CONFIDENTIAL 1 AC/NOV 2021/ACC117/106

UNIVERSITI TEKNOLOGI MARA

TEST 1

COURSE : INTRODUCTION TO FINANCIAL ACCOUNTING /

INTRODUCTION TO FINANCIAL ACCOUNTING
AND REPORTING
COURSE CODE : ACC117/106
EXAMINATION : NOVEMBER 2021
TIME : 1 HOUR AND 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 (a) & (b))

2. Answer ALL questions from all THREE (3) parts.

3. Answer ALL questions in English.

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

This examination paper consists of 5 printed pages

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PART A

This part consists of TEN (10) True / False questions. Choose the most correct
answer.

No. Question True False

1. External users are the groups outside of the business entity who
use the information to make decisions about the business entity.
2. One of the objectives of accounting is to provide information about
the personal assets and liabilities of the business owner.
3. Recording of the business transaction in a systematic way is
called bookkeeping.
4. Matahari Berhad is a type of public limited company.
5. Relevance is the characteristic whereby the information generated
by an accounting system should impact the decision-making of
someone using the information.
6. To make sure that the financial statements prepared is faithfully
represented, it must be easily understood by all type of users.
7. The historical cost concept is the accounting concept that requires
assets and services plus any resulting liabilities to be taken into
the accounting records at cost.
8. Comparability implies that financial information prepared must be
free from bias.
9. Interest paid on bank loan would be classified in the Statement of
Financial Position as a liability.
10. In the double entry system, total of credit entries will be higher
than total of debit entries.
(Total: 10 marks)

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PART B

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

1. Which of the following forms of business ownership is owned, managed, and

controlled by an individual who is the recipient of all profits and bearer of all risks?

A. Sole Proprietorship
B. Partnership
C. Private Company
D. Public Company

2. The final process flow in accounting is:

A. Recording
B. Summarizing
C. Classifying
D. Communicating

3. Internal users of accounting information are:

A. Creditors
B. Potential investors
C. Managers
D. Consumer groups

4. The complete process of accounting is called:

A. Journalizing
B. Posting
C. Summary
D. Accounting cycle

5. The concept that concerns with the significance of currency used when dealing with
economics events and agreeable by both parties is known as:

A. Going concern concept

B. Money measurement concept
C. Economic entity concept
D. Relevance concept

6. Which concept is associated with the assumption that the business will continue to
carry out its objectives and commitments in the future with no intention to liquidate?

A. Timeliness concept
B. Verifiability concept
C. Going concern concept
D. Historical cost concept

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7. “If a company issues its financial statements a year after its accounting period, users
of financial statements would find it difficult to determine how well the company is
doing at present”.

Which qualitative characteristic of accounting information that is reflected from the

above statement?

A. Timeliness
B. Faithful representation
C. Comparability
D. Understandability

8. The building acquired by the owner of a business for his personal purpose, was not
recorded in the books of the business. Which accounting concept did it follow?

A. Relevance concept
B. Monetary concept
C. Historical cost concept
D. Economic entity concept

9. At the end of an accounting period, the business has RM100,000 of total assets and
RM50,000 of total liabilities. Revenue during the period was RM20,000 and expenses
were RM30,000. Determine owner’s equity at the end of the period using the
expanded accounting equation.

A. RM20,000
B. RM50,000
C. RM60,000
D. RM40,000

10. In the double entry transaction, a debit is used to record:

A. Increase in both assets and liabilities accounts

B. Decrease in both expenses and owner’s equity accounts
C. Decrease in both revenues and assets accounts
D. Increase in both assets and expenses accounts
(Total:10 marks)

PART C

QUESTION 1

Glory Enterprise is a sole-proprietorship business of health-care products in Alor Gajah. The

business was set up on 1 January 2020. The following transactions occurred during the
month of October 2021:

October Transactions
1 Paid RM350 for utility expenses by cheque.
1 Used business cash of RM100 to pay for owner’s home electricity bill.

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3 The owner further injected RM10,000 into the business bank account.

7 Purchased a van worth RM50,000 from Bintang Used Cars. Paid 10% of the price
by cheque to settle part of the invoice. The remaining balance will be paid in the
next month.

9 Issued cheque amounted to RM4,000 to Arfa Bhd to settle the last month’s credit
purchase.

15 Delivered goods worth RM800 to Beta Trading. The customer needs to make full
payment within the next 30 days.

16 Purchased goods worth RM3,000 from Glam Bhd by credit.

18 Received cash amounted to RM300 for commission revenue.

19 Issued credit note to Beta Trading for RM150 for defective goods returned.

21 Purchased a computer amounted to RM4,000 from Techno Bhd by cheque.

22 Returned goods amounted to RM250 to Glam Bhd due to wrong specification.

24 Made cash sales to Alora Enterprise amounted to RM500.

25 Issued cheque to Glam Berhad for full settlement for the amount owed and
received RM100 discount being early settlement.

30 Issued cheque amounted to RM1,200 for salary expenses.

Required:

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)
(Use the format given below to answer the above questions)
Date a. Effects b. Journal Entry
Increase Decrease Debit Credit

(Total: 30 marks)

END OF QUESTION PAPER

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