CONFIDENTIAL 1 AC/NOV2023/FAR670

UNIVERSITI TEKNOLOGI MARA

QUIZ

COURSE : FINANCIAL STATEMENT ANALYSIS

COURSE CODE : FAR670
ASSESSMENT : NOVEMBER 2023
TIME : 45 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of two (2) parts: PART A (10 multiple-choice questions)
PART B (1 structured questions)

2. Answer ALL questions.

3. Write down your particulars below:

NAME

UITM NO.

CLASS GROUP

SECTION MARKS

TOTAL

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of _ printed pages
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 CONFIDENTIAL 2 AC/NOV2023/FAR670

PART A: This part consists of 10 multiple-choice questions. Answer ALL questions.

1. Expense off tools that cost less than RM50 would be an example of the application of:

A. Realization.
B. Materiality.
C. Matching.
g
D. Cost.
(1 mark)

2. Measurement is very important in accounting. It sometimes requires accountants to use

his professional judgment in making good estimates of assets and revenue.
Understating assets and revenues is justified based on:

A. Realization assumption.
B. Matching. &
g
C. Conservatism.
D. None of the answers are correct.
(1 mark)

3. Accounting process involves various cycle, including summarising transactions in

journals. Supporting documents are important source of information to record a
transaction. Which statement does not reflect proper use of journal in accounting
process.

A. All transactions could be recorded in the general journal.

B. Companies use a number of special journals to record most transactions.
C. Special journals are designed to improve record- keeping efficiency.
GD. The form of the journals is the same from industry to industry.
(1 mark)

4. Auditing is an important process that provide assurance of the financial report quality. A
type of audit opinion that a company would usually prefer is:

gA. Unqualified opinion

B. Qualified opinion
C. Adverse opinion
D. Clear opinion
(1 mark)

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5. Users need accounting information that can assist their economic decision-making.
They commonly refer to the statement of financial position. The statement of financial
position reports:

A. the assets, liabilities, gains, and losses for a period of time.

G
B. the changes in assets, liabilities, and equity for a period of time.
C. the probable future benefits, probable future sacrifices, and residual
interest for a period of time.
D. the financial condition of an accounting entity as of a particular date.
(1 mark)

6. Company A owns shares of Company B and Company C. The financial statements of

Company B are consolidated with those of Company A. The financial statements of
Company C are not consolidated. Company A reports "Noncontrolling Interest" on its

me
statement of financial position. This account represents:

g
A. A's noncontrolling share of the equity of C.
B. the noncontrolling share by outside owners of the equity of A.
C. the noncontrolling share by outside owners of the equity of B.
D. the noncontrolling share by outside owners of the equity of C.
(1 mark)

7. Operating profit measures how well a company is performing during a particular period.
Identify the item that would be included in operating profit.

A. Interest profit for a manufacturing company

B. Gain from sale of marketable securities for a retailer L
C. Dividend profit for a service company
z
D. Rent profit for a leasing subsidiary
(1 mark)

8. The following statements describe the treasury stock, except:

A. Treasury stock is, in essence, an increase in paid-in capital.

G
B. A firm creates treasurey stock when it repurchases its own stock and does
not retire it.
C. Treasury stock lowers the stock outstanding.
D. Treasury stock may be recorded at par or stated value.
(1 marks)

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9. The following relate to Impian Data Bhd in 2022. Calculate the ending inventory of
Impian Data for 2022.

RM
Purchases 540,000
Beginning inventory 80,000
Purchases Returns F 10,000
Sales 800,000
Cost of Goods Sold -

490,000

G
A. RM120,000
B. RM140,000
C. RM210,000
D. RM260,000
(2 mark)

10. Jentayu Industries Bhd had 300,000 shares of common stock with a RM3 par value and
retained earnings of RM180,000 at 1 January 2021. In 2021, the stock was split 3 for 1.
In 2020, earnings per share were RM1.80. One of the following would not result from
the stock split, that is:

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A. The total amount in the capital stock account would remain the same.
B. Retained earnings would be reduced.
-
C. The par value would become RM1.
-
D. The earnings per share for 20 years prior to the split would be reduced.
(2 marks)
(Total: 12 marks)

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 CONFIDENTIAL 5 AC/NOV2023/FAR670

PART B

Ika Mart Bhd is a leading retail departmental stores, selling variety of products, from apparel
to home furnishings. Meanwhile, Health Remedy Bhd specialises in healthcare, operating a
chain of retail pharmacy stores. Below are the operating income statements for both
companies.

Ika Mart Bhd Health Remedy Bhd

RM RM
Revenue 85,000,000 4,500,000
Cost of goods sold 59,500,000 900,000
Gross profit 25,500,000 3,600,000
Selling and administration expenses 12,750,000 675,000
Research expenses 4,250,000 900,000
Operating profit 8,500,000 2,025,000

Required:

a. Calculate the above operating income statements into a vertival common-size.

(4 marks)

b. Assess the results obtained in (a) above.

(9 marks)
(Total: 13 marks)

END OF QUESTIONS

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