Exercise 1 Exercise 17

Exercise 2 Exercise 18
Exercise 3 Exercise 19
Exercise 4 Exercise 20
Exercise 5 Exercise 21
Exercise 6 Exercise 22
Exercise 7 Exercise 23
Exercise 8 Exercise 24
Exercise 9 Exercise 25
Exercise 10 Exercise 26
Exercise 11 Exercise 27
MTM
Exercise 12 Exercise 28
Exercise 13 Exercise 29

&
Exercise 14 Exercise 30
Exercise 15 Exercise 31
Exercise 16 Exercise 32
Exercise 33
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 3

You can find below the trial balance of company FFF as at 31/12/N (amounts in euros):

ACCOUNT DEBIT BALANCE CREDIT BALANCE

Share capitaldo - 24.447
Tangible fixed assets a A 20.148 -
Accounts receivable from customers A 7.689
Accounts payable to suppliers IL 5.462
Sales R - 81.742
Supplies and services expenses #E 3.339 -
Personnel expenses * E 8.268 -
Bank deposits * A 1.582 -
Rents revenues * R - 750
Inventories * A 9.884 -
Cost of goods sold E 61.491 -
Total 112.401 112.401

Prepare:
a) The income statement for the period ended on 31/12/N.
b) The balance sheet as at 31/12/N.

statement
a income

S Gros,
·

Sales and services

- 1 742)
.

t
sold
cost of good 161 491)
.

and services
·
Supplies (3 . 339)
expenses
18 268)
expenses
.

·
Personnel

·
other revenues
750

Operational -
EBIT 9394E

Interest expenses
OE

Net Income 9394E

Sheet
b) Balance

EQUITY AND LIABILITIES

ASSETS
-

Non current
-
EQUITY
-

fixed assets 20 148 =

Tangible
.

Share Capital 24 . 447E

20 . 148E
Net Income . 394 E
9
current
-

33 841E
LIABILITIES .

Fuven tories -
. 884E
9
Acc . Receiv · costumers
7 .
689E current

cash and deposits 1 582 E to 5.

5 462E
.
Acc .
payable supp

. 9.955E
1 . 462E
5

Total Assets
39 303 E Total E
29303
.

-
Equity
and liabilities

4
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 4

In the table below, present the impact (net amount) caused by the changes resulting from transactions
1 to 7. Each rectangle shall be filled with a single amount, together with a + or – sign (signaling a
positive or negative sign).

1. Establishment of the company with a share capital of 200.000 € deposited in the bank.&
2. Credit purchase of merchandise in the amount of 6.000 €.
tan gible
t 3. Acquisition of a building for 100.000 €, paid immediately.A
acc
Receivable
4. & Sale on credit of all the merchandise acquired in 2., for an amount of 8.000 €.
costumers
from 5. Payment of the debt to suppliers due to the purchase of the merchandise in 2.
6. Payment of the electricity expenses in the amount of 1.000€.E movements
7. Rendering of services to a client for 10.000 €, out of which 40% were immediately received. in deposits

↑
Balance Sheet Income Statement Cash-Flow Statement
Assets Liabilities Equity Revenues Expenses Net Operational Investment Financing
Income
1 ↓ 200 . 000 E + 200 000 E . + 200 000E
.

2 + 6 000E . + 6 000E
.

T F A &
100 000E
. .

+
.

3 100 000 E
.

-
100 000
bank dep .
.
-
.

+ 8 000E
decrease 4 -
6
.

. 000E
+ 2 000
. E 8 000E
.
. 000
+ 6 + 2 . 000E

bank
depe 5 - 6 . 000 - 6 000E
.
- 6 . 000 E
decrease
6 - 1 000 E
.
-
1 . 000E + 1 000E
.
-
1 000E
.
-
1 000E
.

7 + 10 .
000E + 10 000 E 10 000E
. .
+ 10 000 E 4
. .
000 E

5
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 5

Company HHH, Ltd. was founded in October of N with a 20.000 € share capital deposited in its bank
-

account. This company buys and sells granite and other stones. The transactions occurred until the
end of year N are presented below:

1. Credit purchase of 200T of granite worth 6.000 €. 20

2. Credit sale of 150T of granite acquired in point 1 for 7.200 €. R
3. Sale return of 10T of granite sold in the previous point.
4. Payroll processing and payment amounting to 2.000 € (assume there are no withholding taxes or
social security). E
5. Marketing campaign worth 600 € paid immediately. E
6. Conclusion of a bank loan worth 30.000 €.
7. Cash purchase of a light passenger vehicle worth 30.000 €.
8. Purchase of office supplies worth 1.000 €; 50% paid immediately and 50% payable in 60 days. E
9. The company paid interest amounting to 400 €. E
10. The company reimbursed 20% of the outstanding amount of the bank loan; the remaining debt
will be reimbursed in year N+3.

Prepare:
a) The accounting records of the transactions presented above.
b) The trial balance as at 31/12/N.
c) The income statement for the period ended on 31/12/N and the balance sheet as at 31/12/N.
d) The statement of cash flows for the period ended on 31/12/N.
a) REF DESCRIPTION D C
.
AMOUNT

company 12-Bank Dep

51-Share Cap .
20 000 E
O . .

establishment
.

Credit purchase
1 .
of merchandise
321-Inventories 221-Acc .

Payable . 000 E
6

Credit Sale
211-Acc .
Rec .
71-Sales . 200 E
7

of merchandise
.
2

Inventory exit 61 -
COGS 321- Inventories 4 . 500 E

Sall Retur n + 1-Sales 217-Acc . Rec .

480

3
.
61 COGS 300E
Inventory entry 329-Invent
-

Salaries
.
4 Personnel 63-
12-Bank
and wages Dep .
2 . 000 E
expenses
expenses

Marketing 62-services
12-Bank Dep. E
.
5
campaign
and supplies 600

expenses

conclusion of 000 E
.
6 12-Bank Dep .

251-Bank Loans 30 .

bank ean

car purchase E
7 431 - TFA 12-Bank Dep. 30 .
000
.

paid upfiront

62-services & 221-Acc .

Payable 1 .
000 E
e
8
.
Office supplies sei epplies
purchase
Bank Dep 500 E
229- Acc Pay 1 2 - -

Interest exp 69-Int exp 12-Bank Dep 400E

.
9
. .
.
.

Loan 12-Bank Dep. 6 000

10 251-Bank Loans
.

Reinbursement
.

6
EDGER

12 Bank
Dep.
-

20 . 000f 2 000
.
E 51-Share Cap .
229-Acc .
Payable
30 000E 600E 20 000 E
. .

↓ 500 E 6 0004 .

30 . 000 E
. 000 E
1
500E
400
. 000 E
6

30E X 150T = 4500

=
30

fon-coas
Sales

&
321- Inventories

. 000
6 4 500
211-Acc . Rec . 71-Revenues
E
47 2002/480 480E 7 200 =
=
. .

.
.
4 500E 300 E
300 E

(10T)
(105)
↓

Salaries and
Services & 251-Bank Loaus
63-
wages expenses 62-supplies
expenses 6 . 000E 30 000 E
.

000 E
2 .

600E
. 000 =
1

431 -
TFA 69 -
Interest exp .

30 000E
.
400 E
b)
Trial Balance 31/12/N

I IlI I
AMOUNTS NET AMOUNTS
Account
Debit Credit Debit Credit

Bank
12 -
50 . 000 39 500 .
10 . 500 E -

De posets
Accounts
. 200 E 480E 6 720E
211- Receivable
7 .
-

Accounts 6 500 E
500 E . 000 E
7
.

229-
-

Payable

251-Bank 24 000 E
-

Loans 6 .
000E 30 . 000 E .

. 800
9
321- Inventories 4 500 E
-

6 . 300 .

Tangible 30 . 000 E 30 . 000 -

4 31 -
Fixed Assets

20 000 E
Share 20 . 000 E .

59- -

capital

61 - COGS . 500E
4 300 4 . 200 E -

services &
62-supplies . 600E
1 1 . 600 E -

Expenses

Salaries 2 . 000 E . 000 E

2
63- and
wages -

expenses
400 E
Interest 400E
69-
-

expenses

. 200 E
7
7
. 200 E
71-sades -

TOTAL 108 . 980E 108 . 980E 57 . 220E 57 220E .

2) INCOME STATEMENT

Sales and Services rendered . 720 E

6

COGS .
4 200 E

Services and supplies . 600 E

1
expenses
Salaties and
wages expenses 2 .
000

Operational Marginal (EBIT) 29080E)

Interest expenses 400E

Net Income 1480 =

BALANCE SHEET at 31/12/N

ASSETS
EQUITY

20 000 E
Non-current Assets Capital
.

Share
20 .
000 E
TFA 30 . 000 E
Net Income
000 E 19 480 = )
30
.

AssetS
.

Current

TOTAL EQUITY 18 .
520E
Inventories . . 800 E
9

Acc .
Rec .
.
6 )
+ 20 = LIABILITIES

Non-current Liabilities
cash & Deposits 10 .
500 E

200 E Bank Loans 000 E

19 .
24 .

24 000
020 E Current
.

TOTAL ASSETS 49 . liabilities

Acc .
Payable 6 . 500 E

6 . 500 E

TOTAL LIABILITIES 30 . 500 E

TOTAL EQUI 49 .
020 =
 PERIOD N
STATEMENT OF CASH FLOWS FOR
d)

Cash flows from operating activities

outflows to suppliers
- 1 .
100

Outflows to personnel -
2 .
000 E

cash flows from operating

3 100 E
(1)
-

activities
.

cash flows from activities

investing

related TFA
outflows to -
30 000 E .

-shfeows from investing 000E

-
30 .

activities (2)

cash flows from financing activities

inflows from new bank loans + 30 000E .

inflows a re to share capital

+ 20 .
000E
Subscription and Realization

· utflows due to Reinbursement 000 =

- 6 .

of bank wa n s

-
400E
to interest exp.
outflows due

cash flows from financing + 43 .

600
(3)
activities

Net 10 500 E
change in cash for the period .

(1 + 2 + 3)

cash and cash equivalents at

OE
the
beginning of the
period

at
cash and cash equivalents
10 500 E
the end of the period .
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 6

Company III develops a merchandising business of small household appliances. Below you can find the
balance sheet as at 31/12/N-1.

ASSETS (Euros)
Non-current assets
Tangible fixed assets 72.000
Current assets
Inventories 31.000
Accounts receivable from customers 5.000
Bank deposits 30.000
Total Assets 138.000

EQUITY AND LIABILITIES (Euros)

EQUITY
Share capital 100.000
Net income 14.000
Total Equity 114.000
LIABILITIES
Current Liabilities
Accounts payable to suppliers 24.000
Total Liabilities 24.000
Total Equity + Liabilities 138.000

Consider the following transactions regarding Company III, occurred in year N:

1. Transfer of the net income of the previous period to retained earnings.

2. Sale of merchandising for 8.000 €. The company received immediately 2.000 €. These goods were
acquired by 5.600 €.
3. Payment by bank transfer of the electricity bill in the amount of 200 €.
4. Car maintenance amounting 800 €, paid immediately.
5. Receipt of 5.000 € from customers (this debt was recognized in the previous year).
6. Payment of 12.000 € to suppliers.

