CONFIDENTIAL ACIDEC 2016/ACC406 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE INTERMEDIATE FINANCIAL ACCOUNTING AND REPORTING COURSE CODE : ACC406 EXAMINATION : DECEMBER 2016 TIME 3 HOURS INSTRUCTIONS TO CANDIDATES 1 This question paper consists of two (2) parts: PART A (10 Questions) PART B (4 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 invigitator. 4 Please check to make sure that this examination pack consists of i) the Question Paper i) 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 9 printed pages: © Hak Cipta Universiti Teknolog! MARA CONFIDENTIALCONFIDENTIAL 2 ACIDEC 2016/ACC406 PART A This part consists of 10 multiple-choice questions. Choose the most suitable answer. 1. Which of the followings are the purposes of preparing the financial statements: To find the net profit as shown in the statement of profit or loss statement To find the net profit as shown in the statement of financial position To show the financial performance of a business To show the financial position of a business All of the above i, i, fi only isi, iv only i i, iv only (1 mark) 2. The internal users of financial statement seek the following information except: com> Employees - Career enhancement and promotions Management teams - Planning and budgeting purposes ‘Owner - business growth and profit performances Government - economic planning and taxation purposes (1 mark) 3. The owner paid the business expenses using his own monies com> Both expenses increase and capital increase. Both expenses decrease and asset decrease. Expenses increase and asset decrease. Expenses decrease and capital increase. (1 mark) 4. The most appropriate use for sales journal below is correct EXCEPT: pom> Sales journal is used to record all sales including cash sales Sales journal is used to records all sales except credit sales Sales journal is used to record sales of goods on credit only Sales journal is used to record all sales including cash sales and sales of non-current assets (1 mark) (© Hak’Cipta Universiti Teknologi MARA ° “CONFIDENTIALCONFIDENTIAL ACIDEC 2016/ACC406 5. The statement below explained one of the accounting concept used in preparing the financial statements: - Only transactions and events that are capable of being measured in monetary| terms are recognized in the financial statements. - All transactions and events recorded in the financial statements must be reduced! to a unit of monetary currency. Where it is not possible to assign a reliable monetary value to a transaction or event, it shall not be recorded in the financial statements. | Which accounting concept below is the most suitable to be applied for the above statements ‘A. Money measurement concept B. Currency measurement concept C. Kuala Lumpur Stock Exchange concept D. Business entity concept (1 mark) 6. __ Below are two different business entity owned by different owners ‘Abu MiniMart bu and Bakar ‘What is the similarity possess by the business above: A. Unlimited liabilities B. Separate legal entity C. Audited financial statement D. Published financial statement (1 mark) 7. Inadouble entry system, a debit and credit is used to record DEBIT CREDIT A. Increase in Decrease in asset, expense and liability capital and revenue B. Increase in Decrease in asset, revenue, and liability drawing, capital and expense C. Decrease in Increase in liability, capital and expense asset, drawing and revenue D. Increase in Increase in asset, drawing and expenses capital, liability and revenues (1 mark) © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 4 ACIDEC 2016/ACC406 8 The following disadvantages of using books of prime entry system are correct EXCEPT: ‘A. Reduce the amount of posting that is necessary for process transactions. B. The cost to develop the system is expensive. C. Allow segregation of duties as one clerk will responsible for one journal. D. Provide reference as the nature of transactions will determine the journal in which it will be entered. (1 mark) 9. Which of the following is the correct journal entry to record drawings of goods done by the owner for personal use? A B. c. D. Debit Drawings Credit Purchases Debit Purchases Credit Drawings Debit Drawings Credit Cash Debit Cash Credit Drawings (1 mark) 10. Failure to record return of goods previously purchase by cash will affect