CONFIDENTIAL AC/FEB 2021/ACC406

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE : INTERMEDIATE FINANCIAL ACCOUNTING AND

REPORTING
COURSE CODE : ACC406
EXAMINATION : FEBRUARY 2021
TIME : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of two (2) parts. i) PART A (Multiple Choice Questions)
ii) PART B (Short Structure)

2. Answer ALL questions.

3. Answer ALL questions in English.

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

This examination paper consists of 14 printed page

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PART A

This part consists of 55 of multiple-choice questions. Choose the most suitable

answers.

1. Which of the followings are not the external users of financial information?

A. Managers of a business.
B. Creditors of a business.
C. Potential investors.
D. Government agencies such as Inland revenue board.
(1 mark)

2. The accounting process includes all of the following except __________.

A. identification of business transactions.

B. preparation of trial balance.
C. preparation of financial statements.
D. observation of business transactions.
(1 mark)

3. Which of the following types of business organisations have unlimited liability?

A. Private limited company and sole proprietorship.

B. Partnership and sole proprietorship.
C. Private limited company and partnership.
D. Private and public limited company.
(1 mark)

4. Accounting is best described as _________________.

A. recording all financial transactions systematically.

B. recording all production costs and profitability of a business.
C. classifying, recording, summarising and intrepreting all financial transactions of a
business.
D. recording all assets and liabilities of a business.
(1 mark)
5. What is the range number of owners in private limited company?

A. 1 - 50
B. 2 - 20
C. 2 - 50
D. 1 - No limit
(1 mark)

6. Which type of business organisation has the following characteristics:

▪ Owned by 2 to 20 persons
▪ Unlimited liability
▪ No legal obligation to prepare the financial statements

A. Sole proprietorship
B. Partnership
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C. Private limited company

D. Public limited company
(1 mark)
7. The going concern assumption assumes that ______________.

A. the business will be liquidated in the near future.

B. the business’s sole concern is to ensure the accuracy of the financial records.
C. the business will presents useful information in yearly basis.
D. the business will continue on long period of time to carry out its existing objective
and commitments.
(1 mark)

8. The accounting concept that states the recorded business activities should be kept
separated from the recorded activities of its owner is the ___________ concept.

A. comparability
B. economic entity
C. monetary measurement
D. neutrality
(1 mark)

9. “The transaction in bookkeeping is concerned only with those facts which can be
measured in monetary terms”. This is in line with the _______ concept.

A. going concern
B. comparability
C. consistency
D. money measurement
(1 mark)

10. The financial statements should not be prepared with the intention to influence certain
decisions. This is in accordance with the ________ concept.

A. consistency
B. comparability
C. going concern
D. neutrality
(1 mark)
11. The consistency concept states that ___________ .

A. a business should only record business transactions that can be stated in terms
of a currency.
B. a business should change its auditor from year to year.
C. the same accounting methods should be used from year to year.
D. a business should not change the owners of a business.
(1 mark)

12. Which of the following is true concerning comparability concept?

A. Business should record all relevant financial information whether it is favorable or

not favorable for users decision making.

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B. Users can carry out trend analysis and analyse whether the business’s
performance and position has improved across time.
C. Each business transaction has two aspects known as debit and credit.
D. Incomes and expenses incurred should be charged to the statement profit or loss
in the same accounting period.
(1 mark)
13. All of the following are classified as non-current assets except ________.

A. Fixed deposit
B. Stationeries
C. Patents
D. Office equipment
(1 mark)

14. Which of the following is true about carriage outwards?

A. The cost of carriage outwards is recorded in the Statement of Financial Position.

B. The cost of carriage outwards is part of the cost of goods sold.
C. Carriage outwards is recorded in the Statement of profit or Loss as operating
expenses.
D. Carriage outwards refers to the cost of transporting goods from a supplier to the
business.
(1 mark)

15. Which of the following is a current asset?

A. Office equipment
B. Bank overdraft
C. Account Receivable
D. Account payable
(1 mark)

16. Which of the following group belongs to liabilities?

A. Loan and accrued rental expenses, machinery.

B. Account payable, prepaid rental income and accrued utilities.
C. Motor vehicle, prepaid utilities and inventory.
D. Accrued uitilities, loan and accrued rental income .
(1 mark)
17. Which of the following accounting equation is true?

A. Asset + Liability + Revenue = Capital + Expenses

B. Liability + Capital = Assets – Expenses + Revenue
C. Assets – Liability = Capital + Revenue + Expense
D. Asset + Expense – Capital = Liability + Revenue
(1 mark)

18. On 1 January 2020, Mala started her business with cash of RM105,000 and a motor van
worth RM90,000. She also obtained RM250,000 15-year loan from ZZB Bank with 6%
annual interest. What is the total assets of her business?

A. RM460,000
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B. RM195,000
C. RM445,000
D. RM55,000
(1 mark)

19. Based on the following information, calculate the amount of total expenses:

Items RM
Capital 70,000
Revenue 50,000
Liability 60,000
Asset 140,000

A. RM20,000
B. RM30,000
C. RM40,000
D. RM10,000
(1 mark)

20. Which of the following is true about trial balance ?

A. A summary report of a business’s revenues, expenses and liabilities over a specific

time period.
B. A statement that shows the financial position of the business.
C. A statement of debit and credit balances taken out from all accounts.
D. A list of all assets, liabilities and owner’s equity of the business.
(1 mark)

21. Which of the following is true concerning cash discount on sale?

A. Debit sales, credit discount allowed

B. Debit discount allowed, credit sales
C. Debit sales, credit account receivable
D. Debit discount allowed, credit account receivable
(1 mark)

22. When additional machinery is bought by cash, it will ____________ .

A. Increase in assets and increase in liabilities

B. increase in assets and increase in capital
C. increase and decrease in assets at same time
D. decrease in assets and decrease in liabilities
(1 mark)

23. When recording an accounting transaction under the double entry system, ________.

A. there must only be two accounts affected by the transaction.

B. there must always be entries made on both side of the accounting equation.
C. the number of debit accounts must be equal to the number of credit accounts.
D. the amount of debits must be equal to the amount of credits.
(1 mark)

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24. The owner brought in additional cash of RM10,000 into his business . What are the
double entries for the transaction?

Debit Credit
A. Cash Bank
B. Cash Capital
C. Capital Cash
D. Drawings Capital
(1 mark)

25. What are the journal entries to record goods returned to the business by a credit
customer?

A. Debit sales, credit return outwards

B. Debit account payable, credit return outwards
C. Debit return Inwards, credit account receivable
D. Debit sales, credit return inwards
(1 mark)

Question 26-36 - Choose the most suitable answer(s) concerning the effects (increase
or decrease) on assets, liabilities, owner's equity, revenues or expenses for the
following business transactions

Moon Cycling Store is a business selling various types of bicycles and accessories. The
business also offers bicycle repair and maintenance services. This store is based in Melaka
and owned by Elmira. Given below are the business transactions for the month of September
2020.

26. Owner brought in a second hand lorry worth RM75,000 into the business.

A. Increase in assets, increase in expenses

B. Increase in assets, increase in owner’s equity
C. Increase in expenses, decrease in assets
D. Increase in expenses, increase in owner’s equity
(1 mark)

27. Purchased five (5) units of mountain bikes from Orbit Cycle worth RM10,500 on credit.

A. Increase in assets, increase in liabilities

B. Increase in assets, decrease in assets
C. Increase in expenses, decrease in assets
D. Increase in expenses, increase in liabilities
(1 mark)

28. One (1) units of mountain bike that previously purchased on credit was broken and
returned to Orbit Cycle.

A. Increase in assets, increase in expenses

B. Decrease in assets, decrease in liabilities
C. Decrease in liabilities, decrease in expenses
D. Decrease in owner equity, decrease in assets
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(1 mark)
29. Cash sales of cyclist shoes and helmet worth RM3,500.

