CONFIDENTIAL AC/FEB 2022/FAR110

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE : FINANCIAL ACCOUNTING 1

COURSE CODE : FAR110
EXAMINATION : FEBRUARY 2022
TIME : 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of TWO (2) parts: PART A (10 Questions)
PART B (5 Questions)

2. Answer ALL questions in ENGLISH.

3. Please submit your HANDWRITTEN answers in ONE (1) pdf file. Name the pdf file
according to the following format: name_group_subjectcode.
For example: rosmawatiharon_JAC1101A_FAR110

4. Please make sure EVERY page of your answer sheet contains the following
information:
i. Name
ii. Student ID
iii. Group

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

This examination paper consists of 9 printed pages
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PART A

This part consists of TEN (10) multiple choice questions. Choose the most suitable
answer and write the corresponding alphabet representing the answer in the answer
sheet.

1. All the followings are the internal users of accounting information EXCEPT

A. Managers
B. Customers
C. Employees
D. Owners
(1 mark)

2. The following that best describes the qualitative characteristic of accounting

information on faithful representation is ___________________________ .

A. the accounting information has to be reported timely

B. the accounting information can influence the users’ decision makings
C. the accounting information should be free from errors, must be neutral and
complete
D. the accounting information presented in the financial statements have to be
understandable to users
(1 mark)

3. The accounting principle which states the information that would make a difference to
the financial statement users is the ________________ .

A. going concern principle

B. full disclosure principle
C. monetary unit principle
D. revenue and expenses recognition principle
(1 mark)

4. Identify the effect of the transaction on interest paid in cash amounted RM1,500.

A. Asset increases, Asset decreases

B. Asset decreases, Revenue increases
C. Asset increases, Liability increases
D. Expense increases, Asset decreases
(1 mark)

5. Asraf, the sole owner of a computer shop, bought a secondhand van on credit from
Mega Holding Sdn Bhd for business purpose. Asraf should record the transaction as:

A. Debit Motor Vehicle, Credit Capital

B. Debit Motor Vehicle, Credit Mega Holding Sdn Bhd
C. Debit Motor Vehicle, Credit Asraf
D. Debit Mega Holding Sdn Bhd, Credit Capital
(1 mark)

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6. The following account that will appear in the sale ledger is:

A. Return inward account

B. Return outward account
C. Sahara Sdn Bhd – a supplier account
D. Sahara Sdn Bhd – a customer account
(1 mark)

7. The owner of a business paid RM450 utility bill by cash. Only the cash account was
opened and recorded with no opposite entry to the utility bill account. This is an
example of ____________ .

A. Error of original entry

B. Error of transposition
C. Omission of part of an entry
D. Posting to the incorrect side of an account
(1 mark)

8. Which of the following is considered as current asset?

A. Accrued wages.
B. Utilities not yet paid.
C. Accrued interest income.
D. Prepaid commission received.
(1 mark)

9. Based on the following ratios, liquidity ratio can be presented by ____________ .

A. Current ratio
B. Net profit ratio
C. Gross profit ratio
D. Asset efficiency ratio
(1 mark)

10. The statement that shows the difference between the bank balance as per business
book and the bank statement is due to a valid reason or not is called:

A. Cash flow Statement

B. Statement of Profit or Loss
C. Statement of Financial Position
D. Bank Reconciliation Statement
(1 mark)

(Total marks = 10 marks)

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PART B

QUESTION 1

Muhammad Nayan and Hajariah had just started a business on 1 January 2021. They were
involved in a business selling snacks for the brand named “Hot Crispy Potatoes”. Muhammad
Nayan contributed RM15,000 cash and two special machines amounted to RM10,000 to be
used for the business while Hajariah only contributed office equipment valued at RM7,000.
The machines were depreciated at 20% per annum using straight line method and office
equipment will be depreciated at 25% per annum using reducing balance method.

They agreed to share the profit or loss based on the capital contribution. Muhammad Nayan
and Hajariah hired ten local workers for production purposes and one supervisor to monitor
the business operation. The cost of salary and wages incurred for the year 2021 were
RM240,000. In recording the business transactions, the account clerks alerted them about the
accounting concepts that needed to be applied.

