CONFIDENTIAL 1 ACC117/106/TEST 1/MAY2023

UNIVERSITI TEKNOLOGI MARA

TEST 1

COURSE : INTRODUCTION TO FINANCIAL ACCOUNTING

AND REPORTING

COURSE CODE : ACC117/106

EXAMINATION : MAY 2023
TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of two (3) parts: PART A (10 Questions)
PART B (10 Questions)
PART C (1 Question)
2. Answer ALL questions in your 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 test consists of:

i) the Question Paper
ii) an OMR Answer Sheet
iii) the Answer Sheet

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 ACC117/106/TEST 1/MAY2023

PART A

This part consists of TEN (10) true/false questions. State whether the following statement
is TRUE or FALSE.

1. The objective of the financial statement is to provide information about the financial
position, financial performance and cash flows of an entity that is useful for the users in
making economic decisions.

2. Invoices and cheques are examples of source documents.

3. Preparing a financial statement is the earliest step in the accounting cycle.

4. A private company has unlimited liability, in which in the case the business is unable to
pay its creditor, the creditor can go after the personal assets of the owner to recover the
business debt.

5. The business owner paid for his family insurance expenses using business money and
recorded this transaction as the business’s insurance expense. This is in violation of the
business entity concept.

6. Going concern concept is a concept that highlights the significance of a currency used
when dealing with economic events.

7. Physical counting of inventory allows business to verify the number of inventories keyed
in into the inventory system at warehouse.

8. The business has an obligation to provide complete and neutral information to the user
of financial statement.

9. Non-current liability represents the business’s financial obligation that requires settlement
within a one-year period.

10. According to the accounting equation, when the owner’s equity is constant, any increase
in the asset will cause an increase in liability.

(Total: 10 marks)

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CONFIDENTIAL 3 ACC117/106/TEST 1/MAY2023

PART B

This part consists of TEN (10) multiple-choice questions. Choose ONE (1) the most
suitable answer.

1. The financial statement that was formerly known as Balance Sheet is the ___________.

a. Statement of Profit or Loss

b. Statement of Financial Position
c. Statement of Cash Flows
d. Statement of Changes in Equity

2. The following would be considered as an external user of accounting information, except

for?

a. Foreign Customer
b. Local Authority
c. Managing Director
d. Institutional Investor

3. Which of the following statements describes a sole proprietorship business?

a. Profit or loss is divided among shareholders

b. The owner has unlimited liability
c. Owned by two or more people but not exceeding 20 people
d. Owner and business are two separate entities

4. Which of the following business entities have unlimited liability?

I. Sofea Enterprise
II. Azfar Sdn Bhd
III. Red Diamond Bhd
IV. Syahmi & Shaheem Associates

a. I and II
b. II and III
c. II and IV
d. I and IV

5. “Information would become less useful for decision-making if the accounting information is
outdated.” Which qualitative characteristics of the financial statement is related to this
statement?

a. Relevance
b. Timeliness

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CONFIDENTIAL 4 ACC117/106/TEST 1/MAY2023

c. Verifiability
d. Understandability

6. The financial statements should not contain any error and should not omit any important
and material information. This is in line with the concept of _____________.

a. Going concern
b. Historical cost
c. Faithful representation
d. Comparability

7. A supplier analyses the accounting information on its customer’s liquidity then uses that
information to decide whether to grant credit to the customer or not. This statement explains
___________ characteristics.

a. Relevance
b. Going concern
c. Verifiability
d. Understandability

8. The practice of recording the purchased price paid for an item bought even though the
market value of the item is higher, follows ____________.

a. Economic entity concept

b. Verifiability concept
c. Timeliness concept
d. Historical cost concept

9. A credit entry could be caused by ____________.

a. An increase in revenue or a decrease in asset

b. An increase in liability or an increase in expense
c. A decrease in expense or a decrease in revenue
d. An increase in asset or a decrease in liability

10. The owner used business cash for a staff birthday party celebration. What are the
components of the financial statement involved here?

a. A decrease in expense and an increase in owner’s equity

b. A decrease in revenue and an increase in liability
c. An increase in expenses and a decrease in asset
d. A decrease in owner’s equity and a decrease in asset

(Total: 10 marks)

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CONFIDENTIAL 5 ACC117/106/TEST 1/MAY2023

PART C

QUESTION 1
Marean Enterprise, a sole trader business owned by Mrs. Mariam sells various types of footwear.
Given below are the transactions of the business for March 2023.

Date Transactions
March 1 Mrs. Mariam brought in her home’s office furniture worth RM10,000 for
business use.
2 The business received an invoice from Medicare Sdn. Bhd. for 50 pairs of
ladies’ sandals bought amounting to RM 4,000 (credit term 5/30, net 60).
4 A cheque of RM1,300 was received from A&A Trading for goods sold.
8 Sold women’s leather boots on credit to Shoes Enterprise amounted to RM
9,000. A trade discount of 5% was given due to bulk purchases.
9 The business purchased a used van costing RM48,000 on credit from
Motorsport Enterprise. RM 4,800 deposit was paid by cheque.
12 Purchased stationery by cash amounted to RM50.
14 Mrs. Mariam deposited her personal cash into the business bank account,
RM 8,000.
17 The business returned 10 pairs of wrong-colored sandals valued at RM500
to Medicare Sdn. Bhd.
20 The business bought 20 pairs of sneakers from Skichers Trading for a total
of RM1,200. The amount is to be paid in the next two months.
22 Obtained a loan from Bank Isleem which amounted to RM10,000 and the
money was transferred into the business bank account.
26 The business received a cheque from Shoe Enterprise to settle 60% of their
outstanding amount. A cash discount of RM 513 was given due to early
settlement.
27 Mrs. Mariam made a personal donation of RM 1,500 to Masjid Jamek Al-
Raudah by way of an online transfer from the business bank account.
29 The business’s cash of RM4,800 was transferred into the business bank
account.
31 Rent received from Mr. Amin, a tenant, RM1,500 by online banking transfer.

Required:
a. Illustrate the effects (increase or decrease) of the above transactions on the asset,
liability, owner’s equity, revenue, or expense.
(15 marks)

b. Show the journal entry (account to be debited or credited) of the above transactions.
(15 marks)

(Total: 30 marks)
END OF QUESTION PAPER

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