Tutorial Questions

BBFA1053 2023 Jan

T01AL Control Accounts (Q) 2
T02AL Correcting Errors (Q) 4
T03AL Conceptual Framework (Q) 7
T04AW Intangible Assets (Q) 8
T06AW Manufacturing AC - 1 (Q) 10
T07AW Manufacturing AC 2- (Q) 14
T08AL Statement of Cash Flows 19
T09AW Absorption Costing (Q) 29
T10AW Budgetary Control (Q) 33
T11AW Standard and Variances (Q) 37
 Tunku Abdul Rahman University of Management and Technology
Faculty of Accountancy, Finance and Business
Academic Year 202/2023
BBFA1053 Business Accounting

Tutorial 1 Control Accounts

Question 1

Upon examination of the books of Ireland Sdn Bhd, you ascertain that on 1 October 2020, the
receivables balances totalled RM16,048 in debit and RM114 in credit. The payables balances on the
same date totalled RM12,470 in credit and RM210 in debit.

For the year ended 30 September 2021, the following particulars are available:

RM
Sales 127,456
Purchases 79,928

Returns inwards 2,004

Returns outwards 1,070
Carriage inwards charged by supplier 270
Bad debts written off 652
Cheques dishonoured 526
Cash received from customers 110,424
Cash paid to suppliers 74,614
Cheques received from customers 8,114
Cash received in respect of debit balances in Purchases ledger 210
Cash received in respect of debts previously written off as bad debts 188
Amount due from customer as shown by Sales Ledger off-set against
amount due to the same firm as shown in Purchases Ledger 868

On 30 September 2021, there were no credit balances in the Sales Ledger except those outstanding on
1 October 2020 and no debit balances in the Purchases Ledger.

Required:

Prepare for the year ended 30 September 2021:

(a) Trade Receivables Control Account

(b) Trade Payables Control Account

T01AL Control Accounts (Q) 2

 Question 2

Prepare a Trade Receivables Control Account and a Trade Payables Control Account from the following
totals extracted from the books of Lucerne Sdn Bhd.

2021 RM
January 1 Sales ledger debit balances 36,700
Purchases ledger credit balances 35,520
Sales ledger credit balances 340
Purchases ledger debit balances 320

December 31 Sales Journal ?

Purchases Journal ?
Returns Inwards Journal 2,048
Returns Outwards Journal 2,492
Cash received from customers 82,328
Cash paid to suppliers 79,200
Bad debts 480
Dishonoured cheques 384
Discount allowed withdrawn 25
Receivables balance set-off against payables balance 200
Payables balance set-off against receivables balance 1,200

Sales ledger debit balances 110,816

Purchases ledger credit balances 74,404
Sales ledger credit balances 360
Purchases ledger debit balances 80

Question 3

At the close of business on 31 October 2021, the following balances were extracted from the books at
Snowdrop Sdn Bhd.
RM
Trade Receivables Control account 27,540
Trade Payables Control account 32,910

During the month of November, the following transactions occurred:

RM
Cash received from customers 39,620
Cash paid to suppliers 31,240
Sales on credit 42,440
Purchases on credit 27,790
Sales returns 530
Purchases returns 80
Receivables’ cheques subsequently dishonoured 3,700
Bad debts written off 380
Receivables and payables accounts settled by setting off 3,250
one against the other

Required:

Prepare the Trade Receivables control account and Trade Payables control account for Snowdrop Sdn
Bhd for the month of November 2021.

T01AL Control Accounts (Q) 3

 Tunku Abdul Rahman University of Management and Technology
Faculty of Accountancy, Finance and Business
Academic Year 202/2023

Tutorial 2 Correcting errors

Question 1

You have extracted a trial balance on 31 December 2022 which failed to agree by RM350, a shortage
on the debit side of the trial balance. A suspense account was opened for the difference. In January
2023, the following errors, made the previous year, were found:

• The purchases daybook had been undercast by RM200.

• The insurance account had been undercast by RM50.
• Sale of equipment of RM400 had been credited in error to the Sales account.
• Sales daybook had been overcast by RM175
• Discounts received had been undercast by RM75

Required:

(a) Show the journal entries necessary to correct the errors.

(b) Draw up the suspense account after the errors have been corrected.

(c) If the net profit for the year had previously been RM6,800, show statement of corrected net profit
for the year ended 31 December 2022 after all the above corrections have been made.

Question 2

A trial balance was extracted from the books of T Pearce, and it was found that the credit side exceeded
the debit side by RM20. This amount was entered in the suspense account. The following errors were
discovered and corrected:

(a) The sales daybook was undercast by RM160

(b) Wages paid by cheque for RM55 was credited to both accounts.
(c) Cash drawings of RM70 was only entered in the cash account

Construct a suspense account for the above corrections.

Question 3

Ice-cream Sdn Bhd sells goods on credit to most of its customers. In order to control its receivables
collection system, a trade receivables control account is maintained. In preparing the accounts for the
year ended 30 November 2022, the Accountant discovers that the total of all the personal accounts in
the Sales Ledger amounts to RM12,802, whereas the balance on the trade receivables control account
is RM12,550.

Upon investigating the matter, the following errors were discovered:

1. Sales for the week ending 27 November 2022 amounting to RM850 had been omitted from the
control account.

1
T02AL Correcting Errors (Q) 4
 2. A receivables account balance of RM300 had not been included in the list of balances.

3. Cash received of RM750 had been entered in a personal account as RM570.

4. A personal account balance had been undercast by RM200.

5. A contra item of RM500 with the Purchases Ledger had not been entered in the control account.

6. A bad debt of RM500 had not been entered in the control account.

7. Cash received of RM250 had been debited to a personal account.

8. Commission received of RM50 had been debited to Lilo’s sales ledger account.

9. Returns inward valued at RM200 had not been included in the control account.

10. Cash received of RM80 had been credited to a personal account as RM8.

11. A cheque for RM300 received from a customer had been dishonoured by the bank, but no
adjustment had been made in the control account.

Required:

(a) Prepare a statement showing the adjustments that are necessary to the list of personal account
balances in the Sales Ledger.

(b) Prepare a corrected trade receivables control account.