On 1 December 2021, Hajariah took RM100 cash to be donated to Surau Hidayah near her
house. In addition, on 24 December 2021, Puan Azi, a regular customer bought Hot Crispy
Potatoes amounted to RM1,000 on credit. These transactions had not been recorded
elsewhere in the books. On 31 December 2021, the business prepared the financial
statements which consists of Statement of Profit or Loss and Statement of Financial Position.
In summary, the sales for the year were RM500,000 and expenses such as cost of sales,
rental, insurance and utility amounted to RM200,000, RM20,000, RM10,000 and RM15,900,
respectively.

Required:

a. i. State any THREE (3) characteristics of the business organization mentioned in

the above situation.
(3 marks)

ii. Identify any THREE (3) internal users in the above situation and the needs for
accounting information for these users.
(3 marks)

iii. Assess the net profit of the business based on the financial data provided in
the above situation.
(4 marks)

iv. Suggest FIVE (5) accounting concepts that may be applicable for the above
situation.
(5 marks)

(Total: 15 marks)

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QUESTION 2

A. Odah Enterprise is a business involved in buying and selling books and magazines in
Jerantut Pahang since 2019. On 1 October 2021, the following are the opening
balances for Odah Enterprise:

Cash in hand RM1,200

Cash at bank RM50,000
Office furniture RM10,000
Motor vehicles RM90,000

For the month of October 2021, the following transactions had taken place:-

1. On 1 October 2021, Raudhah the owner of Odah Enterprise obtained a loan

from Manis Bank amounted to RM100,000 for business purposes. The period
of payment was 7 years. The amount received was credited to the business
bank account.

2. On 2 October, the business bought 5 units of multi-purpose racks from Kakja

Trading which cost RM200 per unit on cash basis.

3. On 4 October, Odah Enterprise bought educational books from Minerva Sdn

Bhd costing RM5,000. The business paid RM2,000 by cheque and the
remaining balance would be paid the following week.

4. On 6 October, Odah Enterprise sold 40 units of educational books amounted

RM1,000 to Puan Normah on credit. The credit term was 5/10 net 30.

5. On 8 October, Puan Normah returned 2 units of books due to quality problems.

6. On 18 October, Puan Normah made a full payment to Odah Enterprise by

cheque.

7. On 20 October, Puan Raudhah paid rental expenses amounting to RM3,000

using her own money.

8. On 25 October, Odah Enterprise sold a variety of books to the State National

Library amounted to RM10,000. The trade discount was 2% and the transaction
was on credit basis. The credit term offered was 5/20 net 60.

9. On 31 October 2021, Puan Raudhah withdrew RM2,500 from the business

bank account to pay the salaries for her workers.

(Note: the business uses the periodic system to record the inventory)

Required:

Journalise the above transactions in the appropriate special journals. (narrations are
not required for General Journal)
(10 marks)

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B. Nur Chinta, the owner of NC Enterprise keeps the business petty cash book on imprest
system for the amount of RM250, on monthly basis. For the month of November 2021,
the petty cash transactions were as follow:
Nov 1 Petty cash balance RM10
Nov 4 Paid for stationery RM15
Nov 7 Paid for taxi fares for staff RM20
Nov 9 Paid for cleaning expenses RM50
Nov 10 Paid postage RM11
Nov12 Paid bus fares RM7
Nov 17 Paid postage RM17
Nov19 Paid train fares for staff RM30
Nov 20 Paid for cleaning expenses RM50
Nov 29 Paid postage RM11

Required:

Prepare the petty cash book with an analysis column for expenditure on stationery,
postage, travelling and cleaning expenses.
(8 marks)

C. Azfar Daniel, an account clerk at Afiq Trading was asked to prepare the trial balance
as at 31 October 2021. The trial balance did not balance and upon investigation, the
following errors were discovered: -

5 October 2021 A receipt of RM2,800 from Liza Liu Enterprise, a debtor, had
been posted to the credit side of Lisa Lim Enterprise in error.

10 October 2021 The cash sales of RM3,450 had been recorded as RM3,540 in
the sales account.

15 October 2021 The credit purchases from Ateh Enterprise amounted to RM500
had been debited in both accounts, Ateh Enterprise account and
Purchases account.

23 October 2021 An investment of RM2,500 was only recorded in the cash

account.

24 October 2021 A repair to a machine amounted to RM300 had been posted to

the machine account.

31 October 2021 A payment of RM734 cash for insurance had been completely
omitted from the books.

Required:

i. Identify the type of errors made by Azfar Daniel as stated above.

