1. ANSWER SCHEME
QUESTION 1
a.
Error of Omission – Entire transaction not recorded or completely omitted from the
books of account. There is no debit or credit entries. Example
Error of Commission – Correct amount is posted into wrong account of the same
category of accounts. Example
Error of Principle - Correct amount is posted into an account but of a different
category. Example
Complete Reversal of Entries - amount and the accounts are correct but each item is
shown on the wrong side of the account. Example
Compensating Errors – an error on the debit side is compensated by an error of an
equal amount on the credit side. The error cancels out each other. Example
Error of Original Entry – errors were made in the books of original entry (journals).
Example
b. i. Bad Debts – Some customers may never pay for the goods sold to them, even
though reminders have been sent. The business then decides to write off the amount
due and is classified as bad debt. Bad debts is an expense to the business and will
be charged in the Income Statement.
Example
Allowance for bad and doubtful debts – The business, through bad experiences
of bad debts, may decide to allow a certain percentage as provision for bad and
doubtful debts. Estimation is made as to the amount that will not be collectable.
Example
ii. Accrued revenue – also known as revenue owing. It is revenue earned from
services performed but payment is not yet received; and shown as current asset in
the Balance Sheet.
Expenses prepaid – also known as expenses paid in advance. It is payment of
expenses that will benefit more than one accounting period and shown as current
asset in the Balance Sheet.
c. Consistency Concept - This concept deals with the consistent use of basis or
methods. This means when a business has once fixed a method for the accounting
treatment of an item, it will enter all similar items that follow in exactly the same way.
2. QUESTION 2
a.
DEBIT CREDIT EFFECT EFFECT
i. Machinery Papan Trading Asset Mach. Liab. Creditor
Incr. Papan Incr.
ii. Supplier/Creditor Ret. Out Liab.Creditor Asset Stock
Decr. Decr.
Purchases Decr
iii. Bank Interest Rec. Asset Bank Revenue Int.
Incr. Rec. Incr.
iv. Drawings Bank Capital Decr. Asset Bank
Decr.
v. Bank Loan- B.Islam Asset Bank Liab. Creditor
Incr. B.Islam Incr.
b. Insurance a/c
Bal b/d 562 P& L 1,236
Bank 1,019 Bal c/d 345
1,581 1,581
. Wages a/c
Cash 15,000 Bal b/d 306
Bal c/d 419 P& L 15,113
15,419 15,419
Rent Received a/c
P& L 2,741 Bal b/d 36
Bank 2,600
Bal c/d 105
2,741 2,741
Income Statement Extract
Revenue
Rent Received 2,741
Expenses
Insurance 1,236
Wages 15,113
3. QUESTION 3
a.
Lorries A/c
1 Nov 2009 Bal b/d 1,060,000 31 Oct 2009 Bal c/d 1,060,000
1 Nov 2010 Bal b/d 1,060,000 1 Jan 2011/ Disposal 270,000
(Nissan)
31 Oct 2011 Bal c/d 790,000
1,060,000 1,060,000
1 Nov 2011 Bal b/d 790,000
Workings
1 Nov 2009 – 31 Oct 2010 ~ 1,060,000 x 25% = 265,000
1 Nov 2010 – 31 Oct 2011 ~ 790,000 x 25% = 197,500
Nissan: Acc Depr – 25/12/08 – 31/10/09 2 years x 25% x 270,000 = 135,000*
1/11/09 – 31/10/10
Daihatsu: 11/3/09 – 31/10/09: 1 Year- 25% x 440,000 = 110,000*
Toyota: 30/11/07 – 31/10/08 ; 1/11/08 – 31/10/09 - 2 Years x 25% x 350,000 = 175,000*
Acc. Depreciation - Lorries A/c
31 Oct 2010 Bal c/d 685,000 1 Nov 2009 Bal b/d * 420,000
Depreciation 265,000
685,000 685,000
1 Jan 2011 Disposal 135,000 1 Nov 2010 Bal b/d 685,000
(Nissan)
31 Oct 2011 Bal c/d 747,500 Depreciation 197,500
882,500 882,500
Disposal A/c – Lorry Nissan
Lorries 270,000 Acc. Department 135,000
P&L – Profit / 4,000 Bank 139,000
274,000 274,000
Balance Sheet Extract
Cost Acc Deprn. Net Book Value
31 Oct 2010 1,060,000 685,000 375,000
31 Oct 2011 790,000 747,500 42,500
4. b.
