1.

0 Question 1 (CLO 1)

2 external users of accounting

External users are those outside of the organization. They make decision about the organization such as:

Investors
Investor need to know the amount paid such as dividend and profitability to the shareholders before
them buying the share of certain company. Shareholders holding shares in a company might want to
choose whether to buy more shares or dispose the shares they have.

Creditors
Suppliers and bankers who want to know if they should cover credit to the business, how much to
extend and for how long. They will evaluate the ability of the business and repay the loan

2.0 Question 2 (CLO1)

Historical cost
Historical cost is the amount that is originally paid to obtain the asset and may be different from the
current market value of the asset.  Assume, for example, that an herbal medicine company purchases a
piece of land for growing herbs on it, paying RM25, 000 in cash. The company will enter RM25, 000 as
the cost of the land in its accounting records. In a wealthy real estate market, the fair market value of
the land five years later might be RM35, 000. Although the market price of the land has significantly
increased, the amount entered in the balance sheet and other accounting records would continue
unchanged at the cost of RM25, 000.

Revenue Recognition
The revenue recognition principle states that one should only record revenue when it has been
earned, not when the related cash is collected. For example, a cleaning service completes the
cleaning of a company's office for its standard fee of RM100. It can recognize the revenue
immediately upon completion of the cleaning, even if it does not expect payment from the
customer for several weeks.
 3.0 Question 3 (CLO 1)
Transactio
Assets = liabilities + owners’ Equity
n
furniture
office Motor Account
Apr-19 cash + + & + = + capital
equipment Vehicle Payables
fittings
1 41,000.00                   41,000.00
bal. 41,000.00                   41,000.00
2 (500.00) + 500.00                
bal. 40,500.00 + 500.00         =     41,000.00
(2,500.00
5 + 5,000.00         = 2,500.00    
)
bal. 38,000.00 + 5,500.00         = 2,500.00 + 41,000.00
6         1,900.00       1,900.00    
bal. 38,000.00 + 5,500.00 + 1,900.00     = 4,400.00 + 41,000.00
(700.00)
7 (700.00)                  
Rental
bal. 37,300.00 + 5,500.00 + 1,900.00     = 4,400.00 + 40,300.00
(5,250.00
8         + 5,250.00        
)
bal. 32,050.00 + 5,500.00 + 1,900.00 + 5,250.00 = 4,400.00 + 40,300.00
(200.00)
15 (200.00)             =     Telephone
Expenses
bal. 31,850.00 + 5,500.00 + 1,900.00 + 5,250.00 = 4,400.00 + 40,100.00
(1,500.00 (1,500.00)
20             =    
) Drawings
bal. 30,350.00 + 5,500.00 + 1,900.00 + 5,250.00 = 4,400.00 + 38,600.00
(1,900.00 (1,900.00
21             =    
) )
bal. 28,450.00 + 5,500.00 + 1,900.00 + 5,250.00 = 2,500.00 + 38,600.00
2,300.00
22 2,300.00             =    
Revenues
bal. 30,750.00 + 5,500.00 + 1,900.00 + 5,250.00 = 2,500.00 + 40,900.00