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UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE : INTRODUCTION TO FINANCIAL ACCOUNTING

AND REPORTING / ACCOUNTING / FINANCIAL
ACCOUNTING I / ACCOUNTING I / INTRODUCTION
TO ACCOUNTING I / FINANCIAL ACCOUNTING /
PRINCIPLES OF ACCOUNTING 1
COURSE CODE : ACC106/100/105/107/111/114/115/150
EXAMINATION : FEBRUARY 2021
TIME : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of two (2) parts: PART A (10 Questions)
PART B (4 Questions)

2. Answer ALL questions from all two (2) parts in the Google Form provided.

3. Answer ALL questions in English.

4. READ:
i. I declare on my honour that I answer all questions on my own without copying and/or
cheating.
ii. I also declare that I do not communicate with the other students throughout the test
period.
iii. I agree to be given 0 mark if I was found guilty for any of these.

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

This examination paper consists of 15 printed pages
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PART A

This part consists of TEN (10) multiple - choice questions. Choose the most suitable
answer.

1. The ______________ need accounting information to enable them to assess the

ability of the business to pay their debts on time.

A. Shareholders
B. Employees
C. Creditors
D. Consumers

2. The following are the examples of source documents in accounting cycle EXCEPT:

A. Invoices
B. Journals
C. Receipts
D. Credit notes

3. The ____________ concept states that the business and the owner of the business
are two separate entities. Therefore, we only record the transactions that affect the
business and not the owner of the business except when the owner withdraws assets
for personal use and introduces capital to start the business.

A. Economic entity
B. Materiality
C. Historical cost concept
D. Comparability

4. Which of the following business entities have a limited liability characteristic?

i. Jamaluddin Enterprise
ii. Ali & Partners Enterprise
iii. AA Sdn Bhd
iv. Berani Bhd

A. i and ii
B. i and iii
C. iii and iv
D. ii and iv

5. The customers of Kedai Runcit Mewah should be classified as _____________ users

of accounting information.

A. Internal
B. External
C. Half internal and half external
D. None of the above

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6. Which of the following is INCORRECT classification?

A. Motor vehicle – non current asset

B. Closing inventory – current asset
C. Bank overdraft – non current liability
D. Account payable – current liability

7. The following are the examples of sales transactions EXCEPT:

A. Sold goods on credit to Ali amounted to RM200.

B. Sold goods by cash to Odah RM100.
C. Sold goods to Afiq amounted to RM400, received cash RM150 immediately
and the balance will be paid next month.
D. Sold second hand furniture on credit to Razak amounted to RM50.

8. Which of the following transactions will NOT be recorded in Cash Receipts Journal?

A. Sold goods by cash RM250 to Ain.

B. Received RM300 cash from Aliah for the settlement of the debt.
C. The owner introduced RM10,000 cash in hand to start the business.
D. Paid RM150 cash for the insurance expense for the month.

9. All of the following items appear in Statement of Profit or Loss as expenses EXCEPT:

A. Utility
B. Depreciation
C. Interest on fixed deposit
D. Maintenance cost

10. Bought office equipment RM2,000 from Cinta Trading. Cheque valued RM500 was
paid immediately and the balance will be paid next week. Identify the effects
(increase, decrease) for this transaction.

A. Increase Asset, decrease Asset

B. Increase Asset, decrease Liability, decrease Asset
C. Increase Asset, decrease Asset, increase Liability
D. Increase Asset, increase Liability,
(Total: 10 marks)

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PART B

QUESTION 1

a. State whether the following statements are TRUE or FALSE.

1. Under the going concern concept, it is assumed that the business will
continue in operating in the foreseeable future.
2. Accrual concept states that revenues are recognized when cash is received
and expenses are recognized when cash is paid.
3. An amount is material when it changes the user’s judgment about the
financial condition of an entity. This statement relates to neutrality concept.
4. The consistency concept means the accounting methods once adopted must
be applied consistently in the future.
5. A mini supermarket owner sells all kind of groceries. She records all the
purchases and sales in the accounting books in terms of Ringgit Malaysia
(RM). This is in accordance with the money measurement concept.
(5 marks)

b. This section consists of i. EIGHT (8) multiple-choice questions and ii. FOUR (4) fill-
in-the-blank questions.

i. Choose the most suitable answer.