A. Increase in assets, increase in revenues

B. Increase in assets, decrease in assets
C. Decrease in asset, increase in revenues
D. Decrease in expenses, increase in owner’s equity
(1 mark)

30. On 2 September 2020, issued an invoice of RM5,400 to Botanical Garden for bicycles
repair and maintenance services.

A. Increase in assets, decrease in revenues

B. Increase in assets, increase in revenues
C. Increase in liabilities, decrease in assets
D. Increase in assets, increase in liabilities
(1 mark)

31. Installed (five) 5 sets of stainless steel display rack worth RM4,500 from Wong Cabinet
Sdn. Bhd. and payment was made by cash.

A. Decrease in assets, decrease in expenses

B. Increase in assets, increase in liabilities
C. Increase in assets, decrease in expenses
D. Increase in assets, decrease in assets
(1 mark)

32. On 26 September 2020, received cheque of RM5,400 from Botanical Garden being full
settlement of services performed on 2 September 2020.

A. Decrease in expenses, decrease in liabilities

B. Increase in assets, decrease in expenses
C. Increase in assets, decrease in assets
D. Decrease in revenues, decrease in assets
(1 mark)

33. The owner, Elmira took one (1) unit of road bike and cycling accessories worth RM2,780
as a present for his son birthday.

A. Decrease in owner's equity, decrease in expenses

B. Decrease in owner's equity, increase in expenses
C. Increase in owner’s equity, decrease in assets
D. Decrease in assets, decrease in expenses
(1 mark)
34. Paid shop rental RM2,500 through an online fund transfer.

A. Increase in expenses, decrease in assets

B. Increase in assets, decrease in assets
C. Decrease in expenses, decrease in assets
D. Increase in expenses, increase in assets

(1 mark)
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35. The business took a loan from DDM Bank worth RM50,000.

A. Increase in assets, increase in owner’s equity

B. Increase in assets, increase in liabilities
C. Increase in assets, decrease in expenses
D. Increase in expenses, decrease in liabilities
(1 mark)
36. Paid interest on loan amounted to RM2,100 by cheque.

A. Increase in liabilities, decrease in assets

B. Decrease in expenses, decrease in assets
C. Decrease in assets, decrease in liabilities
D. Increase in expenses, decrease in assets

(1 mark)

Question 37-47 - Choose the most suitable answer(s) concerning the journal entry
(accounts to be debited and credited) for the business transactions.

The following transactions were extracted from the book of 98 Food Store for the month of
October 2020.

37. The owner, Sadiq brought in motor van worth RM55,000 into the business.

A. Debit motor van RM55,000, credit bank RM55,000

B. Debit bank RM55,000, credit motor van RM55,000
C. Debit motor van RM55,000, credit capital RM55,000
D. Debit capital RM55,000, credit motor van RM55,000
(1 mark)

38. Purchased four (4) units of large wooden rack worth RM2,700 from Dairy Cabinet and
paid by direct bank transfer.
A. Debit cash RM2,700, credit purchases RM2,700
B. Debit purchases RM2,700, credit bank RM2,700
C. Debit wooden rack RM2,700, credit bank RM2,700
D. Debit wooden rack RM2,700, credit cash RM2,700
(1 mark)

39. On 3 October 2020, purchased 100 cartons of fruit drinks from Yeo’s Trading worth
RM950 on credit .

A. Debit inventory RM950, credit purchase RM950

B. Debit purchase RM950, credit cash RM950
C. Debit inventory RM950, credit bank RM950
D. Debit purchase RM950, credit account payable RM950
(1 mark)

40. 10 cartons of defective fruit drinks worth RM250 were returned to account payable -
Yeo’s Trading.

