INTRODUCTIONS TO ACCOUNTING SET 1

PART A: MULTIPLE CHOICE QUESTION (40 MARKS)

Answer ALL Questions
1. The following are the external users of accounting EXCEPT

A. Creditor

B. Banker

C. Managers

D. Government Agencies

2. Which of the following statement is true about Statement of Financial Position?

A. To determine the profit or loss for the given accounting period.

B. Record all the money paid by business.

C. Show all the income and expenses for an accounting period.

D. Show the list of assets and the liabilities and also the owner’s equity as at certain date.

3. The following statement is FALSE about cost accounting EXCEPT

A. Cost accounting is a new branch of accounting

B. Cost accounting provides the information to the management for performing its
functions

C. Cost accounting is the examination and verification of company account.

D. Cost accounting is to provide the information to the management of the company

determine the total cost or cost per unit of the product or service.

4. Which of the following sources will increase the owner equity?

A. Revenue from business

B. Expenses incurred in the business operation

C. Withdraws of assets by owners

D. Purchase inventory from supplier.

5. The following are the examples of assets EXCEPT

 A. Cash

B. Building

C. Tax Payable

D. Motor Vehicles.

6. Which of the following is a NOT category as non-current assets?

A. Building

B. Motor Vehicle

C. Furniture

D. Inventory

7. Which of the following statement is FALSE about purchases of good?

A. Purchases good from supplier and resale to customers

B. Purchases can made either cash or credit

C. Not all the purchases are debited to the purchases account.

D. Purchases of building need recorded in purchases account.

8. What are the methods that used to value the inventory?

i First-in-first-out (FIFO)

ii Last-in-first-out (LIFO)

iii Weight Average (WA)

iv First-out-last-in (FOLI)

A. i and ii

B. ii and iii

C. i, ii and iii

D. All above

9. Which of the following statement is FALSE about perpetual inventory system?

 A. Keep track of both quantities and cost

B. A computerized accounting system

C. No detail records on inventory on hand thought out the period.

D. Suitable system for business selling high volume product.

10. Revenue expenditure is _________________.

A. The expenditure on the items is expected to contribute more than one accounting
period.

B. Charges as expenses account at the end of accounting period.

C. Charges to assets account and are term of fixed or non-current assets.

D. The expenditure on the items where do not loss their value within one accounting
period

11. The following activities are categories as capital expenditure EXCEPT

A. Repayment of a loan

B. Sale of non-current assets

C. Purchase of good for sale

D. Purchase of delivery van by retailer

12. Which of the following are the causes of depreciation?

i Physical deteriorate

ii Economics factor

iii Time factor

iv Depletion

A. i and ii

B. ii and iii

C. iii and iv

D. All above.

13. Which of the following is TRUE when the allowance for doubtful debt is created?
 i Debit the statement of profit or loss and other comprehensive income

ii Credit the allowance for doubtful debt account

iii Debit the allowance for doubtful debt account

iv Credit the statement of profit or loss and other comprehensive income.

A. i and ii

B. ii and iii

C. iii and iv

D. I and iv

14. On 31 December 2016, the total account receivable for Kelly Enterprise is RM 35,000,
5% of these debts are estimated to go bad in foreseeable future. How much the
allowance for doubtful debts?

A.RM 1,200

B. RM 1,650

C. RM 1,750

D. RM 1,900

15. The following items will result in differences between the balances in the balance
statement and the cash book EXCEPT

A. Standing order

B. Outstanding cheque

C. Interest cheque

.D. Dishonoured cheque

16. Uncredited cheque is ___________________.

 A. Bank charges on the services provided by bank

B. Cheque issued by a business but not yet cashed out by creditors

C. Cheque that are already deposited into a business’s bank account but not yet
recorded in the bank statement

D. Instruction given by a business to make regular payment on it behalf to its creditors.

17. To deposit money in your business’s bank account, you should use ______________.
A. A bank statement

B. A deposit slip

C. A withdrawal slip

D. A cheque book

18. The best ratio use to analyse the ability of business to settle its debts is the __________.

A. Inventory turnover ratio

B. Net profit margin

C. Profitability ratio

D. Liquidity ratio

19. A higher Inventory Turnover Ratio indicates that business is able to ______________.

A. Obtains the loan from bank

B. Collects the debt from debtor

C. Make frequent sales and high turnover of its inventory

D. Liquidate its asset

20. Which ratio below is under liquidity ratio?

A. Quick ratio

B. Net profit ratio

C. Gross profit ratio

D. Inventory turnover ratio

PART B: SHORT STRUCTURE QUESTION [60 MARKS]

Answer ALL Questions
QUESTION 1
State FOUR (4) sources document that need to collect before enter into journals.
[8 marks]
QUESTION 2
Jonathan had the following transaction in December 2017.
1. Started the business with cash RM 100,000
2. Purchased good with credit RM 20,000
3. Sold goods by cash RM 5,000
4. Received a cheque RM 4,500 for services rendered
5. Paid the salary for the worker by cheque RM 5,000
6. Bought the furniture RM 6,000 by credit
7. Withdraw RM 500 cash from business for his own use

Based on the information above, generate an accounting equation to show the effect of the
above transactions. [8 marks]

QUESTION 3
Ritarama Enterprise closes its account on 31 December every year. Below is the information
regarding account receivable, allowance for doubtful debt and allowance for discount
allowable.
Year ended 31 Account Receivable Allowance for Allowance for
December Doubtful Debt Discount Allowable
(RM) (RM)
2012 6,200 500 5%
2013 7,950 550 5%
2014 7,300 620 5%

Based on the information above, you are requested to prepared:

(a) Allowance for Discount Allowable
(b) Statement of Profit or Loss and Other Comprehensive Income
(c) Statement of Financial Position [11 marks]

QUESTION 4
Describe how the factors below can cause the depreciation on non-current assets.
(a) Wear and Tear
(b) Erosion and rust and decay [9 marks]

QUESTION 5
Calculate the value of ending inventory and the cost of goods sold using Weight Average
(WA) Periodic method. [9 marks]
Jun 3 Beginning Inventory 80 units x RM 13.00
5 Purchases 180 units x RM 13.50
13 Purchases 95 units x RM 14.00
28 Sales 225 units x RM 17.00
30 Sales 70 units x RM 17.50

QUESTION 6
(a) What is bank reconciliation statement? [2 mark]

(b) States THREE (3) reasons for the differences between the bank account balances and
bank statement balance. [6 marks]

QUESTION 7
(a) What is ratio? [1 mark]

(b) Below are the financial statements of Moon Enterprises:

Statement of Profit or Loss and Other Comprehensive Income

for the year ended 31 December 2017
RM RM
Sales 520,000
Less: return inwards 20,000
500,000
Less : Cost of goods sold
Opening Inventory 140,000
Purchases 163,000
303,000
Less: Closing Inventory (70,000) 243,000
Gross Profit 257,000
Less : Expenses (160,000)
Net Profit. 97,000
 Statement of Financial Position
As at 31 December 2017
RM RM
Non-current Assets at book value 308,000
Current assets
Bank 86,000
Account Receivable 65,000
Inventories 70,000 221,000
529,000
Owner Equity
Capital 380,000
Add: Net Profit 71,000
Less: Drawings (45,000) 406,000

Long term liabilities

Loan from Sarawak Bank 35,200

Current Liabilities
Account payable 67,000
Accrual expenses 21,000 88,000
529,000

Require:

Calculate the following ratios:

(a) Gross profit ratio

(b) Inventory turnover ratio

(c) Current ratio

[6 marks]

END OF QUESTIONS PAPER