Final Exam Q FAR360 Jun2010

8/8/2019 Final Exam Q FAR360 Jun2010

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CONFIDENTIAL AC/JUN 2010/FAR360

PART A

Answer ALL questions.

1. Explain briefly THREE (3) primary forms of business organizations.(6 marks)

2. A reliable information system is a necessity for the operation of any organization.Differentiate between Accounting Information System (AIS) and ManagementInformation System (MIS).

(4 marks)

3. A cost unit is any activity for which a separate measurement of costs is desired. Coststhat are assigned to cost unit can be divided into two (2) categories. Distinguish between

direct cost and indirect cost. Give TWO (2) examples of each.(6 marks)

4. Costing systems can vary in terms of which costs are assigned to cost units and theirlevel of sophistication. Identify and explain each of the FOUR (4) stages involved indesigning Activity-Based-Costing (ABC) system.

(6 marks)

5. There are several techniques in capital budgeting decision. One of the commonly usedtechniques is payback period. Briefly explain THREE (3) benefits and THREE (3)drawbacks of payback period as a means of capital budgeting decision.

(6 marks)

6. Audit documentation is also referred as working papers. Explain clearly the followingaudit working papers and give an example for each.

a) Permanent Filesb) Current Files

(6 marks)

7. Distinguish clearly between balancing charges from balancing allowances and how theyare being treated in the tax computation of a company.

(6 marks)

8. Differentiate between conversion cost and period cost.(4 marks)

9. Hanun is the major shareholder of Bumi Indah Berhad. She does not understand whysome companies have both internal and external auditors. She argues that both types ofauditors are actually performing similar functions. Do you agree with her argument?Discuss.

(6 marks)(Total: 50 marks)

Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

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PART B

QUESTION 1

AZNAD Sdn Bhd runs a computer company. The companys financial year end is 31December. Financial statements of the company for two consecutive years are as follows:-

Income Statement for the year ended 31 December

Note2009RM

2008RM

Sales 4,500,000 3,750,000

Less: Cost of sales (2,700,000) (2,473,500)

Gross profit 1,800,000 1,276,500

Gain on sale of property, plant and equipment 1 15,000 -

1,815,000 1,276,500

Less:Administration expensesSelling and distribution expensesFinance expenseOperating expenses

23

(420,300)(102,000)(56,000)

(175,000)

(463,000)(137,600)(52,500)

(160,000)

Profit before taxTax expense

1,061,700(265,425)

463,400(120,484)

Profit after tax 796,275 342,916

Balance Sheet as at 31 December2009RM

2008RM

Non-current assets

Property, plant and equipment 3,250,300 2,980,200

Current AssetsInventoryShort term investmentsTrade receivables (net)Prepayments

Bank

417,000100,000863,250

-

29,700

519,800-

649,0004,400

71,800Total Assets 4,660,250 4,225,200

Share capital 1,000,000 1,000,000

Reserves 1,540,350 495,200

Non-current liabilities 1,500,000 1,800,000

Current liabilitiesTrade payablesAccruals

612,0007,900

917,00013,000

Total equity and liabilities 4,660,250 4,225,200


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Notes to the account:

1. Gain on disposal of motor vehicle was in respect of non-commercial vehiclepurchased on 1 January 2007 at RM50,000 and was disposed off in June 2009 at avalue of RM32,000.

2. Administration expenses consist of :

a. Payroll expense of RM300,000 which comprises of salaries and bonuses ofRM238,000, salary for handicapped employee of RM3,600 and EPF contribution ofRM58,400.b. Depreciation for year of assessment 2009 is RM24,000.c. General expenses of RM37,500 which comprise of entrance fee to tradeassociation amounting to RM4,000, allowance for practical training (approved) of

RM2,000 and compensation paid to a client who sued the company for late deliveryof goods of RM31,500 where the case has been settled out of court.d. Donation was made to Institut Jantung Negara of RM15,000.

3. Selling and distribution expenses consist of:

a. RM15,000 for travelling expense represented the cost of air tickets for holidaypassage for companys employees while RM20,000 was for business travelling.

b. Entertainment expenses of RM67,000 includes of RM36,000 for dinners and lunchesto clients and RM31,000 for meals provided to employees on family day.

4. Capital allowance for the year of assessment 2009 is RM20,500.

Required:

1. The company records its inventory based on cost. In the audit findings, the net reliasablevalue of the inventory was RM389,000. The auditor has advised the management toamend the inventory figure. However, the management refused to do so. Except theinventory balance, other figures have been fairly presented.

a. Discuss the type of report that should be issued by the auditor and the reason for thetype of report issued.

(5 marks)

b. Briefly explain FOUR (4) types of audit techniques used in collecting audit evidence.(8 marks)

2. Compute the income tax payable by AZNAD Sdn Bhd for the year of assessment 2009.(20 marks)


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3. From the following information:

a. Draw up a bank reconciliation statement from the details below as at 31 December2009 for AZNAD Sdn Bhd:

RM

Total amount of cheques which not yet presented tothe bank account 15,000

Total amount of lodgment which not yet credited to thebank account

8,000

(5 marks)

b. What is the main purpose of preparing a bank reconciliation statement?(2 marks)

4. In view of the current stiff competition, Teluk Gadong Sdn Bhd has decided to diversifyinto a new business. The new business requires an acquisition of a new machine costingRM2.5 million. The project is expected to generate income of RM450,000 per annum forthe next 10 years. The projects cost of capital is 15% and depreciation is expected to beon a straight line basis within 10 years useful life. The salvage value of the asset isexpected to be RM600,000.

You are required to calculate the following:

a. Payback period of the project.(2 marks)

b. Accounting rate of return (ARR) of the project.(3 marks)

c. Net Present Value (NPV) of the project. Based on your answer, comment withreason(s) whether Teluk Gadong Sdn Bhd should invest into the project.

(5 marks)

Note:

Present value factor for 10 years @ 15% is 0.2472.

Present value annuity factor for 10 years @ 15% is 5.0188.

(Total: 50 marks)

END OF QUESTION PAPER


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Final Exam Q FAR360 Jun2010