FIN 101 SEU Finance Important Accounting Principles Questions

College of Administrative
and Financial Sciences
Assignment 1
Principles of Finance (FIN101)
Deadline for students: (3/1/2023@ 23:59)
Course Name: Principles of Finance
StudentàName:
Course Code: FIN101
StudentàID Number:
Semester: 2nd
CRN:
Academic Year: 1444/1445 H, Second Semester
For InstructoràUse only
InstructoràName:
Students rade:
Level of Marks:
Instructions LEASE READ THEM CAREFULLY
? This assignment is an individual assignment.
? The Assignment must be submitted only in WORD format via the allocated
folder.
? Assignments submitted through email will not be accepted.
? Students are advised to make their work clear and well presented. This also
includes filling in your information on the cover page.
? Students must mention question numbers clearly in their answers.
? Late submitted assignments will NOT be entertained.
? 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 answered 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.
Assignment Questions:
(Marks: 15)
1. A company had cash and marketable securities worth $100,000 accounts payables
worth $60,000 inventory of $2,501,500, accounts receivables of $5,500,000 shortterm notes payable worth $200,000, other current liabilities of 100,000, and other
current assets of $212,800. Calculate the company net working capital and describe
how managers manage the firm working capital. (2 Marks)
2. Your parents have given you $2,500 a year before your graduation so that you can
take a trip when you graduate. You wisely decide to invest the money in a bank CD
that pays 8% interest. You know that the trip costs $2,600 right now and that
inflation for the year is predicted to be 3%. Will you have enough money in a year to
purchase the trip? Show your calculations. (2 Marks)
3. If the following financial information related to XYZ Company. Total Revenues last
year $870, depreciation expenses $40, costs of goods sold $350, and interest
expenses $50. At the end of the year, current assets were $100 and current liabilities
were $105. The company has an average tax rate of 30%. Calculate the net income
for XYZ Company by setting up an income statement. (2 Marks)
4. Calculate the common-size balance sheet from the following information for the
company: (2 Marks)
Cash
Acct/Rec
Inventories
Total Current assets
Net fixed assets
Total assets
50,000
55,000
300,500
405,500
102,000
507,500
Accts/Pay
Accrued expenses
Short-term N/P
Current liabilities
Long-term debt
Total liabilities
Owner’s equity
Total liabilities and
owners%quity
20,800
40,000
9,700
70,500
70,000
140,500
367,000
507,500
5. ten years ago, Amanda Cortez invested $20,000 in an account paying an annual
interest rate of 5%. What is the value of the investment today? What is the interest
on interest earned on this investment? (2 Marks)
6. You have just won a lottery that promises an annual payment of $130,000 beginning
immediately. You will receive a total of 12 payments. If you can invest the cash flow
in an investment that is paying 7% annually, what is the present value of this
annuity? (2 Marks).
7. What are the five important accounting principles that company follow when writing
their financial statements. Using your own words, explain each principle (3 Marks).

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