ACT 2112

SEMESTER I 2010/2011
TUTORIAL 1

1. (a) Explain the meaning of accounting.

(b)What is book-keeping? Explain the differences between book-keeping and accounting.

2. Briefly discuss the nature of the information provided by each of the following financial
statements:
(a) Income statements
(b) Statements of owner’s equity
(c) Balance sheet
(d) Statements of cash flows

3. Identify three users of accounting information and describe the kind of information
needed by each user group.

4. The two main branches of accounting are management accounting and financial
accounting.
(a) Explain the purpose of each of these branches of accounting.
(b) Contrast the distinguishing features of the accounting information produced by each
branch.

5. What is the main purpose of having a body such as Malaysia Institute of Accountants
(MIA)?
What is Malaysian Institute of Certified Public Accountants (MICPA) and what is its
current role?
What are the respective roles of Malaysian Accounting Standard Board (MASB) and
Financial Reporting Foundation (FRF) in the setting of accounting standard?

6. Explain the roles of accounting in business and society.

7. What is Generally Accepted Accounting Principles (GAAP)?

Why is GAAP required?
Give reasons as to why GAAP can be modified according to circumstances.

8. What do you understand by the following principles?

a. Going concern
b. Accrual basis
c. Consistency
d. Materiality
e. Separate entity
f. Monetary unit

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9. Identify the accounting convention.

a. Personal transactions of the owner are kept separate from the

business
b. Land worth RM600 000 is reported at its original purchase
price of RM200 000
c. A business will continue in operation for a long time
d. We only record quantitative information
e. Maintenance cost of a rental house are deducted from the
rental revenue received each month
f. All transaction must have evidence
g. Companies usually close their account and prepare financial
statements annually
h. A transaction will affect at least 2 accounts
i. When the market price of an inventory is lower than its
original cost, the business will recognize the loss in their
inventory value.
j. Bought goods from a supplier on credit in December 2009.
Paid only in February 2010. Recorded the purchase in 2009
books.

10. What is the financial objective of a business?

11. Hani is opening the Hani Distributing Company and distributes books throughout
Malaysia. Hani has invited all his friends to invest in his new business. She is offering
shares for RM10 each.

Required:
a. What form of business is Hani opening?
b. State two advantages and disadvantages of doing business in this form.
c. What type of business does Hani own? Explain how you determine your answer.