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UNIVERSITI SAINS MALAYSIA

SCHOOL OF MANAGEMENT
MID SEMESTER TEST
FINANCIAL ACCOUNTING (ATW111/153)
3 HOURS 2.00 – 5.00 PM 15 DECEMBER 2020
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Answer ALL questions:

Question 1

i. The purpose of accounting is to ___________________.

a. communicate information to interested users so that they can
make informed decisions
b. communicate non-financial information to interested users so that they can
make informed decisions
c. communicate financial and non-financial information to interested users so
that they can make informed decisions
d. communicate the findings of financial statements to interested users so that
they can make financial analysis.

ii. Which of the following statement is true?

a. Bookkeeping is recording all the business transaction and owner's own
transaction
b. Bookkeeping and accounting are one and the same since the bookkeeping
function is includes in accounting process
c. Bookkeeping deals with record-keeping and is one only aspect of accounting
d. None of the above

iii. Which of the following business has unlimited liability

a. Sole trader
b. Private limited company
c. Partnership
d. Public limited company

iv. Which accounting concept gives rise to the accounting equation? 

a. Historical concept
b. Going concern
c. Matching concept
d. Monetary concept

v. Which of the following phase in the accounting process comes first?

a. Interpreting
b. Communicating
c. Recording
d. Identifying
(5 marks)
Question 2

Initial Bike Shop uses the perpetual inventory system and had the following transactions
during the month of May:

May 3 Sold merchandise to a customer on credit for RM600, terms 2/10, n/30. The
cost of the merchandise sold was RM350.

May 6 Sold merchandise to a customer on credit for RM1,300, terms 2/10, n/30.
The cost of the merchandise sold was RM750.

May 8 The customer from May 3 returned merchandise with a selling price of
RM100. The cost of the merchandise returned was RM55.

May 15 The customer from May 6 paid the full amount due, less any appropriate
discounts earned.

May 31 The customer from May 3 paid the full amount due, less any appropriate
discounts earned.

Required:
Prepare the required journal entries that Initial Bike Shop must make to record these
transactions.
(15 marks)

Question 3

Venus Enterprise has the following information regarding to its inventory. Opening stock on
October 1 2020 comprised of 200 units at a total cost of RM120,000. Purchases and sales
during the month of October are as follows:

November Particulars Units Unit Cost

(RM)
3 Purchases 150 700
6 Sales 100 1,500
7 Purchases 200 500
10 Sales 150 1,300
14 Purchases 150 800
19 Sales 170 1,400
20 Purchases 120 1000
23 Sales 60 1,500
25 Purchases 60 1100
31 Sales 180 1,700

Required:
a. Compute the cost of ending inventory on October 31 using FIFO.
(12 marks)
b. Compute the gross profit on sales for the month of October.
(3 marks)
(TOTAL 15 MARKS)
Question 4

a. State THREE (3) importance of using cheque instead of cash when dealing with
business transaction.
(3 marks)

b. Chanteq Enterprise has appointed Ms Carmilla as its new accounts assistant. Upon
receiving the bank statement for the month of October 2020 from Al-Rijal Bank,
Carmilla found out that there were differences between the balance in the bank
statement and the balance in the business’s cash record (bank column) as shown
below:

Al-Rijal Bank Bhd

Bank Statement as at 31 October 2020
Date Particulars Cheque Debit Credit Balance
no. (RM) (RM) (RM)
Oct 1 Beginning balance 2,850
6 Cheque deposit 858360 500 3,350
8 Cheque deposit 765322 3,000 6,350
11 Cheque cleared 230311 2,680 3,670
16 Cheque deposit 555365 1,800 5,470
20 Cheque cleared 714589 5,400 70
22 Credit transfer 350 420
24 Cheque deposit 686300 220 640
26 Cheque deposit 410500 900 1,540
29 Standing order 800 740
30 Bank charges 170 570

Below are the cash records of Chanteq Enterprise for the month of October 2020:

Cash Receipt Journal (Bank Column)

Date Particulars Cheque no. Amount
(RM)
Oct 4 Sales 858360 500
6 Chill Trading 765322 3,000
10 Sales 555365 1,800
15 Commission received 410500 900
21 CTC Enterprise 653036 600
25 Sales 858366 750

Cash Payment Journal (Bank Column)

Date Particulars Cheque no. Amount
(RM)
Oct 8 Advertising 230311 2,860
13 Fateh Enterprise 230312 560
23 Farrel Trading 686300 220
26 Salaries 230313 5,500
27 Postage 230314 580
Additional information:
1. The business bank account on 30 September 2020 shows a debit balance of
RM2,850.
2. Payment for advertising (cheque no. 230311) was wrongly recorded by the
bank as RM2,680.
3. The former account assistant has wrongly recorded an amount received from a
debtor, Farrel Trading (cheque no. 686300) in the cash payment journal.
4. Al-Rijal Bank has confirmed that an entry in the statement (cheque no.
714589) does not belong to Chanteq Enterprise.

Required:
Prepare the bank reconciliation statement as at 31 October 2020.
(12 marks)
(TOTAL 15 MARKS)