one of the following book of prime entry com> Return outwards journal Cash receipts journal Return inwards journal Purchase journal (1 mark) (Total: 10 marks) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 5 ACIDEC 2016/ACC406 PARTB QUESTION 1 Kiranto and Dayangku are good friends since school till they graduated from UiTM with Degree in Music. They share the same enthusiastism in music. Dayangku is a singer and a guitar player and a self-proclaimed musical historian. She has also produced recordings while Kiranto is a radio announcer for MOTFM and a film critic for Screen Reward TV3. He also sang with the Randall Bramblett Band. Kiranto contributed 60% higher than Dayangku's contribution of capital totaling overall capital of RM130,000. Dayangku contributed RM50,000 capital in a form of cash. Kiranto and Dayangku will together manage the business. They locate their business in Shah Alam, a heaven for students of faculty of music and entertainment art. The business has unlimited liabilities. Their business basically sells, buys, and trades CDs, vinyl records, and tapes. Vinyl records are also known as LPs, which stands for long playing records. Almost no new audio releases are produced as vinyl records, many people stil enjoy the music that was recorded on them. Thus Kiranto and Dayangku wanted Tumaboutmusic to supply them LPs as well as needles and styluses for turntables. The store carries “thousands and thousands” of new and used CDs. Tapes run a distant third in terms of inventory, and they “don't carry any new cassettes, which have just about gone the way of the dinosaur,” Kiranto said. The store's owners won't accept any musical merchandise that is scratched up or not handled properly. LPs and tapes must be in very good condition. The business does not sell the musical instruments, The store will pay additional price in between RM1 and RMS in cash or trade, and a trade will bring the customer slightly more value. The store's needs determine whether or not they will buy the CD, LP, or tape. If Turnaboutmusic has 50 copies of a particular recording, obviously the store doesn't need another copy. Required: a, State any TWO (2) types of business organization that can possibly be set up by Kiranto and Dayangku (2 marks) b. Calculate the capital contributed by Kiranto and Dayangku to set up their business. (3 marks) ©. Briefly explain the accounting treatment for the capital contributed by the partners. ( marks) d. State FIVE (5) characteristics possess by the business organization that they decided to set up in the above scenario. (S marks) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 6 ACIDEC 2016/ACC406 @. Briefly explain the concept that should be followed by Kiranto and Dayangku to help their business to continue and excel in the future. (2 marks) f. Briefly explain the application of comparability concept by Turnaboutmusic store. (2 marks) @. State the classification of CDs, vinyl records, and tapes sold by Turaboutmusic store. (1 mark) (Total: 20 marks) QUESTION 2 Given below are the business transactions of Simba Enterprise, during the month of November 2016: 2016 Transactions November | 5 | Purchased goods worth RM4,500 from Abu on credit 8 | Credit sales to Sara worth RM2, 100. 9 | Purchased furniture worth RM8,400 from Saga Perabot and paid |__| RM1,400 by cheque. - 10 | Received commission worth RM3,700 by cheque._ 14 | Simba took out RM550 goods for personal use. 12 | Retum inwards of RM620 from Sara because of damaged goods. 15 | Cash sales to Bismi worth RM6,900. 19 | Received rent RM3,300 by cheque. 21 | Retumed damaged goods worth RM880 to Abu. 23 | Paid insurance by cheque RM1,200, 25 | Simba received a cheque from Aprilbank worth RM50,000 for a 3 years 10% term loan, 26 | Simba brought in his own computer worth RM9,000 into the business. 