and 46%
C). Between 47% and 81%
D). Equal or above 82%
E). Not enough data provided to calculate it

Q29 The current ratio at November 2019 was:

A). Equal or below 1.66
B). Between 1.67 and 3.33
C). Between 3.34 and 6.68
D). Equal or above 6.69
E). Not enough data provided to calculate it

Q30 The accounts receivable turnover at November 2019 was:

A). Equal or below 3.96
B). Between 3.97 and 7.92
C). Between 7.93 and 15.87
D). Equal or above 15.88
E). Not enough data provided to calculate it
Q31 Total return on assets at November 2019 was:
A). Equal or below 5%
B). Between 6% and 10%
C). Between 11% and 19%
D). Equal or above 20%
E). Not enough data provided to calculate it

Q32 The average collection period of sales at November 2019 was:

A). Equal or below 6 days
B). Between 7 and 12 days
C). Between 13 and 27 days
D). Equal or above 28 days
E). Not enough data provided to calculate it

ADMS 2500 Final Exam, Fall 2019 © York University Page 11 – Reg B
 Q33 The working capital turnover at November 2019 was:
A). Equal or below 10.37
B). Between 10.38 and 11.75
C). Between 11.76 and 12.76
D). Equal or above 12.77
E). Not enough data provided to calculate it

Q34 The equity ratio at November 2019 was:

A). Equal or below 0.09
B). Between 0.10 and 0.14
C). Between 0.15 and 0.19
D). Equal or above 0.20
E). Not enough data provided to calculate it

Q35 The interest coverage at November 2019 was:

A). Equal or below 4.49
B). Between 4.50 and 8.99
C). Between 9.00 and 18.00
D). Equal or above 18.01
E). Not enough data provided to calculate it

Q36 The quick ratio at November 2019 was:

A). Equal or below 0.17
B). Between 0.18 and 0.70
C). Between 0.71 and 1.42
D). Equal or above 1.43
E). Not enough data provided to calculate it

Q37 The inventory turnover at November 2019 was:

A). Equal or below 10.36
B). Between 10.37 and 13.73
C). Between 13.74 and 15.79
D). Equal or above 15.80
E). Not enough data provided to calculate it

Q38 Total return on sales at November 2019 was:

A). Equal or below 2%
B). Between 3% and 5%
C). Between 6% and 12%
D). Equal or above 13%
E). Not enough data provided to calculate it

Q39 The current ratio at November 2018 was:

A). Equal or below 1.66
B). Between 1.67 and 3.33
C). Between 3.34 and 6.68
D). Equal or above 6.69
E). Not enough data provided to calculate it
ADMS 2500 Final Exam, Fall 2019 © York University Page 12 – Reg B
Q40 The equity ratio at November 2018 was:
A). Equal or below 0.11
B). Between 0.11 and 0.14
C). Between 0.15 and 0.19
D). Equal or above 0.20
E). Not enough data provided to calculate it

Q41 The interest coverage at November 2018 was:

A). Equal or below 4.49
B). Between 4.50 and 8.99
C). Between 9.00 and 18.00
D). Equal or above 18.01
E). Not enough data provided to calculate it

Q42 The quick ratio at November 2018 was:

A). Equal or below 0.01
B). Between 0.01 and 0.04
C). Between 0.05 and 0.14
D). Equal or above 0.15
E). Not enough data provided to calculate it

Q43 After performing a Liquidity Analysis, you can say that the company’s trend is:
A) Improving.
B) Stable, without changes.
C) Getting worst.
D) Unable to say, critical data is missing.
E) None of the above

Q44 After performing a Profitability Analysis, you can say that the company’s trend is:
A) Improving.
B) Stable, without changes.
C) Getting worst.
D) Unable to say, critical data is missing.
E) None of the above

Q45 When performing an efficiency analysis, which ratio you would consider?
A). Return on Sales (ROS)
B). Current ratio
C). Average collection period
D). Interest coverage
E). Equity ratio

This is the end of the Financial Statement Analysis.

The remaining questions are independent and unrelated to the previous ones.

ADMS 2500 Final Exam, Fall 2019 © York University Page 13 – Reg B
 46) Which of the following is not a desirable attribute of financial statements
A) relevance
B) subjectivity
C) reliability
D) completeness
E) None of the other alternatives are correct

47) The following definition pertains to which desirable attribute of financial statements: statements
should be free of material error and/or fraud and represent what really happened or exists.
A) relevance
B) subjectivity
C) reliability
D) completeness
E) None of the other alternatives are correct

48) GAAP in Canada refers to

A) FASB and ASPE
B) IFRS and ASPE
C) FASB and IFRS
D) ASPE
E) None of the other alternatives are correct

49) Business depend on accounting systems to

A) Manage all the sales with point of sales equipment
B) Keep track and collect all outstanding receivables at any point in time
C) Set up accounting policies and records
D) Convert large amount of transactions into useful data to manage the organization
E) None of the other alternatives are correct

50) You are the Chief Financial Officer of XYZ Corporation. You receive shares of XYZ as part of
your compensation each year and you sell these shares and use the proceeds from the sale to pay
for nursing home care for your mother. You have just learned that XYZ Corporation has lost its
major customer and know that sales for the year will be sharply impacted. Because reported net
income will be below the expectations of market analysts, you know that when the news of the
loss of the customer becomes public, the market price of XYZ Corporation shares will drop. If
you sell your shares of XYZ before the news becomes public you are
A) Sending a signal to the market
B) Engaging in insider trading and acting unethically
C) Exercising due care in taking care of your money
D) Contributing to an efficient capital market by acting rationally upon all available information
E) None of the other alternatives are correct

This is the end of the exam – good luck! Have a good Winter Break!

