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AC/APR 2008/FAR100/110

UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION

COURSE COURSE CODE EXAMINATION TIME

: : : :

FINANCIAL ACCOUNTING 1/INTRODUCTION TO ACCOUNTING FAR100/110 APRIL 2008 3 HOURS

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

Answer ALL questions from all two (2) parts. i) ii) Answer PART A in the Objective Answer Sheet. Answer PART B in the Answer Booklet. Start each answer on a new page.

3.

Do not bring any material into the examination room unless permission is given by the invigilator. Please check to make sure that this examination pack consists of: i) ii) iii) the Question Paper an Answer Booklet - provided by the Faculty an Objective Answer Sheet - provided by the Faculty

4.

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

This examination paper consists of 10 printed pages
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AC/APR 2008/FAR100/110

This section consists of 10 multiple choice questions. Choose the most suitable answer and shade the corresponding alphabet representing the answer in the multiple choice answer sheet provided.

1.

An accountant who have license to practice and provides services such as auditing and management consultancy for a fee is said to be involved in: a. b. c. d. Private accounting Public accounting Governmental accounting Education (1 mark)

2.

Credit notes issued by a business will be entered in: a. b. c. d. Sales account Return outwards accounts Return outwards journal Return inwards journal (1 mark)

3.

The following items are recorded in the general journal except: a. b. c. d. Purchase of inventory on credit from supplier Purchase of non-current asset on credit Withdrawal of inventory by the owner for personal consumption Opening, adjusting and closing entries

4.

(1 mark) If the closing stock of Fatin Bhd is overstated by RM15,000, what is the effect on the gross profit? a. b. c. d. Gross Gross Gross Gross profit will profit will profit will profit will increase by RM15,000 decrease by RM15,000 increase by RM30,000 decrease by RM30,000 (1 mark)

5.

Which of the following is correct? Assets RM 6,580 9,550 8,200 7,850 Liabilities RM 1,120 1,150 2,800 1,250 Capital RM 5,420 8,200 5,600 6,600 (1 mark)

a. b. c. d.

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AC/APR 2008/FAR100/110

Which of the following is incorrect? Transactions i. Paid rent by cash ii. Returned goods previously bought on credit from Erma Trading iii. Took cash out of the business for personal use iv. Received refund of insurance by cheque a. b. c. d. ii only i and ii only ii and iii only ii, iii and iv only (1 mark) Using periodic inventory system, stock movement will be recorded in: a. b. c. d. Sales account Purchases account Return inwards account All of the above (1 mark) How much is the amount of cheque issued, given a purchases invoice showing eight (8) items of RM125 each, less trade discount of 15 percent and cash discount of 6 percent, if paid within the discount period? a. b. c. d. RM799 RM790 RM940 RM850 (2 marks) The following items will cause the difference between the balances in the bank statement and the cash book except: a. b. c. d. Interest charges Standing order Dishonoured cheque Outstanding cheque (1 mark) Debit Rent a/c Purchases a/c Cash a/c Insurance a/c Credit Cash a/c Return inwards a/c Drawing a/c Bank a/c

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AC/APR 2008/FAR100/110

10.

Direct debits mean: a. b. c. d. Instructions by the business to the bank to pay a fixed regular amount of money at stated dates, to persons, business or companies. Instructions to the bank to release amounts of money requested by creditors from time to time. Direct transfer of money from the business bank account into its creditors bank account. Direct transfer of money into the business bank account by its debtors. (1 mark) (Total: 11 marks)

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AC/APR 2008/FAR100/110

PARTB QUESTION 1

A.

State whether each of the following statements is "TRUE" or "FALSE". Give reasons if the answer is false. i. According to historical cost concept, assets should be recorded based on their fair value so that the financial statements are able to provide a true and fair view. Overstatement of revenues and understatement of expenses are inline with prudence concept. Money measurement concept stresses on the usage of money in the measurement of all business transactions. The difference between revenue received and earned, and also expenses paid and incurred is acknowledged in accruals concept. (6 marks)

ii.

iii.

iv.

B.

i.

List down two (2) internal users and two (2) external users of accounting information and outline their purpose of using the information. (8 marks) In Accounting Equation, name three (3) accounts that normally have debit balance and three (3) accounts that normally have credit balance. (3 marks) (Total: 17 marks)

ii.

QUESTION 2 Below is the Books of Prime Entry of Pustaka llmu Book Store for the month of May 2007.

General Journal Date May 1 Particular Bank Motor vehicles Office equipment Capital Loan from CIMB (being opening entries on 1 May 2007) Debit (RM) 32,000 40,000 27,000 Credit (RM)

74,000 25,000

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AC/APR 2008/FAR100/110

Sales Journal Date May 7 May 16

P a r t i c u l a r :'-. . ; .-- ; ,. .:.. .

Nadia Store Raudah Enterprise Nadia Store

Amount (RM) 5,620 3,250 1,750 10,620

Purchases Journal Date May 4 May 13

F ^ r t W i a r // ^ y.;4-^.
:

'

Mary Enterprise Tipah Sdn.Bhd.

