TUNKU ABDUL RAHMAN UNIVERSITY OF MANAGEMENT AND TECHNOLOGY

FACULTY OF ACCOUNTANCY, BUSINESS AND FINANCE

ACADEMIC YEAR 2022/23

MAY/JUNE EXAMINATION

BBFA1043 PRINCIPLES OF ACCOUNTING

MONDAY, 29 MAY 2023 TIME: 2.00 PM – 4.00 PM (2 HOURS)

BACHELOR OF BUSINESS (HONOURS) IN BUSINESS ADMINISTRATION

BACHELOR OF BUSINESS (HONOURS) IN BUSINESS ANALYTICS

BACHELOR OF BUSINESS (HONOURS) IN CORPORATE ADMINISTRATION

BACHELOR OF BUSINESS (HONOURS) IN ECONOMICS

BACHELOR OF BUSINESS (HONOURS) IN ENTREPRENUERSHIP

BACHELOR OF BUSINESS (HONOURS) IN HUMAN RESOURCE MANAGEMENT

BACHELOR OF BUSINESS (HONOURS) IN INTERNATIONAL BUSINESS

BACHELOR OF BUSINESS (HONOURS) IN LOGISTICS AND SUPPLY CHAIN MANAGEMENT

BACHELOR OF BUSINESS (HONOURS) IN MARKETING

BACHELOR OF BANKING OF FINANCE (HONOURS)

BACHELOR OF FINANCE AND INVESTMENT (HONOURS)

BACHELOR OF BUSINESS (HONOURS) INTERNATIONAL BUSINESS MANAGEMENT

BACHELOR OF BUSINESS (HONOURS) ACCOUNTING AND FINANCE

Instructions:

This paper consists of four questions and you are required to answer ALL FOUR (4) of the questions.

All workings that support the answer must be shown.

Marks will be awarded for clarity in presentation and logical arguments.

You are required to continue with a fresh page when answering new questions or parts of the
questions.

This question paper consists of 4 questions on 7 printed pages.

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BBFA1043 PRINCIPLES OF ACCOUNTING

Answer ALL the questions.

Question 1

Mr Yancey owns a business selling fruits. He has provided the following balances that were extracted
from his business ledger as at 31 March 2023:
Debit Credit
RM RM
Inventories at 1 April 2022 7,000
Sales 109,000
Purchases 40,000
Returns outwards 2,000
Returns inwards 4,500
Wages 3,000
Salaries 18,000
Carriage inwards 1,000
Carriage outwards 2,000
Insurance for purchases 1,500
Medical insurance for staff 1,000
Rent 10,400
Utilities 3,900
Commission received 2,200
Interest received 300
Allowance for doubtful debts at 1 April 2022 300
Motor vehicles at cost 22,000
Accumulated depreciation for motor vehicles
- At 1 April 2022 2,200
Office equipment at cost 15,000
Accumulated depreciation for office equipment
- At 1 April 2022 2,000
Trade receivables 12,900
Trade payables 11,000
Cash 3,000
Bank current account 3,000
Fixed deposit 20,000
Capital 41,500
Drawings 2,300
170,500 170,500

Additional information:

1. Closing inventories were valued at cost of RM5,500 but their market value was RM9,000.

2. Recently, Mr. Yancey paid rental for his shop for two months until end of April 2023. This was
already recorded in the trial balance above. Each month’s rental was RM800.

3. Mr. Yancey started to increase his range of fruit sales to include imported fruits. This cost him
import duty of RM500 which was paid by cheque. This figure has not been recorded in the
accounts yet.

4. Mr. Yancey earned commission income of RM1,000. A cheque was received for this
commission, however neither the cheque received nor the commission income has been
recorded yet.

This paper consists of 4 questions on 7 printed pages.

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BBFA1043 PRINCIPLES OF ACCOUNTING

Question 1 (Continued)

5. Mr. Yancey earned 3% interest on his fixed deposit for the year ended 31 March 2023. This
amount has not been recognised in the accounts.

6. A customer with an outstanding debt of RM400 ran into cashflow problems. Mr. Yancey has
decided to write off the debt as bad debt. He has also decided to provide for an allowance for
doubtful debts of RM500 for the year ended 31 March 2023.

7. Depreciation to be provided as follows:

Motor vehicles : 20% per annum, using the straight-line method.

Office equipment : 25% per annum using reducing balance method.

Required:

(a) Prepare the statement of profit or loss for the year ended 31 March 2023. (15 marks)

(b) Prepare the statement of financial position as at 31 March 2023. (10 marks)
[Total: 25 marks]

Question 2

(A)

Acacia Company trades in cut timber for building houses. It buys and sells them by length.

Purchases of timber Sales of timber

Period of purchase Lengths Price per Period of sale Lengths Price per
length length
1 May 2022 1 May 2022
1,750 RM15 1,650 RM27
to 30 April 2023 to 30 April 2023

Additional information:

1. Inventories brought forward from last year at 1 May 2022 was 200 lengths at RM10 each.

2. Inventories remaining at 30 April 2023 was 300 lengths at RM15 each.

Required:

Calculate the gross profit of Acacia Company for the year ended 30 April 2023. (4 marks)

(B)

The cost and net realisable value (NRV) of the following inventory items were provided:

Inventory item A B C D E F
Cost (RM) 61 32 139 77 51 55
NRV (RM) 76 34 135 100 45 65

This paper consists of 4 questions on 7 printed pages.