ADMS 2500 Final Exam, Fall 2019 © York University Page 14 – Reg B
 York University AP/ADMS 2500 3.00
Introduction to Financial Accounting
Final Exam for Fall 2019
Time: 3 hours Regular Exam – Alternate Version Questions: 50

Instructions:
1. Submit: Both the pink mark sense sheet and the exam paper will be collected in final exams.
Ensure your name is on all documents. Marks will be deducted if you do not turn in this exam
paper. Record your name and ID# here:

LAST NAME, NAME: ______________________________________________

Student ID #: _____________________________
Circle your Section: A B C D E F G

2. Mark Sense Sheet:

• Record your name and student number and answer all questions on the computer mark
sense sheet provided with an HB (soft lead) pencil. Bring several pencils in case one
breaks. The computer will not recognize ink or hard lead pencils
• Test Form is left blank and Code is your Section (in the left column)
• Fill in the bubbles for your name and student number in pencil (your phone number is not
required). Leave the last column of the student number BLANK
• If you change an answer, use a high quality eraser to completely remove the previous
mark. If the computer senses two answers to a question, only the first scanned will be
recognized.
• DO NOT UNSTAPLE YOUR EXAM BOOKLET/QUESTION PAPER.

3. Exam Aids:
• Only calculators without alphanumeric programmable memories are allowed. It is
strongly suggested you bring a couple of cheap 4 function calculators to the exam in case
one fails. Be prepared to be challenged by invigilators if you bring a “fancy” calculator.
• Compact foreign language/English dictionaries may be used. However, these will be
examined by invigilators. If there are any loose pages or handwriting in the dictionary, it
will be seized and you will be charged with academic dishonesty. No electronic
dictionaries are allowed.
• TURN OFF YOUR PHONE AND PLACE IT AWAY FROM YOU (not in your pocket)
• In 2500, invigilators answer no questions of interpretation. They will pass along
questions regarding possible errors/typos/missing data to the professors. If you believe a
question contains an error and do not receive a response, make a detailed note on the back
of your pink mark sense sheet and submit it with your paper.

Note – there are blank pages for your rough work found at the end of the exam.
DO NOT UNSTAPLE YOUR EXAM BOOKLET.
ADMS 2500 Final Exam, Fall 2019 © York University Page 1 – Alt Reg
 Questions 1- 45 are based on the following information
(Cash flow statement and Financial Statement Analysis questions)
The income statement for the year ended November 30, 2019, LeDuck Corp.
contains the following information:

LeDuck Corp.
Income Statement
Year Ended November 30, 2019
Revenue $ 250,000
Cost of goods sold $ (150,000)
Office Supplies Expense $ (12,000)
Advertising Expense $ (35,000)
Amortization Expense $ (40,000)
Results of Sale of equipment $ 5,000
Interest Expense $ (6,000)
Income Tax Expense $ (8,000)
Profit $ 4,000

LeDuck Corp.
Comparative Balance Sheet as of November 30th
2019 2018
Cash $ ‐ $ 5,000
Accounts Receivable $ 15,000 $ 7,000
Inventory $ 5,500 $ 15,000
Office Supplies $ 8,000 $ 10,000
Equipment $ 225,000 $ 225,000
Accumulated Depreciation ‐ equipment $(149,000) $ (115,000)
Total Assets $ 104,500 $ 147,000

Accounts Payable $ 5,000 $ 13,000

Advertising Payable $ 7,000 $ ‐
Income taxes payable $ 3,500 $ 8,000
Dividends Payable $ ‐ $ 6,000
Long‐term Notes Payable $ 70,000 $ 100,000
Common shares $ 17,000 $ 15,000
Retained Earnings $ 2,000 $ 5,000
Total Liabilities & Shareholders' Equity $ 104,500 $ 147,000

Additional Information:
1 Equipment that cost $50,000 was sold for a certain amount in cash
2 New equipment was purchased during the year for $50,000
3 Dividends declared in 2019 totalled $7,000
Dividends are treated as financing activities

Please prepare both an Indirect and Direct Cash Flow Statement to answer the questions below.

ADMS 2500 Final Exam, Fall 2019 © York University Page 3 – Alt Reg
 This page is left blank for your calculations

ADMS 2500 Final Exam, Fall 2019 © York University Page 4 – Alt Reg
 Choose the best answer for each of the following 50 questions. There is only one best answer
for each question (2 marks each question).

Questions 1-13 are for the Cash Flow statement prepared using the indirect method.