Amount (RM) 11,550 2,560 14,110

Date May 5

Returns Outwards Journal l>aftiular :r^:k^'\jX^:r:;'S-^ Mary Enterprise

Amount (RM) 250 250

Date
May 9

Returns Inwards Journal Particular Raudah Enterprise

AiiouiKRIVI)
150 150

Date May 2 May 15 May 22 May 23 May 25

Particular Rent Drawings Mary Enterprise Repair and maintenance Salaries

Cash Payments Journal Discount received

Bank (RM) 1,500 5,000

Cash (RM) 200 230 2,500 2,930

6,500 Cash Receipts,Journal Discount allowed

Date May 6 May 12 May 16 May 30

Particular Sales Loan to Maniam Raudah Enterprise Sales

Bank (RM) 6,500 2,945 9,445

Cash (RM) 600

155 155

6,350 6,950

You are required to record the above transactions in the ledger of Pustaka llmu Book Store for the month of May 2007 and balance off the bank account. (Total: 16 marks)

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AC/APR 2008/FAR100/110

QUESTION 3

The following is an extract balance sheet of Insyirah Sdn. Bhd. as at 30 September 2006. Fixed Assets Motor vehicles Office equipment Machinery Cost (RM) 80,000 40,000 34,000 Accumulated depreciation (RM) 30,000 20,000 25,000

It is the policy of the company to charge depreciation both for its motor vehicles and machinery at a rate of 20% per annum on cost while office equipment is depreciated at 10% per annum on net book value. All assets are depreciated in full in the year of purchase. During the year ended 30 September 2007, Insyirah Sdn. Bhd. purchased the following assets and paid by cheque. Date of purchase 23 March 2007 15 April 2007 2 July 2007 a) Type of assets Motor vehicles Machinery Office equipment Cost RM30.000 (excluding painting of business name on the motor vehicle RM300) RM15,000 (excluding freight charges of RM1,500 and installation cost of RM500) RM5.000

You are required to prepare the following for the year ended 30 September 2007: i) ii) iii) iv) v) vi) Motor vehicles account Office equipment account Machinery account Accumulated depreciation of motor vehicles account Accumulated depreciation of office equipment account Accumulated depreciation of machinery account (12 marks)

b)

What is the purpose of depreciation? (2 marks)

c)

List down two (2) characteristics of depreciable assets. (2 marks) (Total: 16 marks)

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AC/APR 2008/FAR100/110

QUESTION 4

Sherry owns a boutique, Permata Anggun at Ampang Park. The boutique sells traditional costumes. The following balances were extracted from the books of Permata Anggun as at 31 December 2007. RM 20,000 2,000 3,000 3,500 2,800 2,200 80,000 150,000 3,200 2,700 2,300 14,000 16,500 1,300 2,600 2,500 500 14,000 6,000 5,000 35,000 30,000 25,000 10,000 10,000 20,000 9,000 500 25,000 1,500 50,000 300 42,400

Stock as at 1 January 2007 Sales returns Purchases returns Carriage Inwards Duty on purchases Carriage Outwards Purchases Sales Discount received Insurance on purchases Commission received Shop rental Salary Salesman commission Discount allowed Interest expense Provision for doubtful debts Accumulated depreciation: - Delivery van - Costumes cabinet - Office equipment Delivery van Costumes cabinet Office equipment Investment Sundry debtors Sundry creditors Telephone and electricity Bad debts Cash at bank Petty cash Loan from BIMB (10% p.a.) Drawings Capital

The following adjustments need to be considered as at 31 December 2007: 1. 2. 3. Shop rental is RM1,000 per month. Sherry paid rental in advance for two months. Salary for fashion designer amounting to RM1,500 was still unpaid. Interest on loan from BIMB for half a year was outstanding.
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AC/APR 2008/FAR100/110

4.

One of the customers was declared bankrupt and unable to settle his debts. The customer still owed the business RM2.000. Provision for doubtful debts on sundry debtors need to be provided at 5% of net debtors. Depreciation on yearly basis is to be provided as follows: Delivery van Costumes cabinet Office equipment 20% using reducing balance method 5% using straight line method 15% using straight line method

5.

6.

7.

Sherry withdraws petty cash RM100 and took a pair of baju songket amounting to RM500 for her daughter's wedding. Stock as at 31 December 2007 was RM 16,000.

8.

Required: a) b) An Income Statement for the year ended 31 December 2007. A Balance Sheet as at 31 December 2007. (Format: Verticle Presentation) (Total: 24 marks)

QUESTION 5 The following information was extracted from ALIA Enterprise and BATRISYA Trading as at 30 June 2007.

Long term loan Short term loan Creditors Cash at bank Cash in hand Debtors Total expenses Discount received Closing stock Opening stock Net sales Purchases

ALIA Enterprise RM 50,000 2,500 29,000 10,000 5,000 15,000 35,000 2,000 2,500 10,000 200,000 40,000

BATRISYA Trading RM nil 1,000 35,000 30,000 13,000 10,000 12,500 3,000 3,000 5,000 140,000 45,000

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CONFIDENTIAL You are required to: a)

10

AC/APR 2008/FAR100/110

Compute the following ratios for each of the business: i) ii) iii) iv) v) Current ratio Acid test ratio Gross profit margin Net profit margin Stock turnover ratio (10 marks)

b)

If you are looking for a profitable business, which business would you choose and why? (3 marks) Explain which business is able to pay off its creditors upon demand? (3 marks) (Total: 16 marks)

c)

END OF QUESTION PAPER

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