Question 4

The total in the Trade Receivables Control Account of Magic-Fish Sdn Bhd as at 31 October 2022 does
not balance with the total balances from the receivables list. On investigation, the following errors were
found:

1. An invoice of RM480 to Mark has not been posted to his account.

2. The balance of RM1,264 due from Wind-Cafe was omitted from the list of balances.

3. The Sales Journal total was overcast by RM1,200.

4. A contra of RM1,314 was omitted from the control account.

5. Pony’s balance of RM970 had been brought down as RM790.

6. The debit side of Luke’s account had been overcast by RM256.

7. A bad debt of RM200 was entered into Pokamon’s account but had not been entered into the
control account.

8. A cash refund of RM72 had been made to Collin, entered into his account and in the control
account but no credit note had been raised.

2
T02AL Correcting Errors (Q) 5
 Required:

(a) Prepare a revised list of trade receivables balances, with the original total of RM47,360.

(b) Prepare a revised trade receivables control account, with the original balance of RM51,742.

3
T02AL Correcting Errors (Q) 6
 Tunku Abdul Rahman University of Management and Technology
Faculty of Accountancy, Finance and Business
Academic Year 202/2023
BBFA1053 Business Accounting

Tutorial 3 Conceptual Framework

Question 1

(a) Briefly explain the components of financial statements and its respective content.

(b) State four user groups of accounting information and explain how such information will be
useful to them.

Question 2

(a) Explain the two main functions of management accounting.

(b) Explain the differences between financial accounting and management accounting.

Question 3

Identify and explain the followings as financial or management accounting or both:

(a) Profit earned by a business, or by each of its department’s or divisions, in a period

(b) Assets and liabilities of a business at a particular date.

(c) Cost of producing a product.

(d) Evaluating whether or not a open a new branch in overseas

(e) Cost of running a particular department

(f) Evaluating the performance of the factory workers in deciding bonus payment.

(g) Ascertain the effect of a new regulatory requirement to the accounting treatments of the
business.

(h) Amount of cash coming into and leaving a business over a defined period

(i) Expected overdraft requirement of a business at defined intervals in the future

Question 4

Explain the fundamental qualitative characteristics of financial information.

Question 5

Explain the enhancing qualitative characteristics of financial information.

T03AL Conceptual Framework (Q) 7

 Tunku Abdul Rahman University of Management and Technology
Faculty of Accountancy, Finance and Business
Academic Year 202/2023
BBFA1053 Business Accounting

Tutorial 4 Intangible Assets

Question 1

IAS 38 Intangible Assets prescribe the accounting treatments for intangible assets. You are required
to:

(a) Explain what you understand by the term “intangible assets”

(b) Explain the criterion for an item to be qualified as an intangible asset.

(c) Explain the terms “research” and “development” in accordance with IAS38.

(d) The accounting treatments of research and development in accordance with IAS38.

Question 2

Novel Bhd has incurred development expenditure of RM500,000 in its effort to develop a panacea of
all ills called “Elixir”. It is expected that this project will be completed and the product will be on sale
in four year’s time.

Survey has shown that there should be a good market for this product and it would most certainly
yield economic benefits. The only reservation is that it has yet to receive support in terms of funding.

Required:

Explain to the directors of Novel Bhd how the costs should be dealt with in the accounts. Your answer
should include relevant provisions of IAS38 Intangible assets.

Question 3

Pokoyo Bhd is a local leader in the field of biotechnology engineering and has sufficient resources to
undertake research and to subsequently implement viable and successful projects.

During the year ended 31 March 2022 the company carried out the following projects:

(a) Development of high grade motor fuel from palm oil through biotechnology. Review of
scientific data indicates that this project is both technically feasible and economically viable.
Costs incurred to date on this project amounted to RM5 million.

(b) To obtain a better understanding of industrial waste the company carried out studies on the
effect of bacteria on such waste. On conclusion of the study, the general consensus was that the
company’s scientists have obtained invaluable understanding of individual waste. Cost incurred
to date is RM700,000.

(c) A project involving a new scientific technique to replace the usage or petrol with water for a
machine. The project is at its early stage of testing and the cost incurred during the year
amounted to RM1 million.

T04AW Intangible Assets (Q) 8

 Required:

Explain with reasons whether the costs incurred can be deferred.

Question 4

Jojo Sdn Bhd commenced operation in 2004. The company have been very innovative since its
incorporation in introducing new technology to its customer. The success was due to its commitment
in research and development for its product.

The company started a research concerning eye identification in 2019. The research was a success and
completed on 31 December 2019. It was then named as ‘Yoyo’. On 1 January 2020, the company
decided to develop Yoyo as it will contribute greatly to security system.

The following are the costs incurred in respect of Yoyo:

YE 31/12 2019 2020 2021

RM’000 RM’000 RM’000
Salaries 240 432 136
Materials consumed 144 303 56
Overhead 95 178 12

Yoyo starts its commercial production on 1 July 2021. It was expected that Yoyo will be highly
demanded for three years.

Required:

(a) Show the research cost account and development costs account for four years ended 31
December 2019, 2020, 2021 and 2022.

(b) An extra of statement of profit or loss and statement of financial position showing the above
items for the years ended 31 December 2019, 2020, 2021 and 2022.

(c) Explain how prudence and matching concepts are applied in the accounting treatment for
research and development.

T04AW Intangible Assets (Q) 9

 Tunku Abdul Rahman University of Management and Technology
Faculty of Accountancy, Finance and Business
Academic Year 202/2023
BBFA1053 Business Accounting

Tutorial 6
Manufacturing Accounts - Part I

Question 1

Amilia was a sole proprietor who started off her business as an apparel manufacturer.
Following was the trial balance of James as at 31 August 2022.

Debit Credit
RM RM
Building 225,000
Motor vehicles 100,000
Machinery 120,000
Accumulated depreciation as at 1 September 2021:
Building 25,500
Motor vehicles 18,900
Machinery 24,850
Direct wages 50,900
Trade receivables 16,000
Trade payables 14,100
Royalties 18,000
Sales 392,870
Other distribution costs 39,700
Other administrative expenses 56,000
Bank overdraft 9,800
Purchases of raw materials 102,400
Opening inventories as at 1 September 2021:
Raw materials 20,980
Finished goods 25,000
Utilities 18,000
Telephone expenses 8,980
Salaries of factory supervisors 19,800
Capital 340,000
Drawings 5,260
826,020 826,020

T06AW Manufacturing AC - 1 (Q) 10

 Additional information:

1. Closing raw materials as at 31 August 2022 was amounted to RM21,760. Closing

finished goods was valued at RM31,680.

2. Depreciation rate for non-current assets were:

Building 2% per annum on cost

Motor vehicles 10% per annum using reducing balance basis
Machineries 10% per annum using straight-line basis

3. Depreciation on building is to be split equally among the divisions.

4. Shared expenses were apportioned to cost of sales, distribution costs and administrative
expenses in the following ratio:

Factory Warehouse Office

Depreciation on motor vehicles 2 3 1
Utilities 3 1 1
Telephone expenses 1 1 3

Required:

Prepare for Amilia, the sole proprietor the:

(a) Manufacturing account for the year ended 31 August 2022;

(b) Statement of profit or loss for the year ended 31 August 2022; and

(c) Statement of financial position as at 31 August 2022.

2
T06AW Manufacturing AC - 1 (Q) 11
 Question 2

Summer Manufacturing Bhd. is a small company manufacturing and sells its apparels to
departmental chains.

Below was the trial balance of Summer Manufacturing Bhd. as at 30 June 2022:

Debit Credit
RM RM
Factory building 365,000
Office building 220,000
Plant and machinery 168,900
Motor vehicles 51,000
Accumulated depreciation as at 1 July 2021:
Factory building 101,890
Office building 36,070
Plant and machinery 31,570
Motor vehicles 14,000
Opening inventories as at 1 July 2021:
Raw materials 54,600
Work-in-progress 9,570
Finished goods 36,500
Revenue 878,640
Purchases of raw materials 475,100
Import duties on raw materials 14,360
Carriage inwards on raw materials 4,020
Carriage outwards 1,600
Receivables and Payables 25,000 40,000
Cash at bank 15,000
Telephone expenses 14,500
Utilities 6,900
Royalties paid 24,500
Salaries for factory supervisors 36,800
Salaries for office staffs 21,050
Wages for factory workers 34,780
Tax paid 70,000
Repair and maintenance for plant and machinery 13,210
Upkeep of office building 4,200
Ordinary share capital 410,000
Retained earnings as at 1 July 2021 154,420
1,666,590 1,666,590

3
T06AW Manufacturing AC - 1 (Q) 12
 Additional information:

1. Inventories as at 30 June 2022 were:

RM
Raw materials 25,780
Work-in-progress 11,420
Finished goods 50,000

Part of the finished goods stated above at cost of RM10,000 has net realizable value of
RM9,300.

2. Utilities in arrears as at 30 June 2022 was RM2,300.

3. On 30 April 2022, a receivable which was previously written off repaid its balance in full,
RM12,000. This was omitted from the accounting records.

4. Total royalties payable for goods manufactured during the year amounted to RM39,650.

5. Salaries of factory supervisors paid in advance as at year end amounted to RM2,380.

6. Depreciation on non-current assets should be provided as below:

Factory building: 2% per annum using straight-line method
Office building: 1% per year on cost
Plant and machinery: 10% per annum using reducing balance basis
Motor vehicles: 15% per annum using reducing balance basis

7. Common expenses were shared among factory, warehouse and office at the ratio stated
below:
Factory Warehouse Office
% % %
Telephone expenses 15 20 65
Utilities 40 30 30
Motor vehicle expenses 20 60 20

8. Tax expenses for the year ended 30 June 2022 was RM63,800.

Required:

Prepare for Summer Manufacturing Bhd.:

(a) Schedule of allocation of expenses;

(b) Manufacturing account for the year ended 30 June 2022;

(c) Statement of profit or loss for the year ended 30 June 2022; and

(d) Statement of financial position as at 30 June 2022.

4
T06AW Manufacturing AC - 1 (Q) 13
 Tunku Abdul Rahman University of Management and Technology
Faculty of Accountancy, Finance and Business
Academic Year 202/2023
BBFA1053 Business Accounting

Tutorial 7
Manufacturing Accounts - Part II

Question 1

The following trial balance was extracted from the books of Jetta Food Manufacturer Sdn. Bhd.
as at 31 December 2022:
Debit Credit
RM RM
Inventories as at 1 January 2022:
Raw material 220,000
Work-in progress 57,000
Finished goods 510,000
Direct labour 97,000
Purchase of raw material 1,645,000
Purchase returns 6,100
Sales 2,750,900
Indirect material 53,000
Factory supervisors’ salaries 73,000
Indirect labour 42,000
Salaries for accounts staff 31,000
Maintenance of machinery 33,000
Royalty 15,000
Commission for salesmen 47,000
Maintenance of office equipment 15,000
Utilities 36,000
Rent expenses 86,000
Carriage inwards 18,000
Insurance for machinery 6,000
Carriage outwards 18,000
Allowance for doubtful debts 1,000
Allowance for unrealised profit as at 1 January 2022 50,000
Machinery 150,000
Office equipment 50,000
Accumulated depreciation:
Machinery 20,000
Office equipment 15,000
Commission received 6,000
Share capital 330,000
Retained profits 42,000
Bank 53,000
Loan 42,000
Trade receivables 50,000
Trade payables 42,000
3,305,000 3,305,000

T07AW Manufacturing AC 2- (Q) 14

 Additional information:
1. The value of inventories as at 31 December 2022 comprised the following:
RM
Raw material 240,000
Work-in-progress 75,000
Finished goods 600,000

2. Allowance for doubtful debts is provided at 4% of closing trade receivables.

3. Accrued salary for accounts staff amounted to RM1,000 as at 31 December 2022.

4. Amount outstanding for utilities was RM600 as at 31 December 2022.

5. Commission received in advance was RM600 for the year ended 31 December 2022.

6. The depreciation policy of the business is as follows:

Machinery 10% per annum using the reducing balance method

Office equipment 15% per annum using the straight-line method

7. Two third of the utilities and rent expenses is apportioned to the factory.

8. Finished goods are transferred from the factory at a markup of 10%.

Required:
Prepare the following for Jetta Food Manufacturer Sdn. Bhd.:

(a) Manufacturing account for the year ended 31 December 2022; and
(b) Allowance for unrealised profit account for the year ended 31 December 2022;
(c) Statement of profit or loss for the year ended 31 December 2022; and
(d) Statement of financial position as at 31 December 2022.

