NAME : JASLEEN QISTIENA BINTI ZAINUDDIN

MATRIKS NUMBER : UDE210044

COURSE : FINANCIAL AND REPORTING I ( UDE1003 )

TUTORIAL 2

Question 1

Lee Motor is a car dealer. It receives orders from customers in advance against 20% downpayment.
The company delivers the cars to the respective customer within 30 days upon which it receives the
remaining 80% of the list price.

The concept used in this situation is objectivity, it is because the method of objectivity can easily
be measured, chances are, it would be more agreeable to different parties, base on the question Lee
Motor’s customer can pay another 80% monthly or depend on agreement after company delivers
the car.

Question 2

A machine is leased to Company A for the entire duration of its useful life. Although Company A is
not the legal owner of the machine, it may be recognized as an asset in its balance sheet since the
Company has control over the economic benefits that would be derived from the use of the asset.

In this situation we can used the concept of dual aspect it is because, Company A is not the legal
owner of the machine and recognized as an asset in balance sheet.

Question 3

Assets are normally shown at cost price in the balance sheet, and the cost is the basis for all
subsequent accounting for the asset.

Base on the question the concept that can be used is historical cost, the historical cost concept is
that, all the asset must be record at the original cost and not the current market or prices in the
financial statement. The historical cost is refer to the actual first place we pay not the current prices.
For an example on 1 january 20X1 Hana bought a land RM80 000 and Hana have to pay RM16 000
for every 5 years, on 1 june 20X2 the land increased price to RM100 000. Base on the historical cost
concept Hana have to pay at the first prices she payed

Question 4

Everything is recorded in terms of money. Items which cannot be recorded in terms of money are
ignored and not included. It follows that the financial statements only give a partial picture of the
state of a business.
The relevant concept can be used is money measurement concept, Money measurement concept
states that only activities that can be measured in terms of money should be recorded in the
accounting books. Accounting always concern about those facts that can be measured in money the
monetary value of the transaction.

Question 5

Profit is the difference between revenue and expenses not cash received and paid. Expenses are
matched to revenues, for example if rent has been set as a percentage of sales (a turnover rent),
then the rent is accrued in the accounts is the same period as the sales and not when the rent is
actually paid.

The concept that can be used is concept of accrual, because rent is accrued in the accounts is the
same period as the sales and not when the rent is actually paid. Concept of accrual basis that income
we earn and expenses incurred are recognized at the time it occurs, and not at the time it is actually
paid. Income is taken into account when it is earned. Usually, income is recorded before money
changes hands. The accrual method records income when a product or service is delivered to a
customer with the expectation that money will be paid in the future.

Question 6

There are two sides to accounting, one represented by the assets and the other represented by the
liabilities against them.

If there are two sides to accounting it is one represented by the assets and the other represented by
the liabilities against them normally we used concept of dual aspect because the concept of two
aspects is the underlying foundation of the “double entry bookkeeping system” and is also known as
the accounting equation. According to the equations is Capital + Liabilities = Assets

Question 7

For accounting purpose, the business is treated as a separate entity from the owner. The accounting
records show transactions of the business not the owner.

When the business is treated as a separate entity from the owner the basis concept of accounting is
business entity. The accounting transactions between business and the owner are separate anything
related to the owner should not be included in the financial statements of the business.
Question 8

Profit is earned at the time the goods or services are passed to the customer and the customer
incurs liability for them.

If one of the pertinent issues in financial accounting is when to take credit of revenue the basis
concept of accounting is the realizations. In order to be in line with the concept of prudence, in
general, profits are taken or realized only when the customer assumes responsibility for them.

Question 9

Among the all concepts under generally accepted accounting principles (GAAP), which two (2) are
the most importance concept that you think company should focus more. Elaborate your opinion.

In my opinion, I think the most importance concept that company should focus more is business
entity. When the business is treated as a separate entity from the owner financial statement will be
balance and it not be mixed up with personal owner account with business account. If the account
treated as a separate entity the financial statement will be balance and can be more advanced in the
future. If the business entity with personal owner account got mixed up, business will be slow or
unsustainable as experiencing this heavy corporate burden can bring the company unable to thrive
in the future. The other concept that important company should focus is the realization concept
According to this concept, income should be recognized only when it is earned, or it makes sense the
company would receive payment from its customers where this income is realized when risks and
rewards are transferred, or income is cleared because, This ensures a true and fair view of the
account as profits should be realized and recognized only when the seller transfers risks and
rewards.

Question 10

Differentiate between conceptual framework and standards

Different of conceptual framework and standards is function of conceptual framework is assist

financial auditors and preparations for improving the implementation of the IFRS Regulation while
the function of accounting standard is encourage and promote the use of sound local financing
mechanisms. The benefits of conceptual framework it is contributes to confirming the credibility of a
reliable financial statement. Accounting standard benefits is to help consumers and stakeholders to
get information and to making decision that is not available due to policy failure. A completely
separate body conceptual framework from is a formal structure, whereas accounting standards is
informal structure.