Faculty of Business, Economics & Accounting

Department of Accounting and Finance

HELP Bachelor of Business (Hons) Year 2
HELP Bachelor of Management (Hons) Year 2

INTERNAL SUBJECT DETAILS

Semester 3, 2016
Subject:

ACC 203
Financial Accounting 2

Subject Lecturer/Tutor: Dr. Lee Teck Heang

Telephone: 03-2716 2000
Fax:
03-2093 5311
Email:
lee.teck.heang@help.edu.my

Consultation:

Please call or email for appointment

REQUISITE(S)
ACC101
Financial Accounting 1
SYNOPSIS

This subject covers further topics in financial accounting. It builds upon the knowledge
gained from ACC101 Financial Accounting 1, and thus, the successful completion of
ACC101 Financial Accounting 1 is a pre-requisite of this subject. The topics include
accounting for branches, clubs / associations and non-profit organisations, as well as
partnerships. It considers how to deal with entities that may use single entry systems or
has incomplete records. This subject takes a look at social and environmental accounting
as well as the effects of globalisation on accounting.

OBJECTIVES
The objectives are:

to enable students to prepare the accounts for branches;

to enable students to prepare the accounts for clubs / associations and non-profit
organisations;

to enable students to prepare the financial statements when there are incomplete
records or when an entity uses a single entry system;

to enable students to prepare the accounts for partnerships;

to enable students to demonstrate an understanding of accounting for goodwill;

to enable students to demonstrate an understanding of the basic concepts in

accounting for corporations / company accounting;

to enable students to prepare the financial statements for corporations;

to enable students to demonstrate an understanding of basic sources of finance

(bonds and other long term borrowings);

to enable students to demonstrate an understanding of social and environmental

accounting and the effects of globalisation on accounting, and

to enable students to prepare the cash flow statements for corporations;

to enable students to analyse and interpret financial statements of corporations,

and

to enable students to demonstrate an understanding of the disclosures in the notes

to the financial statements and appreciate the impact/issues underlying
accounting policy choice.

LEARNING OUTCOMES
Upon completion of this subject, students should be able to:

prepare the accounts for branches;

prepare the accounts for clubs / associations and non-profit organizations;

prepare the financial statements when there are incomplete records or when an entity
uses a single entry system;

prepare the accounts for partnerships;

demonstrate an understanding of accounting for goodwill;

demonstrate an understanding of social and environmental accounting and the effects

of globalisation on accounting;

demonstrate an understanding of the basic concepts in accounting for corporations

company accounting, and

prepare the financial statements for corporations;

TOPICS
Topic 1

Accounting for Branches

Topic 2

Accounting for Clubs, Associations and Non-Profit Organisations

Topic 3

Single Entry and Incomplete records

Topic 4

Partnership I (Introduction and Basic Concepts)

Topic 5

Partnership II (Further Considerations) & Goodwill (IAS 38)

Topic 6

Introduction to Social & Environmental Accounting and Accounting

Issues in the International Arena

Topic 7

Accounting for Corporations I (Introduction, Share Capital, Retained

Earnings, Reserves & Other Considerations) FRS 101

Topic 8

Accounting for Corporations II (Financial Statements) - FRS 101

Topic 9

Accounting for Corporations II (Cash Flow Statements) FRS107

Topic 10

Debentures / Bonds and Other Non-Current Liabilities FRS 137

Topic 11

Financial Statements Analysis and Interpretation for Corporations

Topic 12

Notes to Financial Statement & Accounting Policy Choice (Considering

FRS 101 & FRS 108)

PRESCRIBED TEXTS
Wood, F. and Sangster, A. (2015) Business Accounting Vol 1, 13th edn, Prentice-Hall.
Wood, F. and Sangster, A. (2015) Business Accounting Vol 2, 13th edn, Prentice-Hall.
Jane, L. and Tan, L.L. (2015) Company and Group Financial Reporting, 8th edn, Pearson.

RECOMMENDED REFERENCE
Hoggett, J., Edwards, L., Meldin, J. and Hellmann, A. (2014) Financial Accounting, 9th
edn, John Wiley & Sons Australia Ltd.

JOURNALS, READINGS, AND ARTICLES

1) Sankar Sen, C.B. Bhattacharya (2001), Does Doing Good Always Lead to Doing
Better? Consumer Reactions to Corporate Social Responsibility, Journal of
Marketing Research: May 2001. Vol. 38, No. 2, pp. 225-243.
2) M.R. Mathews (1997), Twentyfive years of social and environmental accounting
research: Is there a silver jubilee to celebrate?, Accounting, Auditing &
Accountability Journal, Vol. 10 Iss: 4, pp.481 531.
3) Jeffrey R. Vincent (February 2000), Environment and Development Economics
Green Accounting: From Theory to Practice, Volume, Issue 01, pp 13-24.

Subject Outline / Teaching Plan

Department
Lecturer

: Accounting & Finance

: Dr. Lee Teck Heang

Week

Subject Code : ACC 203

Subject Title : Financial Accounting 2

Topics

References

Introduction to social and environmental

accounting and accounting issues in the
international arena

Slides & Articles

Single entry and incomplete records

B. Acct 1 (C35)

Accounting for clubs, associations and non-profit

organizations

B. Acct1 (C36)

Partnership I (Basic concepts, preparation of

partnership accounts)

B. Acct1 (C41)

Partnership II ( Admission of new partners,

retirement of partners, and dissolution of
partnership)

B. Acct1 (C42 & 43)

Partnership III (Dissolution of partnership)

B. Acct1 (C44)

Accounting for corporation I (Introduction, share

capital, retained profits, reserves etc)

Comp Acc (C1)

Accounting for corporation II (Preparation of

financial statements and issue and redemption of
shares)

Comp Acc (C2 )

Mid term & Break

9-10

Debentures/ bonds and other non-current liabilities

Comp Acc (C2 & 3)

11

Presentation of Financial Statements I

-Income Statement
-Balance Sheet

Comp Acc (C4)

12

Presentation of Financial Statements II

-Cash flow statement
- Notes to financial statements and accounting
policy choice

Comp Acc (C5)

13

Financial statements analysis and interpretation

B. Acct1 (C34)

14 15

Final Examination

ASSESSMENT:
There are 3 assessment items for this subject.

Assessment Items

Value

Due Date

1. Assignment (Group)

20%

11 Nov 2016

2. Mid Semester Test

20%

Week 8

3. Final Examination (Closed Book)

60%

Examination period: 26 November

- 10 December 2016**

REQUIREMENTS:
To gain a pass in this subject, students must:

Achieve a passing grade in the final examination i.e. score a minimum of 30 marks
out of 60 marks if there is an examination for this subject.

Attempt ALL areas of assessment; and achieve a total result of 50% or better
overall.

** - Please check on the notice board and My Acel for the actual date. HELP
University reserves the right to make any changes to the above where appropriate.

ACC203 FINANCIAL ACCOUNTING 2

ASSIGNMENT

Due on 11 November 2016

Marks: 20%

Your client Mr Smith, an investor from the United Kingdom who is interested to invest
in one of the telecommunications companies in Malaysia. As an investment consultant,
you are required to assess a company in this industry before a recommendation is made.
You are required use financial statement analysis to anaylse the proposed company over
the last five years. The profitability, liquidity and efficiency of the proposed company
should be considered in order to justify your recommendation to him. The length of your
report should be around 2,000 2,500 words.
INSTRUCTION(S):
Assignment in this subject is compulsory. Failure to submit the assignment will result in
automatic failure (FL) and students will not be eligible to sit for the final examination.
Students are required to ensure that assignment should comply with the following
instructions. Failure to do so would invite a penalty.
1. This is a group assignment consisting of 4 group members.
2. The assignment should be computer-typed, double-space and to have a font
size of 12, Times New Roman. Hand-written assignments will not be accepted.
There should a one-inch margin on both sides of the page and all pages must
be numbered accordingly.
3. No Late submission is permitted at any circumstance as it is a group
assignment.
4. Assignments must be submitted to the Administration Office of the Faculty of
Business, Economics & Accounting with the proper acknowledgement of
receipt by the staff. Before submitting your assignment, you should make a
copy and submit the original for assessment.
5. Turnitin information:
Class name: acc203
Class ID: 13025285
Password: acc203

