STUDENT NUMBER:___________

Nova School of Business and Economics

Spring 2022/2023

Financial Accounting

15th June 2023 130 minutes

RESIT EXAM

STUDENT NUMBER:________________

N.B.
This exam has 5 groups.

Do not separate any paper sheet.

Please check that your exam has 13 pages, including a page with the chart of accounts. Write
your student number in every page. If you need dra paper, use the back of the sheets.

GOOD LUCK!

Answers grid – Group I

Mark the right answer with a circle or with an “X”.

Mul ple Choice

a b c d
I.1 X
I.2 X
I.3 X
I.4 X
I.5 X
I.6 X
STUDENT NUMBER:___________

Group I (4.8 points)

Mark your answers to the ques ons of this group in the answers grid provided in page 1.

This exam has 5 groups. This is group 1 of 5.

Each mul ple choice ques on correctly answered is worth 0.8 point. For each wrong answer,
0.2 points will be deducted. If more than one answer is correct, choose the most
comprehensive one.

1. Which of the following statements, regarding VAT, is correct?

a. It is never recorded as a revenue.
b. It is never recorded as an expense.
c. It never has impact on the amount of tangible fixed assets.
d. It does not change the amounts receivable from customers.

2. In the statement of cash flows, the payment of dividends to shareholders is:

a. Presented as an outflow of cash due to operating activities.
b. Presented as an outflow of cash due to investing activities.
c. Presented as an outflow of cash due to financing activities.
d. Not presented in the statement of cash flows.

3. A company, which values its inventories using FIFO, had, on 01.01.N, 1,000 units of
merchandise purchased at unit price of 2 euros. In January N it bought 1,000 units at a unit
price of 3 euros, plus VAT at 20%. In February N, it sold 1,500 units. The cost of goods sold
was:
a. 3,000 euros.
b. 3,500 euros.
c. 4,500 euros.
d. None of the other options.

4. Which of the following statements, regarding a cash advance to a supplier (without VAT), is
true?
a. It reduces the total assets of the company.
b. It decreases increases the total assets of the company.
c. It does not have impact on the total assets of the company.
d. It reduces the total liabilities of the company.
STUDENT NUMBER:___________

5. What is the impact of receiving 10,000 euros of dividends, not subject to tax withholding,
from a financial investment measured using the equity method?
a. An increase in the net income of the company.
b. An increase in the total assets of the company.
c. An increase in the total liabilities of the company.
d. None of the other options.

6. The replacement cost (as new), in year N, of an equipment bought in N-1 for 10,000 euros,
is 15,000 euros. The useful life of this asset is 5 years and the company uses the straight-line
depreciation method on annual basis. This asset was revaluated in N, after the depreciation
expenses of that yea year were recorded. Which of the following statements is true
regarding this revaluation?
a. In N, the company debits account 431 – Tangible fixed assets for 10,000 euros.
b. In N, the company credits account 58 – Revaluation surplus for 3,000 euros.
c. In N+1, the company credits account 58 – Revaluation surplus for 1,000 euros.
d. None of the other options.
STUDENT NUMBER:___________

Group II (4 points)

This exam has 5 groups. This is group 2 of 5.

All answers must be provided in wiseflow. When you are asked to compute or determine
figures or amounts, show your intermediate computa ons in a short way.

Consider company Underdog, Ltd., which sells dog food. On 31/12/N-1, the inventories are
made up of a single batch of 400 units of dog food, purchased at 25 Euros per unit. The amount
of inventories presented on the balance sheet at that date is 9,000 euros.

a) In March N, Underdog, Ltd. sold 300 units of the inventory to company Real Dogs, Inc., at a
price of 22 euros each. Since Real Dogs paid immediately, Underdog also provided a cash
discount in the amount of 1,500 euros. Record the sale on Underdog’s journal, knowing the
transac on was subject to VAT at 20%. (0.8 points)