29 | Purchased stationery RM200 by cash for business use. 31 | Paid interest on loan RM2,300 by cash. Required: State the effects (increase/decrease) on assets, liabilities, revenues, expenses or owner’ equity for the transactions dated 11 November 2016 until 21 November 2016 only. (10 marks) Show the accounts to be debited and credited for the transactions dated 23 November 2016 until 31 November 2016 only. (10 marks) ‘State the appropriate books of prime entry for the transactions dated § November 2016 until 10 November 2016 only. (5 marks) (Total: 25 marks) (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 7 ACIDEC 2016/ACC406 QUESTION 3 Puan Mona Liza is the owner of Mona Enterprise. The financial year end of the business is on 31 December annually. Below is the trial balance extracted from the books of Mona Enterprise as at 31 December 2015. Debit Credit {RM) (RM) Purchases and sales 52,000 109,200 Inventory as at 1 January 2015 6,500 Drawing 7,800 Capital as at 1 January 2015 61,360 Cash in hand 3,900 Bank overdraft 5,200 Discount allowed and discount received 1,040 1,560 Retums inwards and retums outwards 3,900 3,120 Carriage inwards 2,080 Carriage outwards 4,160 Rent 15,600 Wages and salaries 23,400 Insurance 4,820 General expenses 520 Electricity and telephone expenses 4,300 Furniture and Fittings at cost 44,200 Office Equipment at cost 39,000 Accumulated Depreciation — Furniture and Fittings 1,820 Accumulated Depreciation — Office Equipment 2,600 Accounts receivables and accounts payables 16,640 8,320 Allowance for Doubtful Debts as at 1 January 2015 2,080 Bank Loan 26,000 Interest Expense 1,300 Commission revenues 3,900 225,160 225,160 Ade jonal information: 1 Insurance prepaid for the year was RM260. 2. Puan Mona Liza took RMS00 cash for her daughter's wedding ceremony. 3. Commission revenue was accrued amounting RM1,040 at the end of the year. 4, Interest expense accrued is RM260. 5. M200 electricity bill was erroneously recorded as general office expenses. 6. Closing inventory as at 31 December 2015 was RM10,400. 7. Bad debts of RM840 are to be written off and the allowance for doubtful debts is to be adjusted at 10% of net accounts receivables. (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 8 ACIDEC 2016/ACC406 8 Depreciation on furniture and fittings was provided at 5% on straight line method, yearly basis while the office equipment was provided at 10% on reducing balance method, yearly basis. Required: a. The statement of profit or loss for the year ended 31 December 2016. (18 marks) b. The statement of financial position as at 31 December 2016. (12 marks) (Total: 30 marks) QUESTION 4 Kelly, Kayla and Kathy are partners in Karisma Trading sharing profits or losses in the Proportion of 3:1:2 respectively. The partnership agreement states the following: 1 Kelly and Kathy are entitled to a monthly salary of RM2,500 and RM2,000 respectively. 2. Interest on capital is at 5% per annum. 3. Interest on drawings is at 7% per annum. The following balances were obtained from the partnership books for the financial year ended 31 December 2015. DEBIT(RM) | CREDIT(RM) Gross Profit 283,030 ‘Administrative expenses 136,580 Selling and Distribution expenses 79,700 Rental income i 10,400 Land at cost 125,000 (Other non-current assets at cost ‘94,000 Accumulated depreciation as at 1 January 2015: = _Other non-current assets ___ 25,000 ‘Accounts Receivable and Accounts Payable 15,300 33,600 Bank 41,250 | Inventories as at 31 December 2015 _ 41,700 | Capital Accounts as at 1 January 2015: |= Kell > Kayla = _ Kathy ‘Current accounts as at 1 January 2015: ~ ~ -_Kelly = Kayla 4,850 = Kathy Z Coan from Kayla l 538,380 (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL, 9 ACIDEC 2016/ACC406 Additional information: 1 Other non-current assets are to be depreciated at 10% per annum on reducing balance method. No depreciation is to be provided on land. The partners are entitled to 8% interest per annum on any advances or loan provided to the partnership. The following accruals and prepayments are to be adjusted at the end of the accounting period! Rental income received in advance RM820 Administrative expenses accrued RM650 4. The following were cash drawings made by partners, but have not yet been recorded: Kelly RM1,100 (taken on 1 March 2015) Kayla RM2,500 (taken on 30 April 2015) Kathy RM1,800 (taken on 1 May 2015) Required: a. Statement of Profit or Loss for the year ended 31 December 2015. (8 marks) b. Appropriation Account for the year ended 31 December 2016. ( marks) c. State any TWO (2) items that should be recorded in the Partners’ Current Account. Assuming that the partnership is using fixed capital account. (2 marks) (Total: 15 marks) END OF QUESTION PAPER (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL