CONFIDENTIAL 1 AC/NOV2023/ACC117/106

UNIVERSITI TEKNOLOGI MARA

TEST 1

COURSE : INTRODUCTION TO FINANCIAL ACCOUNTING /

INTRODUCTION TO FINANCIAL ACCOUNTING AND
REPORTING
COURSE CODE : ACC117/106
DATE : NOVEMBER 2023
TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of THREE (3) parts: PART A (10 TF Questions)
PART B (10 MCQ Questions)
PART C (1 Question)

2. Answer ALL questions using your own paper. Start each answer on a new page.

3. 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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PART A

Please state True or False for the questions below.

1. Accounting is a system of maintaining records of a business’s operations and

communicating this information to decision makers.

2. In the case of sole proprietorship business went bankrupt, the personal asset of the owner
will not be protected.

3. The only users of financial information are managers of a business.

4. The company is managed and controlled by a Board of Directors appointed by the

shareholders.

5. For information to be relevant, it has only to have only predictive value.

6. Money measurement concept assumes that the businesses must record their assets and
liabilities at their original cost.

7. The business owner bought a motor van for his own use and that transaction has been
recorded in the books of the business. This is against the business entity concept.

8. Comparability, verifiability, timeliness and understandability are identified as enhancing

qualitative characteristics.

9. Maya Trading purchased goods costing RM3500 by cash from Meriam Borong Bhd and
this transaction will increase the expenses and decrease the asset.

10. The double entry to record the purchase of office furniture on credit from Kedai Perabot
Kami Sdn Bhd is Debit Purchases, Credit Kedai Perabot Kami Sdn Bhd.

(Total: 10 marks)
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PART B

Choose the best answer for the questions below.

1. Which of the following is not an internal user of accounting information?

a. Manager
b. Chief Executive Officer
c. Board of Directors
d. Inland Revenue Board

2. Which type of business organization has the following characteristics?

• Owned by 2 to 20 persons
• Owners have an unlimited liability
• Profit or loss will be shared as per profit sharing ratio stated in the
agreement.

a. Agung Hardware Trading

b. Tasty Food Sdn Bhd
c. Berjaya Property Bhd
d. Merry & Hetty Law Firm

3. A term accounting can best be defined as __________.

a. document that reports on an organization's financial position

b. a business plans
c. a system that measures business activities, processes financial information into
reports and communicates the findings
d. a method of recording business transactions

4. The accounting process involves all of the following except:

a. Identifying economic transactions that are relevant to the business.

b. Recording non quantifiable economic events.
c. Communicating financial information to users by preparing financial reports.
d. Analysing and interpreting financial reports

5. Accounting information is considered to be relevant when it:

a. Is capable of making a difference in a decision

b. Is verifiable and neutral
c. Is understandable by reasonably informed users of accounting information
d. Allows us to compare a set of financial statements with those of prior periods
and those of other companies
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6. Which of the followings are the enhancing qualitative characteristics:

I. Comparability
II. Faithful representation
III. Timeliness
IV. Verifiability

a. I and III only

b. I, II and IV only
c. I, III and IV only
d. All of the above

7. Which of the following statements describe a going concern concept?

a. A business will ensure that only items that can be expressed in money terms
are recorded in the financial statements.
b. A business is assumed to operate for an indefinite life.
c. A business will refrain itself from changing the methods or techniques of
valuation to allow comparison of financial statements.
d. All the above.

8. According to business entity concept, which of the following will not be recorded in
the business books of accounts?

a. The owner of the business uses his own money to buy car for his personal
use
b. The business buys goods for the purpose of resale
c. A customer made a purchase and made payment using a cheque
d. The owner of the business brought in cash into the business

9. If the assets of a business are RM100,000 and the owners’ equity is RM30,000, the
value of the liabilities will be ________.

a. RM30,000
b. RM100,000
c. RM130,000
d. RM70,000

10. In double entry system, a credit is used to record __________.

a. Decrease in asset and owner’s equity, and a decrease in liability and

revenue.
b. Decrease in asset and expenses, and increase in liability, revenue and
owner’s equity
c. Decrease in asset and revenue, and increase in liability, expenses and
owner’s equity.
d. Decrease in asset and an increase in owner’s equity, revenue and
expenses.
(Total: 10 marks)

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

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PART C

QUESTION 1

Happy Pet Store is a pet food supply business owned by Madam Tie. The business started
on 1 January 2023. The following transactions took place in the month of October 2023.

Date Transaction
2023 1 Deposited RM10,000 cash into business bank account.
October 3 Purchased lorry from Prime Motor Sdn Bhd for RM70,000. An initial
payment of RM7,000 was made via cheque as a deposit, with the
remaining balance scheduled for payment over twelve months.
4 Bought cabinets from Premium Furniture RM5,000 by cash.
6 Purchased goods worth RM20,000 from Cute Pet Sdn Bhd on credit.
8 Sold goods worth RM8,000 to Molly Cat House on credit.
10 Madam Tie brought in her personal laptop valued at RM4,000 to the
business.
11 Molly Cat House returned defective goods amounting to RM1,000.
12 Cash sales to Cat Star Trading RM3,000.
14 Returned damaged goods worth RM2,000 to Cute Pet Sdn Bhd.
21 Received dividend on investment worth RM5,000 by cheque.
22 Paid the remaining debt owed to Cute Pet Sdn Bhd by cheque.
24 Received a cheque RM7,000 from Molly Cat House.
27 Paid electricity bill amounted to RM1,000 by cash.
29 Madam Tie took cash and goods worth RM200 and RM300 respectively for
her personal use.
31 Paid salaries to the employees by cheque RM10,000.

Required:

Using the format given below, answer the following questions:

Date October a. Effects b. Journal Entry

Increase Decrease Debit Credit

For Example: 1 Asset Asset Bank Cash

a. Illustrate the effects (increase or decrease) of asset, liability, owner’s equity,

revenue, and expenses of the above transactions.
(15 marks)

b. Show the journal entry (debit or credit) of the above transactions.

(15 marks)
(Total: 30 marks)

END OF QUESTION PAPER

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL