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College of Administration and Finance Sciences
Assignment (2)
Deadline: Saturday 13/08/2022 @ 23:59
Course Name: Principles of Accounting
Student’s Name:
Course Code: ACCT490
Student’s ID Number:
Semester: Summer
CRN:
Academic Year: 1443 H
For Instructor’s Use only
Instructor’s Name:
Students’ Grade:
/30
Level of Marks: High/Middle/Low
Instructions – PLEASE READ THEM CAREFULLY
• The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
• Assignments submitted through email will not be accepted.
• Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
• Students must mention question number clearly in their answer.
• Late submission will NOT be accepted.
• Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
• All answers must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism.
• Submissions without this cover page will NOT be accepted.
1
College of Administration and Finance Sciences
Assignment Question(s):
(Marks 30)
Q1. How are the direct write-off method and the allowance method applied in accounting for
uncollectible accounts receivables? Explain with examples
(4 Marks)
Q2. Explain what is meant by depreciation
Describe the methods of depreciation and give a numerical example for each method
(7 Marks)
Q3 The following information is related to PQR company and XYZ company for the year 2013:
Cash dividend declared and paid during the
year
Common stock
Number of shares of common stock
outstanding
Par value of a share
Market value of a share
PQR
Company
XYZ
Company
750,000
124,800
25,000,000
12,000,000
50,000
24,000
50
60
50
52
Both the companies belong to same industry. PQR is an old and well-established company where
as XYZ is a new company. The historical data shows that the PQR has a stable annual dividend
distribution to stockholders.
Required:
Calculate dividend yield ratio of both the companies. Which company would you recommend for
investment in shares? Explain with reasons.
(5 Marks)
2
College of Administration and Finance Sciences
Q4. A company’s income statement for 2021 showed the following:
Net income, SR150, 000;
depreciation expense, SR20,000

Changes in current assets and current liabilities:
Accounts receivable decreased SR20, 000
merchandise inventory increased 8,000
accounts payable increased 3,000.
Required: Prepare the operating activity section of the statement of cash flow using the
indirect method.
(5 Marks)
Q5. Why does the management of any companies analyze financial statements? Explain by using
the different tools in analyzing financial statement with proper numerical example?
(5 Marks)
Q6. a) Explain the methods that can estimate bad debt expenses in business. (Give numerical
examples)
(1 Mark)
b.) Differentiate between Accounts receivable and Notes receivable.
(1 Mark)
c) On 1st of October 2019, XYZ Inc. has sold an equipment for SAR 25,000 to ABC Ltd.by issuing
an 8% note receivable for 90 days. Calculate the interest on the note and on what would be the
maturity date. Pass Journal entry in the books of the company to record these transactions. (2 Marks)
3

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