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AC/APR 2007/ACC100/105/107/ 111/114/115

UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION

COURSE COURSE CODE EXAMINATION TIME

: : : :

FINANCIAL ACCOUNTING 1 ACC100/105/107/111/114/115 APRIL 2007 3 HOURS

INSTRUCTIONS TO CANDIDATES 1. 2. This question paper consists of three (3) parts. PART A (10 Questions) PART B (2 Questions) PART C (3 Questions)

Answer ALL questions from all three (3) parts. i) ii) Answer PART A in the Objective Answer Sheet. Answer PART B and PART C 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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PART A This section consists of 10 multiple-choice questions. Choose the most suitable answer and shade the corresponding alphabets representing the answer in the multiple choice answer sheet provided. 1. A debit item will be: a) b) c) d) Decrease asset Decrease liabilities Increase equity Increase revenue (1 mark) 2. The recording of fixed assets in the balance sheet at its original cost is based on the concept. a) b) c) d) Accrual Materiality Prudence Historical Cost (1 mark) 3. Which of the following is not included as one of the accounting concept? a) b) c) d) Simplicity Consistency Materiality Going-concern (1 mark) 4. Financial accounting reports are prepared primarily a) b) c) d) To value the property of the company To show the value of the shares in the company To help people make decisions about resource allocation To show managers the results of their departments (1 mark) 5. A business had bought fixed asset at a purchase price of RM100,000 each. It is known however that the business will be forced to close down in February 2006, only two months later and the assets are expected to be sold for only RM15,000. Therefore in the balance sheet at 31 December 2005 the assets will therefore be shown at the figure of RM15,000. What was the accounting concept being applied? a) b) c) d) Consistency Accrual Going -concern Materiality (1 mark)
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AC/APR 2007/ACC100/105/107/ 111/114/115

6.

Why do we need to subtract first the provision for doubtful debt before calculating the provision for discount allowed? a) b) c) d) Because that is the formula Because we apply concept of prudence Because we want to decorate our account Because it is obvious that discounts are not allowed on bad debts (1 mark)

7.

Which costs listed below is Capital Expenditure? a) b) c) d) Buying vehicle Paying petrol cost for vehicle A repairs to vehicle Paying road tax for vehicle (1 mark)

8.

On 5 January 2004, Ahmad Enterprise buy fixed asset worth RM50.000. the depreciation of the fixed asset is 5% on reducing balance. What is the Net Book Value of the fixed asset on 2006 if the company's account ended 31 December every year? a) b) c) d) RM45.125 RM47.625 RM42.869 RM47.745 (2 marks)

9.

What is Standing Order? a) b) c) d) Instruction to the bank to pay a certain amount of money at a stated date by the company Permission given to the creditor to obtain the money directly from the bank account Debtors paid directly into the business bank account The money is presented to the bank by the owner (1 mark)

10.

A cheque had been paid to a creditor on 30 January. He banked it at his bank on 31 January but it was not presented to the company's bank until 2 February. This is known as a) b) c) d) Unpresented cheque Uncredited lodgement Dishonoured cheque Bank Reconciliation (1 mark) (Total: 11 marks)

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AC/APR 2007/ACC100/105/107/ 111/114/115

PARTB QUESTION 1

a)

State the journal entries and the effect on accounting equation for each of the following transactions: i. ii. iii. iv. v. vi. Bought Office Equipment on credit. Sold goods to Daud on credit. Return parts of the goods that was previously bought on credit to Yahya. Motor van repairs being paid by cash. Owner of the business took goods for his personal use. One of the debtors paid the amount that he owed by cheque.

Example:

JOURNAL ENTRIES DEBIT i) Office Equipment CREDIT Creditor

EFFECT ON ACCOUNTING EQUATION

t/i

Class of account Asset

t/i

Class of account Liability

(15 marks) b) Other than financial difficulties, what are the other two (2) possible reasons that a debtor is not able to settle his/her debt? (2 marks) (Total: 17 marks)

QUESTION 2 (A) The accounting period of Sasa Trading is 31 August 2006. The following balances are extracted from the ledger book of Sasa Trading: At 1 September 2005: Insurance paid in advance RM562 Wages outstanding RM306 Rent receivable, received in advance RM36 During the accounting period, Sasa Trading: Paid for insurance RM1,019 by bank standing order Paid RM15,000 wages, in cash Received RM2,600 rent, by cheque, from the tenant
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AC/APR 2007/ACC100/105/107/

111/114/115 At 31 August 2006: Insurance prepaid was RM345 Accrued wages was RM419 Accrued rent was RM105 Required: For the year ending 31 August 2006, prepare the following accounts and show the amounts to be transferred to the Profit and Loss account. a) b) b) Insurance account Wages account Rent received account (12 marks)

(B)

a)

State and explain two (2) types of discounts given to a customer. (3 marks)

b)

Distinguish between Straight Line Method and Reducing Balance Method in calculating the depreciation expense. (2 marks) (Total: 17 marks)