1. The following items are example of expenses EXCEPT

A. Utility bills
B. Carriage inwards
C. Commission received
D. Wages and salaries

2. Which of the following is NOT a current asset?

A. Cash in hand
B. Account payable
C. Account receivable
D. Inventories

3. Which of the following expanded accounting equation is FALSE?

A. Assets + Expenses – Revenue = Capital + Liabilities

B. Capital + Revenue + Liabilities = Assets + Expenses
C. Capital + Revenue – Expenses = Assets – Liabilities
D. Capital + Expenses + Assets = Liabilities + Revenue

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4. Which of the following is a current liability?

A. Mortgage
B. Long term loan
C. Account receivable
D. Bank overdraft

5. The effects of acquiring office furniture on credit from Chai Furniture Sdn Bhd
are __________.

A. Increase in both asset and liability

B. Increase in asset and decrease in liability
C. Increase in liability and decrease in asset
D. Decrease in both asset and liability

6. Which of the following accounting equation is NOT correct?

A. Assets – Capital = Liabilities

B. Capital = Assets – Liabilities
C. Assets + Liabilities = Capital
D. Capital + Liabilities = Assets

7. Which of the following is considered as revenue?

A. Carriage outward
B. Carriage inwards
C. Rent received
D. Rent expenses

8. Owner's equity will decrease when:

A. The business obtains net profit

B. The business incurs net loss
C. There is an additional capital from the owner
D. The owner pays his personal debts using his own pocket money
(8 marks)

ii. Choose the most suitable answer from the table below.
(Note: Use small letter only. No symbol or number allowed. For example: non current
asset)

decrease liabilities non current assets

current assets current liability increase

1. __________ is an amount owing by the business that is expected to be paid

within one year.

2. __________ are assets bought not for resale but to be used in the running of
the business.

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3. According to basic accounting equation, when owner’s equity is constant, any

decrease in asset will cause a/an __________ in liability.

4. A balance sheet or statement of financial position is an accounting report that

shows all the assets, __________ and owner’s equity of an organisation at a
particular time.
(4 marks)
(Total: 17 marks)

QUESTION 2

Mei Ling is the owner of ML Restaurant, one of the famous Chinese restaurants in Penang.
Below are the transactions of her business for the month of August 2020:

August 2020 Transactions

3 Mei Ling contributed cash to the business bank amounted to RM50,000.
5 Purchased goods worth RM3,900 on credit from Ah Seng Trading.
10 Made cash sales to Rubin RM280.
16 Sold goods worth RM2,800 on credit to City Sdn Bhd.
21 Purchased goods from Winnie Frozen Food by cheque amounted to
RM950.
25 Returned defective goods worth RM800 to Ah Seng Trading.
26 Received cheque RM2,700 from City Sdn Bhd for the amount due after
deducting RM100 cash discount.
28 Mei Ling took goods RM220 and cash RM300 for her son’s birthday party.
30 Paid electricity bill amounted to RM590 through online banking.
31 Purchased motor car costing RM46,000 from ZAS Motor Trading on credit.

Based on the information given above, answer a. and b. below.

a. This section consists of FIFTEEN (15) multiple-choice questions. Choose the most
suitable answer.

1. On 3 August 2020, Mei Ling contributed cash to the business bank amounted
to RM50,000.

A. Increase Asset, Increase Owner’s Equity

B. Decrease Asset, Decrease Owner’s Equity
C. Increase Asset, Decrease Owner’s Equity
D. Decrease Asset, Increase Owner’s Equity

2. On 5 August 2020, purchased goods worth RM3,900 on credit from Ah Seng

Trading.

A. Decrease Expense, Decrease Liability

B. Increase Expense, Increase Liability
C. Increase Expense, Decrease Liability
D. Decrease Expense, Increase Liability

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3. On 10 August 2020, made cash sales to Rubin RM280.

A. Decrease Asset, Decrease Revenue

B. Increase Asset, Decrease Revenue
C. Decrease Asset, Increase Revenue
D. Increase Asset, Increase Revenue

4. On 16 August 2020, sold goods worth RM2,800 on credit to City Sdn Bhd.

A. Decrease Revenue, Decrease Asset

B. Increase Revenue, Increase Asset
C. Increase Revenue, Decrease Asset
D. Decrease Revenue, Increase Asset

5. On 21 August 2020, purchased goods from Winnie Frozen Food by cheque

amounted to RM950.

