COURSE CODE: ACC117/106/100

DECLARATION FORM OF GROUP ASSIGNMENT

Name of group leader and members: Student ID:

Group:

DECLARATION: We declare that the assignment here submitted is original and no part of this
assignment has been copied from other person's work except when due acknowledgement is
made in the text and all members of the group have read and checked all parts of the piece of work,
irrespective of whether they are contributed by individual members or all members as a group,
here submitted are original except for source material explicitly acknowledged.

Signature of group leader: Submission Date:

DISCLAIMER: A lecturer has a right not to mark this assignment if the above declaration has not
been signed. If the above declaration is found to be false, no mark will be rewarded for this
assignment.
 ACC117/106/100
GROUP PROJECT 2
(SEMESTER OCT 2022-FEB 2023)

PREPARED BY:

NAME STUDENT ID

GROUP:

PREPARED FOR:

DEADLINE OF SUBMISSION:
29 JANUARY 2023

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 INTRODUCTION TO FINANCIAL ACCOUNTING /
INTRODUCTION TO FINANCIALACCOUNTING AND REPORTING / ACCOUNTING
(ACC117 / ACC106 / ACC100)

GROUP PROJECT 2 (15%)

COURSE LEARNING OUTCOME:

This assignment is design to enhance students’ teamwork through analysing financial
statements using simple financial ratios for sole proprietorship business (C4).

INSTRUCTIONS TO ALL STUDENTS:

1. Form a group with a maximum of 4 members.

2. Answer all questions.

3. Submit the answers in a proper report format including the declaration and cover page
with the details required. Only the group leader needs to submit the assignment on
behalf of the group.

4. If the answers found similar or the same with the other group(s), a penalty will be
imposed on all groups involved.

5. The deadline for submission is on 29 January 2023.

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QUESTION
Study the following financial statements for two very similar enterprises owned by Puan Khairiah that
are located in the city center of Perak and then answer the questions which follow.
Statement of Profit or Loss for the year ended 31 December 20x9
FARMASI TAPAH FARMASI SERI ISKANDAR
RM RM RM RM
‘000 ‘000 ‘000 ‘000
Sales 2,880 5,320
Less: cost of sales (2,240) (3,664)
Gross profit 640 1,656

Less: expenses
Depreciation (35) (184)
Other expenses (509) (1,108)
Net profit 96 364

Statement of Financial Position as at 31 December 20x9

FARMASI FARMASI
TAPAH SERI ISKANDAR
RM RM
’000 ’000
Non-current assets
Shophouse at carrying value 72 320
Office equipment at carrying value 34 244
106 564

Current assets
Inventory 224 316
Accounts receivable 422 191
Prepaid expenses 2 -
Bank 6 36
760 1,107

Financed by:
Owner’s equity
Opening balance 334 460
Add: Net profit 96 364
Less: Drawings (112) (118)
318 706

Non-current liabilities 50 153

Current liabilities
Accounts payable 380 245
Accrued expenses 2 -
Short-term loan 10 3
760 1,107

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Additional information:
1. 10% of the sales were cash sales.
2. The net purchase incurred during the year were RM2,080,000 and RM3,700,000 for
Farmasi Tapah and Farmasi Seri Iskandar respectively.
3. Assume a year has 365 days.

Required:
a. Compute the following ratios for both businesses:

i. Current ratio
ii. Quick ratio
iii. Inventory turnover ratio
iv. Accounts receivable collection period
v. Gross profit margin
vi. Net profit margin

(30 marks)

b. Based on your above answer in (a):

i. Interpret each of the accounting ratios for both businesses.

(12 marks)

ii. State which business has difficulty in paying its short-term obligations
without using its inventory and give ONE (1) impact on business when it has
liquidity ratio less than 1.
(2 marks)

c. Identify which business seems to be the most efficient in using its capital to generate
the profit. Justify your opinion.
(6 marks)

(Total: 50 marks)