CONFIDENTIAL AC/DEC2021/ACC106/117

UNIVERSITI TEKNOLOGI MARA

TEST 1

COURSE : INTRODUCTION TO FINANCIAL ACCOUNTING

COURSE CODE : ACC106 / ACC117

DATE : 3 DECEMBER 2021

TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of THREE (3) parts: PART A (10 Questions)
PART B (10 Questions)
PART C (1 Question)

2. Answer ALL questions from all three (3) parts in the Answer Sheet provided.

3. Answer ALL questions in English.

4. Please submit your HANDWRITTEN answers in ONE (1) pdf file.

5. 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 6 printed pages
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PART A

This part consists of 10 true or false questions. State whether the following statements are TRUE
or FALSE.

1. Bookkeeping involves the process of identifying, measuring, recording and communicating

the economic events of an organization.
(1 mark)

2. A company is a business entity formed under the Companies Act 2016 which operates as
an artificial person that exists apart from its owners.
(1 mark)

3. Statement of Financial Position reports the profitability of a business during a specific

accounting period such as a month, a quarter or a year.
(1 mark)

4. Investor need accounting information to help them to decide whether to approve or not the
loan application applied by the business.
(1 mark)

5. Qualitative characteristics of the financial statement, represented by two fundamental and

four enhancing characteristics.
(1 mark)

6. The money measurement concept stresses on the usage of money in the measurement
of all business transactions.
(1 mark)

7. In going concern concept, all transactions of a business should be recorded at their original
cost.
(1 mark)

8. Information is considered relevant when it is able to influence the decisions of the

accounting information users.
(1 mark)

9. Owner’s equity of a business entity will decrease when goods are taken by the owner for
his personal use.
(1 mark)

10. When recording an accounting transaction under the double-entry system, there must only
be two accounts affected by any transaction.
(1 mark)
(Total: 10 marks)

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PART B

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

1. All of the following statements describe accounting except

A. financial reports help the investors to make investment decision.

B. accounting helps to measure business activities, process transaction into financial
reports.
C. accounting information cannot be made available to the public.
D. accounting is also known as the language of business.
(1 mark)

2. __________ is an example of internal user.

A. Customer
B. Supplier
C. Government
D. Employee
(1 mark)

3. The accounting cycle begins with the

A. analysis of business transactions.

B. preparation of ledger accounts.
C. preparation of trial balance.
D. preparation of financial statements.
(1 mark)

4. A form of business organizations that has limited liabilities and the books of accounts must
be audited is

A. company.
B. partnership.
C. sole proprietorship.
D. none of the above.
(1 mark)

5. Financial information contributes towards wise and accurate decision making by the
stakeholders. Thus, it is very important for a company to provide a high quality of financial
reports and avoid any falsification or misrepresentation of information.

The suitable qualitative characteristic for the above statement is

A. relevance.
B. comparability.
C. faithful representation.
D. verifiability.
(1 mark)

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6. The same accounting standards and policies must be applied from one period to another
and from one region to another. It is very important as it allow the users to compare a set
of financial statements with those of prior periods and those of other companies.

The qualitative characteristic that best explain the statement is

A. verifiability.
B. comparability.
C. relevance.
D. understandability.
(1 mark)

7. Under __________, a business is expected to continue its operation for a foreseeable

future.

A. money measurement.
B. going concern.
C. historical costs.
D. business entity / economic entity.
(1 mark)

8. Mr. Hamid, the owner of Hamid Enterprise, took RM5,000 from the business bank account
to pay for his personal loan. This transaction will be recorded as drawing in the business
account. The accounting concept that has been followed is

A. money measurement.
B. business entity / economic entity.
C. going concern.
D. historical cost.
(1 mark)

9. On 1 February 2021, Falisa Bhd bought a delivery van from Macasa Motor worth
RM45,000 of which RM10,000 has been paid by cheque and the outstanding amount will
be paid later. The effect for the transaction would be

A. Increase in asset, decrease in asset

B. Increase in asset, decrease in asset, decrease in liability
C. Increase in asset, increase in liability
D. Increase in asset, decrease in asset, increase in liability
(1 mark)

10. On 5 March 2021, Falisa Bhd paid RM35,000 cash to settle the outstanding amount owed
to Macasa Motor for purchasing delivery van. The double entry for the transaction is

A. Debit delivery van; Credit cash

B. Debit account payable – Macasa Motor; Credit bank
C. Debit account payable – Macasa Motor; Credit cash
D. Debit delivery van; Credit account payable – Macasa Motor
(1 mark)
(Total: 10 marks)

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PART C

QUESTION 1

Naufal Trading started a hardware business in 3 March 2015. The following are the transactions
of Naufal Trading for the month of November 2021:

Date Transactions
November
1 The owner injects additional fund of cash RM20,000 into the business.
5 Bought a display racks RM15,000 by cheque.
8 Purchased hardware tools on credit from Juma Enterprise RM5,000.
17 Sold goods to customer RM350 by cash.
18 Received goods returned by a customer RM50 and payment made by cash.
19 Paid all the amount owing to Juma Enterprise RM4,900 by cheque and received
discount.
20 The owner took cash for his friend RM200.
21 Purchase machinery using a loan from Maybank Finance RM15,000.
22 Sold hardware tools on credit RM2,500 to Amol Sdn Bhd.
23 Paid salaries amounting to RM2,000 by cash.
24 Issue credit note to Amol Sdn Bhd for goods returned amounting to RM200.
25 Amol Sdn Bhd paid the amount owing by cheque and received a discount of
RM100.
26 Received dividends from ASB amounting to RM400 by cheque.
27 The owner paid business advertising bill using his own money amounting to
RM500.

Required:

Using the format given below, answer the following questions:

Example: January 30 Paid RM1,500 for water and electricity by cheque.

Date a. Effects b. Journal Entry

Increase Decrease Debit Credit

January 30 Expenses Asset Water and Bank

electricity

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a. Illustrate the effects (increase or decrease) of asset, liability, owner's equity, income and
expense of the above transactions.
(15 marks)

b. Show the journal entry (debit or credit) of the above transactions.

(15 marks)
(Total: 30 marks)

END OF QUESTION PAPER