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a) List the,6 main items of the capital account on Ghana. balance of payments [6 Marks
b) State the basic assumptions of of PPP (Purching Power Parity) theory. [ 4 Marks
c) How is the equilibrium exchange rate between currencies, as claimed by PPP (Purching Power Parity) theory, explained? [10 Marks] [ Total Marks: 20
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a) Explain how a company may use interest rate swap as a means of managing exchange rate risk. [9 Marks]
b) List four reasons why leasing serves as a popular source of finance for the corporate sector. [4 Marks]
c) List and define each of the intermediate target variables of economic policy. [5 Marks] d) What is redemption yield? [2 Marks] [Total Marks: 20]
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Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
The general Ghanaaian public has expressed concern about investing in the economy following the recent turmoil in the bond market, as a result of Government’s Domestic Debt Exchange Programme. Explain the major financial risks that the personal sector may experience in the Ghanaian economy.
[20 Marks]
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Assume you are the economic and financial consultant of the newly established Abrewa Ventures Ltd which was formed with the owners’ own resources. At its 3d General Meeting, the shareholders approved plans for the medium-term growth of the company but concerns were raised about how to finance it. Upon advice, the owners decided not to use bank loans or any form of credit for the anticipated growth. Identify and explain the four methods of corporate equity finance that would be appropriate to meet the funding needs of the company.
[20 Marks]
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A recent survey of customers of your bank has revealed a poor service quality and the Chief Executive Officer (CEO) is worried about the findings of the survey. As Head of Customer Service, he has asked you to write a detailed report on how the RATER Model affects customers’ perceptions of service quality. (20 marks)
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Your Managing Director learned from a recent seminar on business ethics he attended that marketing managers must essentially behave legally and ethically at all times. He has therefore asked you, in your role as the Head of Marketing to submit a paper on what ethics is, as applied to marketing. You should explain in your paper the distinction between legal and ethical behaviour before addressing any four implications of ethics to marketing. Be guided by the E. Henderson’s Model.
(20 marks)
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(a) Write Short notes on the following: i. Purchases ii. Sales iii. Drawings iv. Capital Expenditure v. Revenue Expenditure (10 marks) (b) Briefly explain the five components of the financial statements. (10 marks)
(Total: 20 marks)
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The following trial balance was extracted from the ledger of Adtrack Enterprise as at 31/12/21.
Dr Cr GHe00 GHe00 Motor Vehicle at cost 350,000 700,000 Factory Building at cost 700,000 On Motor Vehicle On Factory Building Purchases and sales 5,250,000 250,000 Stocks 1/1/2022 290,000 290,000 Discounts 190,000 324,000 Returns 31,1,000 274,000 Wages and salaries 654,000 654,000 Bad debts written off 500,000 500,000 Other expenses 450,000 450,000 Debtors and creditors 1,1,900,000 1,1,900,000 Bank and Cash 900,000 900,000 Drawings 560,000 560,000 Provision for doubtful debts 75,500 75,500 Capital 10,057,000 10,057,000 The following additional information is also made available: a) Stocks at 31/12/2022 were valued at GHe $450,000,000$ b) Wages and salaries accrued amounted to GHe $9,560,000$ c) Other expenses prepaid amounted to GHe $1,800,000$ d) Provision for doubtful debts is to be made at $7 %$ of debtors at 31/12/2022 e) The factory plant and machinery was leased under an operating lease for a period of 7 years with a yearly payment of GHe $12,200,000$. This has not been paid for the year ended 31/12/2022. f) Depreciation for the year is to be provided as follows:
You are required to prepare: i. Income Statement for the year ended 31/12/2022 (10 marks) ii. Statement of Financial Position as at 31/12/2022
(Total: 20 marks)
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Black Trust real estate (in the business of building and selling properties) owns three (3) identical properties, East Legon Hills, Dansoman and Kasoø New Town.
Dansoman is used as the head office of Black Trust. East Legon Hills is let to, and occupied by, a subsidiary. Kasoø New Town is part of the buildings constructed for sale.
You are required to: a. Explain how the three properties will be treated in the financial statements of Black Trust real estate and identify the International Accounting Standard that will be applicable for each of them. b. IAS 16 Property, Plant and Equipment deals with Accounting for Property, Plant and Equipment. i. With respect to IAS 16: Property, Plant and Equipment, define property, plant and equipment? ii. Explain the criteria for recognizing an item of property, plant and equipment. iii. State 5 disclosure requirements of inventory under IAS 2 inventory.
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Documents are very important in international trade as they control the movements of goods and in some cases give legal titles to true owners. Briefly explain ten documents which are neither financial nor transport in nature but which nonetheless, are equally important in international trade. [2 marks each]
[Total Marks 20]
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A
The following is the trial balance of ANG Ltd, a trading company, as of 30 September 2022:
| Debit | Credit |
|---|---|
| GH¢’000 | GH¢’000 |
| Sales | |
| Inventory | 3,150 |
| Cost of sales | 35,500 |
| Selling & distribution expenses | 5,600 |
| Administration expenses | 8,540 |
| Loan Note interest paid | 110 |
| Bank interest | 85 |
| Investment income | |
| Leasehold building at valuation – 1 Oct 2021 | 14,000 |
| Plant and equipment – cost/depreciation | 13,750 |
| Computer equipment – cost/depreciation | 7,200 |
| Motor vehicles – cost/depreciation | 1,500 |
| Trade receivables | 17,900 |
| Bank | |
| Trade payables | |
| 500,000 Ordinary shares | |
| 8% Loan notes (2019 – 2023) | |
| Revaluation surplus | |
| General reserve | |
| Retained earnings – 1 Oct 2021 | |
| 107,335 | 107,335 |
The following additional information is made available:
i. The company paid ordinary dividends of GH¢2.2 per share on 31 January 2022 and GH¢2.6 per share on 30 June 2022. The dividend payments are included in administrative expenses in the trial balance.
ii. Provision is to be made for a full year’s interest on the Loan notes.
iii. non-current assets:
• Depreciation of Property, plant and equipment is to be provided on the following bases:
You are required to:
Prepare the following financial statements of ANG Ltd. for publication in accordance with International Financial Reporting Standards (IFRS):
a. Statement of profit or loss and other comprehensive income for the year ended 30 September 2022 and.
b. Statement of financial position as of 30 September 2022.
c. Show clearly all relevant workings.
B
I. What is the objective of general-purpose financial reporting?
II. The IASB’s Conceptual Framework for Financial Reporting states that “If financial information is to be useful, it must be relevant and faithfully represent what it purports to represent.” Explain the terms Relevance and Faithfully Representation.
C
The accounting treatment of intangible assets is prescribed by IAS 38 Intangible Assets. You are required to:
i. Define intangible asset under IAS 38 Intangible Assets.
ii. Explain the recognition criteria for intangible assets.
iii. State 5 disclosure requirements of Intangible Assets under IAS 38.
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You are in charge of the Foreign Remittances Department of your bank. About a week ago, a certain man came to your office to enquire whether you have received any remittance on his behalf. When asked how much he was expecting he said the amount was USD 23, 745.00 from his brother in America, to which you replied in the negative. He had a few discussion with with you, gave you his name as well as cell phone number and left.
Three days after, you received a SWIFT message MT9 10 (confirmation of credit advice) with an amount of USD 23, 745.00 (from Citbank N.A. so you called him. He gave his account details of your bank’s branch at Somanya. Upon this you gave instruction for payment to be processed into his current account in local currency. Customer withdrew the funds as soon as it hit the account explaining to the branch manager that it was for a building project and had to quickly buy the building material before prices escalate. A week later, you returned from a meeting at Head Office to find a SWIFT message on your desk from Citbank N.A requesting for immediate return of the paid out USD 23.745 received under MT9 10 as it has been confirmed by the FBI as a fraudulent transaction. In fact, Citbank is urgently demanding authorization message from your bank to debit its Nostro account in settlement.
Required:
Explain what you could have done to prevent this from happening to your bank. Your answer should be a ten (10) bullet point format.
[Total Marks 20]
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You are the head of your bank’s Trade Department. Through the bank’s Corporate Department you received an application for the establishment of documentary letter of credit (L/C) from a customer. Medicare & Associates for the importation of hospital equipment from Germany. You supervised the issue of the credit in favour of the beneficiary and advised it through your euro correspondent, Commerzbank, Frankfurt. The credit amount of Euro 350, 000 was the total cost of the hospital equipment at CIF. Tema port. Upon receiving the L/C. Commerzbank immediately advised the beneficiary suppliers who organized the goods and shipped them under the CIF terms to Tema port. Documents were accordingly sent to the counters of Commerzbank for payment as the credit was under sight payment.
After thoroughly examining the documents, Commerzbank paid the beneficiary under the compliant presentation and sent the documents to your bank for reimbursement.
Upon receiving the documents, your examination team went through for any discrepancy but found none. Unfortunately, Medicare & Associates had no funds in their account to meet the payment of the reimbursement claim from Commerzbank.
Your bank had to reimburse Commerzbank immediately in accordance with Article 7 of UCP 600 – which is categorical on the Issuing Bank’s undertaking when it issues a documentary credit. You released the documents received from Commerzbank to customers and goods were cleared to their warehouse which was eventually sold to ultimate buyers. Strangely enough, Medicare & Associates could not pay your bank – citing Covid-19 problems as their reason for the failure to pay.
Medicare & Associates are now asking for the Euro 350,000 to be converted into a loan facility and be given time to pay.
Required i. State the undertaking/responsibilities of your bank with respect to UCP 600 of your bank which agreed to issue this documentary credit on behalf of its customer. (9 marks) ii. Indicate what could have been done to prevent this from happening? (11 marks)
[Total Marks 20]
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You are the manager of Merchant Bank Ltd, which maintains the account of Johnson Company Ltd (JCL.) a local generator dealerships JCL’s Managing Director. Kingsley Arthur, has advised you today that the company has decided to purchase new generators from manufacturers in Europe because the terms of local suppliers are no longer favourable to their business.
Mr. Arthur informs you that he is in negotiations with a new Egyptian buyer. Al Watany Ltd for the export of the generators to Cairo for a total cost of USD 500, 000,00.
Some of the contract details are that the Egyptian buyers would have to make an advance payment of 20% upon signing the contract. Again, the buyers. Al Watany Ltd, should pay the last 10% immediately after shipment of the generators. Mr. Arthur is facing two major problems in the negotiations:
a) Since it is a new trading relationship, Al Watany Ltd is reluctant to agree to the 20% deposit when the contract is signed. Al Watany Ltd is concerned that the money could be lost if the contract did not work out as expected. b) Al Watany Ltd also insists on paying the final 10% of the contract price two months after shipment, so that they can check the generators are in good and acceptable condition on arrival in Cairo. Mr. Arthur is worried that the delay in payment will adversely affect the company’s cash flow.
Required: i. Identify two bank products that would help to overcome the problems in the commercial contract negotiations between Johnson Company Ltd and Al Watany Ltd. [5 marks] ii. Explain how each of these products would operate and advise the companies of the possible effects on their businesses by using these products. [15 marks]
[Total Marks 20]
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In each of the five scenarios below, you are required to state clearly the following: A. The type of rate quotation and its applicable rules on the market. (1 mark) B. The position of your bank in the transaction. (1 mark) C. The applicable rate for your calculation. (1 mark) D. The settlement amount for your customer’s account. (1 mark)
Spot GBP/ZAR 21,95010 21,9835 5. You are in charge of the trading desk for foreign exchange operations at Commerzbank Tower, Frankfurt Main. You picked up an in-coming phone call and the counterpartry, your well-known customer, requested to pay GHS 775, 000,00,00 to a beneficiary company in Adum, Kumasi for goods imported. Based on your bank’s electronic screen displaying the rates for today as shown below, calculate how much should be debited to your customer’s euro account:
Spot EUR/GHS 13,5605 13,5675
[Total marks 20]
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