CONFIDENTIAL 1 AC/DEC 2021/ACC407

UNIVERSITI TEKNOLOGI MARA

COMMON TEST

COURSE : INTERMEDIATE FINANCIAL ACCOUNTING AND

REPORTING
COURSE CODE : ACC407
EXAMINATION : DECEMBER 2021
TIME : 2 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of TWO PARTS.

PART A: 30 Multi Choice Questions
PART B: 1 Structured Question

2. Answer the question in your own Answer Paper.

3. Write your FULL NAME, STUDENT ID and GROUP on top of the first page of your answer.

4. Please scan your answer and combine it into one single PDF file before submit.

5. Please rename your file with your FULL NAME_STUDENT ID_GROUP

6. Answer ALL questions in English.

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

This examination paper consists of 9 pages
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PART A

This part consists 30 multiple choice questions. Choose the most suitable answer.

1. Find the best three from the following regarding the purposes of accounting.

i. To increase the wealth of the business

ii. To provide financial information to the users
iii. To be used as a tool of performance evaluation
iv. To assist management in making decision

A. i, ii and iii
B. i, iii and iv
C. ii, iii and iv
D. I, ii and iv
(1 mark)

2. Indicate from the following which does NOT describe a partnership business.

A. Unlimited liability
B. The partners are liable for business debts.
C. Profit or loss is divided among partners.
D. The business is a legal entity distinct and separate from its owners.
(1 mark)

3. Give examples of internal users of accounting information.

A. Payables, suppliers and account manager

B. Receivables, consumers and marketing manager
C. Owners, managers and employees
D. Bankers, investors and government
(1 mark)

4. Match from the following the best characteristics of Public Companies.

i. Registered with the Companies Commission of Malaysia under Business

Registration Act 1956 & 1957
ii. Limited Liability
iii. Ownership must have a minimum of 1 and a maximum of 50 shareholders
iv. Profit will be paid to the shareholders in the form of dividends

A. i and iii
B. i and ii
C. ii and iv
D. iii and iv
(1 mark)

5. Alisa, as the owner of Alisa Café, purchased a box of roasted coffee amounted to
RM200 by cheque from the supplier named Radix Supplier Sdn Bhd.

Which of the following is the first step for Alisa to record the above transaction.
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A. To obtain the official receipt from Radix Supplier Sdn Bhd

B. To prepare the journal entry
C. To update the cash book
D. To post to the bank account
(1 mark)

6. Indicate a difference between accounting and bookkeeping in term of definition.

A. Classifying
B. Recording
C. Summarising
D. Interpreting
(1 mark)

7. From the legal point of view, the type of business organization where the business is
managed and controlled by several owners or by a board which consists of a few
owners is called

A. Sole proprietorship
B. Partnership
C. Private company
D. Public company
(1 mark)

8. The following statements about a sole proprietorship are true EXCEPT

A. It is a separate legal entity

B. The capital is contributed by the owner
C. The business liabilities are borne by the owner
D. No legal obligation to keep the books and prepare accounts
(1 mark)

9. The following is an external user of accounting information EXCEPT

A. Chief Executive Officer

B. Account receivable
C. Taxing Authorities
D. Account payable
(1 mark)

10. From the legal point of view, which of the following business organization conducts
its business separate from its owners, the owners receive dividends, the owners
have limited liability status and the ownership is between 1 to 50 owners.

A. Fun Grocer Enterprise

B. Ali & Partners, Chartered Accountants
C. Naza Motors Sdn Bhd
D. Telco Berhad
(1 mark)

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11. Layla, the owner of Star Boutique received RM12,000 by cheque from her customer,
Amina that previously bought come apparels from her on credit. What are the two
consequences that effect the accounting equation?

