Tutorial Question (Week 1) - Introduction to Financial Accounting.
Answers all the questions
Section A
1. Name the accounting concepts described here:
a. Business is expected to remain in operation indefinitely.
b. A business’s financial information is recorded and reported separately from the owner’s
personal financial information.
c. Principle/guideline requires a company’s to report its land at the amount the company
paid to acquire/ buy the land, even if the land could be sold today at a significantly higher
amount?
d. Principle/guideline directs a company to show all the expenses related to its revenues of a
specified period even if the expenses were not paid in that period?
e. Principles that stated the economic events are identified and measured in financial terms.
Section B
1. What is accounting?
2. Distinguish between book-keeping and accounting.
3. Name the other parties who may be interested in the financial affairs of a business. Give
reasons for their interest.
4. A trader purchased a machine for RM3000 cash. The seller stated that the machine was worth
RM3500. At which amount should the trader record his new machine?
5. Emily Li buys a dress for RM150 on 10 April. She pays the store on 9 June. The store records
the sale on 10 April, not on 9 June when the cash received.
a. Which accounting concept is being applied here? Explain.
Section C
1. Which type of business organization is owned by its shareholders?
a. Corporation
b. Partnership
c. Proprietorship
d. All the above
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2. Which type of business organization is owned by single owner?
a. Proprietorship
b. Partnership
c. Corporation
d. All the above
3. Which of the following, an unlimited liability business?
a. Corporation and Proprietorship
b. Proprietorship and Partnership
c. Partnership only
d. None of the above
4. The personal assets of the owner of a company will not appear on the company's balance
sheet because of which principle/ concept?
a. Going concern
b. Money Measurement
c. Business Entity
d. Dual Aspect
5. Which principle/guideline justifies a company violating an accounting principle because
the amounts are immaterial?
a. Full Disclosure
b. Materiality
c. Comparability
d. Timeliness
6. Which principle/guideline is associated with the assumption that the company will
continue on long enough to carry out its objectives and commitments?
a. Going Concern
b. Time Period
c. Business entity
d. Full disclosure
7. Which principle/guideline directs a company to show all the expenses related to its
revenues of a specified period even if the expenses were not paid in that period?
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a. Accrual
b. Historical cost
c. Dual Aspect
d. Going Concern
8. Accrual accounting is based on this principle/guideline
a. Materiality
b. Timeliness
c. Stability of Currencies
d. Revenue Recognition
9. Accounting is the information system that
a. Measures business activity
b. Communicate the results to decision makers
c. Process data into reports
d. All of the above
10. Which of the following is least likely to be a user of business’s financial information?
a. Creditors
b. Investors
c. Owners
d. Competitors
11. Which of the following best describes accounting?
a. Can be thought of as the “language of business”
b. Is of limited or little use by individuals outside of the business
c. Records economic data but does not communicate the data to users
d. Relies upon concepts and principles that are independent of specific user needs
12. The two most common specialized fields of accounting in practice are:
a. Environmental accounting and financial accounting
b. Managerial accounting and tax accounting
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c. Financial accounting and accounting systems
d. Managerial accounting and financial accounting
13. Accounting is a system that collects and processes financial information about an
organization and reports that information to decision makers.
a. True
b. False
14. Which of the following is a type of Real account?
a. Machine
b. Wages
c. Rent
d. Commissions
15. Which of the following is a NOT type of Nominal account?
a. Cash
b. Wages
c. Rent
d. Commissions
16. The accounting cycle begins by recording _____________ in the form of journal entries.
a. Business Transaction
b. Financial Information
c. Business Contracts
d. Corporate Minutes
17. After a business transaction has occurred, journal entries are recorded in the
a. General Journal
b. Ledger
c. Expenses Account
d. Balance Sheet
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18. Once journal entries are recorded, they can be posted to
a. General Journal
b. Ledger
c. Expenses Account
d. Balance Sheet
19. Financially, shareholders are rewarded by:
a. Interest.
b. Profits.
c. Dividends.
d. None of the above
20. The type of accounting which reports on the performance of the firm to essential
external users is called
a. External Accounting
b. Managerial Accounting
c. Financial Accounting
d. Internal Accounting
21. Which of the following describes a record of the transactions?
a. General Ledger
b. Balance sheet
c. Income Statement
d. Profit and Loss
22. Which of the following groups use financial accounting?
a. Management, employees, and lenders
b. Suppliers and Investors
c. Tax authorities/ government
d. All of the above
Think Zone
John (owner) withdrew RM10000 from his company account to pay for the monthly rental of his
residence, but John not record this transaction in his drawing account.
a. Which basic accounting concept was violated in this situation?
b. Due to John’s action, what would happen to the accounting information of the company?.