Descrip on Debit Credit Amount

Dog food sale to Real Dogs 71 6,600
68 1,500
243 1,020
12 6,120
Inventory ou low 61 321 7,500

b) Knowing that no further inventory changes occurred in year N and that the dog food’s net
realizable value per unit as at 31/12/N is 21 euros, present the appropriate end-year records
concerning the stocked units. (0.8 points)

Computa ons:

Write-down amount needed as at 31/12/N-1 = 400 x 25 – 9,000 = 1,000

Write-down amount needed as at 31/12/N = 100 x (25 – 21) = 400

Change to inventories write-downs (losses/reversals) = 400 – 1,000 = -600 (reversal)

Descrip on Debit Credit Amount

Merchandise value adjustment 329 76 600
STUDENT NUMBER:___________

c) In year N+1, all the remaining inventory units from year N were sold and no merchandise
purchases were performed. In N+2, the company made a sole credit purchase of 500 units of
dog food for 27 euros each, plus VAT at 20%, receiving a trade discount of 20%. It had
previously made an advance to its supplier of 1,200 euros, including VAT, which had already
been recognized in its journal. The remaining amount was not yet paid to the supplier. Record
the purchase in the company’s journal. (1 point)

Descrip on Debit Credit Amount

Dog food purchase 321 10,800
243 2,160
221 12,960
Cancella on of cash advance 221 1,200
228 1,000
243 200

d) Knowing that the company presented 3,000 euros of inventories in the balance sheet as at
31/12/N+2 and that no accumulated write-downs were recorded inexist as at 31/12/N+2,
determine the cost of goods sold of that year. (0.6 points)

COGS = Ini al inventory + Purchases – Final inventory

Purchases = 500 x 27 x (1 – 20%) = 10,800 euros

COGS = 0 + 10,800 – 3,000 = 7,800 euros

e) The CEO of Underdog, Ltd. is concerned about the company’s efficiency, claiming that the
company should improve the managing of its inventory. To verify that claim, calculate and
analyse the inventory turnover ra o [COGS / Inventories] by the end of year N+2, knowing that
the industry benchmark is 1.5. If you were unable to compute the COGS, assume it to be 5,100
euros. (0.8 points)

Inventory Turnover = COGS / Inventories

Inventory Turnover = 7,800 / 3,000 = 2.6

Given that the industry benchmark is 1.5, the company is managing its inventory be er than
the compe on, possibly selling the stored units faster and/or keeping lower numbers of units
in its warehouse.
STUDENT NUMBER:___________

Group III (4.5 points)

This exam has 5 groups. This is group 3 of 5.

All answers must be provided in wiseflow. When you are asked to compute or determine
figures or amounts, show your intermediate computa ons in a short way.

I a, LLC. is a sportswear manufacturer and retailer. Below, you may find a par al trial balance of
the firm on 31/12/N-1, a er the deprecia on expenses were recorded.

Code Description Debit Balance Credit Balance

…
252 Capital lease 10,000€
…
431 Tangible fixed assets 80,000€
438 Accumulated depreciation 10,000€
…

The company has two tangible fixed assets, a piece of land, acquired for 45,000 euros and
which is currently measured at the revaluated cost, and a machine obtained through a leasing
contract in N-2, of which 15,000 euros were already reimbursed. Deprecia on is computed
using the straight-line method on annual basis.

a) Compute the acquisi on cost of the machine and record the capital lease contract
establishment, knowing it is subject to deduc ble VAT at 20%. If you are not able to determine
the value of the contract, assume it is 30,000 euros. (0.8 points)

Acquisi on cost of the machine = Balance of account 252 + Loan reimbursements

Acquisi on cost of the machine = 10,000 + 15,000 = 25,000€

Descrip on Debit Credit Amount

Leasing contract 431 252 25,000

b) In March of year N, the company asked for an appraisal on its piece of land which
determined a fair value of 57,500 euros. Knowing that this was not the first revalua on of the
piece of land, record the adjustment on the company’s journal and state its impact on the
company’s net income. If you were unable to compute the adjustment amount, consider it was
an increase o o be 2,000 euros. (1 point)
STUDENT NUMBER:___________

Computa ons:

Acquisi on cost of the land a er first revalua on = Balance of account 431 – Acquisi on cost of
the machine

Acquisi on cost of the land a er first revalua on = 80,000 – 25,000 = 55,000

Revalua on surplus = Fair value – Net Book Value before second revalua on

Revalua on surplus = 57,500 – 55,000 = 2,500

Descrip on Debit Credit Amount

Land revalua on 431 58 2,500

Impact on the net income:

There is no impact of the land revalua on on the company’s net income as neither revenues
nor expenses are affected by the transac on.

c) In October N, I a, LLC. purchased office spaces to rent to other companies. Their acquisi on
cost was 150,000 euros, having a useful life of 25 years, and I a values them using the cost
method. The company uses the straight line deprecia on on annual basis and assumes that
25% of the value regards land. On 31st December N, their market value was 175,000 euros.
Present the appropriate end-year records concerning these office spaces, state under which
item of the non-current assets they are presented in the balance sheet, and for which amount.
(1.2 points)

Computa ons:

Annual deprecia on = 150,000€ x (1 – 25%) / 25 years = 4,500€

Descrip on Debit Credit Amount

Office spaces deprecia on 64 428 4,500

Non-current assets item: The office spaces are presented under Investment Proper es.

Amount on the balance sheet (31/12/N): 150,000 – 4,500 = 145,500€

STUDENT NUMBER:___________

d) On 02/02/N+5, the company sold, for 75,000 euros, including VAT at 20%, an equipment it
bought in December N+3 for 100,000 euros, plus VAT at 20%. The useful life of the equipment
was 5 years, and the company used the straight-line method on annual basis to depreciate it.
The buyer paid 50,000 euros and is s ll owing the remaining amount. Record the sale of the
asset, state the amount of the cash flow that shall be presented in the statement of cash flows
regarding the sale (amount and sign) and classify it into one of the three activities of the
company. (1.5 points)

Computa ons:

Gain/loss = Sale price – Net book value

Sale Price = 75,000 / (1 + 20%) = 62,500€

Net book value = 100,000 – 100,000 / 5 x 2 = 60,000€

Gain/loss = 62,500 – 60,000 = 2,500€ (Gain)

Descrip on Debit Credit Amount

Sale of equipment 12 50,000
278 25,000
243 12,500
431 100,000
438 40,000
7778 2,500

Cash flow amount: +50,000€

Cash flow (select one from: “No cash flow”, “Operating activities”, “Investing activities” or
“Financing activities”): Investing activities
STUDENT NUMBER:___________

Group IV (3.2 points)

This exam has 5 groups. This is group 4 of 5.

All answers must be provided in wiseflow. When you are asked to compute or determine
figures or amounts, show your intermediate computa ons in a short way.

Company UnitedPaper, Inc. sells paper and paper accessories to its customers. There was a
large fire that burned many of the companies’ paper records and the CFO needs your help to
piece together the remaining informa on to understand important facts about the financial
posi on and liabili es of the company.

Part I

Regarding the accounts receivable of the company, the following informa on has been pieced
together:

31/12/N-1 31/12/N
Debit Credit Debit Credit
Accounts
Balance Balance Balance Balance
211 – Accounts receivable 70,000€ 100,000€

1. The CFO needs to know the amount of cash the company received from customers to
show in the statement of cash flows. Knowing that, during N, the company sold
500,000 euros of sales before discounts, and that it gave trade discounts of 50,000
euros to its customers, calculate the inflows from customers. All these amounts are
subject to VAT at 20%. (0.6 points)

Cash inflows from customers = 70,000 – 100,000 + (500,000 – 50,000) x (1 + 20%) = 510,000€