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BBFA1043 PRINCIPLES OF ACCOUNTING

Question 2 (Continued)

Required:

Determine the closing inventory values for items A to F respectively. (3 marks)

(C)

(a) Explain TWO (2) advantages of the weighted average cost method of inventory valuation.
(3 marks)

(b) Explain the first-in, first-out method of inventory valuation. (2 marks)

(D)

Tea-in-a-bag Sdn. Bhd. (Tea-in-a-bag) has leftover inventories of 25 units of tea bags, costing RM6
each from the month of March 2023. The following inventory movements occurred during the month
of April 2023:

6 April 2023 : 20 units sold at RM9 each;

12 April 2023 : 30 units bought at RM7 each;
19 April 2023 : 26 units sold at RM10 each.

Required:

(a) Calculate the value of the purchases, cost of goods sold and the closing inventories at 30 April
2023 for Tea-in-a-bag Sdn. Bhd. using the first-in, first-out method of inventory valuation.
(6 marks)

(b) Calculate the value of the purchases, cost of goods sold and the value of closing inventories at
30 April 2023 for Tea-in-a-bag Sdn. Bhd. using the weighted average cost method of inventory
valuation. (5 marks)

(c) Based on your calculations in parts (a) and (b) above, compare the two methods of inventory
valuation. (2 marks)
[Total: 25 marks]

Question 3

The trial balance extract of Cocoa Trading at 30 April 2023 is as follows:

Debit Credit
(RM) (RM)
Trade receivable 57,700
Bad debts 2,300
Allowance for doubtful debt at 1 May 2022 500

Additional information:

1. The company has decided to write off an amount of RM2,700 owed by Atom because the
amount could not be recovered from them.

2. The allowance for doubtful debts at 30 April 2023 is to be set at 1% of trade receivables.

This paper consists of 4 questions on 7 printed pages.

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BBFA1043 PRINCIPLES OF ACCOUNTING

Question 3 (Continued)

Required:

Prepare the following accounts for Cocoa Trading for the accounting year ended 30 April 2023 (close
the account and bring forward to the next month where applicable):

(a) Trade receivables control account; (4 marks)

(b) Bad debts account; (3 marks)

(c) Allowance for doubtful debts account; (5 marks)

(d) Doubtful debts account. (2 marks)

(B)

Below is the trial balance extract of Newgrainland Enterprise as at 30 April 2023:

Debit Credit
(RM) (RM)
Motor vehicle at cost 150,000
Accumulated depreciation for motor vehicle
at 1 May 2022 25,000

Additional information:

1. There was a new purchase of a delivery van which cost RM80,000 paid with cheque in the
month of April 2023. This transaction has not been recorded in the books.

2. Depreciation is to be provided for motor vehicle at 25% using the reducing balance method.

3. A full year of depreciation is to be charged in the year of purchase.

Required:

Prepare the following for Newgrainland Trading for the accounting year ended 30 April 2023 (close the
account and bring forward to the next month where applicable):

(a) Motor vehicles account; (4 marks)

(b) Depreciation for motor vehicles account; (2 marks)

(c) Accumulated depreciation for motor vehicles account. (5 marks)

[Total: 25 marks]

Question 4

Huang Ran Enterprise has provided us with the following financial statements for the two years ending
on 31 March:

This paper consists of 4 questions on 7 printed pages.

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BBFA1043 PRINCIPLES OF ACCOUNTING

Question 4 (Continued)

Statements of profit or loss for the year ended 31 March:

2022 2023
RM’000 RM’000 RM’000 RM’000
Sales 198 282

Cost of goods sold

Inventories as at 1 April 50 20
Purchases 120 224
Inventories as at 31 March (20) (28)
(150) (216)
Gross profit 48 66

Expenditures
Salaries 33 44
Depreciation 2 2
Interest - 2
Other expenses 2 (37) 3 (51)
Net profit before tax 11 15
Tax expense (3) (4)
Net profit after tax 8 11

Statements of financial position as at 31 March:

2022 2023
RM’000 RM’000 RM’000 RM’000
Non-current assets
Equipment 100 133
Furniture 10 110 7 140

Current assets
Inventories as at 31 March 20 28
Trade receivables 24 20
Bank 1 14
45 62
155 202
Equity
Opening capital 100 100
Retained earnings 28 40
128 140
Non-current liability
Loan with 4% interest - 50

Current liabilities
Trade payables 15 12
Accrued expenses 12 27 - 12
155 202
Additional information:

Inventories as at 1 April 2021 was RM50,000.

This paper consists of 4 questions on 7 printed pages.

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BBFA1043 PRINCIPLES OF ACCOUNTING

Question 4 (Continued)

Required:

(a) Calculate the following ratios for the year ended 31 March 2022 and 2023 for Huang Ran
Enterprise:

(i) Gross profit as a percentage of sales; (2 marks)

(ii) Net profit before tax as a percentage of sales; (2 marks)

(iii) Inventories turnover times; (4 marks)

(iv) Trade receivables turnover days; (2 marks)

(v) Trade payables turnover days; (2 marks)

(vi) Current ratio; (2 marks)

(vii) Quick ratio. (2 marks)

(b) Based on the ratios calculated in part (a) above, comment on the changes you see happening
between the years 2022 and 2023. (5 marks)

(B)

(a) Give ONE (1) way that accounting can provide information to suppliers. (1 mark)

(b) Give ONE (1) way that accounting can provide information to banks and other finance
providers. (1 mark)

(b) Give TWO (2) ways that accounting can provide information to investors. (2 marks)
[Total: 25 marks]

This paper consists of 4 questions on 7 printed pages.