CONFIDENTIAL AC/DEC 2022/FAR210

UNIVERSITI TEKNOLOGI MARA

TEST

COURSE : FINANCIAL ACCOUNTING 3

COURSE CODE : FAR 210

DATE : NOV/DEC 2022
TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of two (2) parts: PART A (16 Multiple choice questions)
PART B (2 Short structured questions)

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 question paper consists of 7 printed pages (including cover page)
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PART A: Multiple Choice Questions

1. Income Tax Act 1967 is one of the statutory regulations of financial accounting and
reporting for Malaysian businesses. Select from the following a TRUE statement related
to the Act:

A. Companies Act 2016 do not require companies to prepare the income tax returns
based on the financial statements.
B. It is mainly concerned with ascertaining of chargeable income and tax receivable.
C. Taxation is a business expense that needs to be reflected in the statement of
financial position.
D. Requires business to keep sufficient records to enable the income or loss from the
business are readily ascertained by the Director General of Inland Revenue.

2. From the following situations, identify the INCORRECT statement relating to the
Malaysian Institute of Accountants (MIA) and Malaysian Institute of Certified Public
Accountants (MICPA) before the establishment of Malaysian Accounting Standard
Board (MASB):

A. Both are private sector accountancy bodies that could only regulate the practices of
its members.
B. They regularly review financial statement prepared and audited by their members
C. Both bodies have the statutory power to enforce compliance.
D. They take action against members who found guilty of non-compliance

3. The following represent the functions of Malaysian Accounting Standard Board (MASB):

i. To issue new accounting standards.

ii. To issues statements of principles for financial reporting
iii. To regulate the accountancy profession in Malaysia
iv. To make such changes to the form and content of proposed accounting standards

Select the correct functions of Malaysian Accounting Standard Board (MASB).

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

4. Identify the best situation indicating the shift of the Malaysian accounting standard-
setting process from the private sector accountancy bodies to the public sector statutory
body.

A. When MASB being admitted as a member of the International Accounting Standards

Board (IASB).
B. When the MASB issued technical pronouncements other than MASB Standards.
C. When the Financial Reporting Act 1997 was published.
D. When the Malaysian Private Entities Reporting Standard (MPERS) Framework was
endorsed as a Standards for application by private entities.

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5. From the following, find the INCORRECT statement about the reporting requirements
for a private company:

A. to submit its audited financial statements to the DG of Inland Revenue

B. to comply with the Companies Act
C. to comply with the Approved Accounting Standards
D. to comply with the requirements of both the Securities Commission and the Bursa
Malaysia.

6. Accountants and auditors must overcome ethical dilemmas and allowing for the right
choice and standards that although it may not benefit the company yet will benefit the
public who relies on the accountant/auditor's reporting. The following statements that
depict the roles of accountant to the society are:

i. To uphold ethical standards accepted within the accounting profession.

ii. To in charge for develop standards and promote the use and application of
standards in financial statements preparation.
iii. To prepare financial statements that shows the true and fair view about the
business for economic decision making.
iv. To exercise professional judgment in performing their roles as protectors of public
interest.
v. To assist the company with corporate strategy, provide advice and help businesses
to reduce costs, improve their top line and mitigate risks.

A. i, ii, iii, iv
B. i, iii, iv, v
C. ii, iii, iv, v
D. i, ii, iv, v

7. The following statements describe:

 Has statutory power to enforce compliance;
 Regulating all matters relating to securities and futures contracts;
 Encourage and promote the development of capital market;

A. Bank Negara Malaysia

B. Securities Commission
C. Audit Oversight Board
D. Bursa Malaysia

8. Malaysian Private Entities Reporting Standard (MPERS) is a self-contained Standard

that comes in 35 sections covering all the relevant areas for financial reporting by
private entities. One of the following statements DO NOT describes MPERS:

A. The previous Private Entities Reporting Standard (PERS) Framework is withdrawn

effective 1 January 2014.
B. Private entities may adopt the Malaysian Financial Reporting Standards (MFRS)
Framework used by public entities.
C. Private entities have a choice to make transition to the new MPERS Framework.
D. MPERS is based on the IASB’s International Financial Reporting Standard for Small,
and Medium-sized Entities (SMEs).
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9. Below are the financial reporting requirements that need to be comply by a form of
business organization in Malaysia:
 quarterly financial statements to the Securities Commission and the Bursa
Malaysia.
 other interim and periodic financial reports to the Securities Commission.
 the final audited financial statements to the Securities Commission, the Bursa
Malaysia, the Companies Act, and the Director General of Inland Revenue.
 Financial statements that have been drawn up to show a true and fair view and
are in compliance with Approved Accounting Standards.
Find the right form of business that are subject to the above reporting requirements:
A. Sole proprietorship business
B. Partnership business
C. Private company
D. Public listed company

10. Find the best statement related to Malaysian Accounting Standard Board (MASB)
Standard:
A. MASB Standards were either identical or similar to the International Accounting
Standards Committee (IASC).
B. MASB Standards were developed with reference to the work of the Malaysia
Accounting Standards (MAS).
C. MASB Standards were effective for application as at January 1997.
D. MASB Standard issue new accounting standard as approved accounting standards
(AAS).

11. Reporting entity can be defined as “an entity that is required, or chooses, to prepare
financial statements”. Find the INCORRECT statement from the following, relating to the
financial statement of the reporting entity:

A. Consolidated financial statements referred to the reporting entity which comprise of

both the parent and its subsidiaries.
B. Combined financial statement referred to reporting entity that are linked by a parent-
subsidiary relationship.
C. Unconsolidated financial statement referred to reporting entity which is the parent
alone.
D. Combined financial statement is for reporting entity are not all linked by a parent-
subsidiary relationship.

12. Identify the primary user of the general purpose financial reporting in accordance to the
2018 Conceptual Framework from the following:

A. Employees, investors and trade union representatives

B. Existing and potential investors, lenders and other creditors
C. Lenders and other creditors and customers
D. Existing and potential investors, government agencies and the general public

13. The statement from the following that justify the reason for developing the Conceptual
Framework is:

A. To help all parties to understand and interpret the Standards.

B. To assist preparer to develop consistent accounting policies.
C. To identify the desirable qualitative characteristics of financial information.
D. To assist the MASB to develop MFRS Standards.
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14. “The right or group of rights, the obligation and or the group of obligations, or the group of
rights and obligations, to which recognition criteria and measurement concepts are
applied”. This statement depicts the definition of:

A. Unit of account
B. Right criterion
C. Contractual obligation
D. Obligation

15. Prudence means that assets and income are not overstated and liabilities and expenses
are not understated. In the 2018 Conceptual Framework, prudence concept is employed
as a consideration of:

A. Relevance
B. Verifiability
C. Understandability
D. Faithful representation

16. Choose the CORRECT statement about derecognition as described in the 2018
Conceptual Framework:

A. For an asset, derecognition normally occurs when the entity loses control of all or
part of the recognised asset.
B. For a liability, derecognition normally occurs when the entity no longer has a present
obligation for all or part of the recognised liability.
C. Derecognition is the removal of all or part of a recognised asset or liability from an
entity's statement of financial position.
D. All of the above.

(Total: 16 marks)

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PART B: Short Structured Questions

Question 1

Kopi Tarek Cafe Sdn Bhd is a homemade coffee shop selling high quality and affordable coffee.
The shop also serves its own blend of freshly brewed specialty coffee, sandwiches and pastries.
Encik Umar who is the owner of Kopi Tarek Café Sdn Bhd, had started the business five years
ago with a total asset of RM240,000. For this purpose, Encik Umar managed to secure a
RM100,000 loan from BIMB and another RM80,000 loan from Koperasi Usahawan Bumiputera
of which both are payable within 10 years.