A. Debit account payable RM250, credit return outwards RM250

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B. Debit account payable RM250, credit purchase RM250

C. Debit return inwards RM250, credit purchase RM250
D. Debit return outwards RM250, credit account payable RM250
(1 mark)

41. Received cash worth RM4,500 from Nurul Enterprise for the sales of 2,000 bottles of
soda.

A. Debit account receivable RM4,500, credit sales RM4,500

B. Debit inventory RM4,500, credit sales RM4,500
C. Debit cash RM4,500, credit sales RM4,500
D. Debit purchase RM4,500, credit account receivable RM4,500
(1 mark)

42. Paid RM1,200 cash to Ali Workshop for motor van repairs and maintenance.

A. Debit motor van RM1,200, credit cash RM1,200

B. Debit repairs and maintenance RM1,200, credit bank RM1,200
C. Debit expenses RM1,200, credit bank RM1,200
D. Debit repairs and maintenance RM1,200, credit cash RM1,200
(1 mark)

43. Paid transportation charges of RM1,230 cash to a carrier company for goods delivered
to customers.

A. Debit purchases RM230, credit cash RM230

B. Debit carriage outwards RM230, credit cash RM230
C. Debit cash RM230, credit carriage outwards RM230
D. Debit carriage inwards RM230, credit cash RM230
(1 mark)

44. Paid RM700 to Fasha being full settlement of the amount owed to her. Payment was
made through online banking.

A. Debit account Receivable RM700, credit bank RM700

B. Debit account Payable RM700, credit bank RM700
C. Debit sales RM700, credit cash RM700
D. Debit account receivable RM700, credit cash RM700
(1 mark)

45. Issued invoice worth RM3,500 to Bee Valley for selling of goods. The price was after
5% trade discount.

A. Debit account payable RM3,500, credit sales RM3,500

B. Debit sales RM3,500, credit account receivable RM3,500
C. Debit goods RM3,500, credit account payable RM3,500
D. Debit account receivable RM3,500, credit sales RM3,500
(1 mark)
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46. Purchased a brand new microwave worth RM300 from Mudah Kamu on credit.
A. Debit account receivable RM3,000, credit microvawe RM3,000
B. Debit microwave RM3,000, credit account receivable RM3,000
C. Debit microwave RM3,000, credit account payable RM3,000
D. Debit purchase RM3,000, credit account payable RM3,000
(1 mark)
47. The owner took goods worth RM700 for his daughter's surprise party.

A. Debit capital RM700, credit inventory RM700

B. Debit drawings RM700, credit capital RM700
C. Debit capital RM700, credit purchases RM700
D. Debit drawings RM700, credit purchases RM700

(1 mark)

Question 48-55 - Choose the most suitable answer(s) concerning the book of prime
entry for the business transactions.

The following transactions were extracted from the book of 98 Food Store for the month of
October 2020.

48. The owner, Sadiq brought in motor van worth RM55,000 into the business.

A. General journal
B. Sales journal
C. Purchases journal
D. Cash payment journal
(1 mark)

49. On 3 October 2020, purchased 100 cartons of fruit drinks from Yeo’s Trading worth
RM950 on credit.

A. General journal
B. Sales journal
C. Purchases journal
D. Cash payment journal

50. 10 cartons of defective fruit drinks worth RM250 were returned to account payable -
Yeo’s Trading.

A. General journal
B. Purchases journal
C. Return inwards journal
D. Return outwards journal

51. Received cash worth RM4,500 from Nurul Enterprise for the sales of 2,000 bottles of
soda.

A. General journal
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B. Sales journal
C. Cash receipt journal
D. Cash payment journal
(1 mark)

52. The business received loan of RM50,000 from MAYR Holdings. The amount was
transferred via direct credit.

A. General journal
B. Sales journal
C. Cash receipt journal
D. Cash payment journal
(1 mark)

53. Paid RM700 to Fasha being full settlement of amount owed to her. Payment was made
through online banking.

A. General journal
B. Purchases journal
C. Cash receipt journal
D. Cash payment journal
(1 mark)

54. Issued invoice worth RM3,500 to Bee Valley for selling of goods. The price was after 5%
trade discount.

A. Sales journal
B. Purchases journal
C. Cash receipt journal
D. Cash payment journal
(1 mark)

55. The owner took goods worth RM700 for his daughter's surprise party.

A. General journal
B. Purchases journal
C. Return outwards journal
D. Cash payment journal
(1 mark)

(Total: 55 marks)

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PART B

QUESTION 1

The following is the trial balance extracted from the books of Falini Enterprise as at 30
September 2020.