A. Asset increases and Asset decreases

B. Asset decreases and Capital increases
C. Asset decreases and liability increases
D. Asset increases and liability decreases
(Total: 1 mark)

12. The effect of purchasing a motor vehicle on credit are

A. asset and capital increased the same amount

B. asset and liability increased by the same amount
C. capital and liability increased by the same amount
D. asset, liability and capital increased by the same amount
(Total: 1 mark)

13. As at 30 November 2021, Pesona Bridal Enterprise has the following items in their
books of accounts.
Accounts RM
Motor Van 40,000
Fixed deposits 6,000
Inventories 10,000
Cash in hand 7,000
Account receivables 15,000
Fixtures and fittings 8,000
Account payables 11,000
Bank overdaft 8,000

Estimate the amount of capital.

A. RM19,000
B. RM86,000
C. RM67,000
D. RM105,000
(Total: 1 mark)

14. In accordance to the accounting equation, which of the following is TRUE.

A. Assets = RM45,678; Capital = RM11,111; Liability = RM34,567

B. Assets = RM45,000; Capital = RM32,000; Liability = RM12,400
C. Assets = RM21,200; Capital = RM10,000; Liability = RM11,000
D. Assets = RM46,333; Capital = RM33,000; Liability = RM13,331
(Total: 1 mark)

15. Two examples of non-current liabilities are

A. Fixed deposits and account payables

B. Franchises and bank overdraft
C. Accrued expenses and prepaid revenue
D. Long term loans and Mortgage on premises
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(Total: 1 mark)

16. The double entry system requires that each transaction must be recorded

A. in two journals
B. in two sets of books
C. in at least two different accounts
D. in a bank account and in cash account
(Total: 1 mark)

17. Sally is the owner of Perabot Jati Enterprise. On 28 November 2021, she bought five
wooden tables amounted to RM2,500 by cheque from Syarikat Kayu Asli Sdn Bhd.

The best double entry of this transaction is

A. Debit Furniture, Credit Bank

B. Debit Purchases, Credit Bank
C. Debit Expenses, Credit Cash
D. Debit Bank, Credit Syarikat Kayu Asli Sdn Bhd
(Total: 1 mark)

18. In a double entry system, a credit is used to record

A. increase in asset and expenses; decrease in liability, capital and revenue

B. increase in asset and revenue; decrease in liability and capital
C. increase in liability, capital and revenue; decrease in asset and expenses
D. increase in liability and capital; decrease in asset and revenue
(Total: 1 mark)

19. Fazley started a business by investing RM20,000 into the business bank account.
Illustrate the journal entries to suit the transaction.

A. Debit capital RM20,000, credit bank RM20,000

B. Debit bank RM20,000, credit capital RM20,000
C. Debit bank RM20,000, credit cash RM20,000
D. Debit cash RM20,000, credit bank RM20,000
(Total: 1 mark)

20. Due to wrong specification, Maju Enterprise returned the goods that previously
purchased on credit from Jaya Auto Enterprise amounted to RM1,000.

Which of the following is the journal entry to record the above transaction in the
books of accounts of Jaya Auto Enterprise?

A. Debit Account receivables account, Credit Return inwards account

B. Debit Return inwards accounts, Credit Account receivables account
C. Debit Account payables account, Credit Return outwards account
D. Debit Return Inwards account, Credit Sales account
(Total: 1 mark)

21. It is agreed by the management of Nescoco (Malaysia) Bhd to apply Malaysian

Ringgit (RM) currency in its financial reports. This is in line with
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A. going concern
B. monetary measurement
C. consistency
D. economic entity
(Total: 1 mark)

22. When Michelle, the owner of Love Bakery bought a new machine for her enterprise,
she did not record the initial purchase in the financial books. This situation goes
against

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

23. The auditor highlighted some financial matters to the management of Singa Bhd.
One of them is the significant cash outflows that occurred in previous financial
reporting period. This situation is pertaining to

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

24. Ananda transfer a total of RM50,000 cash into his business’ bank account. As a
result, the cash is now under the management of the said enterprise. This situation is
in line with

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

25. The following narrations are relevant with historical cost argument, EXCEPT

A. it is a practice of asset measurement at original cost

B. it may not be used as a basis of reviewing long term asset valuation results
C. it is in line with prudence principle under accounting practices
D. it may be measured against depreciation and impairment
(Total: 1 mark)