Q1 What is the Total adjustment to reconcile profit to net cash provided by operations?
A) $ 33,000
B) $ 25,000
C) $ 35,000
D) $ 28,000
E) none of the above

Q2 What is the Net cash generated or (used) by Investing activities?

A) $ 44,000
B) ‐$ 5,000
C) $ (1,000)
D) $ 39,000
E) none of the above

Q3 What is the Net Cash generated or (used) by Financing activities?

A) $ (30,000)
B) $ (41,000)
C) $ (28,000)
D) $ (36,000)
E) none of the above

Q4 By how much has the change in Inventory generated or (used) cash?

A) $ 65,500
B) $ (9,500)
C) $ 9,500
D) $ (65,500)
E) none of the above

Q5 By how much has the change in Interest Payable generated or (used) cash?
A) $ (7,000)
B) $ 6,000
C) $ (6,000)
D) $ 7,000
E) none of the above

Q6 By how much has the change in Office Supplies generated or (used) cash?
A) $ (2,000)
B) $ 10,000
C) $ (10,000)
D) $ (8,000)
E) none of the above

ADMS 2500 Final Exam, Fall 2019 © York University Page 5 – Alt Reg
Q7 By how much has the change in Income Tax Payable generated or (used) cash?
A) $ (8,000)
B) $ (4,500)
C) $ 4,500
D) $ 8,000
E) none of the above

Q8 What is the Net Cash provided or (used) by Operations?

A) $ 37,000
B) $ 32,000
C) $ 43,000
D) $ 45,500
E) none of the above

Q9 By how much have the changes in Working Capital generated or (used) cash?
A) $ (14,000)
B) $ 1,500
C) $ (2,000)
D) $ 12,000
E) none of the above

Q10 By how much has the change in Accounts Payable generated or (used) cash?
A) $ (8,000)
B) $ 8,000
C) $ 5,500
D) $ 15,000
E) none of the above

Q11 By how much has the change in Accounts Receivables generated or (used) cash?
A) $ 8,000
B) $ (7,000)
C) $ 7,000
D) $ (8,000)
E) none of the above

Q12 By how much has the change in Advertising Payable generated or (used) cash?
A) $ 7,000
B) $ (7,000)
C) $ 1,000
D) $ (1,000)
E) none of the above

Q13 By how much has the change in Dividends Payable generated or (used) cash?
A) $ (42,500)
B) $ (6,000)
C) $ 6,000
D) $ 42,500
E) none of the above

This is the end of Indirect Method cash flow statement questions.

ADMS 2500 Final Exam, Fall 2019 © York University Page 6 – Alt Reg
 This page is left blank for your calculations

ADMS 2500 Final Exam, Fall 2019 © York University Page 7 – Alt Reg
Questions 14-26 are for the Cash Flow statement prepared using the direct method

Q14 What was the total (payment) collection of Cash Dividends?

A) $ (6,000)
B) $ (7,000)
C) $ (13,000)
D) $ (3,500)
E) none of the above

Q15 What was the total Cash collection (payment) from customers?
A) $ 250,000
B) $ (150,000)
C) $ 242,000
D) $ 240,000
E) none of the above

Q16 What is the total Cash collection (payment) to suppliers?

A) $ 150,000
B) $ (148,500)
C) $ 140,500
D) $ (140,500)
E) none of the above

Q17 What is the total Cash (payment) collection for Advertising expenses?
A) $ (40,000)
B) $ 40,000
C) $ 9,500
D) $ (28,000)
E) none of the above

Q18 What is the total cash collection (payment) for interest?

A) $ (6,000)
B) $ 6,000
C) $ (3,000)
D) $ 3,000
E) none of the above

Q19 What is the total Cash collection (payment) for Income Taxes?
A) $ 12,500
B) $ 8,000
C) $ (12,500)
D) $ (8,000)
E) none of the above

Q20 What is the total cash collection (payment) for rent expense?
A) $ (13,000)
B) $ 12,000
C) $ (12,000)
D) $ 13,000
E) none of the above

ADMS 2500 Final Exam, Fall 2019 © York University Page 8 – Alt Reg
Q21 What is the total Cash collections (payments) for Office Supplies Expenses?
A) $ (10,000)
B) $ (14,000)
C) $ 14,000
D) $ 10,000
E) none of the above

Q22 What where the proceeds of the sale of the machinery?

A) $ 50,000
B) $ 49,000
C) $ (44,000)
D) $ 3,333
E) none of the above

Q23 What is the Accumulated Depreciation on machinery sold?

A) $ 34,000
B) $ 6,000
C) $ 69,000
D) $ 94,000
E) none of the above

Q24 What is the net carrying amount for the machinery that was sold?
A) $ 50,000
B) $ 40,000
C) $ 10,000
D) $ 44,000
E) none of the above

Q25 What is the total Cash (payment) collection of long terms notes payable?
A) $ (30,000)
B) $ 30,000
C) $ 100,000
D) $ 70,000
E) none of the above

Q26 What is the total Cash (payment) collection of shares issues/bought back?
A) $ (11,000)
B) $ 15,000
C) $ 2,000
D) $ (2,000)
E) none of the above

This is the end of the Cash Flow Statement questions.

ADMS 2500 Final Exam, Fall 2019 © York University Page 9 – Alt Reg
 This page is left blank for your calculations

ADMS 2500 Final Exam, Fall 2019 © York University Page 10 – Alt Reg
 Questions 27-45 are for the Financial Statements Analysis

Calculation of ratios for 2019 and 2018

Please round numbers to fit 2 decimal places in all questions (in % questions a 0.12 is presented as
12%, so a 0.124 is rounded as 12% and a 0.125 is rounded as 13%)

Q27 The operating Income at November 2019 was:

A). Equal or below $ 7,000
B). Between $ 7,000 and 14,000
C). Between $ 14,001 and $ 29,000
D). Equal or above 29,001
E). Not enough data provided to calculate it

Q28 Return on Common Equity at November 2019 was:

A). Equal or below 8%
B). Between 9% and 17%
C). Between 18% and 31%
D). Equal or above 32%
E). Not enough data provided to calculate it

Q29 The current ratio at November 2019 was:

A). Equal or below 1.37
B). Between 1.38 and 2.75
C). Between 2.76 and 5.52
D). Equal or above 5.53
E). Not enough data provided to calculate it

Q30 The accounts receivable turnover at November 2019 was:

A). Equal or below 3.96
B). Between 3.97 and 7.92
C). Between 7.93 and 15.87
D). Equal or above 15.88
E). Not enough data provided to calculate it

Q31 Total return on assets at November 2019 was:

A). Equal or below 4%
B). Between 5% and 8%
C). Between 9% and 15%
D). Equal or above 16%
E). Not enough data provided to calculate it

Q32 The average collection period of sales at November 2019 was:

A). Equal or below 6 days
B). Between 7 and 12
C). Between 13 and 27
D). Equal or above 28 days
E). Not enough data provided to calculate it

ADMS 2500 Final Exam, Fall 2019 © York University Page 11 – Alt Reg
Q33 The working capital turnover at November 2019 was:
A). Equal or below 10.25
B). Between 10.26 and 15.51
C). Between 15.52 and 19.02
D). Equal or above 19.03
E). Not enough data provided to calculate it

Q34 The equity ratio at November 2019 was:

A). Equal or below 0.11
B). Between 0.12 and 0.17
C). Between 0.18 and 0.21
D). Equal or above 0.22
E). Not enough data provided to calculate it

Q35 The interest coverage at November 2019 was:

A). Equal or below 1.62
B). Between 1.63 and 3.24
C). Between 3.25 and 6.50
D). Equal or above 6.51
E). Not enough data provided to calculate it

Q36 The quick ratio at November 2019 was:

A). Equal or below 0.11
B). Between 0.12 and 0.47
C). Between 0.48 and 0.97
D). Equal or above 0.98
E). Not enough data provided to calculate it

Q37 The inventory turnover at November 2019 was:

A). Equal or below 10.34
B). Between 10.35 and 15.69
C). Between 15.70 and 17.75
D). Equal or above 17.76
E). Not enough data provided to calculate it

Q38 Total return on sales at November 2019 was:

A). Equal or below 0%
B). Between 0.01% and 1.99%
C). Between 2.00% and 3.99%
D). Equal or above 4.00%
E). Not enough data provided to calculate it

Q39 The current ratio at November 2018 was:

A). Equal or below 1.37
B). Between 1.38 and 2.75
C). Between 2.76 and 5.52
D). Equal or above 5.53
E). Not enough data provided to calculate it

ADMS 2500 Final Exam, Fall 2019 © York University Page 12 – Alt Reg
 Q40 The equity ratio at November 2018 was:
A). Equal or below 0.15
B). Between 0.16 and 0.17
C). Between 0.18 and 0.21
D). Equal or above 0.22
E). Not enough data provided to calculate it

Q41 The quick ratio at November 2018 was:

A). Equal or below 0.01
B). Between 0.01 and 0.02
C). Between 0.03 and 0.10
D). Equal or above 0.11
E). Not enough data provided to calculate it

Q42 When performing a liquidity analysis, which ratio you would consider?
A). Return on Sales (ROS)
B). Current ratio
C). Average collection period
D). Working capital turnover
E). Equity ratio

Q43 When performing an analysis on leverage, which ratio you would consider?
A). Return on Sales (ROS)
B). Current ratio
C). Average collection period
D). Working capital turnover
E). Equity ratio

Q44 When performing a profitability analysis, which ratio you would consider?
A). Return on Sales (ROS)
B). Current ratio
C). Average collection period
D). Interest coverage
E). Equity ratio

Q45 When performing an efficiency analysis, which ratio you would consider?
A). Return on Sales (ROS)
B). Current ratio
C). Average collection period
D). Interest coverage
E). Equity ratio

This is the end of the Financial Statement Analysis.

The remaining questions are independent and unrelated to the previous ones.
ADMS 2500 Final Exam, Fall 2019 © York University Page 13 – Alt Reg
46) Which of the following is not a desirable attribute of financial statements
A) relevance
B) subjectivity
C) reliability
D) completeness
E) None of the other alternatives are correct

47) The following definition pertains to which desirable attribute of financial statements: statements
should be free of material error and/or fraud and represent what really happened or exists.
A) relevance
B) subjectivity
C) reliability
D) completeness
E) None of the other alternatives are correct

48) GAAP in Canada refers to

A) FASB and ASPE
B) IFRS and ASPE
C) FASB and IFRS
D) ASPE
E) None of the other alternatives are correct

49) A set of rules of professional conduct that governs the behaviour of accountants in the performance
of their work is called
A) generally accepted accounting principles (GAAP)
B) the Accounting Act
C) the Sarbanes-Oxley Act
D) a code of ethics
E) None of the other alternatives are correct

50) Three foundations underpinning financial reporting and transparency are the conceptual foundations,
the technical foundations and
A) the professional foundations
B) the Board of Directors foundations
C) the audit foundations
D) The theoretical foundations
E) None of the other alternatives are correct

This is the end of the exam – good luck! Have a good Winter Break!

ADMS 2500 Final Exam, Fall 2019 © York University Page 14 – Alt Reg
 Complete solutions to exam Version A Regular – Fall 2019
Case: LeDark

Q1: A Q11: D Q21: A Q31: C 14% Q41: E

Q2: C Q12: A Q22: B Q32: C 10days Q42: B 0.12

Q3: B Q13: B Q23: B Q33: D 11.36 Q43: E

Q4: C Q14: C Q24: D Q34: D 0.23 Q44: D 0.76

Q5: E Q15: C Q25: A Q35: B 6.00 Q45: D

Q6: C Q16: B Q26: C Q36: C 1.14 Q46: C

Q7: B Q17: D Q27: B 18,000 Q37: C 13.85 Q47: D

Q8: A Q18: A Q28: C 73% Q38: C 6% Q48: A

Q9: C Q19: C Q29: B 3.10 Q39: E Q49: D

Q10: A Q20: E Q30: D 35.71 Q40: A 1.24 Q50: C

ADMS 2500 Final Exam, Fall 2019 © York University Page 16 – Reg A
 Solutions for Indirect method

LeDark Corp.
Cash Flow Statement
Year Ended November 30, 2019

Working capital $ (11,000)

Operating activities
Profit $ 15,000
Adjustments to reconcile profit to net cash
provided by operating activities
Depreciation Expense $ 40,000
(Gain) loss on Sale of Equipment $ (7,000)
Decrease (Increase) in Accounts Receivable $ 8,000 *
Decrease (increase) in Inventory $ (1,500) *
Decrease (Increase) in Office Supplies $ (5,000) *
(Decrease) Increase in Accounts Payable $ (8,000) *
(Decrease) Increase in Advertising Payable $ 1,500 *
(Decrease) Increase in Income taxes payable $ (6,000) $ 22,000
Net cash provided by operating activities $ 37,000

Investing activities 83
Sale of Equipment $ 52,000
Purchase of Equipment $ (47,000)
Net cash used by investing $ 5,000

Financing activities
Repayment of notes payable $ (30,000)
Issue/call of common shares $ (3,000)
Payment of cash dividends $ (11,000)
Net cash used by financing activities $ (44,000)

Net Increase in Cash $ (2,000)

Cash Opening balance $ 7,000

Cash Ending Balance $ 5,000

Calculations
Acc deprn on machinery sold Dividends
Accum deprn beg period $ 115,000 Payable 2018 $ 6,000
Depreciation expense period $ 40,000 Payable 2019 $ ‐
Accum deprn period end $ (150,000) $ (6,000)
* Acc Depr of equipment sold $ 5,000 Declared 2019 $ (5,000)
Paid in 2019 $ (11,000)
Carrying amount of machinery sold
cost of equipment $ 50,000
Accumulated deprec. $ (5,000)
* Amount for equipment sold $ 45,000

Proceeds on Sale of equipment

Carrying amount $ 45,000
Results on sale $ 7,000
Cash received in sale of equip. $ 52,000
ADMS 2500 Final Exam, Fall 2019 © York University Page 17 – Reg A
 Solutions for Direct method

LeDark Corp.
Cash Flow Statement
Year Ended November 30, 2019

Operating activities
Cash Receipts from Customers #1 $ 258,000
Cash payments
to supplies #2 $ (144,500)
for Office Supplies Expense #6 $ (17,000)
for Advertising Expense #3 $ (43,500)
for Interest #4 $ (3,000)
for Income Tax #5 $ (13,000)
for Prepaid Expenses #7 $ ‐ $ (221,000)
Net Cash provided by operating activities $ 37,000

Investing Activities
Sale of Machine $ 52,000
Purchase of Machine $ (47,000)
Net Cash used for investment activities $ 5,000

Financing Activities
Repayment of note payable $ (30,000)
Issue of Common shares $ (3,000)
Payment of dividends $ (11,000)
Net cash used by financing activities $ (44,000)

Net Increase in cash $ (2,000)

