BBM205 MCBBM205 Course Assignment(25%) January 2025 WAWASAN Open University : Basic Accounting

Answer All questions. 

Question 1

Identify and explain the accounting concept referred to in the following cases:

1. A piece of land bought at RM30,000 was recorded at RM30,000 even though its market value was RM180,000.
2. Revenue from business activity and the expenses that incurred to generate the revenue are recorded in the same accounting period.
3. Business is expected to operate indefinitely.
4. Always cautious when reporting the accounting information, not to overstate the assets and understate the liabilities.
5. The personal expenses incurred by the owner should be recorded in the drawings account. Revenue is recorded at the time goods or services are sold.

(3 marks each)

 Question 2

 Explain 5 (five) possible causes that caused the differences in the balance of Bank Statement and Cash Book.                                                                          (15 marks)

Question 3

 You are preparing the year end accounts for your client for Bad and doubtful debts.

Included in the account receivables is an amount of RM3,574 which has been outstanding for just over a year. Your client has decided to write this balance off.Provision for doubtful debts is to be made as follows:

• 6% of balances which have been outstanding for between 30 and 59 days.
• 50% of balances which have been outstanding for 60 days or more.

At the end of the previous year the provision for doubtful debts was RM4,516. The account receivables, including the irrecoverable balance of RM3,574, have been analysed as follows:

Age of debt Balance:                                 RM

Less than 30 days                                   36,591

30 days to 59 days                                  18,700

60 days and over                                      9,722

–––––––

Total                                                             65,013

Required:

•  Explain the difference between a bad debt and a doubtful debt. (2 marks)
• Calculate:

1. the total to be charged to the statement of comprehensive income for the year in respect of bad and doubtful debts. (8 marks)
2. the value to be reported in the statement of financial position for the accounts receivable. (5 marks)

Answer

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