Phase Test Revision

QUESTION 1

a) Classify the following whether they belong to Current Assets or Current Liabilities:

i) Inventories
ii) Accounts Receivables
iii) Accounts Payables
iv) Pre-Paid Expenses
v) Advanced Income
vi) Cash
vii) Bank
viii) Accrued Expenses
ix) Accrued Income
x) Short-term Borrowings
xi) Loan interest unpaid
xii) Taxation unpaid

b) Explain the terms Current Asset and Current Liabilities and their relation
towards working capital calculation.

Cash RM77,000
Bank RM233,000
Receivables RM265,500
Prepayments (Expenses) RM4,200
Accruals (Expenses) RM7,000
Inventory (Closing) RM100,600
Payables RM87,500

c) Calculate the Working Capital with the details above.

d) Calculate the Current Ratio and Quick Ratio with the details above.
QUESTION 2

A company is planning to place RM750,000 as a deposit to gain interest.

a) Calculate the interest amount per annum if the target bank offers a 3.5% simple interest.

b) Calculate the amount accumulated in 4 years’ time if the deposit was made to the bank as
per a).

c) Calculate the amount in the savings account in year 4 if the interest was compounded
quarterly at 2.3% per annum.

d) Calculate the amount of interest accumulated up to year 4 following the compounding in

c).

e) Calculate the difference in interest earned between both offers.

QUESTION 3

a) Define and briefly explain the terms Equity Finance and Debt Finance.

b) List 4 advantages of using Equity Finance.

c) List 4 advantages of using Debt Finance

d) List the 4 important items under Working Capital Management.