Reference no: EM133075444

Questions -

Q1. Given the data below for a firm in its first year of operation, determine net income under the accrual basis of accounting.

Revenue recognized - RM 19,000

Accounts receivable - RM 3,000

Expenses incurred - RM 7,250

Accounts payable (related to expenses) - RM750

Supplies purchased with cash - RM 1,800

A. RM 11,750

B. RM 14,000

C. RM 9,500

D. RM 12,200

Q2. A company bought a property four years ago on 1 January for RM180,000. Since then property prices have risen substantially and the property has been revalued at RM250,000. The property was estimated as having a useful life of 20 years when it was purchased. What is the balance on the revaluation surplus recorded in the statement of financial position?

A. RM250,000

B. RM144,000

C. RM106,000

D. RM70,000

Q3. Honey Dew Sdn. Bhd. sells three products - Basic, Super and Luxury. The following information was available at the year end.

Basic RM per unit Super RM per unit Luxury RM per unit

Original cost 6 10 20

Estimated selling price 8 12 16

Selling and distribution costs 1 4 6

Units of inventory 220 250 150

What is the value of inventory at the year end?

A. RM4,520

B. RM4,820

C. RM6,820

D. RM5,320

Q4. Which of the following statements about IAS 2 Inventories is correct?

A. Production overheads should be included in cost on the basis of a company's normal level of activity in the period

B. In arriving at the net realizable value of inventories, trade discounts and settlement discounts must be deducted

C. In arriving at the cost of inventories, FIFO, LIFO and weighted average cost formulas are acceptable

D. It is permitted to value finished goods inventories at materials plus labor cost only, without adding production overheads.

Q5. In preparing its financial statements for the current year, a company's closing inventory was understated by RM110,000. What will be the effect of this error if it remains uncorrected?

A. The current year's profit will be overstated and next year's profit will understated

B. The current year's profit will be understated but there will be no effect on next year's profit

C. The current year's profit will be understated and next year's profit will be overstated

D. The current year's profit will be overstated but there will be no effect on next year's profit