UNIVERSITI TEKNOLOGI MARA

TEST 1

COURSE : FUNDAMENTAL FINANCIAL ACCOUNTING AND

REPORTING
COURSE CODE : ACC407
SEMESTER : OCT 2023 – FEB 2024
DATE : 24 NOVEMBER 2023
TIME : 1 HOUR 30 MINUTES (3.00 PM – 4.30 PM)

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of two (2) parts:

i. PART A - Multiple Choice Questions (10 Marks)
ii. PART B - Short Structured Questions (40 Marks)
Total: 50 marks

2. Answer ALL questions from all parts in English.

3. Fill in the details below:

Name : _____________________________________________________

UiTM student ID no. : _____________________________________________________

Program Code : _____________________________________________________

Group : _____________________________________________________

Lecturer's Name : _____________________________________________________

4. Do not bring any material into the examination hall unless permission is given by the invigilator.

6. Please check to make sure that this test pack consists of the correct Question Paper.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This test consists of 9 printed pages including cover page
PART A
This part consists of 10 multiple choice questions. Choose the most suitable answer
and write the alphabet representing the answer in the table given below.

1. Which of the following will most likely be performed by a bookkeeper?

A. Evaluating an organisation's operational efficiency.

B. Forecasting the probable results of business future operations.
C. Designing systems that provide information to decision-makers.
D. Updating the business transactions into the files and records.
(1 mark)

2. Ahmad and six of his family members are directors of a business dealing in interior
design. The business owners are limited to 50 members and are not personally liable
for the business debt. What form of business is best described by these statements?

A. Sole proprietorship
B. Partnership
C. Private limited company
D. Public limited company
(1 mark)

3. Financial information is capable of making a difference in the decisions made by users

of that information. Which of the following does not relate to this qualitative
characteristic of information?

A. Predictive value
B. Timeliness
C. Materiality
D. Confirmatory value
(1 mark)

4. Historical cost concept requires the valuation of an assets at _____.

A. Market value
B. Original value
C. Relevant value
D. Revaluation Value
(1 mark)

5. The assumption that a business will continue its business operation indefinitely
applies the ______________.

A. periodicity assumption
B. business entity assumption
C. going concern assumption
D. monetary measurement assumption
(1 mark)

2
6. A company that chose to hide its financial problem and filing for bankruptcy violates
which of the following accounting concepts/assumptions?

A. Business entity concept

B. Going concern assumption
C. Periodicity assumption
D. Historical cost concept
(1 mark)

7. Which of the following is considered as non-current assets?

A. Mortgage, furniture and accounts receivables

B. Office equipment, short-term loan and freehold premises
C. Leasehold Premises, secondhand van and office equipment
D. Motor vehicles, bank overdraft and accounts payables
(1 mark)

8. When a business purchases assets on credit, __________.

A. Total assets and owner’s equity will increase

B. Total assets and liabilities will increase
C. Total assets, liabilities and owner’s equity will remain the same
D. Total assets will increase and total liabilities will decrease
(1 mark)

9. What are the journal entries to record a payment of business’ utility bills using the
owner’s money?

A. Debit Utility bills account, Credit Capital account

B. Debit Utility bills account, Credit Bank account
C. Debit Bank account, Credit Utility bills account
D. Debit Drawings account, Credit Bank account
(1 mark)

10. Which of the following statements is CORRECT?

A. Return outwards are goods returned to suppliers that will record on credit side
of return outwards account
B. Return outwards are goods received from customers that will record on credit
side of return outwards account
C. Return outwards are goods returned to suppliers that will record on credit side
of purchases account
D. Return outwards are goods received from customers that will record on credit
side of sales account
(1 mark)
Answer for Part A: Multiple Choice Question
1 6

2 7

3 8

4 9

5 10

(10 marks)

3
PART B
This part consists of 2 short structure questions. Write the answer in the table given
below.

Question 1

Lucy, a qualified interior designer with skills in drawing techniques and concept development,
owns Lucy Design. Myra specializes in computer visualisation, multimedia, graphic design
and model-making, owns Myra Uptrend. Both are friends and graduated from the same
university. As the owner of the respective business, each hire two employees and wishes to
expand the business to remain competitive. They have discussed several options to merge
their business to benefit from more capital, more expertise, limited liability and limited number
of members.

As a business Lucy Design and Myra Uptrend always ensure the records are well kept
separated from the owner’s record. Both businesses practice the same accounting methods
and procedures year after year and end their financial year on 31 December. Lucy Design
will record items purchased for more than RM500 as assets; whereas; Myra Uptrend adopts
RM800 as the ceiling to record as assets.

Required:

a) Suggest a suitable form of business for the combination of Lucy and Myra’s business.
(1 marks)

b) How will the business suggested in (a) raise its capital?

(2 marks)

c) Identify three (3) potential users of financial information for the business suggested in (a).
(3 marks)

d) Identify and briefly explain two (2) concepts/assumptions adopted by both businesses.
(4 marks)

4
 Answers for Part B: Short Structured Question 1

a)

b)

c)

5
d)

(10 marks)

6
Question 2

Atan Enterprise, owned by Mr. Atan, started business on 1 September 2023. Below are the
business transactions during September 2023.

September
Transactions
2023
1 The owner, Mr. Atan, brought into the business bank account RM10,000
and RM 1,500 cash. He also brought a personal laptop worth RM4,000 into
the business. capital

3 Purchased a van costing RM50,000 on credit from Dmax Sdn. Bhd.

purchase asset
5 Purchased goods from Teratai Enterprise on credit worth RM 1,500.
purchase goods
7 Mr. Atan took goods amounting to RM500 for his personal use and another
RM300 cash for paying his utilities bill.

9 Sold goods in cash to Jambu Enterprise worth RM2,500.

cash sales
10 Sold goods to Ms Liana worth RM3,000. Ms Liana paid 50% by cheque with
the remainder to be paid later. cash sales

14 Atan Enterprise issued a debit note to Teratai Enterprise for the returned
goods, amounting to RM150.
return outwards
20 Atan Enterprise received a cheque of RM1,000 as a rent payment from his
tenant. cash revenue

23 Paid water bills RM250 by cheque.

cash exp
26 Made a full settlement to Teratai Enterprise via online transfer.
credit purchase
27 Received RM300 commission in cash.
commission received
28 Purchased goods from Ladybird Bhd and paid RM550 by cheque.
cash purchase
30 Atan Enterprise bought furniture from SK Manufacturing Sdn Bhd and paid
by cash RM3,000 purchase asset

Required:
a) Identify the effects (increase or decrease) of assets, liabilities, owner’s equity,
revenues or expenses for all the transactions above.
(15 marks)

b) Show the double entries (debit and credit) of all the above transactions.
(15 marks)

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 Answers for Part B: Short Structured Question 2
Date (a) Effects (b) Journal Entry

Sept Increase Decrease Debit Credit

10

14

8
20

23

26

27

28

30

(15 marks) (15 marks)

Total: 50 marks

END OF QUESTION PAPER