Prepare:

a) The accounting records of the transactions described above for period N.

-
b) The income statement for period N.
-
c) The balance sheet as at 31/12/N.
~ The statement of cash flows for period 31/12/N.
d)

7
a)

=>
2

8 000 E
merchandise
.

expenses

Dep

Payment 12-Che 12
to
000
6 22-Acc .
Pay .

b) Income statement

Sales & services rendered 0 .

000 E

cost of goods soed .

5 600E

Services and supplies exp .

1 000 E .

operational margin
-
EBIT 9400E

interest expenses O E

Net income 1 .
400 E
C) BALANCE SHEET at 31/12/N

ASSETS

N on c u r re n t AssetS

Fixed Assets 72 000 E

Tangible
.

72 .
000 E

Current Assets

400 =
=
31 000E -
5 600 E
Inventories 25 .
.
.

Receivable 000E
000 + 2 0007
-
2
Accounts 5
.

0007
.
=
.
6
.

5 000
cash and deposits 000 E
- .

24 .

55 .
400 E

400 E
1
ASSETS .
TOTAL

EQUITY AND LIABILITIES

Equity

Share Capital 100 000 E

.

earnings 94 000 E
Retained .

Net Income .
1 400

E
TOTAL EQUITY 915 .
400

Liabilities

current liabilities

payable to 12 000 E
Accounts .

suppliers

TOTAL LIABILITIES 12 000 E .

TOTAL EQUITY & 127 .

400E
LIABILITIES
 of cash flows
d) Statement

activities
from operating
unflo ws
E 2 000 = + 5 000E
7 000
.

+ .
.

Inflows from customers

=
000 = - 200E 100 12 000
suppliers
-

to 13
.

outflows
- -
- .

cashflows from operating E

- 6 . 000
activities (1)

Cashflows from investing 0 E

activities (2)

cashflows f ro m financing
0 E
activities (3)

Net charge in cash for the

period (1 + 2 +
3) -
6 . 000 E

cash and cash equivalents E

30 000 .

of the
at the beginning
period 24 .
000
of
end
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 7

Below you can find part of the trial balance of BIT Company, which is specialized in IT consulting
services:

31/12/N-1 31/12/N
ACCOUNT DEBIT CREDIT DEBIT CREDIT
Check deposits -
50.000 56.000
Accounts receivable from customers ~ 0 42.000
-
Bank loans - - 0 - 100.000
Other accounts receivable and payable - 0 - 24.000
-
Tangible fixed assets - - 40.000
…. ~
Retained earnings - 10.000 - A
…..
Interest expense - 2.000
Services rendered - 300.000
Net income ~ 20.000 35.000

It is also known that:

1. The general meeting of shareholders decided that the net income of the previous year would
be kept in retained earnings.
2. The balance of the outstanding loans account concerns a bank loan that will be repaid through
5 annual instalments with constant reimbursement. The first repayment will be in N+1. The
interest expense was paid in year N.
3. The balance of "Other accounts receivable and payable" refers to the amount owed due to
the purchase of a land piece registered in Tangible Fixed Assets. It was agreed that the amount
owed would be paid in N+2.

It is intended that you:

a)/ Using the information provided, present the Assets and Liabilities elements that should
appear in the Balance Sheet as at 31/12/N (respecting the order by which they should appear
in that financial statement);
~ Present, in the Statement of Cash Flows, the flows related to the services rendered, the
b)
purchase of fixed assets, and the outstanding loan;
/
c) Assuming that the company is tax exempt, compute the earnings before interest and taxes
(EBIT) that shall be presented in the Income Statement for period N.
L

8
a) BALANCE SHEET 31/12/N (not balanced

listing
the intos we have
just
ASSETS

Non cur rent AssetS

Tangible Fixed Assets 40 .

000 E

current AssetS

Accounts Receivable 42 .
000 E

Cash and Deposits 56 .

000 E

EQUITY AND LIABILITIES

Equity
Retained
Earnings 30 .
000 E = 10 .
000E + 20 . 000 E

↓ ↓
Net Income
000E Retained
35 .
Net Income

liabilities Earhings from east

Year
Non-current liabilities

Bank Loans
80 .
000 = remaining
part of the
Other Acc .
Receivable
24 000E Reinbursement
and
.

payable
I paid in 5 instalments (
current liabilities
100 000
000
. 20
= .

Bank Loans
000 =
20 .
paid in

N+1 so

it's current
b) STATEMENT OF CASH FLOWS Acc .

Rec .

300. 000 M

00
Cash flows from operating activities
& I we have

Received (
Inflows from customers 250 000 = .

Cash flows from 40 000

investing activities
-

Outflows related to TFA 40

-

16 000E .

cash flows from financing activities

Bank Loans
Inflow from 000 E
100
+
.

Outflow due to interest expenses -

2 .
000E

Net
change in cash for the
period . 000 E
6

cash at the
beginning of the period 50 .
000 =

cash at the end of the

period 56 .
000 E

e)

Net Income = 35 . 000 E EBT = 35 . 000E

EBIT = 35 .
000 + 2 . 000 =
37 000E
.
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 8

JOTA Company trades lamps. Consider the following information, obtained from the trial balance as
at 31st January:

Balance

Account Debit Credit Debit Credit

Cash 6.000 € 5.000 € 1.000 €

Bank deposits 137.192 € 136.000 € G

1.192 €

Accounts receivable from customers 400.000 € 280.000 € 120.000 €

Accounts payable to suppliers 80.000 € 220.000 € 140.000 €

Accounts receivable and payable to
44.000 € 80.000 € 36.000 €
the Government
Bank loans 100.000 € 100.000 €

I. The
- following transactions were not yet recorded. Please present the appropriate accounting
records:
1. Receipt, by bank transfer, of 20% of the amount owed by the customers.
2. Credit sale of 20 lamps, model AAA, for 150 € each, plus VAT at 20%. These lamps had been
-
2000 E VAT-400
bought for 100 € each. Peerchase camps 3000 600E
Sale
-

3. Payment of the electricity expense of the month in the amount of 160 € plus VAT at 20%.
4. Payment of the accounts payable to suppliers in the amount of 26.000 €.

II. After recording the transactions mentioned above, indicate the balance of the following accounts
by the end of January, and place an (X) in the group of elements of the balance sheet to which it
belongs:

Assets Liabilities

Account Amount Current Non-current Current Non-current

Check Deposits

Accounts receivable from

99 600 E X
customers .

Government 36 . 562E X
*
Bank Loans . 000 E
1 X

Check Deposets
= 1 .
192 + 24 000
.
-
192-26 . 000 =
(1 .
000E) >
- Loan
#
Accountes Receivable = 120 000
.
-
24 .
000 + 3 . 600 = 99 .
600

Government =
36 . 000 + 600 -

32 =
36 .
5687
9
 °

N DESCRIPTION DEBIT CREDIT AMOUNT

20 % of

.
1
Receipt from 12-Check 211-Acc Rec E
24 000
. .

120 000 E
customers
.

Deposits
.

from .
c u st
the amount
zan-Accounts 3. 600 E received
they
Receivable
Credit sale
79-Sales 3. 000 E
of 20
lamps
.
2
243 VATACC .
600 E
-

Rec .
and Pay
exit 61-COGS 321- Invent . 000
2 - 100EX 201 =
Inventory .

= 2 . 000 E
12-Check Dep. 192 E
(bought
Payment of
62-Services 160E
.
3 electricity
supplies exp
brile
243- VATACC. 32E

.
4
Paymentto -A 12-Check Dep .
26 .
000 E

VAT ACC .

Receivable
291-Acc Rec . 79-Sales 243-
Payable
.

and

. 000E
3 600E
3. 600 E
3
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 9

Company MMM trades cleaning products. Below you can find the transactions carried out by Company
MMM during January N.

1. Cash advance to supplier Y in the amount of 1.000 € plus VAT at 20%.

2. Purchase, from supplier Y, of 400 units of cleaning products at a price of 4 € per unit, plus
VAT at 20%. The owed amount has been settled.
3. Credit sale to customer Z of 200 units of merchandise B at a selling price of 5 € per unit, plus
VAT at 20%. These goods have been acquired at a price of 4 € each.
4. Cash advance from customer ALFA, amounting 1.200 €, to purchase merchandise C. VAT
included at a rate of 20%.
5. Return of 10 units of merchandise B by customer Z.
6. Credit sale to customer ALFA of 500 units of merchandise C at a selling price of 6 € per unit,
plus VAT at 20%. The customer got a trade discount of 10%. These goods had been acquired
at a price of 4 € each.
7. Acquisition and consumption of gasoline in the amount of 80 €. Non-deductible VAT
included at 20%.
8. Acquisition and consumption of diesel, used in vehicles, in the amount of 120 €. VAT
included at 20%. 50% of the VAT is non-deductible.
9. Purchase of a computer, paid immediately, for 1.000 € plus VAT at 20%.
10. Purchase of a light passenger vehicle for 10.000 € plus VAT at 20%. The VAT of light
passenger vehicles is non-deductible. 40% of the vehicle’s amount was paid immediately.

a) Record the transactions presented above.

b) Compute the amount of VAT receivable or payable by Company MMM that results from the
transactions occurred during January N.

10
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 10

In the beginning of December of year N, Company QQQ had a stock of 150 units of merchandise Ω
purchased at the price of 1.000 € per unit. During that month, the company had the following
transactions:

1. Credit purchase of 110 units at the price of 1.150 € per unit, plus VAT at 20%.
2. Return of 10 units of merchandise to the previous point supplier.
3. Credit sale of 200 units at the price of 2.000 € per unit, plus VAT at 20%.
4. Return of 30 units of merchandise by the previous point customer.
5. Credit purchase of 200 units, at a gross price of 1.300 € per unit, less a trade discount of 10%. The
-

company paid the transportation expenses immediately, in the amount of 6.000 €. The purchase
-

and the transportation expenses are subject to VAT at a 20% rate.

6. Credit sale of 50 units at the price of 3.000 € per unit, plus VAT at 20%.

-
a) Prepare the warehouse record of merchandise Ω using First-in-First-Out (FIFO). Calculate the
cost of goods sold.
-
b) Prepare the warehouse record of merchandise Ω using Average Cost (AC). Calculate the cost
of goods sold.
-
c) In a scenario of price increase, as that occurred in December N, which of the methods - FIFO
or AC - results in a higher gross profit of sales? And in a higher final inventory amount?
d) Present the accounting records of the transactions, using the FIFO valuation method with
perpetual inventory.

