CONFIDENTIAL

AC/APR 2010/ACC418

UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION

COURSE COURSE CODE EXAMINATION TIME

: : : :

FINANCIAL ACCOUNTING ACC418 APRIL 2010 3 HOURS

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

2.

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.

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 Objective Answer Sheet - provided by the Faculty an Answer Booklet - provided by the Faculty

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

This examination paper consists of 10 printed pages
Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

CONFIDENTIAL PART A

AC/APR 2010/ACC418

This part 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.

The Historical Cost Concept implies that... A. B. C. D. All transactions of a business should be recorded at their original cost. The owner and the business are separate entity. The business is assumed to operate on a indefinite basis. The concept involves matching expenses incurred against revenue earned, not cash paid against cash received. (1 mark)

2.

The depreciation rate for motor vehicle is 15% per annum calculated on cost. A motor vehicle which was bought 3 years ago has a book value of RM41.250. What is the cost of the motor vehicle? A. B. C. D. RM50.000 RM65.040 RM75.000 RM55.960 (2 marks)

3.

The Income Statement is a statement that... A. B. C. D. ... describes the financial performance of an organization at a period of time. ... describes the financial position of an organization at a point of time. ... drawn up by the bank and sent to the customer to verify the cash book ...drawn up to explain the differences between the bank balance and the balance in the cash book. (1 mark)

4.

Trade discount on purchase A. B. C. D. is a liability account is an asset account is an expense account None of the above (1 mark)

5.

A transaction appears in debit column of a bank statement means that A. B. C. D. There is a withdrawal / payment made out of the bank account. There is a deposit / receipt in the bank account. It is an overdraft. It is a surplus. (1 mark)

Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL 6.

AC/APR 2010/ACC418

The following errors will be disclosed in the trial balance except: A. B. C. D. Error of transposition Omission of part of an entry Error of omission Posting to incorrect sides of accounts (1 mark)

7.

What is gross profit? A. B. C. D. Sales less purchases Gross profit less expenses Sales less gross profit Sales less cost of goods sold (1 mark)

8.

The XY Trading has five acres of land, which cost RM200.000 per acre. The current market value of the land is RM5,000,000 per acre. What is the amount to be reported in the balance sheet for the five acres of the land? A. B. C. D. RM25,000,000 RM200,000 RM 1,000,000 RM 10,000,000 (1 mark)

9.

The purpose of recording depreciation on fixed assets is to: A. B. C. D. reflect the decline in the market value of the assets for each period. allocate the market value of fixed assets over its useful life. reduce income when the company has an exceptionally profitable year. be in conformity with the matching concept. (1 mark)

10.

Owner's equity of a business entity will decrease when? i. ii. iii. iv. A. B. C. D. A net loss arises Bad debts written off Goods are taken by the owner for his personal use Assets are purchased for cash i, ii iii, iv i, ii iii i, iii (1 mark) (Total: 11 marks)

Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL PARTB QUESTION 1

AC/APR 2010/ACC418

Encik Taufik, the owner of TC Trading has appointed you as an accounts clerk to help him prepare the financial statements of his business. Below is the trial balance of TC Trading as at 31 March 2010 together with some additional information: Credit RM 14,180

Debit RM Accounts Payable Accounts Receivable Advertising expenses Bad debts expenses Capital Carriage inwards Cash at bank Discounts allowed Discounts received Dividend received General expenses Import duties Insurance expenses Interest on loan Land and building 6% Loan from CIMB Motor Van Office Equipment Accumulated depreciation: Motor Van Office Equipment Allowance for discount allowable Allowance for doubtful debts Purchases Rent received Returns inward Returns outward Sales Commission received Inventory as at 1 April 2009 Telephone expenses Wages & salaries expenses Water & electricity expenses 24,410 2,615 2,800

224,000 6,260 73,800 5,600 11,225 16,100 2,532 1,050 14,690 2,400 250,000 80,000 53,200 49,050 11,100 14,620 2,520 4,750 326,500 8,624 3,780 2,520 555,790 2,500 42,200 2,700 78,482 5,860 947,929 947,929

Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL

AC/APR 2010/ACC418

Additional information: 1. Depreciation for the year were as follows: Motor Van 15% on cost per annum Office Equipment 20% on cost per annum Inventory on 31 March 2010 was valued at RM30.600. Only 50% of the interest on loan had been paid for the year. Delivering charges incurred amounted RM4.500 (to send goods to his out-station customers) had been paid during the year, but no record had been made in the cash book. Debts of RM360 are to be written off as bad debt and the allowance for doubtful debts is to be adjusted to 12% of outstanding debtors. Allowance for discount allowable is to be adjusted to 10%. Rent received amounting to RM500 is for April 2010. A telephone bill for RM3.900 was not yet paid. Commission of RM3.500 is still not yet received. The owner had taken RM810 worth of the goods for his daughter's party and had drawn out RM4,000 from the business bank account for his personal use. No record had been made in the books. On 1 April 2009, TC Trading had invested RM 18,000 in Saham Amanah Raya Bhd. As at 31 March 2010, 4% dividend was received. None of the transactions had been recorded in the books.

2. 3. 4.

5.

6. 7. 8. 9.

10.

Required: a. Prepare an Income Statement for the year ended 31 March 2010. (17 marks) b. Prepare the Balance Sheet as at 31 March 2010. (13 marks) (Total: 30 marks)

Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL QUESTION 2

AC/APR 2010/ACC418

Kulim Furniture Enterprise has two lorries on 30 June 2009, which are used to deliver furniture to its customers in the area of Kulim. The details of the lorries are as follows: Date of purchase 1 August 2007 10 September 2008 Registration No KDA 2424 KDC 3504 Cost (RM) 65,700 58,000

The business also acquired a factory building on 1 July 2007 at a cost of RM350.000. All payments for the assets purchased were made by cheque. The depreciation policy of the business are as follows: i. ii. Depreciation on lorry is provided at 10% per annum on cost. Depreciation on building is provided at 5% per annum on book value.

The depreciation for both non-current assets was provided based on yearly basis. The accounting period of the business ends on 30 June each year. Required: Prepare the following accounts for the years ended 30 June 2008 and 30 June 2009: a) b) c) Lorries Account (3 marks) Building Account (2 marks) Accumulated Depreciation account for the lorries (4 marks) d) Accumulated Depreciation account for the building (5 marks) e) The Extract Balance Sheet as at 30 June 2009 (2 marks) (Total: 16 marks)

Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL QUESTION 3 A.

AC/APR 2010/ACC418

YY Enterprise sold goods on credit to most of its customers. Below are the information of its account receivable as at 1 January 2009: Account Receivables Allowance for Doubtful Debts Allowance for Discount Allowable RM210,660 RM 12,870 RM 6,000

During the year ended 31 December 2009, the following transactions were still not recorded in the books: i) ii) iii) iv) v) vi) Goods sold on credit amounting to RM50,000. Bad Debts of RM3.000 written off. Discount allowed given to trade debtor amounting to RM500. Debtors made payment by cheque amounting to RM 10,000. To provide an allowance of doubtful debt at 10% of net Account Receivables, To provide an allowance of discount allowable at 5% of net Account Receivables.

Required: Prepare the following accounts for the year ended 31 December 2009: a) Account Receivable (3 marks) b) Allowance for Doubtful Debt Account (1.5 marks) c) Allowance for Discount Allowable Account (2 marks) d) Extract Income Statement for the year ended 31 December 2009 (2.5 marks) e) Extract Balance Sheet as at 31 December 2009. (2 marks) B. Show the journal entries to record the following transactions: a) b) c) d) e) f) g) Interest on fixed deposit of RM500 was received in advance. The salaries expenses still outstanding amounted to RM1,000. Prepaid selling expenses was RM400. Dividend from Amanah Saham Nasional not yet received totaling RM600. Cash drawing of RM80 has yet to be recorded. Bad debts to be written off from the Account Receivable was RM 150. The current depreciation of office equipment amounted to RM400. (7 marks) (Total: 18 marks) CONFIDENTIAL

Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL QUESTION 4

AC/APR 2010/ACC418

Encik Ali, owner of Ally's Kopitiam had maintained his Bank Reconciliation statement since he started his business in year 2007. He hired a clerk, Cik Tina to help him in preparing the monthly reconciliation statement. Encik Ali has prepared his own cash book to record his daily business transactions. The details of receipts and payments for the month of March are as follows: Cash Book (Bank Column Only) RM Details Date 2010, March Encik Samad 800 1 Balance b/f Tn'T Trading 18,090 5 Purchases Cash Sales 15,000 7 Electricity Pretty Gift Shop 16,950 10 Telephone bills Bijak Book Store 4,600 16 Rates & rent Jamy Enterprise 15,000 18 Brothers' Niaga Vege Trading 7,500 22 Water bill 29 Staffs salaries 30 Balance c/f 77,940 Details

Date 2010, March 5 8 12 18 26 29 31

Cheque No.

RM

136099 136100 136101 136102 136103 136104 136105

17,550 10,800 2,610 1,800 4,410 9,000 900 17,820 13,050 77,940

On 7 April 2010, Encik Ali received his monthly bank statement from Bank Islam Berhad for the year ended 31 March 2010 containing the following details: Bank Islam Berhad Bank Statement As At 31 March 2010 Debit (RM) Credit (RM)

Date 2010, March 1 2 5 6 8 11 13 13 17 18 22 26 28 30 31

Particulars

Balance (RM)

Balance b/f Deposit - Cheque No. PBB 06571 Deposit - Cheque No. MBB 87654 Cheque No. 136099 Deposit - Cheque No. RHB 66542 Deposit - Cheque No. MBB 77825 Cheque No. 136101 Cheque No. 136100 Deposit - Cheque No. MBB 22553 Cheque No. 136102 Direct debit Cheque No. 136104 Bank charge Standing order Credit transfer

4,950 800 10,800 18,090 15,000 1,800 2,610 16,950 4,140 180 900 100 918 1,800

(17,550) DR (12,600) DR (11,800) DR (22,600) DR (4,510) DR 10,490 CR 8,690 CR 6,080 CR 23,030 CR 18,890 CR 18,710 CR 17,810 CR 17,710 CR 16,792 CR 18,592 CR

Additional information: i. Cheque No. PBB 06571 amounted RM4.950 was omitted from the cash book, ii. Cheque numbered 136102 was wrongly recorded by the bank. The correct amount is RM4.410.
Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL Required: Prepare: a)

AC/APR 2010/ACC418

The adjusted cash book for the Month of March 2010. (6 marks)

b)

The Bank Reconciliation Statement as at 31 March 2010. (9 marks) (Total: 15 marks)

QUESTION 5 Below are the financial statements of Roslan Enterprise: Income Statement for the year ended 31 December 2009 RM RM Sales 215,000 Less: Return inwards 15,000 200,000 Less: Cost of goods sold Opening inventory 60,000 Purchases 86,500 146,500 Less: Closing inventory (35,000) 111,500 Gross Profit 88,500 (55,000) Less: Expenses 33,500 Net Profit Balance Sheet as at 31 December 2009 RM Non-Current Assets at book value Current assets: Bank Account Receivables Inventories Owner's Equity: Capital Add: Net Profit Less: Drawings Long term liabilities: Loan from Sabah Bank Current liabilities: Creditors Accrual expenses
> Hak Cipta Universiti Teknologi MARA

RM 101,600

38,000 26,000 35,000

99,000 200,600

140,900 33,500 (20,000)

154,400

34,500

9,200 2,500

11,700 200,600 CONFIDENTIAL

CONFIDENTIAL Required: a) Calculate the following ratios: Gross profit ratio Net profit ratio Current ratio Acid test ratio

10

AC/APR 2010/ACC418

(6 marks) b) Given below are the average ratios of the competitors in the same industry: Gross profit ratio Net profit ratio Current Ratio Acid test ratio Required: Compare and comment on the ability of Roslan Enterprise to generate profit as compared to its competitors in the same industry. (2 marks) Compare and comment on the ability of Roslan Enterprise to pay debts in future as compared to its competitors in the same industry. (2 marks) (Total: 10 marks)

30% 25% 7:1 6:1

END OF QUESTION PAPER

Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL