Exercise - Chapter 1&2

Exercise – Chapter 1 & 2 (Based on past years’ exam questions)
DEC 2016
1. Which of the followings are the purposes of preparing the financial statements:
i. To find the net profit as shown in the statement of profit or loss statement
ii. To find the net profit as shown in the statement of financial position
iii. To show the financial performance of a business
iv. To show the financial position of a business
A. All of the above

B. i, ii, iii only
C. i, ii, iv only
D. i, iii, iv only
(1 mark)
2. The internal users of financial statement seek the following information except:
A. Employees - Career enhancement and promotions

B. Management teams - Planning and budgeting purposes
C. Owner - business growth and profit performances
D. Government - economic planning and taxation purposes
(1 mark)
3. The statement below explained one of the accounting concept used in preparing the
financial statements:
- Only transactions and events that are capable of being measured in monetary
terms are recognized in the financial statements.
- All transactions and events recorded in the financial statements must be reduced to
a unit of monetary currency. Where it is not possible to assign a reliable monetary
value to a transaction or event, it shall not be recorded in the financial statements.
Which accounting concept below is the most suitable to be applied for the above
statements
A. Money measurement concept

B. Currency measurement concept
C. Kuala Lumpur Stock Exchange concept
D. Business entity concept
(1 mark)
1
4. Below are two different business entity owned by different owners:
Abu MiniMart
Klinik Abu and Bakar
What is the similarity possess by the business above:
A. Unlimited liabilities
B. Separate legal entity
C. Audited financial statement
D. Published financial statement
(1 mark)
JULY 2017
1. Which of the following refers to a partnership business?
A. Limited liability.
B. Capital contributed by way of ordinary shares.
C. Income from business is not subject to tax.
D. Profit or loss is divided among owners and members.
(1 mark)
2. What is the main objective of preparing the financial statement?
A. to show the value of the shares in the company.

B. to provide information on financial performance and financial position of a
business.
C. to help management hiring additional work forces.
D. to show managers the results of their departments.
(1 mark)
3. The concept that concerns with the significance of currency used when dealing with
economics events and agreeable by both parties is
A. going concern concept

B. monetary concept
C. consistency concept
D. entity concept
(1 mark)
4. The statements below refer to the characteristics of a type of business.
 Widely scattered in Malaysia

 Solely owned business
 Profit gained or loss suffered by own self
Which business meets the above characteristics?
2
A. Public limited company
B. Sole proprietorship
C. Private limited company
D. Partnership
(1 mark)
Extra Questions
1) Amin is the owner of Company A Sdn Bhd. He took goods of RM2,000 from his
company for his own personal use. His accountant wants to record this transaction in the
books of the business. Which concept is the accountant applying?
______________________________
2) Mr Abu, the accountant of Ali Sdn Bhd changed the straight line method of depreciation
to the reducing balance method. Which accounting concept does this contravene?
_______________________________
3) What are the advantages of companies as compared to sole proprietorship or partnership?

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
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4) a) What information can be gleaned from the final accounts of a business that will assist
the credit management in making a more informed decision?
b) For each of the following stakeholders, identify the accounting information that will be
of interest to them and why?
i) Investors.
ii) Lenders.
iii) Employees and their representatives.
iv) Customers.
v) The general public.

Exercise - Chapter 1&2

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Exercise – Chapter 1 & 2 (Based on past years’ exam questions)

A. All of the above

A. Employees - Career enhancement and promotions

A. Money measurement concept

What is the similarity possess by the business above:

1. Which of the following refers to a partnership business?

2. What is the main objective of preparing the financial statement?

A. to show the value of the shares in the company.

A. going concern concept

4. The statements below refer to the characteristics of a type of business.

 Widely scattered in Malaysia

Which business meets the above characteristics?

3) What are the advantages of companies as compared to sole proprietorship or partnership?

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