Part AAnswer any Five (5) out of Seven (7) questions. Each question carries 8 marks.1. What Makes Accounting Information Useful? Qualitative Characteristics2. With the help of logical arguments, discuss the difference between actual and predetermined factory overhead rate.3. List three different groups of users of accounting information. Indicate the type of decisions each group typically makes from accounting information.4. What is the difference between the financial accounting system and the cost management system. Give an example of each.5. List the four financial statements. Explain the connection between these four statements.6. In 2014, you invested $12,000 along with 5 other investors in a new theatre, Rock-On that offers Broadway play productions. Because you live out of state, you have not been actively involved in the daily affairs of the theatre. On January 10, 2015, you are excited because you received $12,000 as a dividend after the end of the 1st year of the theatre’s existence. Included with your $12,000 check are financial statements and some supplemental information regarding the accounting? The supplemental information explains:(1) During the last three months of 2014, an aggressive advertising campaign resulted in the sale of 600 season tickets for the 2015 productions. Each season ticket cost $120 and the resulting $72,000 was included in 2014 income.(2) Along with the advertising campaign, the general manager was able to secure pledges of $7,500 for advertising by local merchants in the playbills for the first two productions for 2015. This amount is included as advertising revenue in the 2014 financial statements.REQUIRED:Are there any problems related to the supplementary disclosures? If so, explain and indicate what effects (over- or understatements) these items will have on the financial statements.©Al Tareeqah Management Studies - 2020 47. All businesses are subject to various types of legal proceedings. Merck & Co. Inc., a global health care company that manufacturers prescription medicines, has been a defendant in a number of product liability lawsuits. In the notes to Merck’s 2012 financial statements, the company states: “There are various other pending legal proceedings involving the Company, principally product liability and intellectual property lawsuits. While it is not feasible to predict the outcome of such proceedings, in the opinion of the Company, either the likelihood of loss is remote or any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to the Company’s financial position, results of operations or cash flows either individually or in the aggregate.”Required:Explain in your own words what Merck means by this statement. In particular, include what they mean by “material” and “remote.” Who is in the best position to determine the outcome of a lawsuit?Part BAnswer any Six (6) out of Eight (8) questions. Question 2 is compulsory. Each question carries 10 marks.Exercise 1ABC Corporation’s presents you the following details:Cash$ 25,000Accounts receivable$ 46,000Property, plant & equipment69,000Long-term debt41,000Capital stock100,000Accounts payable24,000Retained earnings?Inventory33,000Required: What is Brock’s total liabilities balance at the end of the current year?©Al Tareeqah Management Studies - 2020 5Exercise 2Cargo CorporationListed below is information from the financial records of Cargo Corporation at December 31, 2015:Retained earnings$37,000Notes payable--Due July 1, 2018$12,000Accumulated depreciation13,000Interest payable1,000Income taxes payable24,000Office supplies2,000Buildings48,000Accounts payable36,000Cash11,000Inventory33,000Accounts receivable35,000Land50,000Capital stock60,000Prepaid rent4,000Required:a. Prepare the current liabilities section of the balance sheet for Cargo Corp. at December 31, 2015. You may omit the heading. If the amount of current liabilities were larger, what effect would this have on the current ratio?b. Prepare the long-term asset section of Cargo Corp.'s balance sheet at December 31, 2015. You may omit the heading. Why are these amounts classified as "long-term"?c. Prepare the current assets section of the balance sheet for Cargo Corp. at December 31, 2015. You may omit the heading. How does the concept of liquidity apply?d. Calculate the amount of working capital at December 31, 2015 for Cargo Corp. What can you learn from the current ratio that you cannot learn from the amount of working capital?Exercise 3 The following data were taken from the general ledger of Data Corp., a retailer of computers and accessories: Merchandise Inventory, August 1 $ 323,000 Merchandise Inventory, August 31 296,000©Al Tareeqah Management Studies - 2020 6Purchases 1,684,000 Required: Compute the cost of goods sold for the month of August.Exercise 4The following information is given for Sego Company:Cash$ 50,000Inventory$ 45,000Land75,000Accumulated Depreciation40,000Plant & Equipment150,000Accounts Payable60,000What are the company’s current assets?Exercise 5Wentworth Company received advance payments from customers during 2015 of $10,000. At December 31, 2015, $1,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2015, what will be the balances in the Unearned Service Revenue and Service Revenue accounts?Exercise 6The following data are from Burton Corporation, a manufacturer, for the month of September: Direct materials used $145,000 Supervisors’ salaries 6,000 Machine operators’ wages 200,000 Sales office rent and utilities 22,000 Machine depreciation 35,000 Secretary to the Chief Executive Officer salary 3,000 Factory insurance 15,000 What are the Total prime costs?©Al Tareeqah Management Studies - 2020 7Exercise 7Broad Ways provides the following information:Sales (200,000 units)$500,000Manufacturing costs:Variable170,000Fixed30,000Selling and administrative costs:Variable80,000Fixed20,000Required:a. What is the break-even point in units for Broad?b. What is the variable cost per unit for Broad?c. What is the contribution margin per unit for Broad?d. Should a multiple product firm focus on individual product break-even point? Why or why not? Discuss with logical arguments.Exercise 8Following accounts are related to Galaxy Corporation for the year ended December 31, 2016:Sales revenue$165,000Cash$ 30,000Accounts receivable14,000Selling expenses44,000Equipment42,000Common stock41,000Accounts payable12,000Interest income3,000Salaries and wages expense40,000Cost of sales51,000Inventories22,000Prepaid expenses2,000Income taxes payable5,000Income taxes expense18,000Notes payable20,000Retained earnings?Read the information for Galaxy Corporation. Determine the following amounts for Galaxy Corporation:a) Total assets at the end of 2016b) Total liabilities at the end of 2016 _________________________c) What parties have a claim on Galaxy Corporation’ assets? Explain you answer in the terms of the accounting equation.