T07AW Manufacturing AC 2- (Q) 15

 Question 2

Happy Land Sdn. Bhd. has been in the business of toys making since 2000. The following was
the trial balance of Happy Land Sdn. Bhd as at 31 October 2022.

Debit Credit
RM’000 RM’000
Inventories as at 1 November 2021:
Direct materials 228
Work-in-progress 45
Finished goods 646
Purchases of direct materials 1,510
Carriage inwards on raw materials 10
Indirect materials 90
Direct labour costs 110
Interest on loan 20
Plant maintenance 50
Royalty 100
Sales 4,600
Rental income 100
Dividend income 20
Salaries 480
Travelling 170
Auditors’ fees 20
Advertising 30
Legal fees 10
Directors’ remuneration 140
Water and electricity 30
Allowance for unrealised profit as at 1 November 2021 149
10% Bank loan 300
Trade receivables and Trade payables 550 400
Tax paid 50
Cash at bank 60
Land and building 4,500
Plant and machinery 1,000
Office equipment 50
Depreciation - building 40
- plant and machinery 80
- office equipment 6
Accumulated depreciation at 31 October 2020:
- Building 500
- Plant and machinery 480
- Office equipment 30
Share capital 2,500
Share premium 500
Retained earnings as at 1 November 2021 446
10,025 10,025

T07AW Manufacturing AC 2- (Q) 16

 Additional information:

1. Valuation of inventories as at 31 October 2022 was as follows:

RM’000
Direct materials 285
Work-in-progress 40
Finished goods (at cost plus 30% mark up) 680

2. The following expenses were to be apportioned as follows:

Production Selling Administration
Salaries 80% 5% 15%
Water and electricity 70% 10% 20%
Depreciation of building 90% 5% 5%
Interest on loan - - 100%

3. All travelling expenses incurred are related to sales.

4. The legal fees and advertising expenses were to be considered as selling and distribution
expenses.

5. The following items were in arrears as at year end:

RM
- Interest on loan to compute
- Rental income 11,000
- Directors’ remuneration 6,000
- Water and electricity 10,000

6. Salaries prepaid as at year end was RM60,000.

7. Tax expenses for the financial year was RM88,000.

8. A bill of RM15,000 on office equipment repair was wrongly included in the plant
maintenance account.

9. Finished goods are transferred from the factory at cost plus mark-up of 30%.

10. During the year, the company made a bonus issue of of RM250,000 out of share premium
balance. The accountant has yet to record this transaction.

11. On 30 October 2022, the directors of the company have declared a final dividend of 16%
payable on 17 November 2022.

T07AW Manufacturing AC 2- (Q) 17

 Required:

(a) Prepare the schedule of allocation of expenses in the following format:

Production Selling Administration

RM’000 RM’000 RM’000
Indirect materials
Plant maintenance
Salaries
Travelling
Auditors’ fees
Advertising
….
….
….
Total

(b) Manufacturing account for the year ended 31 October 2022;

(c) Allowance for unrealised profit account for the year ended 31 October 2022;
(d) Statement of profit or loss for the year ended 31 October 2022; and
(e) Statement of financial position as at 31 October 2022.

T07AW Manufacturing AC 2- (Q) 18

 Tunku Abdul Rahman University of Management and Technology
Faculty of Accountancy, Finance and Business
Academic Year 202/2023
BBFA1053 Business Accounting
TUTORIALS 8 & 9
Statement of Cash Flows
Question 1

The following are the financial statements extracted from the books of Evergreen Sdn. Bhd.:

Statement of profit or loss for the year ended 31 March 2022

RM
Revenue 960,000
Cost of sales (300,000)
Gross profit 660,000
Sales and distribution expenses (138,000)
Administrative expenses (150,000)
Profit from operation 372,000
Finance cost (120,000)
Profit before tax 252,000
Tax expense (69,000)
Profit for the year 183,000

Statements of financial position as at 31 March

2022 2021
RM RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 522,000 570,000

Current assets
Inventories 75,000 60,000
Trade receivables 237,000 241,500
Fixed deposits 300,000 91,500
Cash at bank 60,000 15,000
672,000 408,000
TOTAL ASSETS 1,194,000 978,000

EQUITY AND LIABILITIES

Equity
Ordinary shares of RM1 each 810,000 690,000
Share premium 90,000 60,000
Retained earnings 42,000 (141,000)
942,000 609,000

Non-current liabilities
Term loan 150,000 270,000

Page 1 of 10
T08AL Statement of Cash Flows 19
 Current liabilities
Trade payables 72,000 75,000
Operating expenses accrued 30,000 24,000
102,000 99,000
TOTAL EQUITY AND LIABILITIES 1,194,000 978,000

Additional information:

1. There was no disposal of non-current assets during the year ended 31 March 2022.

2. The profit before tax is stated after charging depreciation of RM78,000 which is included in the
administrative expenses.

3. There was no payment of dividend during the year ended 31 March 2022.

Required:

(a) Prepare the statement of cash flows of Evergreen Sdn. Bhd. for the year ended 31 March 2022 in
accordance with IAS 7 Statement of Cash Flows, using the indirect method. (21 marks)

(b) Prepare the notes to the statement of cash flows in respect of the cash and cash equivalents.
(4 marks)
[Total: 25 marks]
BBFA1123 May 2017 exam

Page 2 of 10
T08AL Statement of Cash Flows 20
 Question 2

The financial statements of Chico Sdn. Bhd. for the year ended 30 November 2022 are shown below:

Statement of profit or loss for the year ended 30 November 2022

RM
Revenue 539,000
Raw materials and consumables used (53,900)
Staff costs (40,700)
Depreciation (81,400)
Other operating expenses (4,400)
Finance cost (25,300)
Profit before taxation 333,300
Income tax expense (95,700)
Net profit for the year 237,600

Statements of financial position as at 30 November

2022 2021
RM RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 1,259,500 1,052,700

Current assets
Inventories 18,700 17,600
Trade receivables 49,500 37,400
Cash at bank 23,100 35,200
91,300 90,200
TOTAL ASSETS 1,350,800 1,142,900

EQUITY AND LIABILITIES

Equity
Ordinary share capital 542,300 255,200
Retained earnings 608,300 427,900
1,150,600 683,100

Non-current liabilities
Term loan 77,000 352,000

Current liabilities
Trade payables 13,200 18,700
Tax payable 86,900 72,600
Dividend payable 23,100 16,500
123,200 107,800
TOTAL EQUITY AND LIABILITIES 1,350,800 1,142,900

Page 3 of 10
T08AL Statement of Cash Flows 21
 Additional information:

1. Chico Sdn. Bhd. has made a loss of RM4,400 on the disposal of a machine which has a cost of
RM19,800 and net book value of RM6,600. The loss on disposal is included in the other operating
expenses.