11
 8

Il
G
Il
5 &
·
t
↑% t
S =
& &
SI
· -
i S
& T 8
Is

·
8 *

I
=
&

o 9
si
O

O · ↓
·
E
· ·
1: ··
·
o s
I
i
II
· Il

· ·
-

·
I ·
se
· l
&

Il
·
&

4
E
 COGS (FIF0) = 230 500
C)
.

=> Profit (FIFO) Profit (AC)

coos (AC) = 238 .
200

Higher Final
>
- EFO
Inventory
↓
LESS cOSTS
IN THE INVENTORY

a)

REF DEBIT
DESCRIPTION
.

CREDIT AMOUNT

Credit 321- Invent 126 500 E

1 .

Purchase
243- VAT Acc .
25 . 300
Rec . or Pay .

221-Acc .
Pay. 151 .
800 E
to
suppliers
321- Invent 91 500 E
Purchase .
.

.
2
Retorn W
.
VAT ACC . 2 300 E
(invert what 243 - .

we
just did Rec .
and Pay.
221- Acc .
Payable 13 .
100 E
to suppliers
Rec
211 - Acc
.

credit 480 000E

.

from customers
.
3
Sale
71 -
Sales 400 . 000 E

243 VAT ACC . 000 E

80
-

Rec . and Pay

Outflows
= >
-
exit 61-cOGS 321- Invent 207 500
Inventory Record
.
.
Warehouse

Sale 211- Acc Rec .

000 E 150 000 E + 57 500 E
Return
.

72
. .

.
4
.

from customers
INVERT
71-Sales 60 .
000 E

243 -
VAT ACC .
12 000 E
Rec Pay
.

. and

321- Invent 61- COGS 34 500

Inventory entry
.

Credit 321- Invent 234 .

000 =
.
5
purchase Acc .
243- VAT 46 800 E .

200 .900
221- Acc . Rec .

Transportation 321-Invent
c o sts
243 -
VAT ACC. 1
. 200E

12 -
Check Dep .

7 . 200 E

Credit Sale 71 -
sales 150 . 000 =
.
6
243 -
VAT ACC . 30 . 000 E

211- Acc . Rec .

180 .
000 E

61-COGS 321- Invent 57 . 500 E

 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 11

Company Movi Forte Ltd. trades a single model of chairs. Below, you can find information on all the
transactions that occurred during April N. The company uses the # Average Cost method. All
transactions are subject to VAT at a rate of 20%.

a) Complete the warehouse record of the merchandise and the journal of the company,
regarding April N and using the information already provided in those documents.

Inflows Outflows Inventory

Description
Quant. Price Amount Quant. Price Amount Quant. Price Amount
Initial Inventory 200 20E 4.000€
on 1/April/N
Purchase from
+
5

% 250 ) 5 250E
50 25E 1 250E 21 =
.

supplier BETA

Sale to customer 90
-
21E 1 890E
.
-
90
S 160 21 3 360E
.

ALFA

Purchase from 40
-
23
,
50E % 4 300
supplier GAMA 200 21 ,
50
.

160x21E + 40x23 50 =
200 x 20 50x25E 21E 890E
#
+
9 0 x = 1 , =

1000
21E
.

200 + 50 160 + 40
=
25 = (1 . 50
6)
①
0 = 23
-

50
21 50E
+
20 = 1 250
=
.

TRADE >
- something ,

DISCOUNT about net amount

Number
J+1
Description
Credit purchase of chairs, from
Debit Credit
221 – Accounts Payable
Amount ↑ includes
1.200€ VAT
BETA, for 20 € per unit. to Suppliers
Transportation costs were paid 321- Inventories
1 250E
.

200 + 50
VAT Accounts >
-
243-
250E
and Pay
Receivable .

250 + 50
12 – Check Deposits 300€ VAT
-

J+2 Cash advance from client ALFA

12 – Check Deposits 1.200€
218 -

Cash Advances

000 =) Separatee
.
1
from customers

243 -
VAT
200E

12
 90x30E = 2 700
.
E

NOVA SBE – Financial Accounting

Practical Classes - Fall 2024/2025

J+3 Credit sale of chairs, to client 71-Sales

2 700E
ALFA, for 30 € per unit
.

243- VAT Account

540E

211- Accounts Rec .

from ustomeres 3 240 E

.

218 -

Cash Advance
1 .
000 E

243- VAT Account

200

211 Acc Rec

. 200 E
=

1
. .

61 -
COGS 321-Inventories 1 .
890
=E
J+4 Purchase of chairs, from GAMA,
·
321- Inventories
940E

for 25 € per unit, and a trade

discount of 6% included in the 243- VAT Acc.
188E
invoice. Furthermore, a cash s
discount was obtained 221- Acc 9 128E
.

Payable .

to costumers

221- Acc .

Payable 9 .
128E =
I

↑
78 Other Revenues
47
-

E
and gains

243- VAT Accounts 9 , 40E

12 – Check Deposits 1.071,60€

J+5 Acquisition of diesel for the

12 – Check Deposits 240€
merchandise transportation >
- with VAT ,
(200 +
vehicles (VAT 50% deductible) 62-services and
220E
supplies exp.

243- VAT
20E

b) Compute the Gross Margin over Sales using the Average Cost method.
c) What would be the cost of the goods sold if the company had used the First-In-First-Out
method?

13
b)
SALES = 2 .
700 E

cost of sold 1 890 ) >

- 90x21E
goods
=

=
.

Gross =
2 .
700 7 - 1 . 80 =
210E
margin

GROSS each
SALES
OVER X100 =
30 %
Margin (% ) - that I sell
I retain
0 30 cent.
,

2)
cost of 90x20E 200 E
goods sold (FIFO) = = 1 .
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 12
-
journal
Please record the following transactions of company TTE:

C Payment of the office rent of the company. This rent, with a net amount of 750 €, was subject to
1. -

IRS tax withholding at 25%.

2.
- Payment of fees to an engineer relative to the maintenance of the electric installations of the
-

office. This payment was subject to a tax withholding by the company of 500 €, corresponding to
-

a IRS tax withholding rate of 25%. The company will deliver this tax to the Government next
month. This service is subject to VAT at a rate of 20%.
- NOTAXES
C Payment of the third payment on account of corporate income tax, in the amount of 1.000 €.
3. - -
e just
4. Processing and payment of employees’ salaries. The net amount was 18.500 €. The single social
=

tax on behalf of the employees is 11% and on behalf of the employer is 23,75%. Consider an
- -

average IRS tax withholding rate of 15%.

-

/ The bank paid the company net interest of 750 €. This amount was subject to a tax withholding
5. =>

for corporate income tax at a rate of 25%.

S
6. The earnings before taxes (equal to the profit for tax purposes) is 20.000 €. The corporate income
tax rate is 20%.

14
O
&
se ·
··· S - !·
·
I
3 e
i 3 e ·
E
·

S
· · · ·
i
I
8 ·
*
T O

· · · · s 4

b
6
· · ·
&
S 8 ·
· P e 6 b
↓ b
S ·
%
*
3

&
·
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 13

Company X, during year N, made payments regarding corporate income tax in the amount of 2.000 € -

and suffered third parties tax withholdings of 500 €. It is known that at the end of year N, the amount
-

of earnings before taxes (which coincides with the fiscal result) is 20.000 €. The corporate income tax
-

rate is O
20%. ↓

a) Determine the income tax estimate and present the appropriate accounting records.
- . . . . . . .

b) Determine the amount that should be presented in the balance sheet as at 31/12/N
regarding the income tax accounts receivable or payable and if such amount should be
presented as an asset or a liability.

a)

I
DESCRIPTION DEBIT CREDIT AMOUNT
000 E 100 %
20 .

000 7 - % (income
812 -
Income . 41
2 -
Income .
4 000 E 7 . 10

Income Tax tax(

tax Acc Rec/Pay.
expense
.

tax

b)
241
>
- Real income
already 000 = 4 000 E

S
2 .
.

tax exp
paid
.

500E

d
has to pay
company

2 .
000 =
500 = -
4 . 000 = =
4 / . 500 =

#
LIABILITIES

15
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 14

A company has the following Owners’ Equity elements as at 31st December, year N:

Share Capital 200.000

Retained Earnings (Reserves) 120.000
Net Income 80.000

The capital is made up of 100.000 shares. In the general meeting of shareholders, held in March of
N+1, it was decided that 50% of the net income from the previous year would be distributed as
dividends and the remaining 50% would be retained (including the reinforcement of the legal reserve
by 5% of the net income). The dividends paid to the shareholders were subject to a withholding tax of
25%.

The net income generated between January 1st and June 30th of N+1 was equal to 10.000€.

On the 1st of July of N+1, there was a share capital increase, realized by bank transfer, through the
issuance of 10.000 new shares subscribed by new shareholders and issued at their accounting value.

a) Record the transactions related to the distribution and retention of the earnings of year N.
b) Determine the unitary issuance value of the shares that were subscribed by the new
shareholders.
c) Record the share capital increase.

16
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 15

At the end of year N, Company VVX has the following elements of Owner’s Equity:

Share Capital 100.000

Share Premium 30.000
Reserves 105.000
Net Income 20.000

The nominal value of each share is 1€. In N+1, the shareholders decided to distribute dividends of
0,05€ per share and keep the remaining net income in retained earnings. The dividends payment is
subject to withholding tax at 25%.

In August N+1, the company increased its capital with the incorporation of reserves through the
issuance of 65.000 new shares (issued at their nominal value).

In September N+1, the company increased again its capital through the issuance of 50.000 new shares
which was fully paid up, by bank transfer, by new shareholders. At the end of year N+1, the share
premium account had a balance of 67.500€.

Knowing that there were no additional changes in the capital of the company during N+1, you are
required to:

a) Record the decision regarding the retention and distribution of the earnings, including the
dividends payment.
b) Record the transactions related to the capital increases.
c) Identify the impact of each capital increase in the value of Company VVX’s Owners’ Equity.

17
 OF THE EARNINGS
a) RETENTION AND DISTRIBUTION

I I Il
No DESCRIPTION DEBIT CREDIT AMOUNT

all the net

the Net 56-Retained >
-
1 .
Transfer 818 -
20 .
000
income in .
Ret

net income Income earnings

earhings

Cpae
56 Ret 26-Shareh .
. 000 =
- .

5
2 Shareholders
/Pay
.

earnings Acc .
Rec . =
1000 O

26-Shareh . . 000 E
5 pay Shares
GROSS -we
Acc Rec .
/Pay 0 05 = 5 000E
AMOUNT 100 000 X
.
= .

.
,
DIVIDENDS
242
-
Tax 250E
1
Will not
.

Shareh .
withholding >
- always on CREDIT
ACC PAYABLE this
Receive
.

12-Check Dep. 3 750E

.
amount
NET AMOUNT (nO taxes) tax

(subject eng) t

b)

I I I I
No DESCRIPTION DEBIT CREDIT AMOUNT 26 is an

intermediary

E 51-share account
1. 26-shareh . 65 000 E >
-

Subscription .

just increasing
Acc . Rec .

/Pay capital
Capital

.
51-share
55 Reserves 26-Shareh. E
Realization 65 000
-

Acc .
Rec .
/Pay

51 50 .
000
.
2 Subscription NOMINAL VALUE BALANCE
SHARE PREMIUM

F 54-Share 3 7 500
.
-
Lend of year)
Premium PREMIUM N+ 1

r
67 . 500 -

26-Shareh Acc .
8 7 500 E 000 - N
.
30 .

37 .
300
- capital
500 E increase
12-Check Dep 26-Shareh

Realization
.
.
1 7
U
.

I
1
C) t
capital increase - no impact in Owners' Equity value

august NT
just a readjust in .
OE
nd
2 87 500 =
Capital increase >
- Owners' Equity increases by .
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 16

In the Balance Sheet of company Y S.A., as at 31/12/N-1, you can find the following Owners’ Equity
elements. You also have information on the share capital as at 31/12/N:

Owners’ Equity
Year N-1 Year N
Share Capital 100.000
Share Premium 0
Retained Earnings (including Reserves) 80.000
Net Income 20.000
Total Owners’ Equity 200.000

a) On 31/12/N-1, Y’s capital was made up of 20.000 shares. In January N, there was a capital
-

increase to new shareholders through the issuance of 10.000 shares. Each share was issued
-

at 10€. In February N, the new shares were paid by shareholders in the following way:
-

warehouse to be used by the company, valued at 60.000€, and 25.000€ paid by bank transfer.
-

Record the subscription and realization of the capital increase.

-

b) In March N there was a general meeting of shareholders to discuss the retention and
distribution of earnings. It was decided that 60% of it was going to be distributed through
-

dividends to the shareholders, and the remaining would be retained (with 5% to reinforce the
-
-
-

Reserves). The dividends were paid and subject to a withholding tax of 25%. Record the
-
-

decision regarding retention and distribution of net income, as well as the dividends payment.
- -

c) The profit before tax for the period ended on 31/12/N was 30.000€. This profit is identical to
-

the taxable profit, being the corporate tax (IRC) of 25%. Record the corporate tax expense of
-

company Y.

d) Taking into account all the previous information, fill the table presented in the beginning of
the exercise with the different items of company Y’s Owners’ Equity.

18
a)

Nomiral-
000

I I Il
= 5
No DESCRIPTION DEBIT CREDIT AMOUNT
value 20 000
.

per share

subscription 51-Share C 50 000 = 58 50 000 E

a) 10 000 X =
.
.
+ .
.

- shares

54-Share P . 50 .
000 E

Acc
26-Shareh .
100 . 000 E

Realization 431-TFA 26 60 .
000

12- Check Dep. 26 25 .

000E

Transfer of 56 000 E
b) & 18 20 .

net income

I I I I
56 26 12 000 E
Share holders
.

26 12 000 E .

242 . 000 E
3

12 . 000 E
9

56 1 000 E
Reserves 55 .

241-Income . 500 E 30 000 E X 0 25

812 Income .
7

Income tax
.
-

C) Tax Acc Rec /P

. CORPORATE
tax expense
. .

TAX

d) Owners' Equity Year N

increased
Share Capital 150 000 E
.

by 50 .
000

Premium 000E
-
Share 50 .

Retained Earnings
88 000E
lind Reserves
.

Net Income
22 .
500 E

TOTAL 310 . 500 E

 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 17

On the 1st of November N, company TTT, which sells footwear, bought on credit a vehicle to transport
=>
merchandise for 70.000€, plus VAT at 20%. In order to adapt the vehicle, the company had to spend
↑

an additional 10.000€, plus VAT at 20%. The vehicle has an estimated lifetime of 5 years.

1. Compute the vehicle’s depreciations for N and N+1, according to the straight-line depreciation
method. Assume:
a) Annual depreciations
b) Monthly depreciations

2. Assume that depreciations are computed on an annual basis and that the vehicle is the only
-

tangible fixed asset of the company. Determine the amounts that will be presented in the balance
sheet as at 31st December N+1, and the depreciation expense in the income statement of year N+1.
Y

3. On the 1st April N+2, the vehicle was sold for 50.000€, plus VAT at a rate of 20%, immediately
-
-

received. For the following cases, compute the gain or loss associated with this sale:
a) The company computes annual depreciations;
b) The company computes monthly depreciations.

4. Record in the company’s journal:

a) The vehicle acquisition.
b) The depreciation expense concerning year N assuming annual depreciations.
c) The sale of the vehicle assuming annual depreciations.

5. Answer point 4 again, but now assume the company bought a light passenger vehicle instead, with
non-deductible VAT, having been sold for 50.000€ on 1st April N+2.

50 .
000 +

19
.
2

depreciation
expense
=

10000 2 = 32 000 .

=
32 000 = 48 000
80 .
000 -
.
.

TFA (B S . .
) = 48 000 E.

Stat)
=
16 000 =
(Inc
.

Deprec Exp
.
.
.

sold for 50 000= + VAT (20 % )

.
3 .

basis
a) Annual 2 years
-
000
00 x2 32 000
depreciation =

.
= .

expense
000 E
000 = 48 .

80 .
000 -
32 .

48 000 =
= 2 000 = (gain)
000
- .

50
gain/loss
.
= .

N - 2

basis 12
b) Monthly N 1 + =

N + 2
-
3

000
100 x 17) = -

4 333 , 3 (loss)
180 000
- . .

50 000
gain/coss
-
.

12x5
.

Y
C
-000
A = 16 000
D
.

wo DESCRIPTION
431 000
Vehicle Acqu 80 .

a) 243 16 000 .

2719
96 000E .

67 438 16 000E
Depreciation
.

b)
expense
of the
sale
e) vehicle 439 20 .
000 E
vAT

243 10 .
000 E ↑

50 000 + 30 000X0 , 2
92 60 000 = -
> . .

438 32 . 000
=1000000 2

78 2 000 E
.
5

I I I I
-

No DESCRIPTION DEBIT C A

431 279 96 000 E

a) Acq.
.

Vehicle
000
64 438
19 2006) -
16 .
= 19 200
Expense
.

b) Dep .
.

the 439 96 000

of
.

Sale
e)
vehicle 92 50 000 E
.

438 38 400E
.

7 600
400) =
-

(96 000 38
.
-

50 000
.
-

-
.

-8 7 600E .
.

loss
(expense
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 18

In June N, the consulting company UUU established a capital lease contract with the following
conditions.

Value of the computer equipment 20.000 €

18 constant quarterly rents
Value of each rent 1.300 €
>
-
1st rent: 30/06/N
– only includes principal reimbursement
– paid when contracted is signed
2nd rent – 30/09/N includes interest in the amount of 800 €
3rd rent – 30/12/N includes interest in the amount of 700 € >
-

Call option at the end of the contract 1.000 €

Interest included in the call option
-
100 €
Estimated lifetime of the equipment 4 years
Annual basis depreciation

Assuming the contract is subject to a VAT rate of 20%:

- Present the accounting entries regarding the leasing contract, the 1st and 2nd rent payment
a)
and the call option.
-
b) What is the balance sheet value for the tangible fixed assets on the 31st December N+2?
c)
- What is the liability value for the outstanding debt regarding this on the 31st December N?
d) Solve point a) again assuming VAT is non-deductible.

20
 deductible
a) VAT

I III
No DESCRIPTION DE BIT CREDIT AMOUNT

contract
9 . Leasing 431-TFA 252-Cap .
Lease 20 .
000 E

establishment

of 1* ent 252-Cap .
1 1 300 )
Payment
=
.
.

.
2

243 - VAT 260t

interest
12 -
Check Dep . 1 560E .

↑
*
22 .
252-cap 500 > . 300
1 -
800 = 500

3
Payment of Rent
-

69 -
Ent .
exp. 100

243 -
VAT 260E

12- Check Dep. 1 .

5 60E

.
L 900
252- Cap .

.
4 Call option
69 -
Int .
exp. 100 E

243 -
VAT 200 E

12-Check Dep . 1. 200

b) BALANCE SHEET (N + 2)

depreciation
Annual 20 000E -
=
.
= 5 000
.
per year
4
depreciation
X 3 5 000
5 000
=
= > T F A = 20 000 - .

31/12/N
.

In + 2
.

B
.

S
.

. .
-
Accumulated
depreciation
N N+ 1 N + 2
year , , int .

exp

bre600
.

. 30
1
c) BALANCE SHEET IN)
↑

In B .
S .
31/12/N = outstanding = 20 .
000 -
1 . 300 -
500 -
600 = 17 600E
.

debt

↓
balance i n the

of ber
end de cem

Acc .
Ez52)
d) VAT NON-DEDUCTIBLE

No DESCRIPTION DEBIT CREDIT AMOUNT

9 Leasing contract
431-TFA 252-cap .
20 000 E .

establishment Lease

2 Payment of Prent 252 92

1 . 560E
.

.
3 Payment of C ent 252 600E = 500X1 , 20

69-Int exp 160E

.
960 100x1 , 20 100x20 =
.

800 + 160 = 960E

12 . 560E
1

252 1 080 E
.
4 Call option
.

69 120E

12 1. 200

&
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 19

Company FACMAT, Ldt presented on 31st December N the following assets in its balance sheet:

Useful Acquisition
Investment Acquisition Date
Life Amount
Building October N-5 50 years ?
Basic Equipment November N-3 3 years 36.000€

The company uses monthly depreciations in all its tangible fixed assets.

1. Knowing that the building was sold for 800.000€, paid immediately, in September N+1 and that the
accumulated depreciations in that date were 88.750€:
a) Determine the building’s acquisition value, taking into account that land represents 25% of the
total value of the building
b) Record in the journal the sale of the building.

2. Consider that the basic equipment was acquired through a leasing contract and that the first rent
was paid in the acquisition date consisting only of principal reimbursement in the amount of
3.000€, plus VAT at a rate of 20%.
a. Present the accounting entries regarding the conclusion of the leasing contract and the 1st rent
payment occurred in N-3.
b. Compute and record the depreciations concerning the basic equipment during N.

&

21
⑲
9. September
reded
a) ↑
No of months = 3 + 5x12 +1 =
7)

Accumulated = 18 .
750 =

depreciation

monkeydepreciam
cate

- 75 ,

no of months

LAND is not subject

+> 100 - 25
E3 %
=
to depreciation
d
Land
part

b)
Gain/loss =
Sale value -
(Acquisition cost
-

Accumulated depreciation) =

= 80 . 000= -
(1 .
000 . 000 E -

18 . 750E) = -
111 250E
.

CREDIT AMOUNT
NO DESCRIPTION DEBIT

1. Sale of 12 800 000E .

building 431 -
TFA 1 000 000 E
.
.

438 -
ACC .
88 750E
depreciat
.

68- other 999 .

250E

exp and los .

.

b)

.
2

NO DESCRIPTION DEBIT CRED IT A MOUNT

a)
12 36 000 E
1 leasing cap 431
.
.

establish .

.
2 astment paym .
252 . 000E
3

243 600E

12 . 600
3

Monthly 64 -

Dep .
438 10 000E
3
.

b) .

depreciat . expenses

000

000=1
=
Monthly dep . .

Monthly dep .
(yearw) = 10x 1 . 000-40 000
.
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 20

In N-2, a company bought two properties: one to be used as headquarters and the other to rent.

The first was bought by 200.000€. The public deed expenditures and the taxes on the real estate
purchase (IMT) cost 14.000€.

The second building was bought by 100.000€. The taxes on the real estate purchase (IMT) and the
public deed expenditures amounted 8.000€.

The estimated lifetime of both properties is 50 years and the value of land in each property is 25% of
total value.

a) Record, in the journal, the acquisition of both properties.

b) Present the proper records at the end of N-2, assuming both properties are valued at cost.
c) Present the appropriate records at the end of N-2 and N-1, assuming that the company uses
the fair value method and knowing that the property acquired for rental has a fair value of
105.000€ on 31/12/N-2 and 106.000€ on 31/12/N-1.

22
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 21

Below you can find part of the Balance Sheet of Company RARE at the end of year N and N-1, after
recording all the transactions of the economic periods.

31/12/N 31/12/N-1 31/12/N 31/12/N-1

Assets Equity
already
Non-current Assets depreciated
M
Tangible Fixed Asset 20.000 0 (…)
Acquisition
Date + 30/June/N Liabilities

Investment Properties 71.000 75.000 Capital Lease B=? 0

(…) (…)

1. The only Tangible Fixed Asset is a commercial vehicle (to transport merchandise), which acquisition
was financed through a capital lease contract, from which the following information was obtained:
Acquisition Depreciation
Acquisition Cost Useful Life
Date Method Adopted
TFA
Straight Line /
A=? 30 June N 5 years
Annual depreciation

a)
S Determine the value of A.

-
b) Record the establishment of the leasing contract for the acquisition of the vehicle.
each quarter -
3 month

The leasing contract establishes the payment of 12 quarterly rents of 2.100€ and a call option in the
amount of 2.800€, plus VAT at a rate of 20%. Regarding the breakdown of the rents of year N, the
following information is known:

Debt reimbursement
(Euros)
1st rent (paid in 30/06/N) 2.100
2nd rent (paid in 30/09/N) 1.700
3rd rent (paid in 30/12/N) 1.800
Total debt reimbursement in year N 5.600

c)
- Record the payment of the rent on 30/09/N. Consider that the rent was subject to VAT at a

rate of 20%.
d) Determine the value of B, assuming that this contract is the only leasing contract the company
-
-

had in 31/12/N.

2. The only Investment Property is a building, acquired in N-10 for 50.000€ and with a useful life of
50 years. This building is valued using the fair value method. Present the accounting record in
31/12/N regarding this building. ↓
the
Register
the
investment as

Aca cost
end of every
S
at the
we as
year

an adjustment
23 ↓
FAIR VALUE
 9.

a Acquisition cost
-
Annual Depreciatiation = 20 . 000 =

=
200

A = 25 000 E
.

ESCRIPTION
DEBIT CREDIT AMOUNT

b)
Stablishment of 431-TFA 252-cap .

25 .
000 = Aca our
company
leasing contract Leases cost ↓

LESSEE
c) 249 Rent Payment 252 . 700E
1

69-Int
400E
.

expenses

243 - VAT 420 ) = >

- VAT OveR

the total
12-Check 2 .
520E va l u e (2100E)
Deposits

d)
19

-
B = 25 .
000

balance of

account2) at

the end of the

year

.
2
became the

Fair 31/12/N-1 000 - book value

r

value in =
75 .

N
Fair value in 31/12/N = 71 .
000 E of year
FAIR VALUE BOOK VALUE

↓ J
Increase/Dicrease in
property's value in N =
71 .
000 E
-
75 . 000E =

=
- 4 000 E
.

fair value

l o ss

(register a

No O
coss)

I
AMOUNT
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 22

Company VVV was established in the beginning of year N. On 31/12/N, the CFO determined that there
were doubts regarding the collection of the accounts receivable from customer We do not pay, Ltd. in
the amount of 10.000€.

In March N+1, customer We do not pay, Ltd. paid 10% of the debt value. The company still considers
the remaining amount of accounts receivable from this customer as doubtful.

On 31/12/N+1 there were doubts regarding the collection of the debt from customer Cash not
available, Inc. in the amount of 8.000€.

a)/ Record, in the journal, the entries you consider adequate by company VVV in N and N+1
regarding accounts receivable.
b)S Determine the value of the item “Accounts Receivable from Customers” in the balance sheet
as at 31/12/N+1, knowing that the overall value of the accounts receivable from customers
(including bad debts) is 30.000€.
S Which is the impact of the accounting record in year N+1 on the company’s earnings?
c) -

Earnings
before Interest

and Taxes

(EBIT)

24
 desed to Acc . Rec .
#

I I I I
a)
DESCRIPTION DEB IT
Credita AMOUNT

Allowance for 65-Impairment 219-Accumulat

31/12/N doubtful allowances and 10 000 E

Allowanceses
debts o .

&
Year N write-down We still
expenses customers think
from
- from .
cust
. 000
9

collection 12-check Dep 211-Acc Rec doubtful ⑦

03/N + Cash .
.
. 1 .
000 E a re

Receipt 4 from customer

comas
for -

Tot
Allowance 65 219
+
1 7 .

000
31/12/0 doubtful debts

Year N+1 ↓
once
E allowances
a year
check the
debts
of
(end
year)

b) Balance Sheet 31/12/N + 1 = > Accounts Receivable from customers =

= 30 .
000 )
= -
17 000 E =
.
13 000E .

)
c) In N +1 EBIT decreases by 7 000
=

,
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 23

Company UP&DOWN, SA., specializes in the installation and maintenance of elevators. Below is
presented part of the trial balance of the company as at 31st December N:

Account Debit Balance Credit Balance

….
211 – Accounts receivable from customers 110.000 -
219 – Accumulated Allowances for Doubtful - 10.000
Debts from Customers
….

It is known that, from the amount of Accounts Receivable from Customers on 31/12/N, there were
serious doubts regarding the collection of 8.000€. The balance of account 219 - Accumulated
Allowances for Doubtful Debts from Customers presented in the trial balance concerns the initial
balance of year N.

Present the necessary accounting records at the end of year N and the amount that should be
presented as “Accounts receivable from Customers” in the Balance Sheet as at 31/12/N.

25
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 24

In year N, company WWW acquired 100 units of merchandise Y for 100€ each, plus VAT at a 20% rate.
At the end of year N, there were 20 stored units of merchandise Y, with a net realizable value of 80€
per unit.
During year N+1, company WWW sold 15 of the mentioned units, which were paid immediately, each
at a price of 70€, plus VAT at 20%. At the end of that year, the net realizable value of that merchandise
fell to 50€.

It is intended that you:

a) Record the purchase of merchandise Y in year N.

b) Record the adjustment of the final inventory of merchandise Y on 31/12/N.
c) Record the sale of merchandise Y occurred in N+1.
d) Record the adjustment of the final inventory of merchandise Y on 31/12/N+1.
e) Determine the amount to be presented in the item “Inventories” regarding this merchandise in
the balance sheet as at 31/12/N+1.

26
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 25

Below you can find part of the trial balance of company ML, plc, as at 31/12/N-1:

Debit balance Credit balance

(…)
211 – Accounts receivable from customers 25.000
(…)
24 – Government entities
241 - Income tax 1.100
242 – Tax withholding 6.000
243 - VAT 95.000 70.000
(…)
32 – Inventories
Merchandise (acquisition cost) 150.000
Accumulated write down 90.000
(…)

1. Record in the journal the payment to the Tax Authority of the amount of withholding income taxes
outstanding on 31/12/N-1.
2. Consider the following information concerning the inventories (merchandise OMEGA and
merchandise GAMA) on 31/12/N.

Goods Quantity Acquisition cost Net realizable value

OMEGA 320 190/unit 200/unit

GAMA 520 100/unit 75/unit

a) Compute the impact in the income statement due to this information on inventories.

Write down in inventories (losses/reversals)

b) Present the proper adjusting entries for this situation.

27
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 26

The following information for the last quarter of year N regards company RRR and was not yet
recorded in the company’s journal:

a) On 1st October N, RRR opened a fixed deposit account in the amount of 20.000€, with maturity on
1st October N+1. The interest for the whole deposit period, in the amount of 1.200€, will be totally
received in the maturity. -

b) On 1st December N, RRR obtained a bank loan of 50.000€. The full reimbursement and the interest
payment, in the amount of 1.500€, will take place on 1st March N+1.
c) On 1st October N, RRR paid the insurance of a property, in the amount of 1.200€, for the period
from 01.12.N to 01.12.N+1.
d) On 15th December N, RRR rendered a service to client AJ for 2.000€ (plus VAT at a rate of 20%). The
invoice was issued on 10th January N+1.
e) On 8th February N+1, RRR received an invoice, dated 20th January N+1, regarding telephone
communications of December N in the amount of 500€, plus VAT at a 20% .
f) On 1st December N, SOCISGPS paid the rent of an office to RRR, concerning January N+1, in the
amount of 1.000€. The rent is subject to withholding corporate income tax at a rate of 25%.

According to the accrual basis of accounting, record the transactions above in the journals of N and
N+1.

28
 JOURNAL YEAR N
3m . am
- -

1- 1
No DESCRIPTION DEBIT CREDIT AMOUNT OCTIN N+ 1 OCT/N11

a)
Opening of 13-Term Dep .
12-Bank Dep .
20 .
000 E
interest
te r m deposit 271-Accrued
Revenues
79-Interest
Revenues
300
- 0x3 moto

Bank Bankan 5005/interest ofm

b) Bank Loan
As

12-Bank Dep. 1 E
Propertyence
200
c)
.

62-services & 100 = 1200 (1 month of expense)

sup .
expenses
12
se
281 -

expenses
Deffered . 100
1
- Asset Account) Onlypayingwe using

of 271- Accrued 72-services

Rendering 2 000E
d)
.

services Revenues Rendered

272- Accrued
Telecommunication
e) 62-Serv . Exp.
expense
500E
expenses

7507 1 000 X0 75
Office 12 Bank
=
Rent Dep. .
- .

f)
Received
241 -
Income 250E
Tax Acc . Rec .

/Pay
22 -
Def .
Rev .
. 000
1
 JOURNAL YEAR N + 1

No DESCRIPTION DEBIT CREDIT AMOUNT

a) Maturity of 12-Bank Dep

. 13-Term Dep .
20 . 000 E

ter m deposits cancel the acciual

271-Acc . Rev . 300 E-

>at (until
=9 -
Int Rev .
.
900 =

N+ 1 OCT/N + )
12 -
Bank Dep .
. 200 E
1 year
Remaining Revenue
Bank Loan 251-Bank Loan 12-Bank Dep 50 000 E
b)
. .

payment 271-Accie . exp

. 500E

69 Int . 000
1 - > remaining interest expense
-
.
exp .

12-Bank Dep .
1 .
300

62-services >
- transform the asset
c) Prop . insurance 281- Def exp . . 1 100 E
expense into
.

& Sup . an
expense
expense

271- Acc Reven 2 000E

render.
.

Services
. .

a)
invoice ACC .
243- VAT 400E

291- Acc Rea . no info about

400 )
.

-
2 =
s
(edt
.
paid already
.

from c u st if the client

Telecommunic . 272-Accrued
exp
500 - - only
e)
.

cancel the acctual

invoice
243- VAT ACC. 100E

221- Acc
pay. .

600E
to suppliers
c o re business of
Office Rent 282-Deffered 78-ot h e r . 000 E
7
the

f)
e
is not
Revenues the company
Revenue Rev . and gains
of serv .
rendering
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 27

The accountant of company FIX YOU, plc, which has as main activity rendering consulting services, has
-

prepared a provisional balance sheet as at 31/12/N. Some of the elements of that financial statement
are presented below. However, the company’s auditor has detected some facts which were not yet
recorded by the company’s accountant. These facts are mentioned below.

Assets
Non-current assets
…
Book
Tangible fixed assets 224.000 >
- NET

VALUE
Current assets
…
Accounts receivable from the government (income tax) 450
Other accounts receivable ↓
Receivable
0
Acc .

Deferrals from the gov

. 0
Cash 1.000
…
Current liabilities
…
Accounts payable to suppliers 120.000
Accounts payable to the government (VAT) 15.000
Other accounts payable 0
Deferrals 0
…

1. The depreciations of year N have not yet been recorded. The assets were acquired in January N-3,
and have been depreciated on a monthly basis, using the straight line method, with an estimated
useful life of 10 years. It is also known that, in December N, the company sold on credit a basic
equipment, which acquisition value was 12.000€, with a loss of 2.300€. This operation is subject to
VAT at 20%. Record N’s depreciations and the sale of the fixed asset.
2. In December, the company received a rent of a store, concerning the period from 01/12/N to
28/02/N+1, with a gross amount of 1.800€. This amount was subject to withholding income tax at
Revenuel
a rate of 25%. >
- DEFFERAL (deffered

3. The electricity consumption on December N and January N+1 was of 2.000€, plus VAT at 20%. The
invoice was issued in January N+1. >
- ACCRUAL (acarued expense)

Present: ACIMA MENCIONADO

a) The records of the aforementioned transactions in the company’s journal.

~

b) The final amounts, as at 31/12/N, for the elements presented on the partial balance sheet
above.

29
 from .
c u st
MISMATCH different (advance
>
Adjusting suppliers)
OF TIMES Entires from Advance Payment advance to

↓
↓

recondent
Rev . & Exp
.
made in short time

always
not with merchandise
in the time
-
occured
They
CRUALS EEFERRALS To see if is a

recognition
a
Gain/loss
c u r re n t period -postpone the post period
OPPOSITE from
↓ ↓
= Sale value -

(Acq Cost =
Acc .
Dep )
.

will
.

g Receive eure
I before
& no invoice paid
↓
d Refered N BV
5
. .

se
Paffered
Acred
Accued Expenses
[Expenses
Revenues
- ·
Assets
·
Liabilities ·
Liabilities
·
As sets

RECORDS Of TRANSACTIONS
a)

. DEPRECIATION
9

=
·
TOTAL Depreciation N = 30 100 + 1 100 =
31 900 E
224 000 E
. .

Net Book Value = .

= )
Acq . Cost -
Acc .

Dep = 224 .
000 (E)

(#cost3)
= )
Aca .
Cost
=
= 224 000 .

LIFE

Cost 320 000 =

>
Acq .
= .

N of
·
Dep . not = 320 000 = .
-
12 000 = .
=
30 .
000E

sold assets 10
MONTHLY
e DEPREC .

.000
=
N of sold 2 10
·
Dep .

asset

↓
the sale

wa s in DEC.

Depreciation
in DEC is not

Recorded.
we only

Recordat te
the month
.

2 . SALE

N -
3 N -
2 N -
1 N
, ,

300 E
--
Loss = 2
3completar
.

11 months

↑ ↑
Acc Depreciation
142000x3 +
00x
4 70
=
.
= .

J
d
10
years
of useful 120 months

Life of useful
site

- 2 300t = Sale Value -

(12 .
000E -
4 .
700)(E
.

(7)
Sale Value =
5 .
000 E
 DESCRIPTION DEBIT CREDIT AMOUNT
REF .

of N 64-Deprec 438-Acc . 900

1 Depreciation
.

31
A)
.

(T F
.

& Am .
Expense Deprec . . .

68 -
other
Sale of basic
and 2 300 E
expenses
.

cred
equipment on .

cosses

)divide
Aca cost
439 TFA 12 000 =
.
-

accounts
438 . 700 =
4 - Acc .
Dep .

the value

not -278- other 6 .

000 E 5 000EX1 , 20
.
-
VAT
Included & Received
includes
merchandise Acc .
Rec . VAT beet
,

the Revenue
243 VAT 1. 000 E
1
doesn't
-

12 .
D 8007 X 0 . 75
Rent Received
-
Bank . 350E
9 >
- 1 .

.
2
WITHHOLDING
(01/12/N-20/02/N 1) +
241- Income 450 5 - >
1 800x0 . 25-
.
TAX
Tax Acc .
Rec/Pay

7000
78 -
other 600 =
Rev .
and gains

282 Deffered
200EXE
-

1 .
200 = = 1 .

Revenues
when making
62-Services 272-Accred
2000
-
3
. Electricity 1 000E
.
= the Accua
& sup .
Expenses Expenses
don't Record
comsuption we

the VAT

when we
pay
oney

b) BALANCE SHEET

TFA value
Assets before dep
Deprec . NET BOOK VALUE
Non Current Assets ↑ - -

224 000E 34 9007 12 000 = + 4 700 =

784 800 =
-

.
-

T F >
-
.
. .
A .
. .
.

Current AssetS

Tax with holding

-

Receivable from .
900 = >
- 450 + 450E
Accounts gov
(income tax) sold the asset
Accounts Receivable . 000E-
6 we
Other

Rent Received
Defferals S
-

eneck Deposits 2 . 350 6 - > 1 .

000 + 1 .
350

Liabilities

current liabilities

120 000 =
Accounts
payable to
sup . .

7 - 15 000 = + 1 000E
to the
Accounts payable gov
. 16 000 . .
.

(VAT)
Other Acc .

payable O

defferal revenue : Rent

Deffered (revenues) . 200E
1 >
-
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 28

Below is the balance sheet as at 31.12.N (before adjustments) for a public limited entity.

ASSETS Before b) After

adjustments adjustments

0003000
Non-current assets dep
Tangible fixed assets 4
years 270.000€ 225 .

Current assets of depred

.

70 000
downas
.

(write -

Inventories 70.000€ 60 .
000 -
00000
Accounts receivable from the government 5.000€
Accounts receivable from customers 140.000€
-

Bank deposits 102.600€

TOTAL ASSETS 587.600€

OWNERS’ EQUITY AND LIABILITIES

Owners’ Equity
Share capital 50.000€
Retained earnings 81.600€
Net income 75.000€
Total Owners’ Equity 206.600€
Liabilities
Non-current liabilities

Bank loans 200.000€

Current liabilities

Bank loans 146.000€

Accounts payable to the government 35.000€
Total Liabilities 381.000€
TOTAL OWNERS’ EQUITY AND LIABILITIES 587.600€

30
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

However, from the audit conducted on the company’s financial statements, it was verified that the
depreciations, impairment losses, provisions and some adjustments related to the accrual based
accounting were not yet recorded:

1.
/ The tangible fixed assets were all acquired in N-4, have a useful life of 10 years and have so far
-
-

been depreciated through the straight line method; sactual

S
2. The bank loan classified as a non-current liability will be paid in 4 annual installments with constant
-

reimbursement. The first installment will be paid in N+1. A payment of 6.000€ of interest will occur
- -

on 31.03.N+1, regarding the period between E 01.04.N and 31.03.N+1;

/ The balance of accounts receivable from customers is made of a customer account receivable of
3.
160.000€ and of the beginning of year balance of accumulated allowances for doubtful debts. It is
-

estimated that the amount of customers impairments on 31.12.N is 7.000€;

-

,
4. It is necessary to record a write down expense in inventories of 10.000€;
-
-

5. The rent payment, regarding January N+1, in the amount of 1.000€ has not been recorded yet.
- - -

6.
/ The lawyer pointed out there is a lawsuit against the company which is highly likely to result in the
payment of an indemnity of 20.000€.
- -

7.
S The balance of accounts receivable from the government refers to the payments on account made
during the year. The balance of accounts payable to the government corresponds to the income
tax expense estimated for year N, before the adjustments in the previous points, and to the VAT
payable. In order to calculate the income tax, a 25% tax rate was used. Consider the earnings before
-

taxes are the same both for accounting and tax purposes. Please redo the income tax estimate.

It is intended that you:

/a) Present the appropriate adjusting entries to be recorded on the journal of this company.
-

b) Present the balance sheet after these adjustments, as at 31.12.N.

-

c) Consider that, as at 31.12.N, there is only one batch of 5.000 units of merchandise, and there
is no balance of accumulated write down in inventories as at 31.12.N-1. Determine the
realizable value of the inventories as at 31.12.N and their acquisition value.

31
 a)

I Il I
No DESCRIPTION DEBIT CREDIT AMOUNT

>
- no cashflow
438-
9
. Depreciation 64 -

Deprec . Accum .
45 000 E
of interest
.

On TFA and Am .
Exp .
Depreciation total amount
M
69-Interest 272-Acciued

-00009
Interest expense months of
.
2 expenses expenses . 500 E
4
- accrued ex p
.
total months

Allowances fo r 249- Accum . 76- Impair

.
3

Allowances for Allowasse a

doubtful debts

Reversal 13 000 E .

cust. an d provisions
from

asset
in 329 Acc .
.
4 Write-down 65-Impair
-
.

Write-down in 10 000 = account)

All and white .

inventories ,
inventories
down exp
*
- .

281-Deffered 12-check Dep 1 000

Rent payment
.

.
5 .

expenses
lawsuit
.
6 Judicial 67-Expenses 29- Provisions 20 .
000 =
provision with the prov.
of period

tax 241- Income 812

-
Income
Income pay 16 . 625E >
- Reduce the
.
7

Acc Rec/Pay tax Expense of Income

tax .
va l u e
t ax expense

⑨
Acquisition cost -
Acc .
depreciation =
270 .
000 E =

cost-1 cost x4)

#) 000
Acq .
= 270 .

000 E
7 Acq .
Cost =
450 .

Depreciation
400000
N
45 000
=
=
.

