GAB 1013 / SAB 1013 SECTION A [20 Marks] Answer ALL questions. 1.

In the charts of accounts, assets accounts generally begin with the digit ___________ and liabilities with a ___________. A. B. C. D. 2. 1, 2 2, 3 3, 4 4, 5

What is the meaning of fraud? A. B. C. D. Separation of duties Transactions that make up net income Assessment of financial statements to determine if they are fairly determined. Deceit or trickery that causes financial harm to a business or its stakeholders.

3.

Three factors must be present in a fraud triangle EXCEPT ____________. A. B. C. D. perceived pressure perceived risk perceived opportunity rationalization

GAB 1013 / SAB 1013 4. Misappropriation or theft of business assets is a type of ____________. A. B. C. D. 5. employee embezzlement management fraud financial fraud reporting fraud

Which of the following is NOT a purpose of preparing the statement of cash flow? A. B. C. D. To predict future cash flows To evaluate management decisions To predict ability to pay debts and to pay dividends To compute net profit or net loss Which of the following is NOT one of the types of business activities in the statement of cash flow? A. B. C. D. Operating Investing Financing Reporting

6.

7.

Purchase of equity investments will be reported in the _______________ activities section in the statement of cash flow. A. B. C. D. operating investing financing reporting

GAB 1013 / SAB 1013 8. Transactions that increase and decrease long-term assets refer to ______________ activities. A. B. C. D. 9. operating reporting investing manufacturing Financial statement analysis is generally based on the following comparative financial data EXCEPT _____________. A. B. C. D. 10. A. B. C. D. 11. A. users. B. C. information. Management accounting help investors and creditors make investment and credit decisions. Management accounting focuses on future with different items in the financial statements from one year to the next with another company with the industry Current ratio = _____________. Current assets / Current liabilities Total assets / Total liabilities Current liabilities / Current assets Total liabilities / Total assets Which of the following statements is TRUE? Financial accounting report is prepared for internal

GAB 1013 / SAB 1013 D. CPAs. 12. A. B. C. D. 13. All costs in a service company are ______________ costs. period perpetual product periodic Management reports are audited by independent

All other manufacturing costs other than direct materials and direct labor refer to ___________costs. A. B. C. D. marketing operating manufacturing overhead indirect materials Gross profit minus operating expenses equals ____________. A. B. C. D. operating income cost of goods available for sale cost of goods sold cost of goods manufactured The following are examples of indirect materials used in manufacturing a chair EXCEPT _____________. A. B. C. glue nails bolts

14.

15.

GAB 1013 / SAB 1013 D. woods

16.

How do variable costs behave? A. volume. B. C. D. volume. They remain constant for a given time period despite fluctuations in volume. They have both fixed and variable components. They change indirectly in proportion to changes in They change directly in proportion to changes in

17. A. B. C. D. 18.

As activity increases, variable costs per unit ___________________. also increase decrease do not change None of the above

Building rent is an example of _____________ cost. A. B. C. D. fixed variable mixed perpetual

19.

How costs change in response to changes in a cost driver refers to cost ____________. A. attitude

GAB 1013 / SAB 1013 B. C. D. behavior pool driver

20.

Contribution

margin

ratio

Contribution

margin

divides

by

______________. A. B. C. D. Operating income Sales revenue Fixed costs Variable costs

GAB 1013 / SAB 1013

SECTION B [80 marks] Answer ALL questions 1. Fern Company has the following comparative financial statements: FERN COMPANY Comparative Income Statements For Years Ended December 31, 2008 and 2007(in RM) 2008 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total expenses Income before taxes Income taxes Net income 444,000 267,288 176,712 62,694 40,137 102,831 73,881 13,764 60,117 2007 340,000 212,500 127,500 46,920 29,920 76,840 50,660 10,370 40,290

GAB 1013 / SAB 1013

FERN COMPANY Balance Sheet For Years Ended December 31, 2008 (in RM) 2008 Assets Current assets Long-term investments Plant assets, net Total assets Liabilities and Equity Current liabilities Common stock Other contributed capital Retained earnings Total liabilities and equity Prepare the following: a. Horizontal analysis for the income statement. [10 marks] b. Vertical analysis for the balance sheet for both years. [10 marks] 20,200 72,000 9,000 37,280 138,480 19,960 72,000 9,000 33,464 134,424 48,480 0 90,000 138,480 37,924 500 96,000 134,424 2007

GAB 1013 / SAB 1013

2.

a. What is the difference between the accrual basis and the cash basis of accounting? [4 marks] b. Give ONE (1) example of accrued revenue. [1 mark] c. For each of the following separate cases, prepare adjusting entries required for preparation of financial statements for the year ended December 31, 2008. i. Wages of RM10,000 are earned by workers but not paid as of December 31, 2008. [3 marks] ii. Depreciation on the companys equipment for 2008 is RM20,000. [3 marks] iii. The Office Supplies account had a RM500 debit balance on December 31, 2007. During 2008, RM5,000 of office supplies was purchased. A physical count of supplies at December 31, 2008 shows RM1,000 of supplies available. [3 marks] iv. An analysis of the insurance policies in effect on December 31 shows that RM300 of insurance coverage had expired.

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GAB 1013 / SAB 1013 [3 marks] v. The total amount of accrued interest expense at year-end is RM1,000. [3 marks] 3. a. Give TWO (2) examples of investing activities and TWO (2) of operating activities on the statement of cash flows. [4 marks] b. Use the following information to prepare a statement of cash flow (direct method) for Pine Company for 2008: Cash paid for merchandise inventory Cash paid to purchase machinery Cash paid for interest Cash paid for operating expense Cash proceeds from sale of land Cash received for interest Cash balance at the beginning of the year Cash balance at the end of the year Cash dividends paid Cash borrowed on a short-term note Cash received from stock issuance Cash collections from customers RM 100,000 150,000 5,000 200,000 200,000 10,000 15,000 50,000 24,000 25,000 50,000 500,000 [16 marks]

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GAB 1013 / SAB 1013

4.

a. Management

accountability

is

the

managers

responsibility to the various stakeholders of the company. List FIVE (5) stakeholders of a company. [5 marks] b. There are six differences between management accounting and financial accounting. Discuss any FIVE (5) of them. [10 marks] c. In manufacturing companies, materials can be classified into direct and indirect materials. State THREE (3) examples of direct materials and TWO (2) examples of indirect materials. [5 marks]

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