Cash Opening Balance $ 7,000
Cash Ending Balance $ 5,000

Calculations
Customers To Suppliers
#1 Sales $250,000 #2 CoGS $ 135,000
Change in Accounts Receiv $ (8,000) Change in Inventory $ 1,500
$258,000 Change in Accounts P $ (8,000)
$ 144,500

Advertising Expense Interest

#3 Advertising Expense $ (45,000) #4 Interest Expense $ (3,000)
Change in Advertising Pay $ 1,500 Change in 0
$ (43,500) $ (3,000)

Income Tax Office Supplies Expense

#5 income tax expense $ (7,000) Office Supplies Expense $ (12,000)
Change in Income taxes pa $ (6,000) Change in Office Sup $ (5,000)
$ (13,000) $ (17,000)

Prepaid Expenses
#7
Change in
$ ‐
ADMS 2500 Final Exam, Fall 2019 © York University Page 18 – Reg A
Chapter ‐ Financial Statement analysis
2019 2018
Return on Equity Net income Average OE
2019 $ 15,000 20500 73% no
Return on common Equity Net income Average Common Eq
2019 $ 15,000 13500 111% no

Current ratio CA CL
2019 $ 32,500 $ 10,500 3.10
$ 36,000 $ 29,000
2018 1.24

Accounts receivable turnover Trades receivables Sales

2019 $ 7,000 $ 250,000 35.71
2018 $ 15,000 no

Return on Assets Operating income Total average Assets

2019 $ 18,000 $ 125,250 14% no

Average collection period = 1/ Accounts receivable turnover x 365

2019 0.03 365 10.22 no

Working Capital turnover sales WK

2019 $ 250,000 $ 22,000 11.36
2018 $ 7,000 no

Common Equity ratio Common OE Total assets

2019 $ 12,000 $ 104,500 0.11
2018 $ 15,000 $ 146,000 0.10
Equity ratio OE Total assets
2019 $ 24,000 $ 104,500 0.23
2018 $ 17,000 $ 146,000 0.12

Bond interest coverage operating income annual bond interest

2019 $ 18,000 $ 3,000 6.00 no

Quick ratio QA CL
2019 $ 12,000 $ 10,500 1.14
2018 $ 22,000 $ 29,000 0.76

Inventory Turnover CGS AV Inventory

2019 $ 135,000 9750 13.85
2018 no
Return on Sales Net income Net sales
2019 $ 15,000 $ 250,000 6%
2018 no

ADMS 2500 Final Exam, Fall 2019 © York University Page 19 – Reg A
 Complete solutions to exam Version B Regular – Fall 2019
Case: LeBlue

Q1: A Q11: D Q21: DA Q31: C 14% Q41: E

Q2: C Q12: A Q22: B Q32: C 22 days Q42: D 0.44

Q3: B Q13: B Q23: B Q33: D 13.16 Q43: A

Q4: C Q14: C Q24: D Q34: D 0.22 Q44: D

Q5: E Q15: C Q25: A Q35: B 6.00 Q45: C

Q6: A Q16: B Q26: C Q36: C 1.42 Q46: B

Q7: B Q17: D Q27: C 18,000 Q37: C 13.85 Q47: C

Q8: A Q18: A Q28: C 71% Q38: C 6% Q48: B

Q9: C Q19: C Q29: B 2.23 Q39: A 1.26 Q49: D

Q10: A Q20: E Q30:D 16.67 Q40: B 0.12 Q50: B

ADMS 2500 Final Exam, Fall 2019 © York University Page 16 – Reg B
 Solutions for Indirect method

LeBlue Corp.
Cash Flow Statement
Year Ended November 30, 2019

Working capital $ (4,000)

Operating activities
Profit $ 15,000
Adjustments to reconcile profit to net cash
provided by operating activities
Depreciation Expense $ 40,000
(Gain) loss on Sale of Equipment $ (7,000)
Decrease (Increase) in Accounts Receivable $ (8,000)
Decrease (increase) in Inventory $ 4,500
Decrease (Increase) in Office Supplies $ 5,000
(Decrease) Increase in Accounts Payable $ (8,000)
(Decrease) Increase in Advertising Payable $ 7,000
(Decrease) Increase in Income taxes payable $ (4,500) $ 29,000
Net cash provided by operating activities $ 44,000

Investing activities 83
Sale of Equipment $ 51,000
Purchase of Equipment $ (50,000)
Net cash used by investing $ 1,000

Financing activities
Repayment of notes payable $ (30,000)
Issue/call of common shares $ ‐
Payment of cash dividends $ (13,000)
Net cash used by financing activities $ (43,000)

Net Increase in Cash $ 2,000

Cash Opening balance $ 5,000

Cash Ending Balance $ 7,000

Calculations
Acc deprn on machinery sold Dividends
Accum deprn beg period $ 115,000 Payable 2018 $ 6,000
Depreciation expense period $ 40,000 Payable 2019 $ ‐
Accum deprn period end $ (149,000) $ (6,000)
Acc Depr of equipment sold $ 6,000 Declared 2019 $ (7,000)
Paid in 2019 $ (13,000)
Carrying amount of machinery sold
cost of equipment $ 50,000
Accumulated deprec. $ (6,000)
Amount for equipment sold $ 44,000

Proceeds on Sale of equipment

Carrying amount $ 44,000
Results on sale $ 7,000
Cash received in sale of equip. $ 51,000
ADMS 2500 Final Exam, Fall 2019 © York University Page 17 – Reg B
 Solutions for Direct method

LeBlue Corp.
Cash Flow Statement
Year Ended November 30, 2019

Operating activities
Cash Receipts from Customers #1 $ 242,000
Cash payments
to supplies #2 $ (138,500)
for Office Supplies Expense #6 $ (7,000)
for Operating expenses #3 $ (38,000)
for Interest #4 $ (3,000)
for Income Tax #5 $ (11,500)
for Prepaid Expenses #7 $ ‐ $ (198,000)
Net Cash provided by operating activities $ 44,000

Investing Activities
Sale of Machine $ 51,000
Purchase of Machine $ (50,000)
Net Cash used for investment activities $ 1,000

Financing Activities
Repayment of note payable $ (30,000)
Issue of Common shares $ ‐
Payment of dividends $ (13,000)
Net cash used by financing activities $ (43,000)

Net Increase in cash $ 2,000

Cash Opening Balance $ 5,000
Cash Ending Balance $ 7,000

Calculations
Customers To Suppliers
#1 Sales $250,000 #2 CoGS $ 135,000
Change in Accounts Receiv $ 8,000 Change in Inventory $ (4,500)
$242,000 Change in Accounts P $ (8,000)
$ 138,500

Operating expenses Interest

#3 Advertising Expense $ (45,000) #4 Interest Expense $ (3,000)
Change in Advertising Pay $ 7,000 Change in 0
$ (38,000) $ (3,000)

Income Tax Office Supplies Expense

#5 income tax expense $ (7,000) Office Supplies Expense $ (12,000)
Change in Income taxes pa $ (4,500) Change in Office Sup $ 5,000
$ (11,500) $ (7,000)

Prepaid Expenses
#7
Change in
$ ‐
ADMS 2500 Final Exam, Fall 2019 © York University Page 18 – Reg B
Chapter ‐ Financial Statement analysis
2019 2018
Return on Equity Net income Average OE
2019 $ 15,000 21000 71% no
Return on common Equity Net income Average Common Eq
2019 $ 15,000 15000 100% no

Current ratio CA CL
2019 $ 34,500 $ 15,500 2.23
2018 $ 34,000 $ 27,000 1.26

Accounts receivable turnover Trades receivables Sales

2019 $ 15,000 $ 250,000 16.67
2018 $ 7,000 no

Return on Assets Operating income Total average Assets

2019 $ 18,000 $ 127,250 14% no

Average collection period = 1/ Accounts receivable turnover x 365

2019 0.06 365 21.90 no

Working Capital turnover sales WK

2019 $ 250,000 $ 19,000 13.16
2018 $ 7,000 no

Common Equity ratio Common OE Total assets

2019 $ 15,000 $ 110,500 0.14
2018 $ 15,000 $ 144,000 0.10
Equity ratio OE Total assets
2019 $ 25,000 $ 110,500 0.22
2018 $ 17,000 $ 144,000 0.12

Interest coverage operating income annual interest expense

2019 $ 18,000 $ 3,000 6.00 no

Quick ratio QA CL
2019 $ 22,000 $ 15,500 1.42
2018 $ 12,000 $ 27,000 0.44

Inventory Turnover CGS AV Inventory

2019 $ 135,000 9750 13.85
2018 no
Return on Sales Net income Net sales
2019 $ 15,000 $ 250,000 6%
2018 no

ADMS 2500 Final Exam, Fall 2019 © York University Page 19 – Reg B
 Complete solutions to exam Alternate Regular – Fall 2019
Case: LeDuck

Q1: A Q11: D Q21: A Q31: C 10% Q41: D 0.44

Q2: C Q12: A Q22: B Q32: C 22 days Q42: B

Q3: B Q13: B Q23: B Q33: D 19.23 Q43: E

Q4: C Q14: C Q24: D Q34: C 0.18 Q44: A

Q5: E Q15: C Q25: A Q35: B 2.17 Q45: C

Q6: E Q16: B Q26: C Q36: C 0.97 Q46: B

Q7: B Q17: D Q27: B 13,000 Q37: B 14.63 Q47: C

Q8: A Q18: A Q28: C 21% Q38: C 2% Q48: B

Q9: C Q19: C Q29: B 1.84 Q39: A 1.37 Q49: D

Q10: A Q20: E Q30: D 16.67 Q40: A 0.14 Q50: A

ADMS 2500 Final Exam, Fall 2019 © York University Page 16 – Alt Reg
 Solutions for Indirect method

LeDuck Corp.
Cash Flow Statement
Year Ended November 30, 2019

Working capital $ (2,000)