GRADING SCHEME
Mark Range

GRADE

GRADE
POINT

DEGREE
CLASSIFICATI
ON

MARKING RUBRICS

85 - 100

HD 1

4.00

FIRST CLASS

80 84

HD 2

3.75

75 - 79

DI 1

3.50

SECOND
UPPER CLASS

70 74

65 69

DI 2

3.00
SECOND
LOWER CLASS

60 64

CR 2

PS 1

2.50
THIRD CLASS
PASS

50 - 54

PS 2

FL

Basic grasp of key concepts

Less than satisfactory use of analytical
means and logical arguments
Little synthesis of arguments and
hardly any relevant examples
Some evidence of balanced
discussions and poor organisation
Satisfactorily command of language
and considerable amount of errors
Relatively flawed referencing

2.00

0 - 49

Competent grasp of key concepts

Competent use of analytical means
and logical arguments, albeit with
some errors
Fair synthesis of arguments and
moderate use of relevant examples
Fairly balanced discussions and fairly
clear flow of ideas
Competent command of language and
limited amount of errors
Satisfactorily is referencing

2.75

55 - 59

Comprehensive and excellent grasp of

key concepts
Excellent use of analytical means and
logical arguments
Good synthesis of arguments and
excellent use of relevant examples
Balanced discussions and good flow of
ideas
Excellent command of language with
no errors
Excellent and consistent referencing

3.25

CR 1

Comprehensive and excellent grasp of

key concepts
Excellent use of analytical means and
logical arguments
Excellent synthesis of arguments and
excellent use of relevant examples
Balanced discussions and excellent
flow of ideas
Excellent command of language with
no errors
Excellent and consistent referencing

0.00

Shows ignorance of key concepts

Less than satisfactory use of analytical
means and logical arguments
Little synthesis of arguments no
relevant examples
Little or no balanced discussions and
poor organisation

Relatively poor command of language

and unable to expressed ideas clearly
No referencing or poor referencing

HELP UNIVERSITY

ASSIGNMENT FEEDBACK/MARKING SHEET

ACC203
Financial Accounting 2

1. Student ID:_______________________________________
2. Student ID :_______________________________________
3. StudentID:________________________________________
4.. Student ID:________________________________________

Assessment Criteria

Mark
Achieved

Maximum
Mark

Relevance of materials used

Application of appropriate theories

15

Logical flow, sequence and development

15

Evidence of background reading

15

Appropriate depth of analysis

15

Evaluation of issues and results

15

Use of supporting data/evidence

10

Use of referencing system and bibliography

Overall presentation

Total Mark

100

10

Assignment No.: __

Assignment Cover Sheet

Student Information (For group assignment, please state names of
all members)
Name

Grade/Marks

ID

Module/Subject Information

Office Acknowledgement

Module/Subject Code
Module/Subject Name
Lecturer/Tutor/Facilitator
Due Date
Assignment Title/Topic
Intake (where applicable)
Word Count

Date/Time

Declaration
. I/We have read and understood the Programme Handbook that explains on plagiarism, and I/we testify that, unless otherwise
acknowledged, the work submitted herein is entirely my/our own.
. I/We declare that no part of this assignment has been written for me/us by any other person(s) except where such collaboration
has been authorized by the lecturer concerned.
. I/We authorize the University to test any work submitted by me/us, using text comparison software, for instances of plagiarism.
I/We understand this will involve the University or its contractors copying my/our work and storing it on a database to be used in
future to test work submitted by others.
Note:1) The attachment of this statement on any electronically submitted assignments will be deemed to have the same authority
as a signed statement.
2) The Group Leader signs the declaration on behalf of all members.

Signature:

Date:

mail:

11

Feedback/Comments*
Main Strengths

Main Weaknesses

Suggestions for improvement

Student acknowledge feedback/comments

Graders signature

Students signature:

Date:

Date:

Note:

1)A soft and hard copy of the assignment shall be submitted.

2)The signed copy of the assignment cover sheet shall be retained by the marker.
3)If the Turnitin report is required, students have to submit it with the assignment. However, departments may allow
students up to THREE (3) working days after submission of the assignment to submit the Turnitin report. The
assignment shall only be marked upon the submission of the Turnitin report.
*Use additional sheets if required.

12

Department of Accounting & Finance

ACADEMIC INTEGRITY
Honesty and Responsibility
Academic integrity is an important tenet for HELP University. In pursuit of the highest
standards of academic integrity, the Department of Accounting & Finance holds it
students to the highest ethical standards defined by the Rules and Regulations section of
the Academic Handbook. All students at the Department of Accounting & Finance are
subjected to and are bound by the Student Academic Misconduct Rule to assure academic
honesty. Students are required to sign a pledge on the assignment cover sheet before
submitting your assignments to the Administration Office of the Faculty of Business,
Economics & Accounting.
What is Plagiarism?
Plagiarism is academic dishonesty or academic theft, and it is a serious academic offence.
Plagiarism includes, but is not limited to, the followings:
1. quote, paraphrase or summarize someone elses ideas, theories or data, in whole
or in part, without appropriate acknowledgement
2. borrow ideas, opinion or words, in whole or in part, from other sources without
properly crediting the author(s)
3. use any facts, statistics, diagrams or graphs, in whole or in part, without
acknowledging the source clearly
4. claim or imply original authorship of someone elses ideas, theories or data, in
whole or in part, as your own
5. employ or allow someone to help to revise, amend or write your work and pass
off as your own original work
6. collaborate with or allow other students to copy your work
7. draw on sources more than what you have acknowledged by citations
While a student is not discouraged to discuss an assignment with his/her friends or
classmates, the work he/she submits must be done by the student alone. If a student shares
his/her assignment with other students and they plagiarize it, the student is as guilty as
those students who plagiarized his/her assignment. All parties to plagiarism are
considered equally guilty. Under no circumstances should a student be involved in
collusion with other students unless he/she is permitted to work on an assignment jointly
by the lecturer/tutor. If a student is unsure what constitutes plagiarism, he/she is obliged
to consult the lecturer/tutor on the matter before submission of his/her assignment.

13

When and How to Reference?

Knowing when and how to cite is a students responsibility. If he/she is in doubt or need
more help on this matter, the student may consult the lecturer/tutor. The following list
comprises some of the sources a student will need to reference. The list is by no means
exhaustive, but simply consists of the most common sources used by students to complete
their work.
1. Books
2. Chapters in books
3. Journal articles
4. Conference papers
5. Newspaper articles
6. Magazines
7. Websites
8. Study guide

Students are advised to cite in the following cases [1]:

1. When he/she quotes two or more words verbatim, or even one word if it is used
in a way that is unique to the source
2. When he/she introduce facts that he/she have found in a source
3. When he/she paraphrase or summarize ideas, interpretations, or conclusions that
he/she find in a source
4. When he/she introduce information that is not common knowledge or that may
be considered common knowledge in your field, but the reader may not know it
5. When he/she borrow the plan or structure of a larger section of a sources
argument (for example, using a theory from a source and analyzing the same
three case studies that the source uses)
6. When he/she build on anothers method found either in a source or from
collaborative work in a lab
7. When he/she build on anothers program in writing computer code or on a notcommonly-known algorithm
8. When he/she collaborate with others in producing knowledge
In general, a referencing system requires two parts:
1. In-text citations

http://www.yale.edu/bass/writing/sources/plagiarism/warning.html, accessed May 18, 2008.

14

This is information about a source within the text of an assignment.

2. List of references
This is a list of all sources a student has used to research his/her assignment. It is
alphabetically arranged by author surname and appears immediately after the last
page of an assignment.
Different faculties or departments may have different requirement on how referencing
for an assignment should be done. The various formats used for in-text citations and list
of references are available in the following websites:
1. Harvard System (http://www.adelaide.edu.au/library/guide/gen/harvard.html)
2. Chicago Style (http://www.chicagomanualofstyle.org/index.html)
3. American Psychological Association or APA Style (http://www.apastyle.org)
4. Modern Language Association of America or MLA Style (http://www.mla.org)
Once a student has selected a referencing style for his/her assignment, he/she must follow
the same style consistently throughout the assignment. We strongly suggest that the
student consults the lecturer/tutor about which method to use before submission of
his/her assignment.
What are the Procedures and Penalties for Plagiarism?
When a lecturer/tutor encounters a possible case of plagiarism, the lecturer/tutor shall
report the matter to the Head of the Department, who then initiates an investigation on
the matter. The following procedures would be carried out:
1. The lecturer/tutor shall provide evidence that substantiates an academic offence
has occurred. The following documentations must be ready prior to reporting of
alleged plagiarism:
a. Copy of the alleged plagiarized assignment
b. Copy of the source material (e.g. articles, websites, newspaper, etc.)
c. Report of plagiarism
d. Any other information that would support the claim of plagiarism
2. If the evidence warrants an accusation of academic offence, the Head of
Department shall establish a Board of Inquiry comprising 3 academic staff. The
Department shall provide all necessary documentations, including report on prior
academic offences if applicable, to the Board of Inquiry.
3. The Board of Inquiry shall put the matter to the student in writing and give
him/her an opportunity to respond to the accusation within 3 working days.
4. The student will be required to attend a meeting with the Board of Inquiry. After
meeting the student, the Board of Inquiry shall decide whether or not the alleged
plagiarism has occurred. The following documentations shall be submitted to the
Head of Department at the end of the meeting:
15

a. Findings of the investigation

b. Recommended action(s) to be taken or imposed
5. The Head of Department shall review the Board of Inquirys report with
supporting evidence and shall decide on an appropriate action(s) based on the
recommendation of the Board of Inquiry.
6. The decision of the Head of Department shall be put in writing to the student.
Copies of all documentations will be retained in the Department.
7. If the student feels that he/she has been unfairly accused or treated, the student
may appeal to the Head of Department within 5 working days.
8. The Head of Department shall review the appeal and the final decision will be
communicated to the student in writing and a copy will be kept with the
Department. Once a determination of plagiarism and penalty has been made by
the Head of Department, the investigative process will be deemed to have ended
and the student will not be allowed to appeal.
Possible penalties for plagiarism range from mark reduction for the assignment to
expulsion from the University. The student will not be allowed to make up the
assignment. If plagiarism has been found to have occurred, the Department will take
action(s) as determined by the forms of plagiarism implicated:
1. Complete plagiarism
Verbatim copying another persons work without acknowledgement
:

A grade of F in the subject and a warning letter will be issued

2nd offence :

Expulsion from the University at the discretion of the Head of

Department

1st offence

2. Substantial plagiarism
Near-verbatim copying another persons work by simply altering the order of the
sentences or the format of presentation or by changing a few words or phrases
without acknowledgement.
1st offence

Zero mark on the assignment and a warning letter will be issued

2nd offence :