2. UnitedPaper regularly rents out a small office unit to PencilNick, LLC. As agreed by
both companies, at the end of every year, PencilNick pays the rent for the next year.
The rent of N amounted to 2,000 euros and was received in December of N-1. The rent
of N+1 is of 3,000 euros and was received in N. Present all the records of year N
related to this agreement. (0.8 points)

Descrip on Debit account Credit account Amount

Recognize rent revenue of N 282 78 2,000

Receipt of rent payment for year N+1 12 282 3,000

STUDENT NUMBER:___________

3. The CFO calls to your attention that, in January N+1, the company received a letter
from Social Security asking the company to pay the amount owed to it because of
payroll expenses in December N. This letter was destroyed, but the CFO tells you that,
in that month, the average IRS tax withholding rate was 15%, and that the social
security rates for year N were 11% and 23.75% for employee and employer
contributions, respectively. He also shows you this item of the income statement
regarding December N:

Salaries and wages expense 371,250 euros

Compute the amount that needs to be paid to Social Security and record this payment.
If you were not able to determine the amount, assume it is 110,000 euros (0.8 points)

Gross wage = 371,250 / (1 + 23.75%) = 300,000€

Social security taxes: 300,000 x 11% + 300,000 x 23,75% = 104,250€

Descrip on Debit account Credit account Amount

Payment to social security 245 12 104,250

Part II

Finally, the CFO asks for your help regarding a short-term investment the company had
acquired in year N-1, for 3 euros per share. Knowing that the following informa on about this
investment is available at the end of N, record the fair value adjustment for this year. (1 point)

 Company: MarkerMaker
 # of total shares: 1,000,000 shares
 #of acquired shares: 50,000 shares
 Total Equity of MarkerMaker: 2,000,000 euros
 Price-to-book value Ratio [Market price per share / Book value per share]: 1.75

If you were not able to determine the amount of the adjustment, assume it is 10,000 euros.

Book value of shares: 2,000,000€ / 1,000,000 = 2 euros / share

Current market price of shares: 2 x 1.75 = 3.5€

Fair value change = 50,000 x (3.5 – 3) = 25,000€

Descrip on Debit account Credit account Amount

Fair value adjustment 14 77 25,000

STUDENT NUMBER:___________

Group V (3.5 points)

This exam has 5 groups. This is group 5 of 5.

All answers must be provided in wiseflow. When you are asked to compute or determine
figures or amounts, show your intermediate computa ons in a short way.

Part I

Consider the following informa on on the owner’s equity of company Beta:

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

Share capital 150,000 200,000

Share premium 50,000 75,000

In January N, company Beta issued 10,000 shares fully subscribed and paid in cash by company
Alpha. This was the only capital increase that occurred in year N.

a) Record the capital increase in the journal of company Beta. (0.75 points)

Descrip on Debit account Credit account Amount

Capital increase 51 50,000

54 25,000

26 75,000

12 26 75,000

b) Compute the nominal value of the shares, knowing that it is constant through time.
(0.5 points)

(200,000 – 150,000)/10,000 = 50,000 / 10,000 = 5 euros

c) Knowing that company Alpha uses the equity method to value its investment in
company Beta, record the acquisition of the shares in the journal of company Alpha.
(0.25 points)

Descrip on Debit account Credit account Amount

Acquisi on of shares of company Beta 411 12 75,000

STUDENT NUMBER:___________

d) At the end of year N, company Beta presented a net loss of 10,000. Knowing that
Alpha had no shares of Beta prior to the capital increase occurred in N, compute the
share of the capital of Beta held by Company Alpha and present the appropriate
records in the journal of Company Alpha regarding the net loss. If you are not able to
determine the percentage held by Alpha, assume it is 20%. (0.75 points)

Percentage of Beta held by Alpha:

50,000/200,000= 25%

Descrip on Debit account Credit account Amount

Equity method adjustment 68 411 2,500

Part II

In January N+1, company Beta paid fees to a consultant with a gross amount of 5,000 euros, plus
VAT at 20%. Moreover, this payment was subject to tax withholding at a 25% rate.

