ACC407

CHAPTER 1: INTRODUCTION TO ACCOUNTING

CHAPTER 2: INTRODUCTION TO CONCEPTUAL FRAMEWORK FOR FINANCIAL
REPORTING

QUESTION 1

Encik Musa, a sole trader started his business on 1 January 2022 under the name of Maju
Enterprise. The business sells a variety of sports equipment and accessories. He brought in cash
RM50,000 and a used motor van valued at RM5,000 for the business purposes. On 2 October
2022, Encik Musa bought and recorded furniture and office equipment at a cost of RM4,000 and
RM6,000 respectively.

Encik Musa attended his nephew’s wedding ceremony at Kuala Terengganu on 28 October 2022.
He took a hiking bag from the business to be given to his nephew as a wedding present and
recorded this transaction in the business books of accounts. The accounting year end of Maju
Enterprise is on 31 December each year. Encik Musa assumes that his business will continue to
operate and grow in the foreseeable future.

Required:

a. Briefly explain three (3) business characteristics possessed by Maju Enterprise.

(6 marks)

b. Briefly explain two (2) accounting assumptions and concepts that relate to Maju Enterprise.
(4 marks)
(Total: 10 marks)

QUESTION 1

Hannah, a pastry chef has started coffee and bakery business with her two good friends, Yeoh
and Ning, which was registered under the name " PASTRY HOUSE" (PH). PH offers a broad
range of coffee products and freshly homemade bakery and pastry products. They started the
business by investing a capital totalling RM150,000. A loan applied by PH from Bank Bumi was
approved amounting to RM180,000 with 5% interest per annum. The interest on loan is paid on
monthly basis by cash. RM55,000 of the loan was used to buy a delivery van.
The accounting year end of PH is on 31 December each year. PH assumes that the business
will continue to operate and grow in the foreseeable future.

Required:

a) State any six (6) characteristics possessed by the business set up above.
(6 marks)

b) Explain two (2) accounting concepts applied by PH.

(4 marks)
(Total: 10 marks)