A grade of F in the subject and a warning letter will be issued

3rd offence

Expulsion from the University at the discretion of the Head of

Department

3. Minimal plagiarism
Acknowledgement is made but paraphrasing by changing and/or eliminating
some words
1st offence

Deduction of 50% of available marks on the assignment and a

warning letter will be issued
16

2nd offence :

A grade of F in the subject and a warning letter will be issued

3rd offence

Expulsion from the University at the discretion of the Head of

Department

4. Unintentional plagiarism
Insufficient acknowledgement by not applying citation or quotation marks
correctly
1st offence

Deduction of up to 50% of available marks on the assignment

and a warning letter will be issued

2nd offence :

A grade of F in the subject and a warning letter will be issued

3rd offence

Expulsion from the University at the discretion of the Head of

Department

Pleading ignorance or unintentional plagiarism does not constitute valid reasons for
plagiarism and will not avoid the penalties from being imposed. Excuses for acts of
plagiarism such as the following, but not limited to, will not be entertained:
1. I dont have time to do the assignment
2. I have too many assignments due on the same day
3. I dont know, I really didnt do it
4. I am not aware
5. I dont understand what plagiarism means
6. I have no intention to plagiarize
7. I forgot to cite the reference
8. I forgot to include the bibliography
9. My English is not good
10. My lecturer/tutor did not explain to me
11. In my country, it is alright to copy someone elses work
12. My friend copied my assignment when I let him/her to look at my assignment
13. My friend copied my assignment when I allow him/her to use my laptop
14. I did my assignment in the computer lab, someone must have copied my work
15. I asked my friend to submit my assignment and he/she copied my work
16. I discussed my assignment with my friends, so our answers are the same/similar
17. Even though I do not have in-text citation but I have bibliography/reference list
Students should be reminded that it is their responsibilities to take due care throughout
their written work to effectively reference or cite when they use others ideas from any
source.

17

DEPARTMENT OF ACCOUNTING & FINANCE

SEMESTER X, 20XX
SAMPLE FINAL EXAMINATION
Subject Code

ACC203

Subject Name

FINANCIAL ACCOUNTING 2

This examination carries 60% of the total assessment for this subject.
Time allowed :

Reading 10 MINUTES
Writing 3 HOURS

INSTRUCTION(S):
1. This examination consists of FIVE (5) questions.
Students are required to answer FOUR (4) questions in the answer book provided.
2. Writing on the examination answer book is NOT permitted during reading time.
3. This is a CLOSED BOOK examination.
4. Students are NOT permitted to retain this examination paper.
5. Students MUST pass this examination in order to pass the subject.

(This question paper consists of 5 questions in XX printed pages, including cover page)

18

Students are required to answer any FOUR (4) questions

Question 1 (25 marks)

You joined ABC Berhad on 1 May 2011 as an Accountant. You are assigned to prepare
the current year cash flow statement by the Finance Director. You are given the following
Income Statement and Statement of Financial Position as at 30 June 2011. The company
involves in trading of building materials.

Income Statement for the year ended 30 June 2011

RM'000
Gross profit (note i)

2,888

Operating expenses (note ii)

(486)

Operating profit

2,402

Interest received

237

Interest paid

(165)

Gain on sale of short-term investment

15

Profit before taxation

2,489

Taxation

(72)

Profit before taxation

2,417

Dividend paid

(147)

Retained profit for the financial year

2,270

Retained profit b/f

78

Retained profit c/f

2,348

Statement of Financial Position as at 30 June

2011

2010

RM'000

RM'000

3,276

2,004

831

702

4,107

2,706

Non-current assets
Property, plant and equipment
Intangible assets

19

Current assets
Inventories

738

384

1,380

1,059

Tax recoverable

Investment

60

1,319

3,437

1,509

732

933

Tax payable

Bank overdraft

330

738

1,263

Net current assets

2,699

246

Total assets less current liabilities

6,806

2,952

Debentures

2,268

1,665

4,529

1,281

87

72

4,442

1,209

4,529

1,281

Trade receivables

Cash

Current liabilities
Trade payables

Deferred taxation

Capital and reserves

Paid up capital
Reserves (note iv)