2. During the year ended 30 November 2022, Chico Sdn. Bhd. had purchased a fleet of lorries and a
printer amounting to RM284,000 and RM10,800 respectively.

Required:

(a) Prepare the statement of cash flows of Chico Sdn. Bhd. for the year ended 30 November 2022 in
accordance with IAS 7 Statement of Cash Flows, using the indirect method. (23 marks)

(b) Prepare the notes to the statement of cash flows in respect of the cash and cash equivalents.
(2 marks)
[Total: 25 marks]
BBFA1123 Jan 2019 exam

Additional question:

(c) Comment on Chico Sdn. Bhd.’s liquidity, financial performance and the quality of its earnings
based on its statement of cash flows for the year ended 30 November 2022.

Page 4 of 10
T08AL Statement of Cash Flows 22
 Question 3

Token Sdn. Bhd.’s profit and loss appropriation account for the year ended 31 August 2022 and
statement of financial position as at 31 August 2022 and 31 August 2021 are as follows:

Profit and loss appropriation account for the year ended 31 August 2022
RM
Profit before taxation 14,100
Taxation (3,700)
Profit after taxation 10,400
Proposed dividend (7,200)
Retained profits as at 1 September 2021 10,100
Retained profits as at 31 August 2022 13,300

Statement of financial position as at 31 August

2022 2021
Non-current assets RM RM
Property, plant and equipments (at net book value) 220,100 231,400

Current assets
Inventories 71,317 102,994
Trade receivables 98,553 241,300
Fixed deposits 42,000 34,000
Cash 32,000 31,000
243,870 409,294
Total assets 463,970 640,694

Equity and liabilities:

Ordinary share capital 250,000 236,600
Preference share capital 50,000 50,000
General reserve 20,000 20,000
Retained earnings 13,300 10,100
333,300 316,700
Current liabilities
Trade payables 60,818 85,000
Dividend payable 2,000 1,000
Interest payable 2,402 4,000
Bank overdraft 65,450 233,994
130,670 323,994
Total equity and liabilities 463,970 640,694

Additional information:

1. Profit before taxation was arrived at after charging or crediting the following:

RM
Interest expense 1,300
Gain on disposal of non-current asset (600)
Bad debts written off 800
Depreciation 75,500

Page 5 of 10
T08AL Statement of Cash Flows 23
 2. The original cost of the non-current asset sold was RM70,200.

3. The details of the property, plant and equipment as at 31 August are as follows:

2022 2021
RM RM
Cost 274,400 276,600
Accumulated depreciation (54,300) (45,200)
Net book value 220,100 231,400

Required:

(a) Prepare a statement of cash flows for Token Sdn. Bhd. for the year ended 31 August 2022 in
accordance with IAS 7 Statement of Cash Flows, using the indirect method. (22 marks)

(b) Show the notes to the statement of cash flows in respect of the cash and cash equivalents.
(3 marks)
[Total: 25 marks]
BBFA1063 May 2018

Question 4

Discuss how the statement of cash flows is useful to users of financial statements.

Page 6 of 10
T08AL Statement of Cash Flows 24
 Question 5

The following financial statements are extracted from the books of Union Big Bhd.:

Statement of profit or loss for the year ended 31 May 2022

RM
Revenue 6,109,400
Cost of sales (3,077,800)
Gross profit 3,031,600
Distribution costs (1,408,000)
Administrative expenses (887,700)
Profit from operations 735,900
Investment income 15,400
Finance cost (269,500)
Profit before tax 481,800
Tax expense (144,100)
Profit for the year 337,700

Statements of financial position as at 31 May

2022 2021
RM RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 1,685,860 1,518,770

Current assets
Inventories 396,825 425,260
Trade receivables 204,820 222,200
Fixed deposits 487,300 467,500
Cash at bank 16,500 30,800
1,105,445 1,145,760
Total assets 2,791,305 2,664,530

EQUITY AND LIABILITIES

Equity
Ordinary share capital 1,187,780 924,055
Retained earnings 388,960 324,500

Non-current liabilities
Loan notes 594,385 748,110

Current liabilities
Trade payables 380,380 360,965
Tax payable 126,500 185,900
Bank overdraft 113,300 121,000
620,180 667,865
Total equity and liabilities 2,791,305 2,664,530

Page 7 of 10
T08AL Statement of Cash Flows 25
 Additional information:

1. Union Big Bhd. made a gain of RM16,940 on disposal of an old equipment for RM29,700. The gain
on disposal is included in the administrative expenses as shown in the statement of profit or loss
for the year ended 31 May 2022.

2. Investment income as shown in the statement of profit or loss for the year ended 31 May 2022
consists of interest received from short term investments.

3. Profit before tax is stated after charging depreciation of RM124,300.

4. Staff costs included in respective departments are as follows:

RM
Sales and distribution department 278,300
Administration department 400,950

5. The cost and accumulated depreciation of property, plant and equipment is as follows:
As at 31 May 2022 As at 31 May 2021
RM RM
Cost 2,196,920 1,914,000
Accumulated depreciation (511,060) (395,230)

Required:

(a) Prepare the statement of cash flows of Union Big Bhd. for the year ended 31 May 2022 in
accordance with IAS 7 Statement of Cash Flows, using the direct method. (22 marks)

(b) Prepare the notes to the statement of cash flows in respect of the cash and cash equivalents.
(3 marks)
[Total: 25 marks]
BBFA1123 Sep 2019 exam

Page 8 of 10
T08AL Statement of Cash Flows 26
 Question 6

The following are the financial statements of Foxglove Sdn. Bhd. (Foxglove):

Statement of profit or loss for the year ended 31 July 2022

RM
Revenue 672,100
Investment income 1,100
Raw materials and consumables used (298,100)
Staff costs (44,462)
Depreciation (92,400)
Other operating expenses (35,370)
Finance cost (19,250)
Profit before taxation 183,618
Income tax expense (27,500)
Net profit for the period 156,118

Statements of financial position as at 31 July

2022 2021
RM RM RM RM
ASSETS
Non-current assets
Property, plant and equipment 1,123,100 1,084,600

Current assets
Inventory 289,850 323,015
Trade receivables 110,132 132,066
Prepayments 26,400 26,840
Fixed deposits 11,000 22,000
Cash at bank 32,505 33,396
469,887 537,317
TOTAL ASSETS 1,592,987 1,621,917

EQUITY AND LIABILITIES

Equity
Ordinary share capital 259,336 231,902
Share premium 131,802 -
Retained earnings 781,946 659,329
1,041,282 891,231
Non-current liabilities
Term loan 93,555 373,065

Current liabilities
Trade payables 287,980 162,173
Interest payable 13,200 27,500
Tax payable 23,111 21,186
Dividend payable 58,300 60,500
Bank overdraft 75,559 86,262
458,150 357,621
TOTAL EQUITY AND LIABILITIES 1,592,987 1,621,917

Page 9 of 10
T08AL Statement of Cash Flows 27
 Additional information:

1. The cost and accumulated depreciation of property, plant and equipment are as follows:

2022 2021
RM RM
Cost 1,145,100 1,371,700
Accumulated depreciation (22,000) (287,100)

2. The profit before tax is stated after charging depreciation of RM92,400 which is included in
the administrative expenses.

3. Foxglove disposed of a motor vehicle for RM6,160 and incurred a loss of RM19,800. The loss
was recorded in the distribution expenses as shown in the statement of profit or loss for the
year ended 31 July 2022.

4. Staff cost included in the statement of profit or loss for the year ended 31 July 2022 are salaries
from the departments as follows:

RM
Sales and distribution department 21,846
Administration department 22,616

5. The market price of an ordinary share of Foxglove for the years ended 31 July 2022 and 31 July
2021 has remained at RM1.

Required:

(a) Prepare the statement of cash flows of Foxglove Sdn.Bhd. for the year ended 31 July 2022 in
accordance with IAS 7 Statement of Cash Flows, using the direct method. (20 marks)

(b) Prepare the notes to the statement of cash flows in respect of the cash and cash equivalents
for the year ended 31 July 2022 and 31 July 2021. (5 marks)
[Total: 25 marks]
BBFA1123 Sep 2018 exam

Question 7

Discuss the limitations of the statement of cash flows.

Page 10 of 10
T08AL Statement of Cash Flows 28
 Tunku Abdul Rahman University of Management and Technology
Faculty of Accountancy, Finance and Business
Academic Year 202/2023
BBFA1053 Business Accounting

Tutorial 9 Absorption Costing

Question 1

Ice-berry Sdn. Bhd. produces and sells a single product. Selected cost and operating data relating to
the product for the year ended 31 December 2022 are given below:

Unit in beginning inventory 0

Units produced during the year 10,000
Units sold during the year 8,000
Units in ending inventory 2,000

Selling price per unit RM50

Manufacturing costs:
Variable per unit:
Direct material RM11
Direct labour RM6
Variable overhead RM 3
Fixed per year RM100,000

Selling and administration costs:

Variable per unit RM5
Fixed per year RM70,000

Assume that the company uses absorption costing.

Required:

(a) Compute the unit product cost.

(b) Prepare a statement of profit or loss for the year ended 31 December 2022.

Question 2

Spring Bhd. (Spring) has three production departments: Cutting Department, Machining Department
and Assembling Department. The following are the budgeted production overheads for the year 2022:

RM
Indirect labour:
Cutting 55,000
Machining 19,000
Assembling 28,000

Other production overheads:

Factory rental 8,000
Factory depreciation 22,500
Depreciation of machine 24,000
Power 9,000
Lighting 3,500
Supervisors’ salaries 12,000

T09AW Absorption Costing (Q) 29

 The budgeted data relating to the above overhead costs are as follows:

Cutting Machining Assembling Total

Horsepower 10% 70% 20% 100%
Number of labour hours 14,000 17,000 54,000 85,000
Number of machine hours 10,000 35,000 10,500 55,500
Value of machinery (RM) 35,340 82,460 16,492 134,292
Floor area (square metres) 1,000 3,500 3,000 7,500

Required:

(a) Prepare a production overhead analysis sheet, showing clearly the bases of apportionment.
(12 marks)

(b) Calculate the overhead absorption rate for each of the departments using machine hours as the
basis of absorption. (3 marks)

(c) One of the product produced by Spring is called “Berry”. Calculate the selling price of “Berry”
based on the following data and standard cost per unit:

Direct material 3kg at RM2 per kg

Direct labour 6 hours at RM5 per hour
Cutting department 2 machine hours
Machining department 5 machine hours
Assembling department 1 machine hour
Profit 10% of the production cost
(4 marks)

(d) The actual results of the production departments for the year 2022 are as follows:

Cutting Machining Assembling

Total production overhead cost (RM) 85,500 68,732 48,460
Number of machine hours 11,000 37,000 10,000

Calculate the under or over absorption of overheads for the above departments. (6 marks)
[Total: 25 marks]
[Dec’12]

Question 3

Summer Sdn. Bhd. (Summer), a manufacturing company, has three production departments and a
service department. The following are the budgeted production overheads for the year ending 31
December 2022:

Machining Welding Packing Maintenance Total

RM RM RM RM RM
Indirect material 40,000 10,000 74,000 16,000 140,000
Indirect labour 46,000 28,000 74,000
Factory rental 6,000
Factory insurance 36,000
Heat and lighting 14,000
Depreciation-equipment 26,000
Depreciation-machinery 18,000
Total 314,000

T09AW Absorption Costing (Q) 30

 Additional information relating to the above production overhead costs are as follows:

Machining Welding Packing Maintenance Total

Value of machinery (RM) 13,000 18,000 6,000 37,000
Value of equipment (RM) 80,000 5,000 3,000 88,000
Number of labour hours 4,000 15,000 8,000 12,000 39,000
Number of machine hours 17,000 3,000 500 20,500
Number of maintenance hours 9,000 6,000 15,000
Floor area (in square metres) 4,500 3,500 1,000 800 9,800

Required:

(a) Prepare a production overhead analysis sheet, showing clearly the bases of apportionment. You
are required to show the re-apportionment of production overheads from the service
department to production departments. (15 marks)

(b) The Welding and Packaging departments are labour intensive whereas the Machining
department is machine intensive.

