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ACC 70204 Accounting for Decision Making

Test:

Assessment Worth 25% of subject 

6 October 2022

Part A: Multiple Choice Questions (20 x 2 marks = 40 marks)

Encircle the letter that corresponds to the best answer. One correct answer for each question.

1.  The steps in the process of accounting take place in the following order:

a. Identifying, decision making, measuring, communicating

b. Measuring, identifying, decision making, communicating

c. Identifying, measuring, communicating, decision making

d. Identifying, communicating, measuring, decision making

2.  Which of the following refer to the situation at a specific point in time?

a. Balance sheet

b. Income statement

c. Statement of Cash Flows

d. Statement of Changes in Equity

3. Which of the following is not an element of triple bottom line reporting?

a. Economic performance

b. Environmental performance

c. Ethical performance

d. Social performance

4 .  For a company, corporate governance responsibilities ultimately rest with:

a. individual managers

b. the Registrar of Companies

c. the board of directors

d. the shareholders

5. ABC Restaurant Sdn Bhd started the year with total assets of RM90,000 and total liabilities of RM40,000. During the year the business earned RM100,000 in income and incurred RM55,000 in expenses. Dividends paid were RM10,000. The profit for ABC for the period was:

a. RM35,000

b. RM45,000

c. RM20,000

d. RM90,000

6.  A business which is a separate legal entity can be a:

a. sole trader

b. company

c. partnership

d. all options are businesses which are separate legal entities.

7. An advantage of the company form of business is that:

a. it has a limited life

b. it is simple to establish

c. its owner's personal resources are at stake

d. its ownership is transferable through the sale of shares

8. Retained earnings at the end of the period are equal to:

a. assets plus liabilities

b. retained earnings at the beginning of the period plus profit earned for the period minus dividends

c. profit earned for the period plus retained earnings at the start of the period

d. retained earnings at the beginning of the period plus profit earned for the period minus liabilities.

9.  If total liabilities increased by RM25,000 and equity increased by RM5,000 over a period, then total assets must have changed by?

a. RM25,000 increase

b. RM20,000 decrease

c. RM30,000 increase

d. RM20,000 increase

10.  The duality concept requires that each transaction must be recorded:

a. first as income then as an expense

b. in at least two different accounts

c. in a journal and a ledger

d. in two sets of books

11. Some of ABC's transactions for the month of October are as follows. Which transaction, if any, is an expense for the month of October?

a. Paid RM1,000 off a loan obtained during July

b. Purchased RM50 worth of petrol on credit, to be paid for in November

c. Purchased a photocopier for RM15,000

d. Paid a mechanic RM250 for repair work carried out in September

12.  If a car is serviced on 31 May and an invoice is issued, the owner picks up the car on 31 May, the owner sends a cheque to the servicing firm on 4 June, and the firm banks the cheque on 7 June, under accrual accounting, income is recognised by the servicing firm on:

a. 31 May

b. 4 June

c. 7 June

d. 5 June

13.  The effect on the accounting equation of the business buying a computer worth RM900, paying RM450 cash and owing RM450 to be paid in 30 days’ time is:

a. increase the asset computers, decrease the asset cash, decrease the liability accounts payable

b. decrease the asset computers, increase the asset cash, decrease the liability accounts payable

c. increase the asset computers, decrease the asset cash, increase the liability accounts payable

d. increase the asset computers, increase the asset cash, decrease the liability accounts payable

14. A machine is purchased for RM120,000. It is estimated that it has a useful life of 4 years and will then be sold for RM8,000. Using the straight-line method, the carrying value of the machine at the end of the third year of the machine's useful life is:

a. RM28,000

b. RM42,000

c. RM36,000

d. RM60,000

15. If sales = RM45,000, purchases = RM25,000, beginning inventory = RM10,000 and ending inventory = RM8,000, cost of sales is:

a. RM18,000

b. RM27,000

c. RM7,000

d. RM20,000

16. The account income received in advance is:

a. an income account

b. an expense account

c. liability account

d. an asset account

17. Which of these is not part of shareholders’ equity in the balance sheet?

a. Dividends payable

b. Share capital

c. Revaluation reserve

d. Retained earnings

18. Parent Berhad acquired all the shares in Subs Berhad at a cost of RM1,250,000. The fair value of the assets acquired was RM1,450,000 and the fair value of the liabilities assumed was RM450,000. The amount of goodwill acquired by Parent Berhad is:

a. RM1,000,000

b. RM200,000

c. RM850,000

d. RM250,000

19. These are all external users EXCEPT:

a. Managers

b. Shareholders

c. Income Tax Department

d. Suppliers

20. Asia Airline has received payment for advance booking of a flight ticket worth RM2,000 from a customer. How will this transaction be recorded in Asia Airline’s accounts?

a. Increase cash and increase income received in advance

b. Increase cash and increase income

c. Increase accounts receivable and increase income

d. Increase accounts receivable and increase income received in advance

Part B: Financial Statements (34 marks)

The balances of the accounts of Adeline Trading Sdn Bhd for the month ended 31 December 2021 are as follows:

Accounts payable RM  3,100 Dividends paid RM 8,000

Accounts receivable 10,400 Insurance expense 2,200

Buildings 260,000 Supplies Inventory 400

Cash 16,600 Accrued expenses payable 3,300

Sales revenue 40,600 Utilities expense 1,400

Share capital 261,000 Salaries expense  10,000

Retained earnings (beginning) 25,900 Cost of Goods Sold 24,900

Required:

Prepare an income statement, and a classified statement of financial position for Adeline Trading Sdn Bhd. Show your calculation of Retained Earnings clearly.

Part C: Accounting Worksheet (26 marks)

Amos has started his business on March 2022, and has furnished you with the following transactions:

2022

 

 

March

3

Injected capital to commence business RM200,000.

 

4

Purchased office stationery RM1,600.

 

7

Received cash fees RM2,400.

 

8

Took out a loan from Smith Bank RM18,000.

 

8

Paid rent RM1,800.

 

10

Purchased office furniture on credit RM8,000.

 

12

15

Invoiced a customer for services RM2,200.

Signed a one year contract with a supplier to purchase goods worth RM20,000

 

17

Paid wages to executive assistant RM980.

 

27

The customer paid RM2,200 for the invoice dated 12 March 2022.

Required:

Enter the above transactions into the following accounting worksheet and calculate the profit or loss for the period.

Answer:

Date March
2022

Cash

Accounts Receivable

Office

Furniture

Accounts Payable

Loan

Capital

Profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

 

 

 

 

 

 

The profit for the month is ……………….