a) Present the appropriate accounting records. (0.75 points)

Descrip on Debit account Credit account Amount

Payment of fees to a consultant 62 5,000

243 1,000

242 1,250

12 4,750

b) State the amount of the cash flow that shall be presented in the statement of cash flows
regarding this transaction (amount and sign) and classify it into one of the three
activities of the company. (0.5 points)

Cash flow amount: -4,750

Cash flow (select one from: “No cash flow”, “Opera ng ac vi es”, “Inves ng ac vi es”
or “Financing ac vi es”): Opera ng ac vi es
 STUDENT NUMBER:___________

QUADRO DE CONTAS / CHART OF ACCOUNTS

ACCOUNT
CÓDIGO CONTA ACCOUNT TITLE
CODE
11 CAIXA 11 CASH
12 DEPÓSITOS À ORDEM 12 CHECK DEPOSITS
13 DEPÓSITOS A PRAZO 13 TERM DEPOSITS
14 OUTROS INSTRUMENTOS FINANCEIROS 14 SHORT-TERM FINANCIAL INVESTMENTS
211 CLIENTES C/C 211 ACCOUNTS RECEIVABLE FROM CUSTOMERS
218 ADIANTAMENTOS DE CLIENTES 218 CASH ADVANCES FROM CUSTOMERS
219 PERDAS DE IMPARIDADES ACUMULADAS EM CLIENTES 219 ACCUMULATED ALLOWANCES FOR DOUBTFUL DEBTS FROM CUSTOMERS
221 FORNECEDORES C/C 221 ACCOUNTS PAYABLE TO SUPPLIERS
228 ADIANTAMENTOS A FORNECEDORES 228 CASH ADVANCES TO SUPPLIERS
241 IMPOSTO SOBRE O RENDIMENTO 241 INCOME TAX ACCOUNTS RECEIVABLE OR PAYABLE
242 RETENÇÕES DE IMPOSTOS E TAXAS 242 TAX WITHHOLDING ACCOUNTS PAYABLE
243 IVA 243 VAT ACCOUNTS RECEIVABLE OR PAYABLE
245 SEGURANÇA SOCIAL 245 SOCIAL SECURITY ACCOUNTS PAYABLE
251 EMPRÉSTIMOS BANCÁRIOS 251 BANK LOANS
252 LEASING FINANCEIRO 252 CAPITAL LEASE
26 ACIONISTAS 26 SHAREHOLDERS ACCOUNTS RECEIVABLE OR PAYABLE
271 ACRÉSCIMOS DE RENDIMENTOS 271 ACCRUED REVENUES
272 ACRÉSCIMOS DE GASTOS 272 ACCRUED EXPENSES
278 OUTRAS DÍVIDAS A RECEBER 278 OTHER ACCOUNTS RECEIVABLE
279 OUTRAS DÍVIDAS A PAGAR 279 OTHER ACCOUNTS PAYABLE
281 GASTOS DIFERIDOS 281 DEFERRED EXPENSES
282 RENDIMENTOS DIFERIDOS 282 DEFERRED REVENUES
29 PROVISÕES 29 PROVISIONS
321 MERCADORIAS 321 INVENTORIES - MERCHANDISE
329 PERDAS DE IMPARIDADES ACUMULADAS EM MERCADORIAS 329 ACCUMULATED WRITE DOWN IN INVENTORIES
411 INVESTIMENTOS FINANCEIROS 411 INVESTMENTS IN COMPANIES
419 PERDAS DE IMPARIDADES ACUMULADAS EM INV. FINANCEIROS 419 ACCUMULATED IMPAIRMENT (FINANCIAL INVESTMENTS)
421 PROPRIEDADES DE INVESTIMENTO 421 INVESTMENT PROPERTIES