26. The following statements are correct under monetary measurement assumption,
EXCEPT

A. a business entity should record its’ accounting transactions under the terms of
local currency
B. it proposes the concept of measurability that transactions and events may be
measured in reliable monetary terms
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C. it is possible to objectively attribute the skills and competence of employees

as assets in monetary terms
D. it is permitted to monetarily accept purchased goodwill as an asset in the
balance sheet
(Total: 1 mark)

27. The following statements are relevant under economic entity concept, EXCEPT

A. an entity may be created to undertake a business operation

B. an owner’s personal financial transactions may be combined under one same
entity
C. a business entity may be recognized under a variety of forms – sole
proprietorship, partnership, or a corporation
D. the net worth of an entity may be evaluated by considering total assets
available against total liabilities
(Total: 1 mark)

28. Michael owns a bookstore and possess the following assets – shop premise,
company vehicle, Michael’s residential mortgage, computer equipment, and furniture
and fixtures. By applying the economic entity principle, which of the following is
relevant?

A. shop premise, company vehicle, computer equipment, furniture and fixtures

B. shop premise, residential mortgage, computer equipment, furniture and
fixtures
C. shop premise, residential mortgage, furniture and fixtures
D. computer equipment, residential mortgage, company vehicle, furniture and
fixtures
(Total: 1 mark)

29. The following statements are correct under going concern concept, EXCEPT

A. it implies that an entity may still operate in the foreseeable future

B. it is a going concern if no evidence shows the entity may cease in future
C. it implies that an entity may not be forced to shutdown and liquidate its assets
at extremely low costs
D. it means the business is not going to bankrupt in any case
(Total: 1 mark)

30. The following examples might be related with going concern situation, EXCEPT

A. Pine Bhd is in serious financial trouble and failed to commit on its obligations,
and then the government lent a bailout scheme in paying all the creditors
B. East Bhd closes a few number its branches due to weak cash flows
contribution
C. Senview Bhd is unable to make settle its creditors due on time due to weak
liquidity position
D. Hovr Bhd maintain its’ own financial records and not the shareholders’
(Total: 1 mark)

(Total: 30 marks)

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PART B

QUESTION 1

Encik Remy is the owner of Sejahtera Trading. The business is involving in selling variety of
furniture. The following transactions were carried out in the month of October 2021:

Date Transactions

Encik Remy started his business with RM30,000 cash and motor
October 1
vehicles worth of RM75,000.
Received invoice from Aiqea Berhad amounting RM20,000 for goods
2 purchased before deducting trade discount of 10%.

Paid RM200 cash for advertising charges to Panorama Magazine.

4

6 Sold goods to Sri Jaya Trading worth RM3,500 on credit.

7 Issued debit note to Aiqea Berhad for RM200 due to defective goods.

9 Encik Remy took goods worth RM300 for personal use.

Received cheque from Sri Jaya Trading for full settlement. Give cash
10 discount 2%.

15 Paid wages to workers amounting RM1,000 by cash.

A cash sales made to Encik Sahol worth RM1,000.

17

Purchased goods worth RM4,000 from Rancak Trading. Half was paid
20 by cheque and half will be settled in 30 days.

Issued credit note to Encik Sahol for goods returned of RM100. He

23 receives a cash refund from the business.

Encik Remy brought in additional cash into business amounting

25 RM10,000.

Sent a cheque to Rancak Trading for full settlement. Received cash

27 discount RM200.

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Required:

a. Illustrate the effects (increase or decrease) of assets, liability, owner’s equity,

income and expenses of the above transaction.
(15 marks)

b. Show the journal entries (debit and credit) of the above transactions.
(15 marks)

(Use the format given below to answer the above questions)

Example: Paid stationery by cash amounting RM20.

Date Accounting Effects (a) Journal entries (b)

Asset Expenses Liability Revenues Owner’s Debit Credit
Equity

Oct 1 Decrease Increase Stationery Cash

(Total: 30 marks)

END OF QUESTION PAPER

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