)
160 000 = .
(Debt)

③ Acc . Rec .
from cust . = 140 000
.

= 20 000 = .
(Allowance)
-
> we only

-0
-

asset
need 7 .
000
need
so we

to adjust
and
the
Reverse
allowance i
⑦ Impact on EBT

500 13 000 = 10 000 = 66 500E

20 000 =
4
45 000 E - . + . .
= -
.

- .
.

↓ ↓ ↓ ↓ ↓
↓
will decrease
Allow. Write- provisions
Dep . Exp
. Int
EBT
Reversal down expenses
Exp
-
.

exp

#
.

LESS +AXES

tax Rate
-

-
66 . 500 X0 .
25 = -
16 . 625E
↓
decrease
Ta x
in Income
Payable
b) BALANCE SHEET 31 12. .
N (after adjustements

Assets

Non Current Assets

270 000 45 000

TF A 000E
-
=
225
.
.

Cur rent Assets

Inventories 60 .
000E = 70 000 .
-
10 .
000

000 35 000 + 16 625 13 3757

Acc Rec from 0 = 5 = . = -

gov.
. . .
.
.

to the gov.
Rec from cust 153 000 = =
160 000 7 000
Acc .
payable
Acc
-
.
· .
. .
.

000
cliabilities) #
Bank Deposits 101 . 600 = = 102 .
600 + 1 .

Deffered Exp .
. 000
1

TOTAL ASSETS 540 .

600E

Owners' Equity
10
O O
75 000
Net Income
= .

50 000 E
Share Capital
.

(bef .
adjustments)
Retained Earhings & 1 . 600 =
>
- Net Income = (100 000 .
-
66 .
500) X 0 75 =
25 125E
Net Income 425 = ,
.

25 .

(after adjustments)
TOTAL EQUITY 1 56 .
725E

Liabilities

Non current liabilities

(move to current eiab )
.

Bank Loans 150 .

000 = 200 . 000 -
50 000
.

↓
Provision 20 .
000

current liabilities

) 146 000 + 50 000

Bank Loans 196 000 .
= = .
.

Acc .

payable to
gov. 13 . 375E

Accrual Expenses 4 .
500 E

TOTAL LIABILITIES 383 .

875E

TOTAL EQUITY & LIAB . 540 .

600 E

c) we made a

value 000 = >

-
Net Realizable = 60 .

write-down
E
of 10 000 .

Acquisition cost =
70 . 000 E

S
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

land is not
EXERCISE 29 subject depreciation
&
In N, Company YYY acquired a piece of land to build its new headquarters for 100.000 Euros.
On 31.12.N+1, this piece of land had a fair value of 120.000 Euros, and on 31.12.N+2 of 70.000 Euros.
-

a) Knowing that the company uses the revaluation model to value this piece of land, record the
appropriate entries in N, N+1 and N+2.
-

b) What is the impact in the company’s net income in year N+2?

32
 I Il I
⑲as No DESCRIPTION DEBIT CREDIT AMOUNT

431-TFA 12
N Land Acquisition 100 . 000 E

N + 1 Revaluation 434
5 Revaluate 20 .
000 CANCEL

can't have Revaluation

&
we
at the
N +2 Revaluation 58 438 20 .
000E and impairment
same time

65paimAc
.
30 000 E
.

b)

&
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 30 VAT included

In November[l N-2, company RHA, S.A. acquired basic equipment for 97.920 Euros (VAT included at
-------- -

20%). The company uses the straight-line depreciation method on a monthly basis and has considered
a useful life of 4 years for this equipment.
-

On 31/12/N, the replacement cost of this equipment (as new) was 90.000 Euros (plus VAT at 20%).
-

a) Record in the journal of [ N the revaluation of this asset (after that year’s depreciation),
knowing that it had never been revaluated. -

b) Compute and record the depreciation of this equipment in yearL

- - - - -
N+1.

33
 0.00
aAcoso
=

700/month
600
1
Monthly depreciation
=
= .

NBV (31/12/N) = 89 600

.
-
(1 . 700 x 26) = 37 400 =
.

d
months

2 + 12 + 12
-

aca in Nov/N-2

with revaluation :

Monthly depreciation
10000
1 875
=

= .

NBV (31/12/N) = 90 000.

-

(1 . 875x26) =
47 250 =
.

I I I I
NO DESCRIPTION D C A

of 431-TFA 8 400 E
>
-
90 000 81 600
1 Revaluation - .
. .

basic equipment 438 - Aca.

4
. 550E >
- 48 .
750 -
44 200
(TFA)
.

deprec .

58 - Revaluat
3 . 150 = 3 41 . 250 -
37 400
.

surpluses

64 Deprec 438 22 500 E >

- 12x 1 875
b)
-

in
.

2 Depreciation
. .

a nd Amm .
Exp
N + 1
56-Retained
-50X2
58-Rev . Sur. 2 )
100 =
.

Earnings
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 31

On 01/01/N, Company A, S.A. acquired 30% of the equity of Company B ,S.A. by 40.000 Euros. At that
-

time, Company B owners’ equity amounted 100.000 Euros.

-

At the end of year N, Company B presented a net income of 20.000 Euros. This was the only change in
-

the owners’ equity elements of B since A bought the shares.

In the general meeting of shareholders, occurred in March N+1, the shareholders of Company B
- -

decided to distribute 40% of the earnings from the previous year. The dividends payment occurred in
- -
-

May N+1, and the gross dividends were subject to a withholding tax of 25%.
-
-

At the end of N+1, Company B presented a negative net income of 10.000 Euros. This was the only
-
- -

change in the owners’ equity elements of B occurred in N+1.

IGNORE a)
X Assuming that Company A used the Acquisition Cost Method to value this investment, present
a) all the appropriate accounting records related to the events described in N and N+1.
b) Assuming now that Company A used the Equity Method to value this investment, present all
the appropriate accounting records related to the events described in N and N+1.
c) Assuming Company A uses the Equity Method, determine the amount that should be
presented as “Investments in Companies” in the Balance Sheet as at 31/12/N+1.

34
a) Ignore

I Il I
b) no DESCRIPTION D C A

of 411-Investment 12
04/N Acquisition 40 .
000 E
in companies
30 % of comp . B

411 78- Other >

- 000 40 . 3
Method 6 = 20
31/12/N Equity 000 .

and
.

Revenues
N .
I
Adjustement gains
.

Equity Method 278 - Other Acc .

491 2 400 E 0 4x6 000
03/N + 1 . .
.

distribution Receivable
Dividends
.
Met
56 - Ret .

Earnings 57-Equity . 600 E

3 0 6x6 .
000
Ad . .
Investment

Dividend receipt 278 400 E

05/N + 1 2 .

Income t ax
241 400X0 , 25
-

/ Pay
2008 -> 2 .

Acc . Rec .

12 . 800 E
1

3
EquityMethode
Adj . 68- other exp 411 . 000 6 -
3 > 10 000 X 0
,
31/12/N + 1
.

and cosses

In B S 31/12/N + 1 = Investment in = 40 000 + 6 000 -

2 400 -
3 000 =

c)
.
. . .
. .

companies 600E
= 40 .
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 32

Company XJX, SA purchases and sells merchandises A and B. Below are part of its financial
statements.

PERIOD
BALANCE SHEET
31/12/N-1 31/12/N

ASSETS

Non-current assets
Tangible fixed assets
Investment properties 80.000
Total non-current assets
Current assets
Inventories
Accounts receivable from customers 48.000 52.800
Other accounts receivable 0
Deferrals 0
Cash and check deposits 25.000
Total current assets
Total assets

OWNERS’ EQUITY AND LIABILITIES

Owners’ Equity
Share capital 20.000
Reserves 13.750
Retained earnings 0
Revaluation surplus 0
Net income 10.000
Total owners’ equity

Liabilities
Non-current liabilities
Bank loans
Total non-current liabilities
Current liabilities
Accounts payable to suppliers 48.000 72.000
Accounts payable to the government 0
Bank loans
Other accounts payable 0
Accruals
Deferrals 0
Total current liabilities
Total liabilities
Total owners’ equity and liabilities

35
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

PERIOD
INCOME STATEMENT
YEAR N
Sales and services rendered 220.000
Cost of goods sold 114.600
Services and supplies expenses 30.000
Personnel expenses
Inventory write-downs (losses/reversals)
Gains/losses in fair value
Other revenues and gains
Other expenses and losses
Earnings before interest, taxes, depreciation and amortization
Depreciation and amortization
Earnings before interest and taxes

Interest expenses
Earnings before taxes
Income tax
Net income

PERIOD
STATEMENT OF CASH FLOWS
YEAR N
Cash flows from operating activities
Inflows from customers
Outflows to suppliers
Outflows to personnel
Outflows/inflows due to income tax
Other inflows/outflows
Cash flows from operating activities (1)
Cash flows from investing activities
Inflows related to tangible fixed assets
Inflows related to investment properties
Outflows related to tangible fixed assets
Outflows related to investment properties
Cash flow from investing activities (2)
Cash flows from financing activities
Inflows related to bank loans
Inflows related to share capital subscription and realization
Outflows related to bank loans
Outflows related to interest expenses
Outflows related to dividends paid
Cash flows from financing activities (3)

Net change in cash for the period (1+2+3)

Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period

36
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

Additionally, the following part of the trial balances as at 31/12/N-1 and 31/12/N are available:

31/12/N-1 31/12/N
Balance Balance
Debit Credit Debit Credit
321-Inventories 20.000 ?
329-Accumulated write-downs 1.000 ?

..
new
431.1-Transportation equipment 10.000 15.000 - Vehicle

431.2-Office equipment 30.000 ?

438-Accumulated depreciation ? ?

NOTE: Assume that there are no other transactions with impact on the amounts presented above,
other than those described in this exercise.

-
1) As at 31/12/N, the following merchandise existed on the company’s warehouse:
Reversal write-down

Inventory description Quantity Acquisition cost Net realizable value

Merchandise A 12.500 2€ 3€
Merchandise B 1.000 2€ 1,6€

Present the appropriate records concerning write-downs, as at 31/12/N.

-
2) Find the amount of Purchases made during year N.

-
3) Consider the following information on tangible fixed assets:

All tangible fixed assets as at 31/12/N-1 were acquired in November N-3. The useful life of the
- -
-

transport and office equipment is 4 and 8 years, respectively. The company uses the straight line
- - -

method depreciation, on an annual basis.

-

~
(i) Find the accumulated depreciation as at 31/12/N-1.

The only existing transport equipment is a light passenger vehicle, which was sold in year N for 2.000€,
- -

having been replaced by a new vehicle with the same useful life. Both transactions were paid
- -

immediately.

-
(ii) Record the sale of the light passenger vehicle.

The administrative equipment was revalued in year N, before that year’s depreciations were
-

accounted for. The replacement cost of the equipment is 40.000 euros.

-

↓
the Acc Dep.
Adjust
.

- Record the revaluation of the asset.

(iii) Net Book Value

-
(iv) Find and record the depreciation of year N and the revaluation surplus of that year.

37
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

4) It is known that the investment property recorded relates to a warehouse which fair value as at
- - -

31/12/N is 74.000 euros, and which is currently rented. The rent, in the gross amount of 7.200 euros,
- -

was received on 1/12/N, and concerns the period ranging from 1/12/N to 30/11/N+1. The rent
- - -

payment is subject to tax withholding at a rate of 25%.

- -

Present the appropriate accounting records relating to the warehouse value as at 31/12/N and the
-

rent receipt on 1/12/N.

-

-
5) In N-1, a bank loan was obtained in the amount of 100.000 euros, to be reimbursed in 4 annual
- -
- -

installments with capital reimbursement of 25.000 euros each. The first installment was paid in
- - -

October N, together with interest referring to the period ranging from 1/10/N-1 to 30/09/N in the
-
-
-

amount of 6.000 euros. The interest to be paid in October N+1 are equal to 4.000 euros.
- - -

Present the appropriate accounting records in year N regarding this bank loan.
-

6) In
- the annual shareholders meeting held in March N, it was decided that the net income from year
- -

N-1 should be divided as follows:

-

• 30% to be distributed to shareholders. The dividends were paid in April N;

-
-

• The remaining should be held in reserves.

- -

Present the appropriate accounting records.

7) In
- order to calculate the income tax, a 25% tax rate was used. Consider the earnings before taxes
- -

are the same both for accounting and tax purposes.

Please redo the income tax estimate and record it.

I. Considering all the information presented , complete the financial statements (balance sheet as at
-

31.12.N-1 and 31.12.N, income statement of year N and statement of cash flows of year N).
- - -
-

Additionally, assume that sales, purchases and services and supplies expenses were subject to VAT at
- - - -

a 20% rate. Consider that all VAT was paid during the period. Impload
-
on moodle

-
II.
Compute and interpret the following indicators and ratios: Net working capital, current ratio,
-

return on equity, return on assets, equity-to-assets, days sales outstanding (DSO), days payable
- -

outstanding (DPO) and days in inventory.

-

FORMULAS ARE GIVEN IN THE EXAM .

>
- compare with last year's Ratio/competitor's rativo

38
 wR needed
No DESCRIPTION A C A
(2
-
7
, 6) x1 000
.

Impair ↑
329- Acc . Write-d . .
9 write-down 76-Allow =
100040
Rev . 600
in inventories ,
write-down Rev.

ii. Sale of 437 10 000 E

.
3 light .

passenger vehicle
438 . 500 E
7

12 2 .
000 E

68 500 E

431
iii .
Admin equip 10 000 E .

Revaluation 438 . 750E

3

58 6 .
250E diferente #
438 increase
iv . Depreciation N 64 8 . 750E
in N B V
. . .

IV . Revaluation 58 56 . 250 E
1
Surpres

427 6 000 - 74 000 -

20 000 =
66 . . .

.
4 Fair valu e l o ss
= -
6 . 000t/loss)
78 600E >
- 7200 Coney a
Rent Receipt 12 month)
282 - Deff .
Rev . 6 . 600 E

12 5. 400E
5
[1
247 1 .
800E >
-
(third party
making t h e
tax
Loan Reinburs . 25 12 25 000 E .
withholding
.
5 for
us)
1 500 =
Interest payment 272
360003(3
.

min

N)
69 . 500 E
4

12 6 000 E .

69 (OCT/NT
4000
272 1 000 =
Accrued Expenses .
=
3
on interest

Transfer of. N I
. 118 56 10 000 E .

.
6
.

Reserves 56 55 7 .
000E

56 26 . 000 E
3
Shareholders

Payment of divid . 26 12 3 000 = .

(only paid
im
Aprie/N)

241 13 962 , 57 - 25 % X55 850E

8 12 . .

.
7 Income Tax Exp
.
 Coney looking

Initial
at 211 notzall
2) Inventory + Purchases = COGS + Final Inventory
-
Stock available

to sell

In .
Inventory = 20 .
000 =

Fin .

Inventory
=
12 . 500 X 2E + 1 . 000 X2E =
27 .
000E

Purchases = coGs + 27 000 E.

-
20 .
000 E =
114 . 600E + 7 . )
000 = = 121 .
600 E
↓
income
Statement

3)
Annual Insp
equipment) 500
Depreciation
10000
i . .
= = 2 .

31/12/N -1)
=

equipment 3
Depreciation (tansp x 2 500 =
Accumulated ·
-

=
7 . 500 E

Annual Depreciation (@min. eq) = 3 750E

=

=20
000
=
. .
.

Accumulated Depreciation (admin

ea ) . .
= 3 750 X3 .
=
11 . 250 E

7
Total Dep (31/12/N -1) 500 + 3 750 18 7507
= =
Acc .
. . . .

N
year
wa s not depreciated
ii.
↑
Gain/loss =
Sale value -

(Acq . cost -
Acc .
Dep ) .
=

I
2 000 110 000 7 500) =
-
-

. .
.

=
=
500 /loss)

iii

Increase in asset after Revaluation =

40 . 000
-

30 .
000 =
10 . 000

250 3 750
1000003-11
Increase in Acc .

Dep after Revaluation = .

= .

(31/12/N -
1)

iV .

(admin e

Depreciation(aspea +Depreciation
Depreciation -
N

=
1 250
Realization of Surpens
=
Rev
.
.

5 years left to dep.

 EBT 850E
7)
=
55 .

I .
on moodle

II .

NETWORKING =
Cur rent Assets
-

Cur rent Liabilities =

150 400E
.
-

116 .
762 5 =
,

CAPITAL
= the
33 . 637 5) -
company should have
,

short ter m assets to

cover cur rent loans

=-a
CURRENT
=
Current Assets
RATIO
Current Labil .

ROE = RETURN ON EQUITY = Net Income = 41 . 887 5 =

47 13 %
, ,

Equity 80 . 875 ,
5

come ==
ROA RETURN ON ASSETS 163
=
=

EQUITY-TO-ASSETS 5 03
=
=

=
-Se

De
OUTSTANDING Account
DAYS SALES 365

(DSO)

X 365 72 000
DAYS ACC Payable
=
PAYABLE OUTSTANDING .
= .
X 365 =

(DPO) (Perc .
#Ser v .
Sup) X 1, 2 (722 .
000 + 30 . 000) X1 ,
2

=
144 (more time with

the money on my side)

↓
to invest

entonies 365365
INVENTORY
DAYS IN
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

EXERCISE 33

The following Balance Sheet belongs to a public limited company, which only trades one model of
machines and provides technical assistance services. This balance sheet was reported to 31st
December, N.

(€) 31/12/N
ASSETS
Non-current Assets
Tangible Fixed Assets * 265.000
Investment Property 10.000
Current Assets
Inventories ** 70.000
Accounts Receivable from Customers*** 100.000
Other Accounts Receivable 29.000
Accrued Revenues 6.000
Check Deposits 100.000
Total Assets 580.000

LIABILITIES AND SHAREHOLDERS’EQUITY

Shareholders’ equity
Share Capital 50.000
Retained Earnings 40.000
Net Income 10.000
Total Shareholders’ Equity 100.000

Liabilities
Non-current Liabilities
Bank Loans 100.000
Current Liabilities
Bank Loans 100.000
Accounts Payable to Suppliers 245.000
Tax Withholding Accounts Payable 30.000
Other Accounts Payable 5.000
Total Liabilities 480.000
Total Liabilities and Shareholders’ Equity 580.000

(*) All the T.F.A. were bought at the same time for a total amount of 530.000 Euros, and have an
estimated useful life of 4 years.
(**) Single batch of 1.000 units, with a cost of 70 Euros each.
(***) This value results from a debit balance of 110.000 Euros in the customers’ accounts receivable
and a credit balance of 10,000 Euros in the allowances for doubtful debts account.

39
 NOVA SBE – Financial Accounting
Practical Classes - Fall 2024/2025

I. During N+1, this corporation has done the following operations, which you are required to
record in the journal:

1. Transfer of the net income from the previous year to retained earnings.
2. Purchase, on credit, of 900 units of merchandise at a unit price of 80 Euros plus VAT at 20%.
This company got a trade discount of 10%.
3. Sale on credit of 800 units at a unit price of 100 Euros, plus VAT at 20%, to client X. This
company uses FIFO as valuation criteria for its inventories.
4. Technical assistance services rendered, on credit, amounting to 150.000 Euros, plus VAT at
20%.
5. Acquisition of a car for 30.000 Euros (non-deductible VAT included at 20% rate). 50% of the
amount was immediately paid, while the remaining continued as a liability.
6. Receipt of interest from the deposits amounting 12.000 Euros (gross amount). This amount
was subject to withholding tax (IRC) at 25%. This interest refers to the period from 1/July/N
to 30/June/N+1. The company took into consideration this fact in the previous year.
7. Full reimbursement of the short-term bank loan.
8. Full payment of the accounts payable to suppliers from the previous year.
9. The company made a 300 Euros payment on account of corporate income tax (IRC).
10. Cash sale of basic equipment for 3.000 Euros, plus VAT at 20%. This equipment had been
acquired for 10.000 Euros and was already 50% depreciated.
11. The investment property item refers to a piece of land which fair value on 31/December/N+1
is 20.000 Euros.
12. In the general meeting of shareholders, the following decisions regarding the net income from
the previous year were taken:
• 5% retained (to reinforce reserves);
• 95% distributed as dividends.
13. Payment to shareholders of the dividends approved in the general meeting, which were
subject to withholding tax (IRS/IRC) at 25%.
14. Acquisition of 10.000 shares of company ZZZ for 1 Euro each with the purpose of re-selling
them in 3 months. The company paid expenses with this purchase in the amount of 50 Euros.
On 31/12/N+1, these shares were quoted at 1,20 Euros each.
15. Compute and record the depreciation expense knowing that all tangible fixed assets have a
useful life of 4 years and the company depreciates its assets annually following the straight
line method.
16. The net realizable value of the merchandise on 31/December/N+1 is 70 Euros per unit.
17. Receipt of 95.000 Euros from customers. On 31/December/N+1, there were doubts regarding
the collectability of 5.000 Euros of accounts receivable.
18. Assume that the profit for tax purposes is equal to the accounting profit and is subject to a
corporate income tax (IRC) of 25%.

II. Prepare the following financial statements for year N+1:

• Income Statement
• Balance Sheet
• Cash-Flow Statement

III. Compute and interpret the following indicators and ratios:

• Net Working Capital, Current Ratio, Equity-to-Assets, Return on Equity (ROE), Return on
Assets (ROA), days sales outstanding (DSO), days payable outstanding (DPO) and days in
inventory;
• Earnings Per Share (EPS), and book value per share knowing that the nominal value of each
share is 1 Euro and that, on 31/December/N+1, the market price of the shares was 4 Euros.

40