A. Decrease Expense, Decrease Asset

B. Increase Expense, Decrease Asset
C. Decrease Expense, Increase Asset
D. Increase Expense, Increase Liability

6. On 25 August 2020, returned defective goods worth RM800 to Ah Seng

Trading.

A. Decrease Expense, Decrease Liability

B. Increase Expense, Increase Liability
C. Increase Expense, Decrease Liability
D. Decrease Expense, Increase Liability

7. On 26 August 2020, received cheque RM2,700 from City Sdn Bhd for the
amount due after deducting RM100 cash discount.

A. Decrease Asset, Decrease Asset, Decrease Revenue

B. Increase Asset, Increase Asset, Increase Revenue
C. Increase Asset, Decrease Asset, Decrease Revenue
D. Increase Asset, Increase Asset, Decrease Revenue

8. On 3 August 2020, Mei Ling contributed cash to the business bank amounted
to RM50,000.

A. Debit Bank, Credit Capital

B. Debit Capital, Credit Cash
C. Debit Cash, Credit Capital
D. Debit Capital, Credit Bank

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9. On 5 August 2020, purchased goods worth RM3,900 on credit from Ah Seng

Trading.

A. Debit Account Payable - Ah Seng Trading, Credit Purchases

B. Debit Purchases, Credit Account Payable - Ah Seng Trading
C. Debit Purchases, Credit Account Receivable - Ah Seng Trading
D. Debit Account Receivable - Ah Seng Trading, Credit Purchases

10. On 10 August 2020, made cash sales to Rubin RM280.

A. Debit Sales, Credit Account Receivable - Rubin

B. Debit Sales, Credit Cash RM280
C. Debit Account Receivable – Rubin, Credit Sales
D. Debit Cash, Credit Sales

11. On 16 August 2020, sold goods worth RM2,800 on credit to City Sdn Bhd.

A. Debit Account Payable – City Sdn Bhd, Credit Sales

B. Debit Account Receivable – City Sdn Bhd, Credit Sales
C. Debit Sales, Credit Account Payable – City Sdn Bhd
D. Debit Sales, Credit Account Receivable – City Sdn Bhd

12. On 21 August 2020, purchased goods from Winnie Frozen Food by cheque
amounted to RM950.

A. Debit Account Payable – Winnie Frozen Food, Credit Purchases

B. Debit Purchases, Credit Bank
C. Debit Bank, Credit Purchases
D. Debit Purchases, Credit Account Payable – Winnie Frozen Food

13. On 25 August 2020, returned defective goods worth RM800 to Ah Seng

Trading.

A. Debit Account Payable - Ah Seng, Credit Purchases Return

B. Debit Account Payable - Ah Seng, Credit Sales Return
C. Debit Purchases Return, Credit Account Payable - Ah Seng
D. Debit Sales Return, Credit Account Payable - Ah Seng

14. On 26 August 2020, received cheque RM2,700 from City Sdn Bhd for the
amount due after deducting RM100 cash discount.

A. Debit Bank, Debit Purchase Discount, Credit Account Receivable –

City Sdn Bhd
B. Debit Bank, Debit Account Receivable – City Sdn Bhd, Credit Sales
Discount
C. Debit Bank, Debit Sales Discount, Credit Account Receivable – City
Sdn Bhd
D. Debit Account Receivable – City Sdn Bhd, Credit Bank, Credit
Purchases Discount

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15. On 30 August 2020, paid electricity bill amounted to RM590 through online
banking.

A. Debit Cash, Credit Electricity Bill

B. Debit Electricity Bill, Credit Bank
C. Debit Bank, Credit Electricity Bill
D. Debit Electricity Bill, Credit Cash
(15 marks)

b. This section consists of i. FIVE (5) True of False questions and ii. FIVE (5) multiple-
choice questions.

i. State whether the following statements are True or False regarding the appropriate
books of prime entry for the transactions.

1. On 3 August 2020, Mei Ling contributed cash to the business bank amounted
to RM50,000. - Cash Payment Journal
2. On 5 August 2020, purchased goods worth 3,900 on credit from Ah Seng
Trading. - Purchases Journal
3. On 10 August 2020, made cash sales to Rubin RM280. - Sales Journal
4. On 16 August 2020, sold goods worth RM2,800 on credit to City Sdn Bhd. -
Sales Journal
5. On 21 August 2020, purchased goods from Winnie Frozen Food by cheque
amounted to RM950. - Purchases Journal
(5 marks)

ii. Choose the most suitable answer.

1. On 25 August 2020, returned defective goods worth RM800 to Ah Seng

Trading.

A. Sales Return Journal

B. Purchase Return Journal
C. General Journal
D. Cash Receipt Journal

2. On 26 August 2020, received cheque RM2,700 from City Sdn Bhd for the
amount due after deducting RM100 cash discount.

A. Sales Return Journal

B. Purchase Return Journal
C. General Journal
D. Cash Receipt Journal

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3. On 28 August 2020, Mei Ling took goods RM220 and cash RM300 for her
son’s birthday party.

i. General Journal
ii. Cash Receipt Journal
iii. Cash Payment Journal
iv. Purchase Journal

A. i and ii
B. i and iii
C. i and iv
D. iii and iv

4. On 30 August 2020, paid electricity bill amounted to RM590 through online

banking.

A. General Journal
B. Cash Receipt Journal
C. Cash Payment Journal
D. Purchase Journal

5. On 31 August 2020, purchased motor car costing RM46,000 from ZAS Motor
Trading on credit.

A. General Journal
B. Sales Journal
C. Purchases Journal
D. Cash Payment Journal
(5 marks)
(Total: 25 marks)

QUESTION 3

The following balances were extracted from the books of VE Enterprise on 31 December
2020.

RM RM
Capital 50,000
Motor vehicles 90,000
Fixtures and fittings 48,500
Inventory as at 1 January 2020 32,200
Allowance for doubtful debts as at 1January 2020 500
Accumulated depreciation as of 1 January 2020:
Motor Vehicles 16,000
Fixtures and fittings 10,400
3% fixed deposit 30,000
4% bank loan (taken on 1 July 2020) 50,000
Sales 199,070
Purchases 73,500

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Sales returns 2,050

Purchase returns 2,120
Sales discounts 2,550
Purchase discounts 2,830
Account receivables 37,700
Account payables 48,650
Carriage expense 3,570
Interest on fixed deposit received 450
Commission received 2,600
Salaries and wages 16,100
Electricity expenses 5,400
Custom duty on purchase 3,000
Miscellaneous expenses 450
Maintenance 3,300
Drawing 2,300
Cash in hand 6,800
Cash at bank 25,200
382,620 382,620

Additional information:

i. Inventory as at 31 December 2020 is RM18,180.

ii. Depreciation charged for the year ended 31 December 2020 are as follows:

a. Motor vehicles - 10% on the cost

b. Fixtures and fittings - 5% on the carrying amount

iii. The electricity expenses are overpaid by RM100.

iv. 40% of the carriage expenses is for carriage inwards.

v. The interest on fixed deposit of RM450 is not yet received.

vi. An interest on bank loan is still outstanding and accrued.

vii. The miscellaneous expenses of RM350 are still accrued.

viii. The owner took goods worth RM700 for personal use.

ix. During the year, one of the customers fell into bankruptcy and unable to pay his debt
of RM300. The business decided to write off the amount as bad debt. An allowance
for doubtful debt is to be provided at 1% on the remaining account receivables.

Required:

Prepare Statement of Profit or Loss for year ended 31 December 2020 and Statement of
Financial Position as at 31 December 2020 for VE Enterprise.