(3 marks)

ii. Give the necessary corrections to be made for the above errors that will not affect the
trial balance.
(5 marks)
(Total: 26 marks)

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QUESTION 3
The following is the trial balance of JM Trading for the year ended 31 December 2021:-

JM Trading
Trial Balance as at 31 December 2021
Particular Debit (RM) Credit (RM)
Capital 500,000
Land 450,000
Loan from Islamic Bank 150,000
Motor vehicle 75,000
Furniture and fittings 20,000
Office equipment 50,000
Account Receivables 11,250
Account Payables 11,655
Commission income 2,400
Interest expenses 3,750
Carriage inwards 1,500
Carriage outwards 2,000
Cash in hand 9,800
Cash at bank 60,880
Inventories as at 1 January 2021 9,700
Purchases and sales 546,250 1,005,700
Returns 8,000 12,000
Discounts 1,300 3,600
Maintenance cost 17,800
Salary expenses 350,000
Utility expenses 25,000
Rental expenses 80,000
Insurance on purchases 6,000
Accumulated depreciation on 1 January 2021
- Motor vehicle 15,000
- Furniture and fittings 6,000
- Office equipment 21,875
1,728,230 1,728,230

The following adjustments need to be considered for the preparation of financial statements
for the year:

1. Closing inventory as at 31 December 2021 was RM25,900.

2. Accrued utilities and maintenance cost were RM600 and RM2,000 respectively.

3. The prepaid salary expenses for the year ended 31 December 2021 amounted to
RM5,000.

4. The business had earned a commission income of RM800, but the amount was not
recorded yet.

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5. Yearly depreciation rates for the company's non-current assets are as follows:

Office Equipment 25% reducing method

Motor vehicle 20% straight line method
Furniture and fittings 10% straight line method

Required:

a. Prepare the Statement of Profit or Loss for the year ended 31 December 2021 and
the Statement of Financial Position as at that date. (Round up the figures to the
nearest RM)
(20 marks)

b. Explain the difference between accrued revenue and prepaid revenue.

(2 marks)
(Total: 22 marks)
QUESTION 4

The following was the extract of MN Enterprise’s book for the year ended 31 December
2021.
Cash sales 500,000
Credit sales 1,000,000
Net Sales 1,485,000
Gross profit 785,000
Current liabilities 80,000
Inventories 30,000
Account receivables 150,000
Bank 50,000
Prepaid rental expenses 2,000
Accrued rental income 1,000

Additional information:-

1. The value of the inventories as at 1 January 2021 was RM20,000.

2. The business’s cost of sales is 40% from its total sales.

3. The business net profit is 30% lesser than its gross profit.

Required:

a. Briefly explain any FOUR (4) limitations of accounting ratios.

(4 marks)

b. Compute the following ratios for MN Enterprise for the year ended 2021:

i. Current ratio
ii. Acid test ratio
iii. Inventory turnover ratio
iv. Gross profit margin
v. Net profit margin
(10 marks)
(Total: 14 marks)

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QUESTION 5

a. State THREE (3) advantages of preparing a bank reconciliation statement.

(3 marks)

b. The Bank Account and Bank Statement of Asri Catering Enterprise did not equal in
balance on 30 September 2021 as shown below:

Bank Account
Debit Credit Balance
Date Particular Cheque No. (RM) (RM) (RM)
1 Beginning balance 82,550
2 Purchases 011 1,250 81,300
2 Purchases 012 1,100 80,200
7 Computer 1,500 78,700
13 Utility bill 013 850 77,850
20 Sales 2,200 80,050
24 Stationery 014 180 79,870
26 Sales 3,400 83,270
28 Sales 4,800 88,070
30 Salaries 4,500 83,570

Al – Rayyan Bank Bhd

Bank Statement for the month of September 2021
Debit Credit Balance
Date Particular Cheque No. (RM) (RM) (RM)
1 Beginning balance 82,550
3 Cheque issued 011 1,250 81,300
4 Cheque issued 012 1,100 80,200
16 Cheque issued 013 580 79,620
18 Standing order 1,800 77,820
21 Cheque deposit 2,200 80,020
24 Credit Transfer 2,850 82,870
25 Cheque issued 014 810 82,060
27 Cheque deposit 3,400 85,460
30 Bank charges 100 85,560

Additional information:

i. Payment for utility bill (Cheque No 013) and stationery (Cheque No 014) were
wrongly recorded by the bank as RM580 and RM810.

ii. The bank had wrongly credited the bank charges.

Required:

Prepare the bank reconciliation statement for Asri Catering Enterprise as at 30 September
2021.
(10 marks)
(Total: 13 marks)

END OF QUESTION PAPER

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