BACHELOR OF ACCOUNTING AND FINANCE (HONS)

JAN 2022 FINAL EXAMINATION

COURSE: FINANCIAL ACCOUNTING 2

COURSE CODE: FIN2224

TIME ALLOWED: 4 HOURS

(2.00 PM – 6.00 PM)

DATE: 13 JANUARY 2022

This examination question paper consists of SIX (6) printed pages

including the cover page.

INSTRUCTIONS TO CANDIDATE:

1. Answer ALL (4) questions.

Question 1

The Purchases Ledger Control Accounts of Pfozer, a private company, for the month
of January 2018 was prepared as shown below:

Purchases Ledger Control Account

Debit Credit
RM RM
Cash paid to 1,253,270 Balance b/f 105,000
suppliers
Discount received 12,500 Credit purchases 1,600,000
Balance c/f 455,730 Purchases returns 4,000
Interest charged 12,500
1,721,500 1,721,500

The list of balances extracted from the Purchases Ledger at 31 January 2018 totalled
RM 436,735.

In addition to the error in the Purchases Ledger Control Account a shown above, the
company’s auditors discovered the following errors:

1. An invoice for RM 3,000 recorded in the Purchases Daybook was not posted
to the Supplier’s Account in the Purchases Ledger.
2. The discount received column in the Cash Book was over-added by RM 2,000
3. The list of payables’ balances includes a credit balance of RM 1,000, which
was incorrectly listed as a debit balance.
4. The debit side of one Supplier’s Account had been under-added by RM 250.
5. A credit balance of RM 3,295 has been omitted from the list of balances.
6. Purchases Ledger contras of RM 4,000, representing a balance in the Purchases
Ledger set off against a balance in the Sales Ledger, have been recorded in the
Account of the supplier but not in the Control Account.
7. A cheque from RM 14,500 paid to a supplier has been wrongly posted to the
Supplier’s Account RM 10,450.
8. A purchases invoice of RM 30,000 was omitted from the Purchases Daybook.
9. The Purchases Daybook was over-added by RM 5,000.

Required:
a. Prepare a statement correcting the balance at 31 January 2018 on the Purchases
Ledger Control Account.
(10 marks)
b. Prepare a statement correcting the original total of the list of balances extracted
from the Purchases Ledger.
(12 marks)
c. List three advantages of Control Accounts.
(3 marks)
(Total: 25 marks)
QUESTION 2

The following Trial Balance has been extracted from the accounting records of
Jagga, a private company, at 31 December 2020:

Debit Credit
RM’000 RM’000
Administrative Expenses 2500
Bank overdraft 250
10% Debentures 600
Distribution Costs 1200
Dividends Received 130
Long term Investment 730
Furniture & Fittings
Cost 100
Acc. Depreciation 40
Interim Ordinary Dividend 80
Ordinary Share Capital 900
Plant & Equipment
Cost 7600
Acc. Depreciation 5000
10% Preferred share capital 200
Preferred Dividend 20
Retained Earnings at 1 January 2320
Provisions for doubtful debts 160
Purchases 7250
Sales 13260
Share Premium 400
Inventory 2170
Trade Payables 990
Trade Receivables 2600
24250 24250

The following additional information is provided:

1. The inventory at 31 December 2020 was valued at RM 2,500,000.
2. Depreciation is to be charged as follows:
Furniture & Fittings (all relating to the administration): 10% on cost.
Plant & Equipment (all relating to cost of sales): 50% on the reducing
balance basis.
3. The provision for doubtful debts is to be maintained at 8% of trade
receivables.
4. Prepayment and accruals at 31 December 2020 were:

Prepayments (RM) Accruals (RM)

Administrative Expenses 120,000 10,000
Distribution Costs 80,000 30,000
5. Interest on debentures for the year has not yet been paid.
6. The directors propose to pay final dividend of RM 0.20 per ordinary share.
 7. The company’s authorised share capitals is made up of 1,000,000 ordinary
shares of RM 1 each and 250,000, 10% preferred shares of RM 1 each.

Required: Prepare Jagga’s Statement of Profit & Loss for the year ended 31
December 2020 and Statement of Financial Position as at 31 December 2020.

(25marks)
(Total: 25 marks)
QUESTION 3

a. “Intangible assets are business assets that have no physical form. Unlike a tangible
asset, such as a computer, you can’t see or touch an intangible asset.”

Discuss on the IAS 38 Intangible Assets.

(6 marks)
b. IAS 37 specify the criteria for provisions, contingent liabilities and contingent
assets which must be met in order for a provision to be recognized.

Discuss the differences of Provision, Contingent of Liabilities and Contingent of

Assets according to IAS 37.

(9 marks)
c. In Malaysia, partnership entities governed under Partnership Act 1961 and
corporation governed under Companies Act 2016.

Explain the differences of accounting treatment between the both entities.

(10 marks)
(Total: 25 marks)
QUESTION 4

a. A company can raise funds through issuance of equity or liability.

Explain the modes of funding for equity and liability.

(15 marks)
b. Reserves are undistributed profits which have been retained within the company.

Explain the types of reserves.

(10 marks)
(Total: 25 marks)
(Overall Total: 100 marks)

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