Additional information:
(i)

Gross profit:
20

RM000

(ii)

Sales

5,486

Less: Cost of sales

(2,598)

Operating expenses comprise:

RM000
Amortisation of intangible assets

21

Depreciation expense

66

Distribution cost

141

Administrative expenses

258

(iii) During the year, the company has issued 15,000 ordinary shares at premium.
(iv) Reserves comprise:

(v)

2011

2010

RM000

RM000

Shares premium

2,094

1,131

Retained profits

2,348

78

Investment is not considered as cash equivalents.

Required:
(a)

Prepare a cash flow statement of ABC Berhad in accordance of FRS 107 for the
year ended 30 June 2011 using the direct method.
(15 marks)

(b)

Reconcile operating profit to net cash flow from operating activities.

(7 marks)

(c)

State Two (2) benefits for the preparation of a cash flow statement.

(3 marks)

21

Question 2 (25 marks)

The Fitness Club provides the following receipts and payments account for the year
ended 31 December 2011.

Receipts and Payments

Receipts

RM Payments

RM

Balance b/f

6,000 Cost of jumble sales

Subscription

3,720 Payment to bar creditors

Receipts from bar debtors

3,262 Maintenance

Cash sales (bar)

2,400 General expenses

1,250

Receipts from jumble sales

1,172 Barman's wages

1,400

Donations

320 Purchase of equipment

752
1,280
800

2,780

Extension to club premises

5,000

Balance c/f

3,612

16,874

16,874

Additional information:
1/1/2011

31/12/2011

RM

RM

Bar debtors

300

460

Bar creditors

320

620

Bar stocks

400

370

Subscription in arrears

100

125

Subscription in advance

50

75

9,480

10,600

40,000

41,000

Equipment
Club premises

Note: Donation is to be regarded as an income for the club

22

Required:

(a)

Bar Trading account for the year ended 31 December 2011;

(b)

Income and Expenditure account for the year ended 31 December 2011. (8 marks)

(c)

Statement of financial position as at 31 December 2011.

(d)

Advise the committee of Fitness Club Two (2) ways in which clubs income can be
improved.
(4 marks)

23

(5 marks)

(8 marks)

Question 3 (25 marks)

(a)

Maju Jaya Berhad issued 1,000,000 ordinary shares of RM1.00 each, payable 20%
on application, 20% on allotment, 40% on the first call and 20% on the second
(final) call. On 30 December 2011, the company received applications for
1,530,000 ordinary shares. On 1 January 2012, the directors decided to refund the
application monies in respect of 30,000 shares and the remaining shares are to be
allotted on the basis of 2 shares for every 3 shares applied. The excess application
monies are to be set off against the allotment monies due from the successful
applicants. The first and second calls are all paid in full on 1 February 2012 and 1
March 2012 respectively.

Required:

Show the journal entries for the above transactions. Narration is not required for
the journal entries.
(8 marks)

(b)

XYZ Berhad issued its ordinary shares of RM1.00 each, payable 20% on
application, 20% on allotment, 40% on the first call and 20% on the second (final)
call. On 1 December 2011, the company offered 10,000,000 ordinary shares to the
public. On 1 January 2012, a shareholder, Ali, applied for 200,000 ordinary shares
and paid up the application money as requested. He was allotted all 200,000
ordinary shares in the allotment of shares by the company. However, Ali failed to
pay up the first and second call which was due on 15 February 2012 and 15 March
2002 respectively. On 1 April 2012, the directors of the company therefore decided
to forfeit his shares and reissue the shares at 80% of the nominal value to Ahmad.
Ali suffered the forfeiture of his shares and the amount outstanding from him was
written off.

