Universiti Teknologi Mara Final Examination: Confidential AC/APR 2007/FAR100/FAR110/ FAC100

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AC/APR 2007/FAR100/FAR110/ FAC100
UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION
COURSE COURSE CODE EXAMINATION TIME
: : : :
FINANCIAL ACCOUNTING 1/INTRODUCTION TO ACCOUNTING FAR100/FAR110/FAC100 APRIL 2007 3 HOURS
INSTRUCTIONS TO CANDIDATES 1. This question paper consists of three (3) parts: PART A (10 Questions) PART B (2 Questions) PART C (3 Questions)
2.
Answer ALL questions from all three (3) parts. i) ii) iii) Answer PART A in the Objective Answer Sheet. Answer PART B in the Answer Booklet. Answer PART C in the Answer Booklet. Start each answer on a new page.
3.
Do not bring any material into the examination room unless permission is given by the invigilator. Please check to make sure that this examination pack consists of: i) ii) iii) the Question Paper an Answer Booklet - provided by the Faculty an Objective Answer Sheet - provided by the Faculty
4.
DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 11 printed pages
Hak Cipta Universiti Teknologi MARA
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PART A This section consists of 10 multiple-choice questions. Choose the most suitable answer and shade the corresponding alphabet representing the answer in the multiple choice answer sheet provided. 1. Which of the following is NOT part of accounting definition: a. b. c. d. Recording Classifying Concluding Summarizing (1 mark) 2. Which of the following changes will NOT occur as a result of a business transaction in the bookkeeping records? a. b. c. d. Increase Increase Increase Increase asset and increase liability asset and increase capital capital and increase liability capital and decrease liability (1 mark) 3. The adjustment for depreciation is an example of a. b. c. d. recognizing an accrued expense . apportioning costs between two or more periods. apportioning revenues between two or more periods. recognizing an unrecorded revenue. (1 mark) 4. Which statement is NOT true about Perpetual Inventory System. a. b. c. d. It is usually used by firms selling goods that have a high individual unit value. It is a relatively easy task to maintain records of the cost of each unit of goods sold. It is a method that provide close control over the actual goods on hand by showing exactly what goods should be on hand. It allows the owner to determine cost of goods sold at the end of an accounting period. (1 mark) .
5.
Chan's bookkeeper has posted an invoice for motor repairs to the motor vehicles account at cost. What term is used to describe this type of error? a. b. c. d. Error Error Error Error of of of of omission commission transposition principle (1 mark)
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6.
A stock turnover of 3 times means: a. b. c. d. on average the business able to increase its stock 3 times higher than last accounting period. on average the business able to replace its stock 3 times in that accounting period. on average the business able to reduce its stock 3 times higher than last accounting period. on average the business able to collect debt from debtors 3 times in that accounting period. (1 mark)
7.
Which of the following statements are TRUE about accounting concepts: i. ii. iii. iv. A business continues in existence for the foreseeable future - Going Concern Concept Related revenues and expenses should be matched with each other Accruals/Matching Concept Income should not be recognized until it is reasonably certain of receiving Prudence Concept Similar items should receive a similar accounting treatment - Materiality Concept i, ii and iii i and ii ii and iii All of the above (1 mark)
a. b. c. d.
8.
The Policy of Thuna Restaurant is to keep petty cash float of RM1.000 and will be reimbursed monthly. For the month of July, the petty cashier has paid telephone expense of RM120, repair of air condition in the restaurant of RM380 and electricity expense of RM200. The amount to be reimbursed would be a. b. c. d. RM700 RM1,000 RM500 RM300 (2 marks)
9.
Prior to recording the adjusting entries, revenues exceed expenses by RM70,000. The adjusting entries are accrued wages of RM2.000 and depreciation expense of RM5.000. Net income for the year would be . a. b. c. d. RM63.000 RM77.000 RM67.000 None of the above (2 marks)
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10.