Debit (RM) Credit (RM)

Capital 237,000
Cash at bank 149,000
Cash in hand 17,200
Accounts payable 37,950
Advertising expenses 20,600
Carriage inwards 3,600
Accounts receivable 37,800
Allowance for doubtful debts as at 1 October 2019 3,780
Land 200,000
Machinery 138,600
Furniture 23,400
Discount allowed 6,200
Rent received 87,450
Drawings 8,820
Carriage outwards 9,000
Commission revenue 18,960
Administrative expenses 6,300
Insuranse expenses 12,780
Loan from AB Bank 150,000
Purchases 108,600
Rental expenses 24,000
Copyright 6,000
Repairs 4,200
Return inwards 5,400
Return outwards 5,610
Sales 348,750
Sundry expenses 7,200
Inventory as at 1 October 2019 66,600
Duty on Purchase 9,360
Wages and salaries 43,200
Water and electricity 14,040
Accumulated depreciation as at 1 October 2019
- Machinery 27,720
- Furniture 4,680
921,900 921,900

Additional information:

1. Inventory as at 30 September 2020 was valued at RM 27,000.

2. Loan from AB Bank was taken on 1 January 2020 and the interest at 9% per
annum has not yet been paid.
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3. Accrued rental received was RM12,600 and RM2,340 of wages and salaries
were still outstanding on 30 September 2020.

4. RM2,000 of insurance expenses was paid for October and November 2020.

5. Commision revenue amounted to RM1,800 were received in advance.

6. The owner took goods worth RM1,150 for his personal use.

7. Depreciation for the year is to be provided as follows:

Machinery 20% straight line method
Furniture 15% reducing balance method

8. RM2,160 to be written off as bad debt and provision for doubtful debts to be
adjusted to RM2,500.

Required:

a. Statement of Profit or Loss for the year ended 30 September 2020.

(18 marks)
b. Statement of Financial Position as at 30 September 2020.
(12 marks)

Note 1: Use vertical format presentation for both statements and show all calculations.
Note 2: Calculate to the nearest RM.
(Total: 30 marks)

QUESTION 2

AHA Trading, is a partnership business owned by Amin, Hani and Almi selling traditional
herbal medicine. Below is the information related to their partnership business:

1. The net profit for the year ended 31 December 2020 was RM97,367.

2. Capital Account as at 1 January 2020:

Amin RM80,000 credit

Hani RM80,000 credit
Almi RM50,000 credit

3. Current Account as at 1 January 2020:

Amin RM25,000 credit

Hani RM8,000 credit
Almi RM10,000 debit

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4. Each partner will be charged to interest on drawings at 5% per annum. The

partner’s drawings during the year were as follows:

1 March 2020 1 October 2020

RM RM
Amin 2,000 22,000

5. Amin and Hani are entitled to a monthly salary of RM1,500 at the end of each
month. Hani only received salaries up to September 2020 for the year.

6. On 6 June 2020, a cash advance of RM50,000 was made by Almi to the

partnership. Interest on loan from partner is agreed at 9% per annum and to be
adjusted in the Statement of Profit or Loss.

7. Each partner is entitled to interest on capital at 10% per annum.

8. The profits or losses of the partnership business are to be shared equally between
the partners. Almi is guaranteed a minimum profit of RM15,000. Any deficiency
will be borne by Amin and Hani.

Required:

a) Appropriation statement for the year ended 31 December 2020.

(8 marks)
b) Partners’ current account for the year ended 31 December 2020.

(5 marks)
Note 1: Calculate to the nearest RM.

c) State two (2) advantages of a partnership business .

(2 marks)
(Total: 15 marks)

END OF QUESTION PAPER

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