These ten questions cover adjustment trails, allowances, bank reconciliation, differences between two answers, trial balance errors, written explanations and ledger accounts. They are original, use fictional businesses and run from easier to harder. All amounts are in RM.
Cover the answer, write your working on paper, then open the answer and compare each step. Use the ledger trainer to check debits and credits, the percentage-base explorer for rates, and record every slip in the mistake log so you can retest it later.
Warm-up questions
1. A draft net profit is RM18,000. Rent of RM500 is owed and unrecorded. Insurance of RM300 was prepaid but charged in full. Depreciation of RM1,400 has not been recorded. Find the adjusted profit.
Show answer
18,000 − 500 (accrued rent) + 300 (prepaid insurance) − 1,400 (depreciation) = RM16,400.
Check: plus items 300, minus items 500 + 1,400 = 1,900, and 18,000 + 300 − 1,900 = 16,400.
2. Receivables are RM12,000. The allowance for doubtful debts should be 5% of receivables. The existing allowance is RM450. State the new allowance and the effect on profit.
Show answer
New allowance = 5% × 12,000 = RM600. Increase = 600 − 450 = RM150.
The allowance has increased, so profit falls by RM150.
3. Kedai Jaya’s cash book shows RM3,420. The bank statement shows bank charges of RM60 and a customer’s direct payment of RM500, neither in the cash book. Cheques of RM900 are unpresented and a lodgement of RM1,100 is not yet credited. Find the adjusted cash book balance and the bank statement balance.
Show answer
Adjusted cash book = 3,420 − 60 + 500 = RM3,860.
The statement balance plus the lodgement minus the unpresented cheques equals 3,860. So statement + 1,100 − 900 = 3,860, and statement = 3,860 − 200 = RM3,660.
Check: 3,660 + 1,100 − 900 = 3,860.
Core questions
4. Two students adjust a draft profit of RM23,100. Student A gets RM22,500 and Student B gets RM23,100. The question included RM600 of wages owed at year end. Whose answer is correct, and what did the other student miss?
Show answer
The gap is 23,100 − 22,500 = RM600, which equals the accrued wages. Wages owed is an unrecorded expense, so profit falls: 23,100 − 600 = RM22,500.
Student A is correct. Student B left the draft profit unchanged and missed the accrual.
5. A trial balance has debits of RM61,400 and credits of RM61,850. The ledgers show a Discount allowed balance of RM225. Suggest a likely cause and say how you would test it.
Show answer
Credits exceed debits by 61,850 − 61,400 = RM450. Half of 450 is 225, which matches the Discount allowed balance.
Discount allowed is an expense and should be a debit. If it was extracted in the credit column, the credit side is 225 too high and the debit side 225 too low, a gap of 225 + 225 = 450. Test: check the ledger and the trial balance column for Discount allowed.
6. A vehicle costs RM24,000 with a residual value of RM4,000 and a life of 5 years. Explain how the annual straight line depreciation was found.
Show answer
Depreciation is RM4,000 a year. The depreciable amount is the cost less the residual value: 24,000 − 4,000 = RM20,000. Straight line shares this equally over 5 years: 20,000 ÷ 5 = 4,000. The charge is an expense, so it lowers profit each year by the same amount.
7. In the year, Kedai Aman paid rent of RM7,200. At the start RM600 was prepaid, and at the end RM900 is prepaid. Prepare the rent account and state the charge to profit and loss.
Show answer
Charge = 7,200 + 600 − 900 = RM6,900.
| Rent account | RM | RM | |
|---|---|---|---|
| Balance b/d (prepaid) | 600 | Profit and loss (charge) | 6,900 |
| Bank | 7,200 | Balance c/d (prepaid) | 900 |
| 7,800 | 7,800 |
Both sides total RM7,800.
Harder questions
8. Trade receivables are RM10,000. Bad debts of RM400 are to be written off, and then the allowance for doubtful debts is set at 5% of the remaining receivables. The existing allowance is RM350. Find the total effect on profit.
Show answer
Receivables after write-off = 10,000 − 400 = RM9,600.
New allowance = 5% × 9,600 = RM480. Increase = 480 − 350 = RM130.
Total effect = bad debt 400 + allowance increase 130 = profit falls by RM530.
A common slip is to apply 5% to RM10,000. The allowance is based on receivables after the write-off.
9. A student’s note says: “I can’t do accruals.” Rewrite it as a useful question note for a revision session, using Question 7 as the task.
Show answer
A good note: “Task: rent account, paid RM7,200, opening prepayment RM600, closing prepayment RM900. My attempt: 7,200 − 600 + 900 = 7,500. Expected: 6,900. Stuck point: I am not sure whether the opening prepayment is added or subtracted. Question: why does the opening prepayment increase this year’s charge?”
The note has the task, the attempt, the expected figure, the stuck point and one question.
10. A business has a draft profit of RM40,000. Four corrections are found.
- Closing inventory was overstated by RM1,200.
- A machine bought on 1 July for RM12,000 has not been depreciated. The rate is 10% a year on cost, charged for the months of use, and the year end is 31 December.
- Drawings of RM800 were wrongly charged to wages.
- Discount received of RM250 was not recorded.
Lay out the adjustment trail and find the corrected profit.
Show answer
| Item | Working | Effect | Running total (RM) |
|---|---|---|---|
| Draft profit | given | 40,000 | |
| Inventory overstated | closing inventory too high, so profit too high | − 1,200 | 38,800 |
| Depreciation | 10% × 12,000 × 6/12 = 600 | − 600 | 38,200 |
| Drawings in wages | wages overstated, remove it | + 800 | 39,000 |
| Discount received | income not recorded | + 250 | 39,250 |
Corrected profit: RM39,250.
Check: plus items 800 + 250 = 1,050. Minus items 1,200 + 600 = 1,800. Then 40,000 + 1,050 − 1,800 = 39,250.
If you got these wrong
- Wrong sign or a missed item in a trail (Questions 1, 4, 10): go back to laying out a multi-stage adjustment trail and revise accruals and prepayments.
- Allowance base or increase (Questions 2, 8): reread the mistake section of the adjustment trail lesson and use the percentage-base explorer.
- Reconciliation or a gap between answers (Questions 3, 4): see reconciling two answers that use different starting points and bank reconciliation. The bank reconciliation walkthrough shows both routes.
- Trial balance differences (Question 5): use finding an error from an unbalanced statement and trial balance and error limits.
- Written explanations (Question 6): work through explaining a calculation in words and depreciation and asset disposal.
- Ledger accounts and notes (Questions 7, 9): read preparing a ledger question for a tuition lesson.
If the same error type returns after a second attempt, bring the paper to online one-to-one Accounting tuition and let a teacher read it with you.