Calculate a suitable production overhead absorption rate for each of the production
departments. (3 marks)

(c) Summer produces a product called “Cupcake”. One unit of “Cupcake” requires direct material
cost of RM25 and direct labour cost of RM50.

Each unit of “Cupcake” requires two machine hours in the Machining department, two direct
labour hours in the Welding department and three direct labour hours in the Packaging
department.

An additional 20% of the production costs is to be provided for selling and distribution costs
and the company expects to sell the product at a profit of 10% of the total cost.

Required:

Calculate the selling price per unit of “Cupcake” using the overhead absorption rates calculated
in part (b) above. (7 marks)
[Total: 25 marks]
[Jan’12]

Question 4

Snowman Sdn. Bhd. (Snowman), a manufacturing company, has two production departments –
machining department and assembly department and three service departments – store room,
maintenance and tool room.

The following are the budgeted production overheads of Snowman for the year ended 31 December
2022:

RM'000
Indirect labour:
Machining 1,250
Assembly 1,130
Store room 450
Maintenance 275
Tool room 147
3,252
3

T09AW Absorption Costing (Q) 31

 Other production overheads:
Supervisors’ salaries 180
Factory rental 510
Rates 100
Plant depreciation 60
Factory depreciation 168
1,018

Total 4,270

Additional information relating to the above production overhead costs are as follows:

Machining Assembly Store room Maintenance Tool room Total

No. of employees 100 50 30 25 15 220
Value of plant 7,500 1,200 - 4,400 3,500 16,600
(RM'000)
Floor area (sq.m.) 2,700 4,800 1,280 700 300 9,780
Machine hours 395,500 180,000 - - - 575,500
Material requisitions 8,500 6,800 - 1,200 1,700 18,200
Maintenance hours 45,800 2,800 - - 14,500 63,100
Tool room hours 18,400 15,000 - - - 33,400

Required:

(a) Prepare a production overheads analysis sheet, showing clearly the bases of apportionment.
You are required to show the re-apportionment of production overheads from the service
departments to the production departments. (20 marks)

(b) Calculate the overhead absorption rate for each of the above production departments using
machine hours as the basis of absorption. (2 marks)

(c) One of the products produced by Snowman is called ‘I-Fish’. The following are the
information related to “I-Fish”:

Direct materials per unit 5kgs at RM13 per kg

Direct labour per unit 6 hours at RM17 per hour
Machining department-standard hours required per unit 8 machine hours
Assembly department-standard hours required per unit 10 machine hours
Selling and administrative expenses 30% of factory costs
Profit 25% of selling price

Required:

Calculate the unit selling price of ‘I-Fish’. (3 marks)

[Total: 25 marks]
(Apr’14)

T09AW Absorption Costing (Q) 32

 Tunku Abdul Rahman University of Management and Technology
Faculty of Accountancy, Finance and Business
Academic Year 202/2023
BBFA1053 Business Accounting

Tutorial 10 Budgetary Control

Question 1

(a) Briefly explain FOUR (4) purposes of preparing budgets. (8 marks)

(b) Swan Sdn. Bhd. produces and sells furniture.

(1) Budgeted production and sales volumes are as follows:

Nov 2022 Dec 2022

Production (units) 40,000 30,000
Sales (units) 35,000 32,000

(2) Production cost per unit is expected to be RM20 and selling price per unit is 150% of
production cost.

(3) Selling and distribution costs are variable in proportion to sales and are budgeted at10% of
sales value.

(4) Administrative expenses are fixed and are budgeted at RM144,000 per annum.

(5) There is no opening inventory on 1 November 2022.

Required:

Prepare the budgeted statement of profit or loss for the months ended 30 November 2022 and 31
December 2022.
(11 marks)
(Mar’12)

T10AW Budgetary Control (Q) 33

 Question 2

Annie Bhd. intends to start a manufacturing company. The following is the forecast data for the six
months ended 31 December 2022:

(1) Sales and production

2022 July August September October November December

Sales (units) 2,100 1,700 2,500 2,700 1,770 1,630
Production (units) 2,200 2,300 2,300 2,400 2,200 2,000

(2) Sales price is RM90 per unit. Customers will pay two months after sales.

(3) Raw material cost is RM30 per unit of product. 90% of the raw material costs will be paid in
the month the materials are used for production and the remainder in the following month.

(4) Direct labour cost of RM50 per unit of product is payable in the month incurred.

(5) Other variable expenses relating to production amount to RM3 per unit of product. These
expenses are paid in the month after they are incurred for production.

(6) Fixed expenses relating to sales and marketing totalled RM38,400 per annum, assuming these
expenses accrue evenly throughout the year. They are payable every month.

Required:

(a) Prepare the cash budget for each of the six months ended 31 December 2022. (17 marks)

(b) Prepare the budgeted statement of profit or loss of the above company for the six months
ended 31 December 2022. (5 marks)

(c) State THREE (3) purposes of preparing budget. (3 marks)

[Total: 25 marks]
(Mar’13)

T10AW Budgetary Control (Q) 34

 Question 3

Olivia Sdn. Bhd. (Olivia) intends to start a retailing business on 1 April 2022. The following are the
budgeted data for the four months ending 31 July 2022:

(1) Olivia will deposit RM160,000 into the company’s bank account as start-up capital.

(2) Office equipment costing RM47,000 and fixtures and fittings costing RM118,000 will be
purchased.

The office equipment will be fully paid on 18 April 2022.

The payment term for the fixtures and fittings is: 90% to be paid on 1 April 2022 and the
remaining 10% to be paid on 1 May 2022.

(3) The sales for the company are expected to be as follows:

Month RM
April 2022 18,000
May 2022 17,500
June 2022 25,000
July 2022 47,800

20% of the sales will be on cash basis and the balance will be on credit.

A 3% discount will be given to credit customers who pay in the month following the month of
sales. 75% of the credit customers are expected to take up the above discount and the balance
will pay 2 months after the sales.

