CONFIDENTIAL AC/DEC 2019/FAR110

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE FINANCIAL ACCOUNTING 1

COURSE CODE FAR110

EXAMINATION DECEMBER 2019

TIME 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of two (2) parts: PART A (10 Questions)
PART B (5 Questions)

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Do not bring any materials into the examination room unless permission is given by the
invigilator.

4. Please check to make sure that this examination pack consists of:

i) the Question Paper

ii) an Answer Booklet - provided by the Faculty

5. Answer ALL question in English

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 10 printed pages

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CONFIDENTIAL 2 AC/DEC 2019/FAR110

PART A

This part consists of TEN (10) multiple-choice questions. Choose the most suitable
answer and write the corresponding alphabet representing the answer in the answer
booklet

1. Assets can best be defined as

A. resources that a business owns to carry out business transactions such as

production and sales.
B. anything the business owes to suppliers or bankers and have the obligation to
pay them.
C. capital that the owner introduced to the business.
D. business records to determine the correct profit in a financial period.
(1 mark)

2. Choose the MOST accurate statement about users of accounting information.

A. The government is considered as internal user.

B. Present debtors are external users.
C. Employees are considered as external users.
D. Bankers are considered as internal users.
(1 mark)

3. Total assets at the end of the period was RM325,000 and liabilities was 40% of total
assets. Determine owner's equity at the end of the period.

A. RM195,000
B. RM232.143
C. RM455.000
D. RM130.000
(1 mark)

4. The assumption that states the activities of each company be kept separate from the
activities of its owner and ail other companies is the

A. economic entity assumption.

B. going concern assumption.
C. monetary unit assumption.
D. time period assumption.
(1 mark)

5. The following are true about cash discount EXCEPT

A. It is received or given for credit purchases or credit sales only.

B. It is usually valid for specific period only.
C. It encourages customers to buy in bulk.
D. It encourages customers to pay promptly.
(1 mark)

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6. A trial balance is

A. a list showing the extraction of the business income statement.

B. a memorandum listing all the accounts and their balances.
C. a statement showing the financial position of a business.
D. a memorandum showing the assets, liabilities and owner's equity of a business.
(1 mark)

7. The following statements are correct EXCEPT?

A. Accrued expenses are expenses incurred but not yet paid.

B. Accrued revenues are revenues earned but not yet received.
C. Prepaid expenses are expenses paid in advance.
D. Prepaid revenues are payments received for services rendered in the previous
accounting period.
(1 mark)

8. Sabar Sdn. Bhd. showed net sales of RM480.000 and purchases of RM340.000. What
is the gross profit if opening stock is RM160,000 and closing stock is RM80.000?

A. RM120,000
B. RM60,000
C. RM420.000
D. RM500.000
(1 mark)

9. Under the periodic inventory system, the cost of goods sold are determined by:

A. Deducting the opening stock from the total of closing stock and net purchases.
B. Deducting the closing stock from the total of the opening stock and net
purchases.
C. Deducting the opening and closing stock from net purchases.
D. Adding the opening and closing stock to net purchases.
(1 mark)

10. Standing Order is defined as

A. an instruction to the bank to pay certain amount of money at a stated date by

the business.
B. a permission given to the creditor to obtain the money directly from the bank
account.
C. direct payment by debtors into the business bank account.
D. the money presented to the bank by the owner.
(1 mark)
(Total: 10 marks)

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PARTB

QUESTION 1

A. The primary objective of accounting is to provide information for people and

organisations to make decisions. The information is usually financial, but can also be
non-financial.

Required:

a. List any THREE (3) basic activities of accounting.

(3 marks)

b. State any FOUR (4) qualitative characteristics of accounting information.

(4 marks)

B. Amir and Agos are brothers who decided to venture into the tapioca business. The
business prospered when the brothers decided to run the business as co-owners with
limited liability. The business sells tapioca resin within Malaysia and to countries
abroad.

All business transactions are recorded in Ringgit Malaysia. Any contributions and
withdrawals of assets by the brothers are documented and recorded. Some of the
customers from abroad delayed payment even though the products were delivered
and recorded as sales.

The brothers ensured that the financial statements prepared are free from all biasness
and should completely reflect the true picture of the entity according to the information
provided. The future of the business is very promising since many organisations
throughout the world are concerned with biodegradable products.

Required:

a. Explain THREE (3) advantages of the above business set up.

(3 marks)

b. Suggest FIVE (5) accounting concepts applied as explained in the above

scenario.
(5 marks)

C. Istiqamah Amanah uses the periodic inventory system in recording its inventories.
The following are transactions that occurred in the month of June 2019.

Date Transactions
2019
June 1 The owner introduced capital in the form of cash worth RM20.000
which was deposited into the business bank account. The owner
also brought in a computer and furniture worth of RM2.000 and
RM10,000 respectively.
3 Paid utilities RM250 by cheque.

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Issued an invoice for goods sold on credit to Shahril worth RM3.000

with a credit term of 5/10, n30.
The owner took RM300 cash and RM500 worth of goods to celebrate
his daughter's birthday
Received an invoice for goods purchased of RM4.000 from Azita
Enterprise with a trade discount of RM200. The credit term is 2/10,
n30.
10 Shahril settled the amount owing to Istiqamah Amanah by cheque.
Issued a debit note to Azita Enterprise for goods returned amounting
13
to RM300.
17 Settled the amount due to Azita by cheque.
23 Sales worth RM700 was received in the form of a cheque.

Required:

Journalise the above transactions in the appropriate special journals.

(8 marks)
(Total: 23 marks)

QUESTION 2 transaction analysis is not covered in final exam

A. Puan Safiyyah is a wholesale trader who is involved in buying and selling cosmetics.
On 1 June 2019, she bought different shades of lipstick, foundation and mascaras from
Jelita Trading costing RM3.200 by cheque. The next day, she also bought some
makeup brushes, cosmetic bags and eyelash curlers from Beauty Trading. The
transaction cost her RM2.400 which she paid in cash.

On 10 June 2019, Puan Safiyyah sold several items of cosmetics for cash RM700 and
a credit sale to Chantique Shop worth RM2.000. Puan Saffiyah offered Chantique
Shop a 10% trade discount and a credit term of3/15, n30. On the same day, she took
out RM300 cash for her personal use. On 22 June 2019, she purchased on credit a
second hand van from MotoCar Transport Company, costing RM45.000. She paid a
cash deposit of RM10,000 for that purchase.

To take advantage of the cash discount, Chantique Shop settled the amount due to
the business on 25 June 2019. On 26 June 2019, Puan Safiyyah paid RM450 for
utility bills. She paid telephone bills of RM250 using her own money. On 30 June 2019,
she brought into the business her personal computer, valued at RM3.200.

(Note: The owner uses the periodic system to record the inventory).

Required:

Analyse each ofthe transactions above by showing the effect upon assets, liabilities,
capitals, drawings, revenues and expenses.

Note: Use the following format:

E.g. June 1 Started business with RM5.000 cash.

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Date Asset Liability + Owner's Equity

=
Capital - Drawing + Revenue -
Expense
Junel +5,000 +5,000

(10 marks)

B. The trial balance of Khadeejah Departmental Store prepared by the new bookkeeper
as at 30 June 2019 did not balance. Upon inspection by the senior accounts officer,
the following errors were discovered:

i. The purchase of a second hand motor vehicle by cash amounting to RM9.000

was not recorded in the cash account.

ii. A cheque received for investment income worth RM12,000 was totally omitted
from the records.

iii. Purchase of goods from Syarikat Nusantara Trading of RM5.500 was credited
to the purchases account and debited to Syarikat Nusantara Trading account.

Required:

a. Identify the type of errors made by Khadeejah Departmental Store as stated

above.
(3 marks)

b. Show the corrections of the above errors either in the ledger or journal.
(5 marks)
(Total: 18 marks)

QUESTION 3

The following is the trial balance of Alam Maju Enterprise as at 30 June 2019:

ALAM MAJU ENTERPRISE

Trial Balance as at 30 June 2019
Debit (RM) Credit (RM)
Cash 125,700
Accounts receivable and Accounts payable 6,800 8,200
Short term investment 20,000
Inventory-1 July 2018 43,200
Vehicles insurance 3,600
Supplies expenses 12,500
Equipment 230,000
Accumulated depreciation - equipment 69,000
Motor vehicle 84,000
Accumulated depreciation - motor vehicle 50,400
Rent 2,500
Capital 209,400

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Drawings 1,800
Purchases and Sales 160,500 457,000
Discounts 3,900 5,400
Returns 5,500 6,400
Dividend 1,000
Commissions 4,800
Utilities expense 14,500
Carriage inwards 6,800
Carriage outwards 3,500
Salaries and wages 62,000
Advertising 15,000
Miscellaneous expense 14,800
814,100 814,100

The following adjustments need to be considered for the preparation offinancial statements
for the year:

1. Closing inventory as at 30 June 2019 was RM39.500.

2. Accrued utilities and advertising expenses were RM600 and RM2.000 respectively.
3. The vehicle insurance covers two-year premium from 1 July 2018 to 30 June 2020.
4. The business has earned commission income of RM1.800, but the amount was not
recorded yet.
5. Yearly depreciation rates for the company's non-current assets are as follows:
Equipment 10% straight line method
Motor vehicle 20% reducing balance method

Required:

a. Prepare the Statement of Profit or Loss for the year ended 30 June 2019 and the
Statement of Financial Position as at that date.
(20 marks)
b. Explain the difference between accrued revenue and prepaid revenue.
(2 marks)
(Total: 22 marks)

QUESTION 4

The following is the statement offinancial position of Albar Enterprise as at 30 June 2019.
ALBAR ENTERPRISE
Statement of Financial Position as at 30 June 21319
RM RM
Non-Current Assets 170,200

Current Assets
Inventories 15,000

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Account receivables 37,000

Cash at bank 40,000
Prepaid rental 800
Prepaid insurance 700 93.500
263,700
Financed by:
Capital 206,700
Add: net profit 25,000

Current Liabilities
Account payable 30,000
Accrued printing and stationery 2.000 32.000
263,700

Additional information:

1. Cash sales and credit sales for the year ended 2019 were RM30.000 and
RM70.000 respectively.
2. Cost of goods sold was 55% of sales.