Given the following information, calculate the value of the business capital. Bank Debtors Stock Prepaid expenses Fixed assets/ Non-current assets Creditors Prepaid revenues a. b. c. d. RM17,400 RM12.400 RM10,300 RM20.300 (2 marks) (Total: 13 marks) RM4.000 RM300 RM 1,000 RM500 RM15,000 RM2.800 RM600
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PARTB QUESTION 1 The Trading, Profit and Loss Account is used to measure the accounting profit of a business for a particular accounting period. You are required to explain any three (3) purposes of calculating the accounting profit. (3 marks) Briefly explain the terms below: Credit note Debit note Invoice (3 marks) Briefly explain the differences between a bad debt and a doubtful debt and state clearly how we should treat them in the Income Statement and Balance Sheet. (4 marks) (Total: 10 marks)
II.
iii.
QUESTION 2 a. Hadif is the owner of a business selling toys. The business uses periodic inventory system to record the inventories. As an Accounts Assistant you are required to record the following transactions using the format given below: Example: Paid RM350 cash for wages Assets Decrease cash RM350 Expenses Increase wages RM350 Liabilities Capital Revenues
1.
Hadif started business with Cash RM15,000, Premises RM80.000 and Motor Van RM25.000. Bought office equipment from Casa Impian Enterprise worth RM20,000 of which RM5.000 has been paid by cash and the balance will be paid later. Purchase of toys from Idaman Trading RM8.000 and paid by cheque. Made cash sales of RM3.000 and credit sales of RM7.800.
2.
3. 4.
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5.
The following amounts were outstanding at the end of the accounting period: i. ii. Electricity and water RM700 Rent RM580
6.
Hadif received RM1.400 cash from Madihah for renting out part the business premises. Debtors amounted to RM300 were found to be bad. (10 marks)
7.
b.
Calculate the value of the missing items below:
Assets (RM) 102,000 78,000 27,400

IV.
Liabilities (RM) 27,000 24,000
Capital (RM)
Drawings (RM) 7,500
Revenue (RM) 34,000 22,500 9,000 41,800
Expenses (RM) 21,000
55,000 20,000
5,600 1,200 15,000
12,500 34,800
88,000
120,000
(4 marks) (Tota I: 14 marks)
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PARTC QUESTION 1
The following Trial Balance was extracted from the books of Arissa Enterprise, a sole trader, as at 31 December 2006. Arissa Enterprise Trial Balance as at 31 December 2006 Particulars Capital Shop Premises Fixtures and Fittings Trade debtors and Trade creditors Purchases and Sales Cash Bank Discounts Returns Stock (1 January 2006) Freight (for purchase of goods) Insurance (for purchase of goods) Carriage outwards 10% Loan from SME Bank Fixed Deposit with BCB Bad debts Rates Salaries Water and electricity Drawings 6% Loan to Misha Interest on Loan to Misha Interest on Fixed Deposit with BCB Provision for depreciation - Shop Premises Provision for depreciation - Fixtures and Fittings Provision for doubtful debts Provision for discount allowable DR (RM) 65,000 43,000 30,000 35,800 28,000 40,000 4,200 3,800 28,200 5,400 970 9,250 35,000 750 1,050 3,500 880 1,250 6,000 460 1,400 9,750 12,900 450 270 342,050 CR (RM) 116,540
27,500 53,080
6,400 4,300
109,000
342,050 The following adjustments need to be considered: 1. 2. Stock as at 31 December 2006 was valued at RM30,200.
Included in the interest on loan to Misha is an amount of RM100 which should be received next accounting period. A credit note of RM320 issued to Batrissa (a customer) has not been recorded yet.
3.
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4.
Trisha, a debtor whose debts was previously written off as bad, suddenly settled her account in full by cheque amounting to RM280. Provision for doubtful debts should be increased by RM250 and RM290 should be provided as provision for discount allowable to debtors who may qualify for them. Loan from SME Bank was taken on 1 October 2006. No interest has been paid on this loan at the end of the accounting period. Only half year's interest was received during the year on the 8% Fixed Deposit with BCB Bank. Salaries of RM1,500 were still unpaid at the end of the accounting period. Insurance on purchase of goods amounting to RM170 is meant for the next accounting period. Depreciation is to be provided as follows: i. ii. Shop Premises Fixtures and Fittings 5% on book value 10% on cost
5.
6.
7.
8. 9.
10.