(4) Monthly purchases will be equivalent to 45% of monthly sales. No inventory is maintained as
all the purchases are sold in the month of purchase. These purchases will be paid in the month
following the month of purchases.

(5) Selling and distribution expenses are expected to be 23% of total sales and will be paid on the
last day of the month incurred.

(6) Administrative expenses for April 2022 are expected to be RM2,500 and are expected to
increase by RM1,000 per month from May onwards. Included in these administrative expenses
are depreciation charges which amounted to RM800 per month from April 2022 to July 2022.
Administrative expenses are paid in the month incurred.

(7) Interest expense of 2.75% per month is charged on bank overdraft and is calculated based on the
bank balance at the end of the month. Interest expense is paid in the following month.

Required:

(a) Prepare a cash budget for each of the four months ending 31 July 2022. (20 marks)

(b) Prepare a budgeted statement of profit or loss for the four months ending 31 July 2022.
(5 marks)
[Total: 25 marks]
(Apr’14)

T10AW Budgetary Control (Q) 35

 Question 4

Minnie intends to start a retail business in January 2022. Her start up capital is expected to be
RM300,000 and the budgeted data for the four months ending 30 April 2022 are as follows:

(1) Sales value for January 2022 is budgeted to be RM300,000 and is expected to increase by 5%
every month thereafter.

(2) 40% of the sales will be on cash basis and the remainder will be settled within two months
following the sales.

(3) Minnie is given one month credit period for her purchases by the suppliers. Cost of sales is
expected to be 70% of sales.

(4) Minnie intends to maintain the closing inventory at 30% of the following month’s cost of sales.

(5) Rental is expected to be RM30,000 per month, payable at the beginning of every month
starting from January 2022. Minnie is required to pay 3 months rental deposit in January 2022.

(6) Salaries of RM35,000 per month will be paid at the end of each month.

(7) Other general expenses are expected to be RM7,000 per month, payable in the following
month.

(8) Advertising expenses of RM3,500 will be paid in February 2022.

(9) Furniture and fittings costing RM50,000 with a useful life of 5 years will be purchased in
January 2022.

(10) Interest expenses of 1% per month are charged for bank overdraft and are calculated based on
the closing bank balance of each month. The interest expenses are payable in the following
month.

Required:

(a) Prepare the cash budget for each of the four months ending 30 April 2022. (14 marks)

(b) Prepare the budgeted statement of profit or loss for the four months ending 30 April 2022.
(5 marks)

(c) Prepare the budgeted statement of financial position as at 30 April 2022. (6 marks)
[Total: 25 marks]
(Aug’12)

T10AW Budgetary Control (Q) 36

 Tunku Abdul Rahman University of Management and Technology
Faculty of Accountancy, Finance and Business
Academic Year 202/2023
BBFA1053 Business Accounting

Tutorial 11 Standards and Variances

Question 1

The standard cost of providing a meal in a fast food restaurant is as follows:

RM
Ingredient cost 1.80
Direct labour cost 0.30
Variable overhead cost 0.20
Total variable costs 2.30

The standard price of the meal is RM4.50 and the budgeted sales volume is 4,650 meals each month.

In the month of September, a total of 4,720 meals were sold for RM20,768. The actual total variable cost per
meal was RM2.30.

Required:

Calculate the following variances:

(a) Sales price variance

(b) Sales margin price variance
(c) Sales volume variance

Question 2

The standard cost of making one unit of product “Flying-kite” is as follows:

Standard direct material 5 kgs at RM5 per kg.

Standard direct labour 2 hrs at RM7 per hr

The actual production costs and other details are as follows:

Actual production units 500 units
Material cost at RM4.80 per kg RM13,440
Actual hours worked 1,200 hours
Labour cost at RM6.50 per hour RM7,800

Required:

(a) Calculate the following variances:

(i) Material price variance;

(ii) Material usage variance;
(iii) Material total variance;
(iv) Direct labour rate variance;
(v) Direct labour efficiency variance; and
(vi) Direct labour total variance. (12 marks)

(b) Briefly explain ONE (1) possible cause for each of the variances calculated in part (a) (i) and (ii) above.
(3 marks)
[Jan’12]

T11AW Standard and Variances (Q) 37

 Question 3

Jojo Sdn. Bhd. produces a single product called “Apple 7”. The company plans to produce and sell 5,000
units of “Apple 7” each month for the year ended 31 December 2022. The following are the standard unit
cost and selling price of “Apple 7”:

Direct materials 2.5 kgs @ RM2.30 per kg

Direct labour 5 hours @ RM3.50 per hour
Variable factory overheads 3 hours @ RM2.10 per hour
Selling price RM100 per unit

The actual data for the month of February 2014 are as follows:

Production units 5,200 units

Sales units 4,500 units at RM101 per unit
Direct materials 16,000 kgs at a cost of RM40,200
Direct labour 24,200 hours at a cost of RM92,000

Required:

Calculate the following variances:

(i) Material price variance;

(ii) Material usage variance;
(iii) Material total variance;
(iv) Direct labour rate variance;
(v) Direct labour efficiency variance;
(vi) Direct labour total variance. (12 marks)
[Mar’13]

Question 4

The standard costs of manufacturing 10,000 units of product “Star 3” for the month of June 2022 are as
follows:

 50,000 kgs of direct materials will be required at a total cost of RM100,000;

 30,000 labour hours amounting to RM210,000 are expected to be incurred;
 Variable production overheads are budgeted at RM9.00 per unit of product “Star 3”, and
 Fixed production overheads are expected to be RM10 per unit of product “Star 3”.

The actual results for the month of June 2014 were as follows:

 Actual output 10,500 units;

 Direct material used 63,000 kgs costing RM113,400;
 Total direct labour cost was RM168,000 for 21,000 labour hours worked;
 Variable production overheads amounted to RM157,500; and
 Fixed production overheads incurred were RM126,000.

Required:

(a) Calculate the standard cost per unit of product “Star 3”. (4 marks)

(b) Calculate the following variances:

(i) Material price variance;

(ii) Material usage variance;
(iii) Material total variance;
(iv) Direct labour rate variance;
(v) Direct labour efficiency variance; and
(vi) Direct labour total variance (12 marks)
[Aug’12]
T11AW Standard and Variances (Q) 38