ART A: MULTIPLE CHOICE QUESTIONS (15 MARKS)

1. Which of the following does the Conceptual Framework regard as essential characteristics of a

liability? i. It is a present obligation ii. Must involve an inflow of economic resources iii. Where it is probable there is a future outflow of economic resources from an entity iv. The amount of the settlement of the obligation can be measured reliably A. i, ii and iy only B. i, iii and iv only C. iii and iv only D. i, ii, iii and iv

2. When a company incurs employees' salaries but does not pay them, how will the basic

accounting equation be affected? A. Shareholders' equity decreases. B. Revenues decrease. C. Expense decrease. D. Liabilities decrease.

3. The qualitative characteristic that says accounting information is presented clearly and concisely

based on certain formats with accompanying notes is:

A. Timeliness. B. Verifiability. C. Understandability. D. Comparability.

4. The following will be capital expenditures that will add to the value of a non-current asset

except: A. Putting a new roof on a building. B. Installing a new energy-saving air-conditioning system. C. Building new custom shelving and cabinets into rental units. D. Re-painting of a building.

5. A company purchased RM4,500 of inventory on 1 May with credit terms of 2/10, n/30. On 6

May, it returned RM250 of that inventory. On 8 May, it paid the amount owing to the supplier.

The cash paid on 8 May is: A. RM3,825. B. RM4,165. C. RM4,250. D. RM4,500.

6. A 90-day, 12% note for RM10,000 dated 1 May 2020, is received from a customer on account.

The maturity value of the note is: A. RM11,200 B. RM10,300 C. RM10,000 D. RM9,550

7. Based on the following data for the year what is the accounts receivable turnover?

Net credit sales Cost of goods sold Account receivable, beginning of the year Account receivable, end of the year Inventory, beginning of the year Inventory, end of the year

RM 500,000 300,000 45,000 35,000 90,000 110,000

A. 5.0 B. 11.1 C. 12.5 D. 14.3

8. The journal entry a company records for the payment of interest, interest expense and

amortization of premium on bond is: A. Debit Interest Expense, credit Cash and Premium on Bond. B. Debit Interest Expense and Premium on Bond, credit Cash. C. Debit Interest Expense and credit Cash. D. Debit Interest Expense, credit Interest Payable and Premium on Bond.

9. Vega Sdn. Bhd. purchased two identical inventory items. One of the items cost RM60 was

purchased in January. The other was purchased in March and the company paid RM70 for the inventory item. One of the items was sold in April at a price of RM100. Select the correct answer assuming Vega Sdn. Bhd. uses a LIFO cost flow method. A. The balance in the ending inventory would be RM70. B. The amount of the gross profit would be RM40. C. The amount of the ending inventory would be RM65. D. The amount of gross profit would be RM30.

10. Which of the following is NOT TRUE about an entity's equity?

A. An equity represents owners' claims on the entity's assets. B. Equity is the amount of assets that are left over after the entity has paid off its liabilities. C. Equity represents the entity's assets and liabilities. D. Equity will increase if there are additional contributions by owners and when revenues are

generated from the sale of goods or services.

11. TTDI Laundry purchased two new washing machines by paying cash RM7,800 in total. The

washing machines market value on the date of purchase was RM8,800. The company incurred RM400 in transportation costs, RM200 in installation costs and paid RM100 fine for illegal parking while the machines were being delivered. What amount will TTDI Laundry record the washing machines? A. RM8,400. B. RM8,500 C. RM8,800. D. RM7,800.

12. If financial information is significant enough to influence business decisions, it has the following

qualitative characteristic: A. Following historical cost principle. B. Neutrality. C. Relevant D. Comparability,

13. The analytical measures chosen to analyse a company may be influenced by all except one of the

following. Which one? A. Industry type. B. Capital structure. C. Diversity of business operations. D. Product quality or service effectiveness.

14. Foodscape Sdn. Bhd. owned an asset that cost RM32,000. The company sold the asset on 1

January 2019 for RM8,000. Accumulated depreciation on the day of sale amounted to RM26,000. Based on this information, the sale would result in:

A. An RM8,000 increase in total assets. B. A RM6,000 cash inflow in the financing activities section of the statement of cash flows. C. A RM3,000 gain in the operating activities section of the statement of cash flows. D. An RM8,000 cash inflow in the investing activities section of the statement of cash flows.

15. During 2018 and 2019, Hailing Sdn. Bhd. drove their motor vehicle 100,000 and 80,000

kilometres, respectively, to transport their customers. If they originally purchased the motor vehicle at the beginning of 2018 for RM48,000 and the motor vehicle has an estimated life of 5 years or 300,000 kilometres with an estimated residual value of RM3,000, what amount of depreciation expense should the company record in 2019 using the units of production method? A. RM15,000 B. RM12,000 C. RM9,600 D. RM9,000