Required:
Show the journal entries to record the forfeiture and re-issuance of Alis shares in
the book of XYZ Berhad. Narration is not required for the journal entries.
(10 marks)

24

(c)

Briefly explain Two (2) different types of preference share.

(4 marks)

(d)

Explain the difference between bonus issue and right issue.

(3 marks)

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Question 4 (25 marks)

(a)

You are a consultant in an investment consultancy company. Your client, Alex, a

Singaporean, is considering investing in the share market in Malaysia. He has
provided you with the following information on two companies (i.e. Company A
and Company B) which are operating in the same industry. The ratios of the industry
average are also provided.
Ratio

Company A

Company B

Industry average

(i)

Current ratio

2.5:1

2.5:1

2: 1

(ii)

Acid test ratio

2:1

1.5:1

2:1

(iii)

Accounts receivable turnover

(times)

3.5 times

3 times

2 times

(iv)

Debts to Equity ratio

0.5

(v)

Gross profit percentage

40%

40%

30%

(vi)

Net profit percentage

25%

30%

20%

(vii)

Inventories turnover (times)

3 times

4 times

3 times

(viii)

Earning per share

8 cents per
share

15 cents per
share

10 cents per
shares

(i)

As an investment consultant you are required to write a report to your client

to comment on the profitability, liquidity and efficiency of Company A and
Company B. Support your comments where appropriate with the ratios above.
(12 marks)

(ii)

Discuss the general limitations of financial statement analysis.

(4 marks)

(b)

Discuss the importance of providing disclosure and explanatory notes in the

financial statements in the context of FRS 101.
(5 marks)

(c)

What are the differences between revenue reserves and capital reserves?
(4 marks)

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Question 5 (25 marks)

(a)

Maxwell Berhad has passed the resolutions on 30 September 2011 as follows:

(i)

To issue 800,000 ordinary shares of RM1 each at a premium of 20% to

finance the redemption of the 9% preference shares.

(ii)

To redeem the preference shares at a premium of 10% per share.

(iii) To make a bonus issue of 1 ordinary share of RM1 each for every 5 shares held
by the existing ordinary shareholders. (Note: the 800,000 new issue of ordinary
shares are not entitled for the bonus issue.)

The following is the extract of the statement of financial position as at 30 September

2011 before the above resolutions:

Maxwell Berhad
Statement of financial position as at 30 September 2011
RM

RM

Non-current assets
Land and building

2,200,000

Plant and machinery

2,000,000

Office equipment

700,000

Current assets
Trade receivables

300,000

Bank

800,000
1,100,000

140,000

Current liabilities
Trade payables

960,000

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5,860,000

Share capital
2,600,000 ordinary shares at RM1 each paid up fully

2,600,000

1,400,000 9% redeemable preference shares

at RM1 each paid up fully

1,400,000

Share premium

260,000

General reserves

400,000

Retained profits

1,200,000

5,860,000

Note:

Students are required to record the journal entries according to the sequence of
the resolutions passed.

It is the companys policy to first utilize share premium account followed by

general reserves to issue bonus shares.

Required:

(i)

Prepare the journal entries recording the transaction of the company to reflect
the resolutions passed. Narration is not required for the journal entries.
(12 marks)

(ii)

Prepare the statement of financial position after the resolutions have been
taken place.
(5 marks)

(b)

State Two (2) circumstances in which share redemption are permitted under Section
67A of the Companies Act 1965.
(3 marks)

(c)

To raise funds for the recent business expansion, Wonderful Berhad had on 1
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January 2009 issued a three-year 2% RM200,000 debentures at par, redeemable at

RM218,915. The prevailing market interest rate of similar debt issued at par and
redeemable at par is 5%. The debentures were redeemed through bank payment
after 3 years.
Required:
Prepare the journal entries of the above transactions in the book of Wonderful
Berhad from 2009 to 2011. Narration is not required for the journal entries.
(5 marks)

**END OF EXAMINATION PAPER**

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