Required:

a. Compute the following ratios for Albar Enterprise for the year ended 30 June
2019.

Gross profit ratio

i. Net profit ratio
ii. Current ratio
v. Quick ratio
(10 marks)

b. Explain the ratios that have been calculated above.

(4 marks)
(Total: 14 marks)

QUESTION 5

a. In August 2018, Aziina of Aziina Trading received a cheque worth RM20,000 for
payment of goods supplied to Azmi Sdn Bhd. Aziina's accounts officer immediately
recorded the receipt in the books of accounts. Due to Aziina's busy schedule, she
was only able to present the cheque at the bank on 30 August. On 3 September,
Aziina Trading received the monthly bank statement. The accounts officer found a
difference in the receipt amounts worth RM20.000 being the amount received from
Azmi Sdn Bhd.

Required:

Name the specific term used to describe the above situation with explanations.
(3 marks)

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b. In March 2019, Pn. Mida, the owner of QUMIDA Enterprise received the following
statement from REJAB Bank.

REJAB Bank
Durian Tunggal, Melaka
Bank Statement for the month of March 2019

Client: QUMIDA Enterprise

Account no: 010203040506
Type of account: Current Account
Statement date: 31 March 2019

Date Particulars Dr Cr Balance

unprsented cheque 151228 1000 RM RM RM

1/3/2019 Beginning Balance 151,000

3/3/2019 Cheque issued -151231 23,000 128,000
4/3/2019 Cheque issued-151232 5,500 122,500
5/3/2019 Cash deposit 34,000 156,500
9/3/2019 Novbank Assurance - 3,450 153,050
Standing instruction
9/3/2019 Service charges 10 153,040
11/3/2019 Cheque deposit 27,200 180,240
13/3/2019 Cheque issued -151234 7,700 172,540
16/3/2019 Isma Euseff - Credit transfer 5,500 178,040
18/3/2019 Cheque deposit 13,700 191,740
19/3/2019 Cheque issued -151235 14,100 177,640
19/3/2019 Cheque issued -151233 12,300 165,340
20/3/2019 Anit Enterprise - Credit 48,400 213,740
transfer
23/3/2019 Cheque issued -151236 78,000 135,740
25/3/2019 Cheque issued -151237 16,100 119,640
26/3/2019 Cheque deposit 33,000 152,640
27/3/2019 Cheque deposit 22,000 174,640
31/3/2019 Dividends paid 20.00 174,660

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The bank account of QUMIDA Enterprise showed the following records:

Bank Account
Date Particulars Dr Cr Balance
RM RM RM
1/3/2019 Beginning Balance 150,000
2/3/2019 Purchases (151231) 23,000 127,000
2/3/2019 Entertainment expenses 5,500 121,500
(151232)
5/3/2019 Cash 34,000 155,500
9/3/2019 Furniture (151233) 12,300 143,200
9/3/2019 Sales 27,200 116,000
10/3/2019 A/c Payable - Ipah Enterprise 7,700 108,300
(151234)
16/3/2019 Purchases (151235) 14,100 94,200
17/3/2019 Sales 13,700 107,900
18/3/2019 A/c Payable - Suparman Sdn 78,000 29,900
Bhd (151236)
20/3/2019 A/c Receivable - Anit 48,400 78,300
Enterprise
23/3/2019 Purchases (151237) 16,100 62,200
24/3/2019 Sales 33,000 95,200
24/3/2019 Purchases (151238) 9,290 85,910
25/3/2019 A/c Receivable - Hasran 22,000 107,910
26/3/2019 Repair and maintenance 770
(151239) 107,140
30/3/2019 A/c receivable - Hatia Sdn 11,000 118,140
Bhd

Additional information:

1. Cheque number 151228 of RM1.000 issued to Cheryl on 20 February 2019 is still

unpresented as at 31 March 2019.
2. The standing instruction to Novbank Assurance is for the payment of monthly
insurance premium, whereas the amount received from Isma Euseff is for the
settlement of accounts receivable balance.
3. Rosie, a newly appointed accounts clerk had incorrectly credited the business sales
transactions on 9 March 2019.

Required:

Prepare the bank reconciliation statement for QUMIDA Enterprise as at 31 March 2019.
(10 marks)
(Total: 13 marks)

END OF QUESTION PAPER

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