Required: a. Trading, Profit and Loss Account (Income Statement) for the year ended 31 December 2006. (16 marks) Balance Sheet as at that date. (12 marks) Note: i. ii. Calculate to the nearest ringgit Format: Vertical Presentation (Total: 28 marks)
b.
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QUESTION 2
Puan Seri Balkis is the owner of Batek Designer since year 2003. She has no proper knowledge of accounting. All this while, she just makes sure that she has surplus cash. One day while checking records of her business, she realized that the record of cash book kept by her did not tally with the bank statement received for that month. She was unhappy and asked you to help her in this matter. For the month of January 2007 Puan Seri Balkis has provided the following records of cash book and the bank statement received from Affin Islamic Bank. Cash Book (bank Column) Particulars RM Date Particulars Velvet Enterprise 500 January 1 Balance b/d Sales Felix Mari Marsha Milan Sales Anding Inang Cash Cash Sales Balance c/d 250 200 850 650 480 550 505 505 20,880 25,370 1 5 13 17 18 29 Purchases Arfa Enterprise Purchases Utilities bills Nizarman Sdn Bhd Senikraf Sdn Bhd
Date January 5 10 15 18 20 23 25 27 30 31
RM 22,000 2,000 300 500 250 110 210
25,370
Date January 1 1 5 5 10 13 15 17 18 19 23 25 25 27 27 28 29 30
Bank statement as at 31 January 2007 Particulars Debit (RM) Credit (RM) 22,000 Opening balance Cheque cleared 2,000 500 Cheque deposited Cheque cleared 300 Cheque deposited 250 Cheque cleared 500 Cheque deposited 200 Cheque cleared 250 Cheque deposited 350 Cheque returned 200 Cheque deposited 780 Dividends 360 Cheque deposited 550 Cheque deposited 505 Credit transfer 305 Standing order 210 Bank charges 55 Direct debit 100
Balance (RM) 22,000 CR 20,000 CR 20,500 CR 20,200 CR 19,950 CR 19,450 CR 19,650 CR 19,400 CR 19,750 CR 19,550 CR 20,330 CR 20,690 CR 21,240 CR 21,745 CR 22,050 CR 21,840 CR 21,785 CR 21,685 CR
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10
Additional information: i. The opening balance of cash book was wrongly recorded as credit balance. It should be recorded as debit balance. The bank had wrongly debited the cheque deposited on 10 January 2007 amounting to RM250. On 18 January 2007, the bank had wrongly recorded the cheque RM850 deposited as RM350. On 23 January 2007 the business recorded receipts from Anding Inang RM480 instead of RM780.
ii.
iii.
iv.
Required: a. Update the Cash Book (bank column) for the month of January 2007. (9 marks) b. Prepare a bank reconciliation statement as at 31 January 2007. (6 marks) (Total: 15 marks)
QUESTION 3 Below is the trial balance as at 31 March 2007 of Alia who runs a florist. DR (RM) Capital Bank Cash Stock 1 April 2006 Debtors & Creditors Premise Motor Vehicles Return Inwards and Outwards Salaries Water & Electricity General Expenses Commission Received Insurance Purchases & Sales 81,250 10,550 38,000 60,000 130,000 82,500 20,000 120,000 26,000 6,450 24,000 179,250 778,000 CR (RM) 251,900
29,450
4,150
2,500 490,000 778,000
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Additional information: 1. 2. Stock as at 31 March 2007 was valued at RM25.000. Accrued insurance and accrued commission received as at 31 March 2007 is RM4.000 and RM2.000 respectively. Industry average: Gross profit ratio Net profit ratio Current ratio Acid test ratio Stock turnover ratio Required: a. Calculate the following ratios for the business: i. ii. iii. iv. v. Gross Profit Ratio Net Profit Ratio Current Ratio Acid Test Ratio Stock Turnover Ratio (12 marks) b. Compare and comment your findings with industry average. (5 marks) c. If everything remained unchanged, but, cost of goods sold increased by 15%, calculate the percentage of increase or decrease on net profit ratio of the business. (3 marks) (Total: 20 marks) 30% 15% 2.5% 1.5% 8 times.
3.
END OF QUESTION PAPER
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AC/APR 2007/FAR100/FAR110/ FAC100