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AC/APR 2007/ACC100/105/107/

111/114/115 PARTC QUESTION 1 The following is the trial balance extracted from the books of Zidane Enterprise as at 31 August 2006. Debit RM Capital Cash at bank Cash in hand Creditors Marketing Expenses Carriage Inwards Debtors Provision for doubtful debt Land & Building (cost) Motor vehicles Accumulated depreciation of motor vehicles - 31 August 2005 Office Equipment (cost) . Accumulated depreciation of office Equipment - 31 August 2005 Discount allowed Rent received Drawings Carriage Outward Commission received General expenses Insurance expenses Long term loan (taken 1 January 2006) Purchases Rent expenses Return inwards Return outwards Sales Stationery expenses Stock as at 1 September 2005 Sundry expenses Wages and salaries Water and electricity 60,000 14,400 25,300 14,400 2,400 25,200 2,520 146,400 92,400 18,480 15,600 3,120 40,800 58,300 5,880 6,000 12,640 4,200 8,520 100,000 92,400 28,800 3,600 3,740 232,500 4,800 44,400 6,240 28,800 9,360 654,600 Credit RM 198,000

654,600

The following information is available: i. ii. Stock as at 31 August 2006 was valued at RM18,000. Interest on loan at 9% per annum had not been paid at 31 December 2006.
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AC/APR 2007/ACC100/105/107/ 111/114/115

iii.

Accruals at the end of 31 August 2006 are: Wages and salary Rent Received Insurance RM1,560 RM8.400 RM1.080

iv.

Prepayments at the end of 31 August 2006 are: Commission Received Water and Electricity Rent RM 1,200 RM900 RM5.400

v.

Depreciation were provided using the rates as follows: Motor Vehicles Office Equipment 20% (on Cost) 15% (on Net Book Value)

vi.

RM1,440 to be written off as bad debt and provision for doubtful debt to be decreased by RM840.

You are required to prepare: a) The Trading, Profit and Loss account / Income Statement for the year ended 31 August 2006. (17 marks) The Balance Sheet as at 31 August 2006. (11 marks) Note: Vertical format is required. (Total: 28 marks)

b)

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AC/APR 2007/ACC100/105/107/ 111/114/115

QUESTION 2 On 15 July 2006 Era Maju Enterprise received the monthly bank statement for the month of June 2006. The bank statement contained the following details: Date 1 June 4 June 8 June 13 June 13 June 14 June 15 June 16 June 17 June 20 June 21 June 21 June 22 June 23 June 24 June 25 June 26 June 28 June 30 June 30 June Particulars Balance 20230 Cheque Deposit 20231 560712 Cheque Deposit 20222 20232 20233 Cheque Deposit Standing Order Bank Charges 20234 20235 Cheque Deposit Credit Transfer Cheque Returned 20236 Miscellaneous Dividend/Interest Payments RM 97.64 394.70 233.40 100.95 Receipts RM Balance RM

509.00
400.33 70.00 152.36

618.40
160.00 15.00 128.18 185.54

395.60 136.00
395.60 114.54 17.50

13.36

2,106.29 2,008.65 2,403.35 2,169.95 2,069.00 2,578.00 2,177.67 2,107.67 1,955.31 2,573.71 2,413.71 2,398.71 2,270.53 2,084.99 2,480.59 2,616.59 2,220.99 2,106.45 2,088.95 2,102.31

For the corresponding period, Era Maju Enterprise owns records contained the following bank account: Date 1 June 8 June 13 June 18 June 22 June 30 June Details Balance b/d Sales Sales Sales Sales Sales RM 1,705.96 394.70 509.00 618.40 395.60 210.00 Date 3 June 11 June 15 June 16 June 20 June 21 June 28 June 30 June 30 June 3,833.66 Details Electricity Purchases Commission Purchases Purchases Motor Expenses Wages Rent Balance c/d Cheque No. 20230 20231 20232 20233 20234 20235 20236 20237 RM 97.64 233.40 70.00 152.36 118.18 185.54 114.54 220.00 2,642 3,833.66

Note: Further inquiries with the bank confirmed that the bank had correctly entered the amount for cheque number 20234 and cheque number 560712 was wrongly entered by the bank.
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Required: Prepare a bank reconciliation statement as at 30 June 2006: a) The Adjusted Cashbook (bank column only) of Era Maju Enterprise. (8 marks) b) c) The Bank Reconciliation Statement as at 30 June 2006 (7 marks) Explain briefly the main purpose of preparing bank reconciliation statement. (2 marks) (Total: 17 marks)

QUESTION 3 The following ratios relate to Al-Ridha Enterprise: 2005 25% 4.28 6% 1 RM50,000

Gross profit as a percentage of sales Stock turnover Net profit as a percentage of sales Quick ratio (acid test) Stock as at 1 January 2006

AL- RIDHA ENTERPRISE TRADING, PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2006 RM 200,000 (a) (b) 33,000 5,000 (c)

Sales Less: Cost of goods sold Gross profit Less: Administration expenses Interest expenses Net profit

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10

AC/APR 2007/ACC100/105/107/ 111/114/115

AL- RIDHA ENTERPRISE BALANCE SHEET AS AT 31 DECEMBER 2006 RM Fixed Asset Current Assets Stock Debtors Less: Current Liabilities Creditors Bank Overdraft RM 92,000

(d) (e) 15,000 10,000

Financed by: Capital Add: Net Profit

100,000 (c)

Required: a) Calculate the missing figures. Show the workings. (8 marks) b) As a shareholder, which profitability ratio i.e. net profit as a percentage of sales or gross profit as percentage of sales would be most important to you? Why? (2 marks) (Total: 10 marks)

END OF QUESTION PAPER

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