< BACHELOR OF ACCOUNTING WITH HONOURS >

SEM 1 / 2019

BBFA1103

INTRODUCTORY ACCOUNTING
ASSIGNMENT 1

Question 1
Internal Users of Accounting Information

1.1 Managers

Managers need accounting information to plan, monitor and make

business decision. Managers also have to monitor the performance of
business by comparison against competitor analysis, past performance and
key performance. Managers need to allocate the financial, human and
capital resources for business budgeting process. Preparing monitoring
budget effectively requires reliable accounting data relating to the process,
activities, product, services, segments and departments of the business.
Managers rely on accounting data to form their business decision such as
investment, financing and pricing decision. For example, managers require
to calculate the proposed project by reliable estimates of the revenues and
costs.

1.2 The directors of companies

The directors of campanies need to assess how well their business is

performing. The directors have to deside the amount that have to devide to
pay to the shareholders or bonus to teh employees who need to know
compony profit. They also have to know how risk their business is.
Accounting information helps the directors in assessing the level of
stability in business over the years and to what eztent have changes in
economic factors affected the bottom line of the business. Such as,
accounting information help directors to decide if they need to invest any
further in the business or if they should use their financial resource
elsewhere in more promising business ventures.

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Question 2
Example of business adheres following all the accounting principle.

2.1 Matching

Matching use to determine profit for the accounting period, the revenues
of that period must be match with the expenses for the same period. For
example, Ali’s Machining buys a new piece of equipment for RM 5,000 in
2019. This machine has a useful life of 10 years. This means that the
machine will produce products for at least 10 years for future. According
to the machine cost should be matched with revenues it creates. Thus, the
machine is depreciated over its 10 years useful life instead of being fully
expensed in 2019.

2.2 Full disclosure

This principle state to the all relevent and materials information must be
adequately disclose either in the financial statement. For example, Piano
Emporium is a nationwide piano retailer. It reports RM 15,000 in piano
inventory last year. In the notes of its financial statements, PE should
disclose its significant accounting policies. This would include its
inventory evaluation methods. PE should disclose whether its financial
statements are prepared uses FIFO or LIFO inventory cost methods.

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QUESTION 3

Assets = Liabilities + Owner's Equity

RM20,000 = RM0 + RM20,000
RM22,500 = RM2,500 + RM0
RM22,850 = RM350 + RM0
RM23,325 = RM0 + RM475
RM23,225 = RM0 + -RM100

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ASSIGNMENT 2
a) Statement of Comprehensive Income for the year ended 31 December 2018.

Jumbo Trading
Statement of comprehensive income
For the year ending December 31, 2018

Account RM RM
Sales 66,276
Cost of goods sold
(29,011)
( 7,171 + 27,300 - 5,460 )
Gross profit 37,265

Operating expenses
Salaries and wages 8,410
Maintenance and petrol 2,436
Advertising 8,925
Bad debts 210
Utilities 393
Rent 1,470
Insurance 1,575
Total expenses (23,419)
Operating income 13,846

Non-operating or other
Provision for doubtful debts 90.30
Carrige inwards 441
Carrige outwards 525
Sales return 231
Purchases return 236
Creditor 7,628
(9,151.30)
Net income 4,694.70

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 b) Statement of Financial Position as at 31 December 2018.

Jumbo Trading
Statement of comprehensive income
For the year ending December 31, 2018

RM RM
Assets
Current Assets
Bank 14,553
Cash 11,750
Stock 5,460

Non-current Assets
Office equipment 42,000  
Total Assets 73,763.00

Liabilities
Current liabilities
Bad debt 90.30
 
Total 73,672.70

Owner equity
Capital 73,684
Plus: Net profit 4694.70
Less : Drawings 3990  
74388.70