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Based on the financial statements prepared above, fill in the blanks with the correct answer:
(Note: Use number only. No RM, space, comma, and decimal point allowed. For example: 10000 or -
10000)

Items RM
1. Net sales (1 mark)
2. Opening inventory (1 mark)
3. Net purchases (1 mark)
4. Carriage inwards (1 mark)
5. Closing inventory (1 mark)
6. Cost of sales (1 mark)
7. Gross profit / -loss (1 mark)
8. Interest on fixed deposit (1 mark)
9. Total other income (1 mark)
10. Carriage outwards (1 mark)
11. Depreciation expense for motor vehicles (1 mark)
12. Depreciation expense for equipment (1 mark)
13. Interest on bank loan (1 mark)
14. Miscellaneous expenses (1 mark)
15. Doubtful debt (1 mark)
16. Total operating expenses (1 mark)
17. Net profit / -loss (1 mark)
18. Accumulated depreciation for motor vehicles (1 mark)
19. Carrying amount of motor vehicles (1 mark)
20. Accumulated depreciation for fixtures and fittings (1 mark)
21. Carrying amount of fixtures and fittings (1 mark)
22. Total non-current assets (1 mark)
23. Account receivables (1 mark)
24. Allowance for doubtful debt (1 mark)
25. Interest on fixed deposit not yet received (1 mark)
26. Prepaid electricity expenses (1 mark)
27. Total current assets (1 mark)
28. Drawings (1 mark)
29. Total non-current liabilities (1 mark)
30. Accrued interest on bank loan (1 mark)
31. Accrued miscellaneous expenses (1 mark)
32. Total current liabilities (1 mark)
33. Total equity and liabilities (1 mark)
(Total: 33 marks)

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QUESTION 4

Membara Enterprise is involved in the food processing industry. The following was extracted
from the financial statements of Membara Enterprise for the year ended 31 December 2020:

RM RM
Opening inventory 35,000 Net sales 400,000
Closing inventory 45,000 Cost of sales 160,000
Current assets 100,000 Net profit 100,000
Total assets 500,000

Additional information:

1. Accounts receivable is 40% of current assets.

2. All sales were made on credit.
3. Current ratio is 2:1.
4. Assuming that there are 365 days in a year.

Required:

Based on the information given above, compute the following items:

(Note: Use number only. No RM, space, and comma allowed. Round off to one decimal point only.
For example: 10000.1 or -10000.1)

Items
1. Current liabilities RM_____ (1 mark)
2. Gross profit RM_____ (1 mark)
3. Gross profit margin _____% (1 mark)
4. Net profit margin _____% (1 mark)
5. Average inventory RM_____ (1 mark)
6. Inventory turnover ratio _____times (1 mark)
7. Accounts receivable RM_____ (1 mark)
8. Average collection period _____days (1 mark)

Based on the information given above, choose the most correct answer for the following
questions:

9. _____ can be used to analyze the business’s ability to repay its current liabilities
using its liquid asset.

A. Net profit margin

B. Average collection period
C. Current ratio
D. Quick ratio

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10. Which one of these statements best explains the current ratio of 2:1?

A. The business has RM2 of non-current assets to repay RM1 of its non-current
liabilities.
B. The business has RM2 of non-current assets to repay RM1 of its current
liabilities.
C. The business has RM2 of current assets to repay RM1 of its non-current
liabilities.
D. The business has RM2 of current assets to repay RM1 of its current liabilities.
(1 mark)

11. _____ is calculated by dividing the net profit by sales and multiply the result by 100.

A. Return on investment
B. Net profit margin
C. Gross profit margin
D. Inventory turnover ratio

12. Membara Enterprise’s competitors, which are Berjaya Trading and Gemilang
Enterprise, reported a net profit margin of 30% and 40%, respectively. By comparing
Membara Enterprise and its competitors, which of the following statements is
correct?

A. Membara Enterprise has a lower net profit margin as compared to Berjaya

Trading.
B. Membara Enterprise has a higher net profit margin as compared to Gemilang
Enterprise.
C. Membara Enterprise is reporting a similar net profit margin as compared to
Gemilang Enterprise.
D. Membara Enterprise is the most profitable among the three businesses.

13. _____ ratio gives an idea of how fast the goods are being sold.

A. Inventory turnover ratio

B. Average collection period
C. Net profit margin
D. Quick ratio

14. The _____ the inventory turnover ratio, the better it is for the business because it
indicates how fast the goods are being sold.

A. Static
B. Higher
C. Lower
D. None of the above

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15. If debts are not collected on time, the business may not have enough _____
resources to operate.

A. Human
B. Time
C. Cash
D. Inventory
(Total: 15 marks)

END OF QUESTION PAPER

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