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AC/APR 2008/ACC104

UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION

COURSE COURSE CODE EXAMINATION TIME

: : : :

ACCOUNTING AND FINANCE ACC104 APRIL 2008 3 HOURS

INSTRUCTIONS TO CANDIDATES 1. This question paper consists of two (2) parts : PART A (8 Questions) PART B (6 Questions) 2. Answer ALL questions from all two (2) parts. i) Answer PART A in the Objective Answer Sheet. ii) Answer PART B in the Answer Booklet. Start each answer on a new page. 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) Hi) the Question Paper an Answer Booklet - provided by the Faculty an Objective Answer Sheet - provided by the Faculty

3.

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 QUESTION 1 This section consists of 8 multiple-choice questions. Choose the most suitable answer and shade the corresponding alphabet representing the answer in the multiple choice answer sheet provided.

1.

Debit note is a document that a. b. c. d. informs the buyer about the amount due on goods purchased. sent by the buyer to the seller when return goods. sent by the seller to the buyer when the buyer returns goods. contains information such as cheque number, payee's name and amount paid. (1 mark)

2.

Which one is correct? a. b. c. d. Increasing in assets Decreasing in liability Decreasing in capital Increasing in drawing Credit assets account Credit liability account Debit capital account Credit drawing account (1 mark)

3.

Capital of an enterprise will increase when i. ii. iii. iv. a. b. c. d. owner bought a motor vehicles for the business using his own pocket money owner took out some goods for his own use the enterprise bought a machine at a cost of RM24.500 business has obtained a profit. i only i, and iv only i, ii, and ivonly i, iii and ivonly (1 mark)

4.

A firm bought a lorry for RM85,000. The lorry estimated useful life is 8 years. The scrap value of the lorry at the end of year eight is RM7.000. What is the book value of the lorry at the end of year four if the firm adopts a straight line method of depreciation? a. b. c. d. RM46,000 RM42.500 RM39,000 RM43.000 (2 marks)

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5.

Nasuha, who has a book store, sold three text books to her nephew, llham at the price of RM165 on credit. This should be recorded as Debit Drawing account Drawing account llham account llham account Credit Purchase account Sales Account Sales account Drawing account (1 mark)

a. b. c. d.

6. RM Sales Less: Cost of Good Sold Opening stock Add: Purchase Less: Closing stock Cost'of Good Sold Gross; Profit RM 45,000

10,000 5,500 4,800 10,700 34,300

From above information, the stock turn over ratio is a. b. c. d. 1.38 times 3.2 times 1.45 times 4.2 times (2 marks) 7. Which of the expense can be considered as capital expenditure? a. b. c. d. Repairs to motor vehicles Renewing road tax for company's car Electricity expenses Purchased of second hand machine (1 mark) 8. If assets bought wrongly recorded as purchases, a. b. c. d. assets would be overstated assets would be understated Cost of goods sold would be understated Gross profit would be overstated (1 mark) (Total: 10 marks)

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PARTB QUESTION 1 Kembang Segar Florist started business on September 2007. Below are the business transactions during the month of September 2007: Date September 2 Transactions Sally, the owner of Kembang Segar Florist brought in RM20.000 cash into the business. Purchased stock of fresh flowers from Pinky Distributor on credit totaling RM6.000. 5 6 Made cash sales to Rozana Kedai Bunga amount RM550. Sally returned some of the fresh flower worth RM450 to Pinky Distributor as delivered not according to the requested specified in the requisition form. Transfer cash of RM10,000 into bank account. Sally withdraws cash of RM400 for her daughter birthday party. Cash payment of RM200 was made for repairing motor vehicle. Sold artificial flowers of RM900 to Indah Hiasan Enterprise on credit. Sally bought cabinets from Arif Furniture amount RM1,150 on credit. Sally paid the amount due to Pinky Distributor by cheque. Sold fresh flowers worth RM350 to Sedap Cathering and received cash.

15 17 19 23 27 29 30

Required: Journalize the above transactions using the following format: Date September 2 Debit Cash a/c RM 20,000 Credit Capital a/c RM 20,000 (Total: 10 marks)

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QUESTION 2 Identify the correct accounting concept for the situation stated below. a. The business is always assumed to operate for an indefinite period of time or a foreseeable future. Every transaction will involve two entries, that is a debit and credit entry. One account will be debited and another account will be credited for one particular transaction. The accounting information only involved the transactions or facts that can be measured in monetary value. Revenues earned during an accounting period has to be matched with the expenses associated with the earnings so as to arrive at the true profit for a specific period. All transactions of a business are recorded at the original cost that are based on the original purchase cost at the date when the purchase is made. (Total: 5 marks)

b.

c.

d. e.

QUESTION 3 The following information is related to Sheila Laundry Enterprise for the period ended 30 June 2007: Sheila Laundry Enterprise Income Statement for the year ended 30 June 2007 RM Sales Cost of Good Sold Gross Profit Motor Vehicles Expenses Electricity Expenses Salaries Interest on Loan Net Profit RM

67,000 (34,780) 32,220 780 950 1,200 250

(3,180) 29,040

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Sheila Laundry Enterprise Balance Sheet as at 30 June 2007 RM Fixed Assets Motor Vehicles Office Equipment Current Assets Stock Debtors Bank Cash on Hand RM

39,000 11,000 3,000 2,050 4,000 3,800

50,000

12,850 62,850

Finance by: Owner's Equity Capital Net Profit Long Term Liabilities Loan Current Liabilities Creditors Accrued Salary

21,010 29,040

50,050 10,000

2,500 300

2,800 62,850

Required: Calculate and explain the following ratios: a) b) c) d) e) Net Profit Margin Gross Profit Margin Current Ratio Acid Test Ratio Debtor Collection Period (Total: 10 marks)

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QUESTION 4 The following is the Trial Balance of Sofia Enterprise as at 31 December 2007. Debit Credit

(RM)
Drawings Opening inventory Premises Cash in hand Motor vehicles (at cost) Accounts receivable Accounts payable Purchases Sales Provision for doubtful debts Returns inwards Returns outwards Bank overdraft Duty on purchases Insurance Wages Electricity, telephone and water Advertising Printing and stationery Repairs and maintenance Rent received Discount received Carriage inwards Carriage outwards Accumulated depreciation - motor vehicles Capital 1,500 10,450 44,000 200 30,000 8,000

(RM)

6,000 42,900 52,800 400 1,800 700 2,700 2,400 1,000 12,400 1,500 3,000 2,300 2,600 1,200 300 4,000 1,750 5,700 100,000 169,800

169,800

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Additional information to be taken into consideration: 1. 2. 3. 4. 5. 6. Inventory on 31 December 2007 was valued at RM11,245. Depreciation at a rate of 20% per annum on the net book value is to be charged on the motor vehicles. Wages owing at the end of the year amounted to RM300. Insurance paid was for the period 1 April 2007 to 31 March 2008. Provision for doubtful debts is to be increased to RM500. During the year, the owner withdrew goods valued at RM800 from the business inventory for private use. No entries had been made in the books for the withdrawal of these goods.

Required: a) An income statement for the year ended 31 December 2007 and; (15 marks) b) A balance sheet as at that date. (10 marks) (Total: 25 marks)

QUESTION 5 Asyura Construction Sdn Bhd had been engaged to construct a bridge at Eskandar Damai. The terms of the contract were as follows: 1. 2. 3. 4. Contract price is RM3,000,000. The date of commencement of construction work will begin on 1 June 2007. The expected date of completion is 31 May 2009. Cash collected from contractee for progress payment would be subjected to retention money of 10%.

For the year ended 31 March 2008, the following details were available: RM 640,000 120,000 40,000 210,000 130,000 300,000 55,000 180,000 65,000

Materials purchased Materials sent to site Materials transferred to other project Direct wages Direct expenses Plant bought at cost Hire of plant Subcontractor's fees Head office charges

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Additional information: 1. Other data available as at 31 March 2008: Advance payment to subcontractor Direct wages owing Unused material 2. 70,000 30,000 260,000

Plant is depreciated at 15% per annum on cost and is charged to the contract on a monthly basis. A further amount of RM1,600,000 is needed to complete the construction work. It is the company's policy to determine profit based on cost incurred to date. Value of work certified to date is RM1,200,000.

3.

4.

Required: Prepare the following for the year ended 31 March 2008: a) Construction in Process Account (13 marks) b) Account Receivable (2 marks) c) An extract of Balance Sheet as at 31 March 2008 (4 marks) (Total: 19 marks)

QUESTION 6 Taste Good Sdn Bhd produces and sells 15,000 bottle of Delly Juice per month at a selling price of RM3.50 per bottle. Cost of each bottle used is RM0.40. To produce Delly Juice, two types of ingredients are needed, Mixing and Flavouring which cost RM6.000 and RM7.500 respectively in a month. Labour charges incurred is RM0.60 per bottle. Variable overhead incurred is 50% of direct labour cost. The estimated monthly fixed costs are advertising expenses of RM2.000 and administrative expenses of RM1.900. Required: a) Calculate the contribution per bottle of Delly Juice. (2 marks) b) Calculate the contribution/sales ratio. (2 marks) c) Calculate the break even point (in units and RM). (4 marks)
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AC/APR 2008/ACC104

d)

If Taste Good Sdn Bhd targeted profit of RM19,500, how many bottles should be sold? (3 marks) Based on a forecast for the next year, the price of Mixing will increase by 3% while the price of Flavouring remain the same. Due to marketing strategy for Delly Juice, Taste Good Sdn Bhd is considering a new packaging which will cost RM0.35 per bottle. The company also expects the selling price of Delly Juice to increase by RM0.50. Other costs remain the same. i) Calculate the new breakeven point (in units and RM). (6 marks) ii) If the company sells 17,000 units of Delly Juice, calculate the profit earn. (4 marks) (Total: 21 marks)

e)

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