428 DEPRECIAÇÕES ACUMULADAS DE PROP. DE INVESTIMENTO 428 ACCUMULATED DEPRECIATION (INVESTMENT PROPERTIES)
429 PERDAS DE IMPARIDADES ACUMULADAS EM PROP. DE INVESTIMENTO 429 ACCUMULATED IMPAIRMENT (INVESTMENT PROPERTIES)
431 ATIVOS FIXOS TANGÍVEIS 431 TANGIBLE FIXED ASSETS
438 DEPRECIAÇÕES ACUMULADAS EM AFT 438 ACCUMULATED DEPRECIATION (TANGIBLE FIXED ASSETS)
439 PERDAS DE IMPARIDADES ACUMULADAS EM AFT 439 ACCUMULATED IMPAIRMENT (TANGIBLE FIXED ASSETS)
441 ATIVOS INTANGÍVEIS 441 INTANGIBLE ASSETS
448 AMORTIZAÇÕES ACUMULADAS 448 ACCUMULATED AMORTIZATION (INTANGIBLE ASSETS)
449 PERDAS DE IMPARIDADES ACUMULADAS EM ATIVOS INTANGÍVEIS 449 ACCUMULATED IMPAIRMENT (INTANGIBLE ASSETS)
51 CAPITAL SOCIAL 51 SHARE CAPITAL
52 ACÇÕES PRÓPRIAS 52 TREASURY SHARES
53 OUTROS INSTRUMENTOS DE CAPITAL PRÓPRIO 53 OTHER EQUITY INSTRUMENTS
54 PRÉMIOS DE EMISSÃO 54 SHARE PREMIUM
55 RESERVAS 55 RESERVES
56 RESULTADOS TRANSITADOS 56 RETAINED EARNINGS / ACUMMULATED LOSSES
57 AJUSTAMENTOS DO MEP 57 EQUITY METHOD INVESTMENT ADJUSTMENTS
58 EXECEDENTES DE REVALORIZAÇÃO 58 REVALUATION SURPLUSES
59 OUTRAS VARIAÇÕES NO CAPITAL PRÓPRIO 59 OTHER CHANGES IN EQUITY
61 CUSTO DAS MERCADORIAS VENDIDAS E DAS MATÉRIAS CONSUMIDAS 61 COST OF GOODS SOLD
62 FORNECIMENTOS E SERVIÇOS EXTERNOS 62 SERVICES AND SUPPLIES EXPENSES
63 GASTOS COM O PESSOAL 63 SALARIES AND WAGES EXPENSES
64 GASTOS DE DEPRECIAÇÃO E DE AMORTIZAÇÃO 64 DEPRECIATION AND AMORTIZATION EXPENSES
65 PERDAS POR IMPARIDADE 65 IMPAIRMENT, ALLOWANCE AND WRITE DOWN EXPENSES
66 PERDAS POR REDUÇÕES DE JUSTO VALOR 66 FAIR VALUE LOSSES
67 PROVISÕES DO PERÍODO 67 EXPENSES WITH PROVISIONS OF THE PERIOD
68 OUTROS GASTOS E PERDAS 68 OTHER EXPENSES AND LOSSES
69 JUROS DE FINANCIAMENTOS 69 INTEREST EXPENSES
71 VENDAS 71 SALES
72 PRESTAÇÃO DE SERVIÇOS 72 SERVICES RENDERED
76 REVERSÕES DE IMPARIDADES E PROVISÕES 76 IMPAIRMENT, ALLOWANCE, WRITE DOWN AND PROVISIONS REVERSAL
77 GANHOS POR AUMENTOS DE JUSTO VALOR 77 FAIR VALUE GAINS
78 OUTROS RENDIMENTOS E GANHOS 78 OTHER REVENUES AND GAINS
79 JUROS E DIVIDENDOS RECEBIDOS 79 INTEREST REVENUES
811 RESULTADOS ANTES DE IMPOSTOS 811 INCOME BEFORE TAXES
812 IMPOSTO SOBRE O RENDIMENTO DO PERÍODO 812 INCOME TAX EXPENSE
818 RESULTADO LÍQUIDO 818 NET INCOME