ACC117/EXERCISE 3…1

ACC117: EXERCISE 3 – TOPIC 3

EXERCISE TOPICS COVERAGE

3 Classification of Accounts
Accounting Equation

Topic: Classification of Accounts

1. Ainul is a sole trader who sells furniture. The following purchases will be classified as
inventories EXCEPT for the purchase of
A. Bookshelves
B. Bedroom set
C. Motor van
D. Sofa set

2. Trade discount on sales should be treated as

A. a liability
B. a revenue
C. an expense
D. none of the above

3. Which of the following expenses cannot be considered as a revenue expenditure?

A. Depreciation of fixtures
B. Repairs of motor vehicles
C. Installation of machinery
D. Water and electricity

4. Which of the following items cannot be considered as a revenue?

A. Rent received
B. Commission received
C. Dividend received
D. Accounts receivable

5. Which of these items would be accounted for as an expense?

A. Dividends to stockholders
B. Repayment of a bank loan
C. Payment of the current period's rent
D. The purchase of land

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC117/EXERCISE 3…2

6. The assets that can be converted into cash within a short period (a year or less) are
known as
A. Investments
B. Current assets
C. Non-current assets
D. Intangible assets

7. Patents, Copyrights and Trademarks are

A. Investments
B. Current assets
C. Current liabilities
D. Intangible assets

8. The debts which are to be repaid within a short period (a year or less) are known as
A. Current assets
B. Current liabilities
C. Non-Current liabilities
D. Non-current assets

9. The sales income (Cash and Credit) of a business during a given period is called
A. Turnover
B. Sales returns
C. Purchase return
D. Sales discount

10. Which of the following is NOT an example of intangible assets?

A. Goodwill
B. Patents
C. Franchise Rights
D. Building

11. Which of the following is an example of business liability?

A. Fixed Deposit
B. Freehold Land
C. Loan from Institusi Mewah
D. Loan to Hanita

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC117/EXERCISE 3…3

Topic: Accounting Equation

1. Calculate the expenses for the following accounting equation: Capital RM42,000,
Revenue RM75,000, Asset RM88,000 and Liability RM47,000.
A. RM67,000
B. RM76,000
C. RM74,000
D. RM29,000

2. Which of the following relationship about the accounting equation is NOT correct?
A. Owner’s Equity + Liabilities = Assets
B. Liabilities + Assets = Owner’s Equity
C. Assets – Owner’s Equity = Liabilities
D. Assets – Liabilities = Owner’s Equity

3. Which of the following equations properly represents a derivation of the fundamental

accounting equation?
A. Assets – Liabilities = Owner's equity
B. Assets + Liabilities = Owner's equity
C. Assets = Owner's equity
D. Cash = Assets

4. On 1 January 2020, Flora Enterprise showed total assets of RM75,000 and

liabilities of RM25,000. Owners' equity on 1 January 2020 for Flora
Enterprise is?
A. RM10,000
B. RM75,000
C. RM50,000
D. RM25,000

5. If the total assets of Kenanga Trading are RM150,000 and its owner’s equity is
RM30,000. How much is the value of its liabilities?
A. RM30,000
B. RM180,000
C. RM150,000
D. RM120,000

6. Determine the value of account receivable from following information:

Cash RM96,000, Account payable RM66,000, Office equipment RM42,000
and owner’s equity RM154,000.
A. RM82,000
B. RM42,000
C. RM220,000
D. RM30,000

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC117/EXERCISE 3…4

7. During the year ended 31 December 2019, Wayu Sdn Bhd’s assets increase
by RM128,000 and its liabilities decrease by RM32,000. Compute the effect
on its owner’s equity.
A. Increase by RM96,000
B. Increase by RM160,000
C. Decrease by RM160,000
D. Decrease by RM96,000

8. Calculate the value of Seri Indah Enterprise’s total assets if the liabilities of the
business are RM90,000 and its capital is RM210,000.
A. RM120,000
B. RM210,000
C. RM90,000
D. RM300,000

9. Capital + Liabilities – Assets are equal to:

A. 0
B. 1
C. 2
D. 3

10. Assets – Liabilities is equal to:

A. Revenue
B. Capital
C. Liabilities
D. Profit

11. Assets - Capital is equal to:

A. Expenses
B. Assets
C. Capital
D. Liabilities

12. If the assets are RM110,000 and Capital RM44,000 its liabilities would be:
A. RM154,000
B. RM110,000
C. RM66,000
D. RM88,000

Pn.Azura Mohd.Noor
UiTM Perlis
 ACC117/EXERCISE 3…5

SOLUTION: EXERCISE 3

Classification of Accounting Equation

Accounts
1 C 1 B
2 D 2 B
3 C 3 A
4 D 4 C
5 C 5 D
6 B 6 A
7 D 7 B
8 B 8 D
9 A 9 A
10 D 10 B
11 C 11 D
12 C

Pn.Azura Mohd.Noor
UiTM Perlis