Since commencement of the business, Encik Umar had successfully managed Kopi Tarek Cafe
Sdn Bhd and is confident to continue handling the business activities in the future. Based on
the increasing sales and growing market demand, Encik Umar is also confident that Kopi Tarek
Cafe Sdn Bhd will continue in business in the foreseeable future.

On 14 April 2021, Kopi Tarek Cafe Sdn Bhd ordered 8 boxes of coffee beans amounted to
RM7,500 from Kopi Gantang Berhad, one of the shop’s main supplier. Kopi Gantang Berhad
delivered the item ordered on the following day. Kopi Tarek Cafe Sdn Bhd paid RM2,500 cash
upon delivery and the balance will be paid within 20 days.

Required:
Based on the above scenario:

a. Compute the initial equity claims of Kopi Tarek cafe Sdn Bhd.
(2 marks)

b. Briefly assess the underlying assumption as clarified by the MASB’s revised (2018)
Conceptual Framework for Financial Reporting.
(2 marks)

c. In the book of Kopi Tarek Cafe Sdn Bhd and based on the MASB’s revised (2018)
Conceptual Framework for Financial Reporting, classify the element of financial
statements created as a result of the transaction with Kopi Gantang Berhad.
(5 marks)

Question 2

Quick Send Express which was incorporated on 1 January 2018 is a courier express
company that offers fast pick-up and delivery services. The company mainly engaged in
package delivery and logistics in Malaysia, Indonesia and Singapore with its automated
sorting warehouse.

Due to the increase in demand of their services, Quick Send Express purchased twenty (20)
units of imported lorries from China to be used in its business operations. The lorries were
delivered on 1 November 2021. The costs incurred related to the lorries purchased were as
follows:

RM
Purchase price 2,450,000
Delivery and transportation cost 500,000
Import duties and taxes 750,000
Insurance and road tax 380,000
Administrative costs in processing the purchase 650,000

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Maintenance cost 670,000

Printing of company’s logo on the lorries 750,000
Training cost to the lorry’s driver 850,000
Testing cost (necessary to ensure the lorries are in proper working condition) 475,000
Exchange loss 238,000

Quick Send Express adopts a depreciation policy using the straight-line method, calculated
on a yearly basis. The lorries are expected to have a useful life of 10 years. The company
closes its books on 31 December each year.

Required:

a. Justify whether the purchased lorries are assets to Quick Send Express.
(3 marks)
b. Assess whether the purchased lorries can be classified by Quick Send Express as the
property, plant and equipment in accordance with MFRS 116 Property, Plant and
Equipment.
(3 marks)

c. Assess whether the purchased lorries can be recognized as an asset in the company’s
financial statement.
(3 marks)

d. Compute the initial cost of the purchased lorries.

(3 marks)

e. Compute the depreciation of the purchased lorries for the year ended 31 December
2021.
(3 marks)

f. Quick Send Express own a building which was acquired on 1 January 2018. During
the year ended 31 December 2021, the company incurred further cost for maintaining
and enhancing the building to ensure that it is in proper condition. These costs include
the renovation of a new room of RM80,000 and repainting and cleaning of RM45,000
which is considered as subsequent costs to the building.

As the Senior Accounts Executive of Quick Send Express, direct the Junior Accounts
Executive on the accounting treatments for the above subsequent costs incurred
during the financial year ending 31 December 2021.
(5 marks)

g. As at 31 December 2021, Quick Send Express decided to sell their old sorting machine
for RM30,000 cash. The machine was acquired on 1 January 2018 at a cost of
RM100,000. The accumulated depreciation on the date of disposal was RM80,000.

As the Senior Accounts Executive, direct the Junior Accounts Executive of Quick Send
Express on the accounting treatment for the disposal of the old sorting machine as at
31 December 2021.
(5 marks)
(Total: 25 marks)

END OF QUESTION PAPER

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