CONFIDENTIAL 1 AC/MAY 2022/ACC117/106

UNIVERSITI TEKNOLOGI MARA

TEST 1

COURSE : INTRODUCTION TO FINANCIAL ACCOUNTING /

INTRODUCTION TO FINANCIAL ACCOUNTING
AND REPORTING
COURSE CODE : ACC117/106
EXAMINATION : MAY 2022
TIME : 1 HOUR AND 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of THREE (3) parts: PART A (10 Questions)

PART B (10 Questions)

PART C (1 Question (a) & (b))

2. Answer ALL questions from all THREE (3) parts.

3. Answer ALL questions in English.

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

This examination paper consists of 6 printed pages

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CONFIDENTIAL 2 AC/MAY 2022/ACC117/106

PART A

This part consists of TEN (10) True / False questions. Choose the most correct
answer.

No. Question True False

1. Managers used accounting information for their investments,

financial stability, and growth of their business.

2. Bookkeeping is different from accounting as it is only a part of

accounting.

3. A company is a type of business organization that has a separate

legal entity from its owners and the owners will not be personally
liable for the debts of the business.

4. Observation of business transactions is one of the stages in the

accounting cycle.

5. Faithful presentation means accounting information recorded can

be compared with the previous year accounting information.

6. The historical cost concept states that companies record assets at

their cost value.

7. Under the going concern concept, the business will continue to

record business transactions on the assumption that the business
will stop operation next year.

8. Accounting information is verifiable when the different sources of

information would still reproduce similar information.

9. When an additional van is bought with cash, it will increase assets

and increase the owner’s equity.

10. The double entry rule for expenses is the same as for assets
where both expense and asset accounts are debited when they
are increasing.

(Total: 10 marks)

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PART B

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

1. All the following statements describe the characteristics of a sole proprietorship

EXCEPT:

A. The liability is not restricted to the capital contributed

B. It is a “one-man show” business
C. The financial statements are required to be audited
D. Only the owner contributes capital to the business

2. Accounting process starts from _____________.

A. Performing analysis of recorded data

B. Presenting the classified data into a summarized report
C. Classifying the business transactions into the right category
D. Recording business transactions in the books of accounts

3. Which of the following business entities have a limited liability characteristic?

i. Jay Jay Enterprise

ii. Jay Jay & Partners
iii. Jay Jay Sdn Bhd
iv. Jay Jay Bhd

A. i and ii
B. i and iii
C. ii and iv
D. iii and iv

4. The ______________ need accounting information since they are interested in the
business’s ability to progress and expand. They also look for steady employment and
monetary benefit that they can gain from the business.

A. Shareholders
B. Employees
C. Creditors
D. Consumers

5. Which of the following statement is correct about the comparability concept?

A. The concept allows users to identify similarities and differences in its financial
position and performance across time and across companies
B. Under the concept, accountants should assume that the business will
continue to be profitable in the foreseeable future

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C. The concept means that once an accounting method is adopted, it must be

applied consistently in the future
D. The concept states that an accountant should take a figure which will
understate rather than overstate the profit

6. The accountant of Merong Sdn Bhd did not report employees’ satisfaction levels in
the financial statement. This statement shows that the company adheres to
____________

A. Going concern concept

B. Money-measurement concept
C. Comparability concept
D. Business entity concept

7. Which of the following accounting equation is wrong?

A. Assets – Capital = Liabilities

B. Capital = Assets – Liabilities
C. Assets + Liabilities = Capital
D. Capital + Liabilities = Assets

8. What do accounting concepts refer to?

A. Principles that must be followed in the preparation of financial statements.

B. An art of recording transactions based on generally accepted accounting
principles and approved standards.
C. Adoption of a certain accounting method or basis and the consistent
application of that method or basis
D. An information on recording process where it helps us how to measure
expense or income items

9. The accounting effect of acquiring office furniture on credit from Chai Furniture Sdn
Bhd are __________.

A. Increase in asset and decrease in liability

B. Increase in both asset and liability
C. Increase in liability and decrease in asset
D. Decrease in both asset and liability

10. The double entries for credit purchase transactions worth RM2000 with cash
discount of 3% are as follows:

i. Dr. Purchase RM1,940 and Cr. Account Payable RM1,940

ii. Dr. Purchase RM2,000 and Cr. Cash RM2,000
iii. Dr. Discount Received RM60 and Cr. Account Payable RM60
iv. Dr. Account Receivable RM60 and Cr. Discount Allowed RM60

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A. i and ii
B. i and iv
C. i and iii
D. ii and iii
(Total:10 marks)

PART C

QUESTION 1

One Hud Enterprise is a new business entity set up by Wan Hud. The business is engaged
in the trading and supply of toys for children. The transactions of the business for the month
of April 2022 are as follows:

APRIL Transactions
1 Wan Hud banked in his personal cash of RM70,000 into the business current
account with Cheem Bank as initial capital.
4 Rented a shop office from Qiqin Property Sdn Bhd and issued a cheque of
RM16,000 for payment of rental expenses.
5 Purchased display cabinets of RM20,000 on credit from Masimas Furniture
Trading.
6 Paid Berani Toys Sdn Bhd RM12,000 cheque for the purchase of inventory.
7 Purchased goods of RM8,000 on credit from Rozarif Toys Sdn Bhd.
8 Received commission of RM100 cash for introducing a customer to Berani Toys
Sdn Bhd.
11 The loan application made by One Hud Enterprise was approved by Cheem Bank
and RM50,000 was credited into the business bank account.
13 Sold various toys of RM13,000 on credit to Maleha Nursery.
15 Returned defective toys worth RM1,000 to Rozarif Toys Sdn Bhd.
18 Received cash of RM7,000 from Kanita Kindergarten for supplying various toys.
20 Issued a cheque of RM6,500 to Rozarif Toys Sdn Bhd for the full settlement of the
amount due.
20 A cash discount of RM500 was received from Rozarif Toys Sdn Bhd.
22 Received cash of RM3,000 from Maleha Nursery for partial payment of the
outstanding amount.
25 Wan Hud took some toys worth RM400 as birthday gift for his nephew.
29 The business took RM3,000 cash from its bank account.

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Required:

a. Illustrate the effects (increase or decrease) of asset, liability, owner’s equity, income,
and expense of the above transactions.
(15 marks)
b. Show the journal entry (debit or credit) of the above transactions.
(15 marks)
(Use the format given below to answer the above questions)
Date a. Effects b. Journal Entry
Increase Decrease Debit Credit

(Total: 30 marks)

END OF QUESTION PAPER

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