Question 2 As the auditor of a business you discover the following items during your review of the financial statements and books of account that are not quite in compliance with the appropriate concepts.

Required: For each of the following: (1) List ONE (1) appropriate accounting concept to be applied (explanation is not required) and show the effect on the Income Statement and the Balance Sheet of the adjustments needed to account for these items.

(i) No depreciation has yet been calculated for motor vehicles which has been bought last year, that cost RM200,000. The business writes off motor vehicles on cost over 4 years.

(ii) The business received RM10,000 from a tenant to a shop lot owned by the entity. Each month charged by the business is RM1,000. The tenant has no outstanding balance from last year.

(iii) Motor vehicle insurance for a whole year in advance RM1,200 had been paid 3 months before the year-end.

(iv) A customer owing 1% of the total receivables RM5 million at the year-end has been remaining to be outstanding for 9 months.

(v) A debtor owing RM2,000 at the year-end has been confirmed pass away and written off.

(vi) The half-years interest at 10% per annum on a bank loan of RM400,000 has not been entered on the bank statement until three days after the year end and has not been accounted for in the business records