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Accounting Exam: Income Statement, Creative Accounting, Payback Period, NPV and IRR

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Added on  2023-06-09

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This exam includes two sections with questions on income statement, creative accounting, payback period, net present value (NPV) and internal rate of return (IRR). The first section requires the calculation of income statement and evaluation of creative accounting. The second section includes calculation of payback period and NPV, and explanation of IRR. The exam covers topics such as revenue, cost of sales, operation expenses, and more.

Accounting Exam: Income Statement, Creative Accounting, Payback Period, NPV and IRR

   Added on 2023-06-09

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Accounting Exam: Income Statement, Creative Accounting, Payback Period, NPV and IRR_1
Section B.
(35 marks for each, total of 70 marks for this section)
Answer both the questions in this section
Question 1: Income statement
Title: Income statement for Danielle for the year ended 31st March 2020
Particular £ £
Revenue 102453
Less Return Outward 911 101542
Less Cost of Sales
Opening Stock 955
Add Purchases 48661
Less Discount allowed (560)
Less Return inward (743)
Less Closing Stock (1007) 47326
Gross Profit 54216
Less Operation Expenses
Salaries 28749
Motor Expenses 5673
Advertisement 1350
Insurance 3764
Heat and Light 2479
Rates 1245
General Expenses 941
Interest on Loan 4000
Rent 12000
Repairs and Renewals 7459
Stationery 780
Telephone bill 450
Total Operation Expenses 68900 (68900)
Net Profit / Net Loss (14682)
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Accounting Exam: Income Statement, Creative Accounting, Payback Period, NPV and IRR_2
b) Creative accounting has probably been best defined as “the use and abuse of accounting
techniques and principles to achieve financial results which, intentionally, do not
provide a true and fair view”. Evaluate this statement. Aim for this section to be around
300 - 400 words. (20 marks)
(Total 35 marks for Question B1)
3
Accounting Exam: Income Statement, Creative Accounting, Payback Period, NPV and IRR_3

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