BKAL 1013 (F)

Semester A161
Tutorial 4: Chapter 6 & 7
DUE DATE: 27 Nov 2016

1. Which of the statements below is TRUE about the Company Annual Report?

A. Issued once every financial month

B. Contains only the financial report and the chairmans statement
C. It does not provide a notice of annual general meeting and proxy form
D. The content differs from one company to another

2. How often is the annual report being issued?

A. Every six month

B. Every month
C. Once a year
D. None of the above is correct

3. Company directors are required to include in the annual report the companys and its
subsidiaries financial statements as mandatorily required in the:

A. Section 169 (5) Company Act 1965

B. International Financial Reporting Standards (IFRS)
C. Income Tax Act 1967
D. Bursa Malaysia Listing Requirement

4. An annual report contains a great many statements and reports. Which one of the
following statements/reports is not covered either by statute or by accounting standards?

A Periodic summary

B Cash flow statement

C Auditors' report

D Directors' report

5. The Chairmans Statement:

A. specifically directed to the companys shareholders

B. presented with the companys financial statements and notes to the accounts
C. provides information on company directors and their respective posts
D. contains invitations to all the members of the meeting to attend the annual general
meeting of the company
6. A financial report includes the items as stated in Part VI: Accounts and Audit, Company
Act 1965. The items are:
i. Directors Report
ii. Auditors Report
iii. Directors Statement
iv. Statutory Declaration
v. Notice of Annual General Meeting

A. i, ii and iii
B. ii, iii and v
C. i, ii, iii and iv
D. All the above

7. The opinion given on the sufficiency of financial records kept by the company in
accordance to the stated act and compliance with the approved accounting standards can
be found in which of the following report?

A. Directors Report
B. Audit Committees Report
C. Chairmans Statement
D. Auditors Report

8. Which of the following items will typically be found in a corporate annual report?

A Company budgets

B Notes to Financial Statements

C Selected financial data for competitor companies

D Management's declaration that the auditors are responsible for the

financial statements

9. Assume that you want to determine the amount of gross profit for a company. Which of
the following financial statements is the BEST source of this information?

A Statement of Retained Earnings

B Statement of Stockholders' Equity

C Statement of Cash Flows

D Comprehensive Income Statement

 10. An annual report contains a great many statements and reports. Which of the
following statements/reports is NOT required either by statute or by
accounting standards?

Financial highlights
A

B Income statement

C Operating and financial review

D Chairman statement
11. All statements are TRUE about the horizontal analysis EXCEPT:
A. a percentage analysis of increases and decreases in related items in comparative
financial statement
B. a percentage analysis used to show the relationship of each component to the total
within a single statement
C. also known as Trend Analysis
D. an analysis that can compare two, three or more statements

12. A ratio that measures the instant debt-paying ability of a company is called:
A. current ratio
B. quick ratio
C. equity ratio
D. working capital

13. Which one is FALSE about debt ratio?

A. Important for the company to measure the extent of credit used to finance the asset
B. Allow company to plan the use of fund available to generate more income
C. Important to measure the percentage of total assets being financed by the creditors
D. Measured based on the ratio of total assets to total liabilities

14. A business should keep adequate inventory on hand to meet the needs of its customers
and operations. However, an excessive amount of inventory can:
i. reduce solvency by tying up funds
ii. increase insurance expense and storage cost
iii. increase funds that could be used elsewhere to improve operations
iv. risk of losses because of price declines or obsolescence
A. i, ii and iii
B. i and ii
C. i, ii and iv
D. All the above
 Use the following information for questions 15 to 17:
The following items are reported on a Exell Sdn Bhd Statement of Financial Position:
Cash 200,000
Marketable securities 50,000
Account receivables 150,000
Inventory 80,000
Salary payable 50,000
Unearned rent 20,000
Account Payable 150,000
Building 500,000
Equipment 150,000
Long term liabilities 400,000

15. The current ratio would be:

A. 2.2
B. 2.5
C. 1.2
D. 3.2

16. The acid-test ratio would be:

A. 1.8
B. 1.6
C. 2.2
D. 1.0

17. The debt ratio would be:

A. 0.8
B. 1.3
C. 0.7
D. 0.5

18. In a vertical analysis of Statement of Financial Position, which of the following is given a
designation of 100 percent?
A. Cost of goods sold
B. Total assets
C. Total liabilities
D. Net income

19. If sales for 2010 (the base year), 2011 and 2012 are RM20,000, RM15,600 and RM24,600
respectively, the trend analysis for 2011 and 2012 shows:
A. 62.4% and 128%
B. 156% and 118%
C. 128.2% and 133%
D. 78% and 123%
20. How the collection of an accounts receivable would affects the current ratio and the quick
ratio respectively?
A. No effect on current ratio; increase in quick ratio
B. Increase in current ratio; increase in quick ratio
C. No effect on current ratio; no effect on quick ratio
D. Decrease in current ratio; decrease in quick ratio
 Use the following information to answer questions 21 - 23:
Given are information pertains to Imara Corporation (IMARA).

Imara Corporation
Partial Statement of Financial Position
31 December 2012
Liabilities and Shareholders' Equity
Current liabilities RM 60,000
Long-term liabilities 90,000
Shareholders' equity 150,000
Total liabilities and shareholders' equity 300,000

Imara Corporation
Statement of Comprehensive Income
For the Year Ended 31 December 2012
Net sales RM80,000
Cost of goods sold 45,000
Gross margin 35,000
Operating expenses 15,000
Income before income taxes 20,000
Income tax expense 5,000
Net income 15,000

Note: IMARA had 6,000 units of ordinary share issued and outstanding. There is no change
in shareholders' equity balance from last year. The market price of IMARA ordinary share
on 31 December 2012 was RM20. IMARA paid dividends of RM1.60 per share during
2012.

21. What is the profit margin for IMARA?

A. 18.75%
B. 43.75%
C. 25.0%
D. 42.86%

22. What is the debt ratio for IMARA?

A. 20%
B. 30%
C. 40%
D. 50%

23. What is the price/earnings (P/E) ratio for IMARA?

A. 8.0 times
B. 12.5 times
C. 20.0 times
 D. 37.73 times

24. A liquidity ratio measures the

A. income or operating success of an enterprise over a period of time.
B. ability of the enterprise to survive over a long period of time.
C. short-term ability of the enterprise to pay its maturing obligations and to meet
immediate needs for cash.
D. number of times interest is earned.

25. Teguh Bina Sdn Bhd had a balance in the Accounts Receivable account of RM820,000 at
the beginning of the year and a balance of RM880,000 at the end of the year. Net sales
during the year amounted to RM6,120,000. The receivables turnover ratio was
A. 7.2 times. B. 7 times.
C. 6.9 times. D. 6.8 times.

26. The debt to total assets ratio measures

A. the company's profitability.
B. whether interest can be paid on debt in the current year.
C. the proportion of interest paid relative to dividends paid.
D. the percentage of the total assets provided by creditors.

27. Which one of the following ratios would NOT likely be used by a short-term creditor in
evaluating whether to sell on credit to a company?
A. Current ratio B. Acid-test ratio
C. Asset turnover D. Receivables turnover

28. Bina Indah Bhd had net income of RM160,000 and paid dividends to common
stockholders of RM40,000 in 2010. The weighted average number of shares outstanding in
2010 was 50,000 shares. Bina Indahs common shares is selling for RM50 per share on the
Bursa Malaysia. Bina Indahs price-earnings ratio is
A. 3.2 times. B. 15.6 times.
C. 10 times. D. 5 times.

29. Earnings per share is used for which kind of evaluation?

A. The ability of a company to pay its current liabilities
B. The ability of a company to pay its long-term liabilities
C. The overall profitability of a company
D. Evaluating stock in a company from an investor's perspective
30. The asset turnover ratio is used for which kind of evaluation?
A. The ability of a company to pay its current liabilities
B. The ability of a company to pay its long-term liabilities
C. The overall profitability of a company
D. Evaluating stock in a company from an investor's perspective

31. The debt-to-equity ratio is used for which kind of evaluation?

A. The ability of a company to pay its current liabilities
B. The ability of a company to pay its long-term liabilities
C. The overall profitability of a company
D. Evaluating stock in a company from an investor's perspective

32. Which of the following factors might suggest that a company is having difficulty selling its
inventory?
A. An increase in receivables
B. A buildup of inventory balances
C. An increase in total debt
D. An increase in interest expense
 BKAL 1013 (F)
Semester A161
Tutorial 4: Chapter 6 & 7
DUE DATE: 27 Nov 2016
ANSWER SHEET
NAME : _______________________________________
MATRIC NO : _______________________

No No No No
1 11 21 31

2 12 22 32

3 13 23 33

4 14 24 34

5 15 25 35

6 16 26 36

7 17 27 37

8 18 28 38

9 19 29 39

10 20 30 40