CONFIDENTIAL 1 AC/APR 2019/FAR110

UNIVERSITI TEKNOLOGI MARA

COMMON TEST

COURSE : FINANCIAL ACCOUNTING 1

COURSE CODE : FAR 110
EXAMINATION : APRIL 2019
TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of THREE (3) sections.

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Do not bring any material into the examination room unless permission is given by the
invigilator.

4. Please check to make sure that this examination pack consists of :

i. the Question Paper

ii. an Answer Booklet – provided by the Faculty

5. Answer ALL questions in English.

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

This examination paper consists of 5 printed pages

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CONFIDENTIAL 2 AC/APR 2019/FAR110

SECTION A

Part 1: MULTIPLE CHOICE QUESTIONS.

This part consists of TEN (10) multiple choice questions. Choose the most suitable
answer.

1. Which of the following is an internal user of accounting information?

A. Potential investors
B. Bankers
C. Managers
D. Inland Revenue Board
(1 mark)

2. The type of business organisation where several owners have unlimited liabilities is
known as:

A. Sole proprietorship
B. Partnership
C. Private limited company
D. Public limited company
(1 mark)

3. Which of the following characteristics does NOT reflect a sole proprietorship?

A. It is difficult to raise capital

B. It is managed by the owner
C. The liability of the owner is limited to the amount of his investment
D. The business liabilities are borne by the owner

(1 mark)

4. Receipt of bank loan by cheque affects the element of the accounting equation in the
following way:

A. Increase assets and decrease owner`s equity

B. Decrease assets and increase liabilities
C. Increase assets and decrease liabilities
D. Increase assets and increase liabilities
(1 mark)

5. Communication of economic events is part of the accounting process that involves:

A. Recording and classifying information

B. Identifying economic events
C. Quantifying transaction into monetary terms
D. Preparing and distributing accounting reports to interested users
(1 mark)

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6. The following events are considered as business transaction EXCEPT:

A. Paid office rental by cheque

B. The appointment of new marketing manager
C. Repayment of business’s bank loan by cheque
D. Bought office equipment on credit
(1 mark)

7. A sales journal is used to record

A. Only credit sales

B. Only cash sales
C. Cash and credit sales
D. The sale of noncurrent asset on credit
(1 mark)

8. An account clerk has mistakenly recorded a rent received by cheque by debited rent
received account and credited bank account. Identify the error:

A. Compensating error
B. Error of reversal entries
C. Error of commission
D. Error of principle
(1 mark)

9. One of the errors that affect the trial balance agreement is:

A. Error of omission of part of an entry

B. Error of reversal entries
C. Error of commission
D. Error of principle
(1 mark)

10. An account receivable is understated by RM400 and an account payable is also

understated by RM400. This is an error of:

A. Original entry
B. Compensating
C. Commission
D. Principle
(1 mark)
(Total: 10 marks)

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CONFIDENTIAL 4 AC/APR 2019/FAR110

PART 2

State the most suitable accounting concept in the following situation:

1. Jaya Enterprise is a business that deals with buying and selling wallpaper owned by
Amin. The business is assumed to continue its operation indefinitely to carry out its
objectives and commitments.

2. Amin recorded all the business transactions in Ringgit Malaysia (RM).

3. Although salaries and utilities expenses have not been paid, Amin has taken them into
consideration as expenses of the current financial year.

4. The fixtures and fittings bought by the business two years ago are still recorded at the
original cost even though the current value has decreased.

5. The personal assets of Amin such as a land worth RM100,000 will not appear on the
business’s book.

(5 marks)
(Total: 15 marks)

SECTION B

Rosalinda started her business on 2 Jan 2019 named Kedai Rose. Her business sells fresh
and artificial flowers, and her business also offers flower arrangement services.

On 5 Feb 2019, Rosalinda brought into the business a second hand van valued at RM9,500
for its usage. On 8 Feb, the business received 10 packs of artificial flowers from Ladang
Bloom that cost RM300 each. Ladang Bloom sent the related invoice on the next day with
payment term of 5/15, net 30. On the same day, Rosalinda withdraw cash to buy decoration
items for flower arrangement, valued at RM200 from a local store.

On 9 Feb, Rosalinda made flower arrangements for Dhia Planet with agreed price of
RM4,000. Dhia paid RM400 by cash and the balances were on credit term 5/7, net 15.

On 10 Feb, a pack of artificial flowers was returned to Ladang bloom due to damage. On 15
Feb, Rosalinda made a flower arrangement worth of RM60 and presented it as a gift to her
friend who was admitted in a hospital.

On 20 Feb, the business made full settlement to Ladang Bloom by cheque. Four days later,
the business received a cheque from Dhia Planet as a full settlement of its debt. On 28 Feb,
Dhia paid salary for her employees amounted to RM7,000 through online banking services.

Required:
Analyse each of the transactions above on the accounting equation using the following
format:

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Example:
1 Jan Started business with RM 50,000 of cash.
Date Assets = Liabilities + Owner’s Equity
Capital Drawings Revenues Expenses
1 Jan +50,000 +50,000
(Total: 10 marks)

SECTION C

Bite Sdn Bhd is a business selling variety of bottles owned by Elisa. The business started its
operation on 1 March 2019. The following transactions are to be recorded in the books of
Bite Sdn Bhd for the month of March 2019:

MARCH Transactions
1 Elisa contributed capital of RM10,000 into the business bank account. She also
brought in a computer valued at RM1,500 into the business.
3 Received an invoice from Juli Sdn Bhd for 40 units of aluminium bottles valued
at RM50 each with a credit term 2/10, n/30.
5 Purchase 10 units of glass bottles values at RM60 each from Queen Enterprise
by cheque.
6 The business paid RM700 for advertising expenses by cheque.
8 Cash sales to customer for 2 units of bottles valued at RM80 each.
9 Issued invoices to the following customers:
Design Enterprise 5 units aluminium bottles valued at RM90 each
Pretty Sdn Bhd 12 units glass bottles valued at RM90 each
Both of the customer credit term is 5/15, n/30.
10 Settled all amounts outstanding to Juli Sdn Bhd by cheque.
11 Issued a credit note to Pretty Sdn Bhd due to 2 units of glass bottles were
broken while in transit valued at RM90 each.
12 Received a full payment from Pretty Sdn Bhd by cheque.
13 Elisa took 2 units of aluminium bottles for her friend anniversary gifts valued at
RM50 each
14 Issued a cheque to pay 2 worker’s salary amounted to RM1,500 per person.
15 Elisa decided to contribute additional capital amounted to RM1,000 by cheque.
16 The business paid utility expenses amounting to RM50 by cash
18 Return 1 unit of glass bottles values at RM60 purchase from Queen Enterprise
because it is chipped in transit.

Required:

a. Prepare the THREE (3) column ledger to record the above transactions.

b. Prepare a Trial Balance as at 31 March 2019.

(Total: 25 marks)
(Total marks: 50)

END OF QUESTION PAPER

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