Operating activities
Profit $ 4,000
Adjustments to reconcile profit to net cash
provided by operating activities
Depreciation Expense $ 40,000
(Gain) loss on Sale of Equipment $ (5,000)
Decrease (Increase) in Accounts Receivable $ (8,000)
Decrease (increase) in Inventory $ 9,500
Decrease (Increase) in Office Supplies $ 2,000
(Decrease) Increase in Accounts Payable $ (8,000)
(Decrease) Increase in Advertising Payable $ 7,000
(Decrease) Increase in Income taxes payable $ (4,500) $ 33,000
Net cash provided by operating activities $ 37,000

Investing activities 83
Sale of Equipment $ 49,000
Purchase of Equipment $ (50,000)
Net cash used by investing $ (1,000)

Financing activities
Repayment of notes payable $ (30,000)
Issue/call of common shares $ 2,000
Payment of cash dividends $ (13,000)
Net cash used by financing activities $ (41,000)

Net Increase in Cash $ (5,000)

Cash Opening balance $ 5,000

Cash Ending Balance $ ‐

Calculations
Acc deprn on machinery sold Dividends
Accum deprn beg period $ 115,000 Payable 2018 $ 6,000
Depreciation expense period $ 40,000 Payable 2019 $ ‐
Accum deprn period end $ (149,000) $ (6,000)
Acc Depr of equipment sold $ 6,000 Declared 2019 $ (7,000)
Paid in 2019 $ (13,000)
Carrying amount of machinery sold
cost of equipment $ 50,000
Accumulated deprec. $ (6,000)
Amount for equipment sold $ 44,000

Proceeds on Sale of equipment

Carrying amount $ 44,000
Results on sale $ 5,000
Cash received in sale of equip. $ 49,000
ADMS 2500 Final Exam, Fall 2019 © York University Page 17 – Alt Reg
 Solutions for Direct method

LeDuck Corp.
Cash Flow Statement
Year Ended November 30, 2019

Operating activities
Cash Receipts from Customers #1 $ 242,000
Cash payments
to supplies #2 $ (148,500)
for Office Supplies Expense #6 $ (10,000)
for Operating expenses #3 $ (28,000)
for Interest #4 $ (6,000)
for Income Tax #5 $ (12,500)
for Prepaid Expenses #7 $ ‐ $ (205,000)
Net Cash provided by operating activities $ 37,000

Investing Activities
Sale of Machine $ 49,000
Purchase of Machine $ (50,000)
Net Cash used for investment activities $ (1,000)

Financing Activities
Repayment of note payable $ (30,000)
Issue of Common shares $ 2,000
Payment of dividends $ (13,000)
Net cash used by financing activities $ (41,000)

Net Increase in cash $ (5,000)

Cash Opening Balance $ 5,000
Cash Ending Balance $ ‐

Calculations
Customers To Suppliers
#1 Sales $250,000 #2 CoGS $ 150,000
Change in Accounts Receiv $ 8,000 Change in Inventory $ (9,500)
$242,000 Change in Accounts P $ (8,000)
$ 148,500

Operating expenses Interest

#3 Advertising Expense $ (35,000) #4 Interest Expense $ (6,000)
Change in Advertising Pay $ 7,000 Change in 0
$ (28,000) $ (6,000)

Income Tax Office Supplies Expense

#5 income tax expense $ (8,000) Office Supplies Expense $ (12,000)
Change in Income taxes pa $ (4,500) Change in Office Sup $ 2,000
$ (12,500) $ (10,000)

Prepaid Expenses
#7
Change in
$ ‐
ADMS 2500 Final Exam, Fall 2019 © York University Page 18 – Alt Reg
Chapter ‐ Financial Statement analysis
2019 2018
Return on Equity Net income Average OE
2019 $ 4,000 19500 21% no
Return on common Equity Net income Average Common Eq
2019 $ 4,000 16000 25% no

Current ratio CA CL
2019 $ 28,500 $ 15,500 1.84
2018 $ 37,000 $ 27,000 1.37

Accounts receivable turnover Trades receivables Sales

2019 $ 15,000 $ 250,000 16.67
2018 $ 7,000 No

Return on Assets Operating income Total average Assets

2019 $ 13,000 $ 125,750 10% no

Average collection period = 1/ Accounts receivable turnover x 365

2019 0.06 365 21.90 no

Working Capital turnover sales WK

2019 $ 250,000 $ 13,000 19.23
2018 $ 10,000 no

Common Equity ratio Common OE Total assets

2019 $ 17,000 $ 104,500 0.16
2018 $ 15,000 $ 147,000 0.10
Equity ratio OE Total assets
2019 $ 19,000 $ 104,500 0.18
2018 $ 20,000 $ 147,000 0.14

Interest coverage operating income annual interest expense

2019 $ 13,000 $ 6,000 2.17 no

Quick ratio QA CL
2019 $ 15,000 $ 15,500 0.97
2018 $ 12,000 $ 27,000 0.44

Inventory Turnover CGS AV Inventory

2019 $ 150,000 10250 14.63
2018 no
Return on Sales Net income Net sales
2019 $ 4,000 $ 250,000 2%
2018 no

ADMS 2500 Final Exam, Fall 2019 © York University Page 19 – Alt Reg