1. Dr Suspense 4,100
Cr Purchases 4,100
2. Dr Discount Allowed/ 190
Cr Suspense/ 190
3. Dr Suspense 335
Cr Debtor Anaz 335
4. Dr Premises 270,000
Cr Purchases 270,000
5. Dr Suspense 99
Cr Sales 99
6. Dr Sales Ret/Ret In. 120
Cr Debtor 120
QUESTION 4
a. Opening Capital = Assets – Liabilities = 17,573 – 2,030
= RM15,543
Workings
TOTAL SALES = Cash Sales + Credit Sales
= 3,921 + 46,215
= 50,136
Shop Fittings: 4,200 + 2,550 – (300 + 250)
= 6,200 x 10% = 620
Creditors Control A/c
Bank 22,177 Bal b/d 1,598
Bal c/d 2,445 Purchases 23,024
24,622 24,622
Debtors Control A/c
Bal b/d 2,643 Bank 44,846
Sales 46,215 Bal c/d 4,012
48,858 48,858
5. M.Vehicle Exp.A/c
Bank 2,116 Bal b/d 432
Bal c/d 291 P&L (Inc. St) 1,975
2,407 2,407
Income Statement for the year ended 30 September 2011
Sales 50,136
Less C.O.G.S
Op. Stock 3,210
Add Purchases 23,024
26,234
Less Closing stock 4,063 22,171
Gross Profit 27,965
Less Expenditure
M. Veh Exp 1,975
Insurance 769
Electricity 1,090
Advertising 1,430
Rent 2,000
Telephone 360
Depreciation – M. Veh. 1,020
- Shop Fittings 620 9,264
Net Profit 18,701
Statement of Financial Position as at 30 September 2011
Non Current Assets
Acc. Depr NBV
Cost
Motor Vehicle 5,100 1,020 4,080
Shop Fittings 6,200 620 5,580
9,660
Current Assets
Debtors 4,012
Stock 4,063
Bank (1,775 + 300) 2,075
Insurance Prepaid 177 10,327
RM19,987
Owner’s Equity
Capital 15,543
6. Add Net Profit 18,701
34,244
Less Drawing 16,993 (16,743/ + 250/)
17,251
Current Liabilities
Creditors 2,445
M.Veh Exp. Accrued 291
2,736
RM19,987
QUESTION 5
Income Statement for the year ended 30 November 2011
Sales 508,000
Less Sales Return 6,000
502,000
Less C.O.G.S
Op. Stock 75,000
Add Purchases 380,000
+ Purchases 3,000
383,000
+Carr. In. 21,500
404,500
Less Partner’s Drawings 1,130(500 + 630 )
403,370
Less Purch.Ret. 12,000
391,370
466,370
Less Closing Stock 68,000
398,370
Gross Profit 103,630
Add Disc. Rec. 1,000
104,630
Less Expenditure
Disc. allowed 1,200
Bad debts 1,400
Carr. out 3,000
Advertising 5,000
Rates 2,600
Staff salaries 42,900
Office expenses 7,500
Depreciation – F&F 1,500
7. (Incr.)Allow.for D. Debts 400 65,500
Net Profit 39,130
Appropriation Account
Add
Int.on Drawings: Sun 360
Moon 280
640
39,770
Less Salaries: Sun 12,000
Moon 8,000
20,000
Int.on Capital: Sun 5,000
Moon 2,500
7,500
Int.on Current Acc.: Sun 100
Moon (30)
70
27,570
12,200
Partner’s Approp. Profits: Sun 6,100
Moon 6,100
Current A/c
Sun Moon Sun Moon
Bal b/d 600 Bal b/d 2,000
Int.on Curr.a/c 30 Salaries 12,000 8,000
Drawings 15,500 10,630 Int.on Cap.a/c 5,000 2,500
Int.on Drawings 360 280 Int.on Curr.a/c 100
Bal c/d 9,340 5,060 Approp. Profit 6,100 6,100
25,200 16,600 25,200 16,600
8. Statement of Financial Position as at 30 November 2011
Non Current Assets
Freehold Premises 50,000
Fixt.& Fitting(cost) 15,000
Less Acc.Depr. 4,500
10,500
60,500
Current Assets
Debtors 52,400
Less All.D.Debts 2,400
50,000
Stock 68,000
Bank 31,600
Rates Prepaid 20
149,800
RM 210,300
Owner’s Equity
Capital: Sun 100,000
Moon 50,000
150,000
Curr. Acc.: Sun 9,340
Moon 5,060
14,400
164,400
Non Current Liabilities
Loan- Chartered Bank 8,700
Current Liabilities
Creditors (33,300+3,000) 36,300
Salaries Accrued 900
45,900
RM210,300