Question 1

Motor Vehicles
Date Details RM Date Details RM
2017
1 Jan Van A 2400
Van B 2400
1 July Van C 2800

Provision of Depreciation
Date Details RM Date Details RM
2017
31 Dec Van A 480
Van B 480
Van C 280

Depreciation of each van:

Van A= RM 2400 x 0.2 = RM 480
Van B= RM 2400 x 0.2 = RM 480
Van C= RM 2800 x 0.2 x 6/12 months = RM 280

Provision of accumulated depreciation

Date Details RM Date Details RM
2017
31 Dec Van A 480
Van B 480
Van C 280
Question 2
A. What is the meaning of depreciation.
Depreciation is a reduction in the value of an asset over time. Value of an asset will
be reduce by the time goes longer.

B. Give three reasons why depreciation may occur.

 Usage rights. A fixed asset may actually be a right to use something (such as
software or a database) for a certain period of time. If so, its life span terminates
when the usage rights expire, so depreciation must be completed by the end of the
usage period.
 Inefficiency/obsolescence. Some equipment will be rendered obsolete by
more efficient equipment, which reduces the usability of the original equipment.
 Wear and tear. Any asset will gradually break down over a certain usage
period, as parts wear out and need to be replaced. Eventually, the asset can no
longer be repaired, and must be disposed of.

C. Name two methods of depreciation

- Straight line method
- Reducing balance method

D. In what way do you think the concept of consistency applies for depreciation?
The concept of consistency applies for depreciation so that it is able to achieve
compatibility from one accounting period to another.
For example, if depreciation is charged according to a particular method it should be
followed year after year for the purpose of comparison.

E. If depreciation was omitted, what effects would this have on the final accounts?
If depreciation is omitted on final account it will overstate the profit. Failing to
show depreciation overstates the profit of the organization, and causes cash flow
problems when the depreciated item is required to be replaced. By overstating the
profit, the organization is also liable for additional tax payments.
Question 3
Capital expenditures are for fixed assets, which are expected to be productive assets
for a long period of time.
.Example of capital expenditure are:

 Buildings (including subsequent costs that extend the useful life of a building)
 Computer equipment
 Office equipment
 Furniture and fixtures (including the cost of furniture that is aggregated and
treated as a single unit, such as a group of desks)
 Intangible assets (such as a purchased taxi license or a patent)
 Land (including the cost of upgrading the land, such as the cost of an
irrigation system or a parking lot)
 Machinery (including the costs required to bring the equipment to its intended
location and for its intended use)
 Software
 Vehicles

Revenue expenditures are for costs that are related to specific revenue transaction or
operating periods, such as the cost of goods sold or repairs and maintenance expense
Examples of revenue expenditure are:
 Cost of merchandise bought for resale.
 Cost of raw-material and stores purchased for manufacturing process.
 Wages paid for manufacture of products for sale.
 Depreciation of assets used in business.
 Interest on loan borrowed for business.
 Freight and cartage paid on merchandise purchased.
 Cost of oil to lubricate machinery.
 Service to vehicle.
 Question 4
Labor cost = RM 10.50 x 8 hours = RM 80
12.20 x 6㎡ = RM 73.20
Variable cost = RM 80 + RM 73.20 = RM157.2
Selling Price = RM 200

A) the contribution per unit towards bird feeding table.

Contribution per unit= Selling Price-Variable Cost Per unit
= RM 200 - RM 157.20
= RM 42.80
B) number of units and value that would have to be sold for break even
Break Even Point (unit) = Fixed cost / contribution per unit
= 25200 / RM 42.80
= 589 units
Break even point (value) = BEP(unit) x selling price
= 589 x RM 200
= RM117800

C) Calculate the profit earned if lovely furniture Berhad sells 5700 units.
Sales(unit) = (Fixed cost+profit) / contribution per unit
=(25200 + 5700) / 42.80
= 722 units
Sales(Value) = 722 units x RM 200
=RM144400
D) 4 assumptions which are made in break even analysis.
 The total costs may be classified into fixed and variable costs. It ignores
semi-variable cost.
 The price of the product is assumed to be constant.
 The fixed costs remain constant over the volume under consideration.
 The price of the product is assumed to be constant.
Question 5
Sinaran Sdn. Bhd.
Cash Budget for each of the three months of June, July
amd August
June July August
Recipt
(+) Cash sales 7,000 6,000 5,000
(+)Account recieveable 54,000 45,000 63,000

(=)Total Cash Receive 61000 51000 68000

Payment
Wage incurred 12,000 10,000 9,000
material purchases 30,000 25,000 35,000
overhead 12,000 16,000 14,000
commission 2,250 3,150 2,700
loan 25,000 0 0
delivery 0 15,000 0
machine 0 0 15,000
total payment 81250 69150 75700
Cash surplus/defict -20250 -18150 -7700
Opening Balance 22,000 1,750 -16,400
Closing Balance 1,750 -16,400 -24,100
Rahim Enterprise
Statement of Profit and Loss for the year ended 30 December 2017
RM RM RM
Sales 18600
Less: Returns inwards (440)
Net Sales 18160
Less: Cost of goods sold
Opening Inventories 3776
Purchases 11556
Less: Returns outwards (355)
11201
Add: Carriage inwards 234 11435
15211
Less: Closing Inventories (0) (15211)
Gross Profit 2949
Less: Expenditure
Carriage outwards 326
Salaries and wages 2447
Motor vehicle expenses 664
Rent 576
Sundry expenses 1202 (5215)
Net Loss (2266)

Rahim Enterprise
Statement of Financial Position as at 31 December 2017
RM RM RM
Non-current assets
Motor Vehicles 2400
Fixtures and fittings 600 3000
Current assets
Inventories (Closing) 0
Debtor 4577
Cash at Bank 3876
Cash in hand 120 8573
11573
Equity
Capital as at 1 January 2017 12844
Minus: Loss (2266)
10578
Less: Drawings (2050)
Capital as at 31 December 2017 8528
Current liabilities
Creditors 3045