This set mixes the five skills from company accounting: telling share capital from a loan, retained profit, dividends, a simple statement, and commenting without giving advice. All companies are fictional, and tax is ignored throughout.
Questions run from easier to harder. Write your full working before you open each answer. Log the steps that went wrong in the mistake log and retest queue.
Questions
Question 1
Lotus Kites Ltd has these items: ordinary share capital, a bank loan, loan interest, retained profit, a dividend paid. Classify each as equity, liability, expense or appropriation of profit.
Show answer
Ordinary share capital: equity. Bank loan: liability. Loan interest: expense (a finance cost). Retained profit: equity. Dividend paid: appropriation of profit, shown after profit for the year.
Question 2
Lotus Kites Ltd issues 30,000 ordinary shares at RM 1 each for cash and borrows RM 15,000 from a bank. Write the two ledger entries and state the total debited to Bank.
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Shares: Debit Bank RM 30,000, Credit Ordinary share capital RM 30,000. Loan: Debit Bank RM 15,000, Credit Bank loan RM 15,000. Total debited to Bank: 30,000 + 15,000 = RM 45,000.
Question 3
The loan in Question 2 carries 8% interest a year. Find the interest for a full year, and for 9 months.
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Full year: 15,000 × 8/100 = RM 1,200. Nine months: 1,200 × 9/12 = RM 900. Check: 900 ÷ 1,200 = 0.75 = 9/12.
Question 4
Opening retained profit is RM 22,400. Profit for the year is RM 14,600.
Dividends are RM 6,000. Find closing retained profit.
Show answer
22,400 + 14,600 = 37,000. Then 37,000 − 6,000 = RM 31,000.
Question 5
Closing retained profit is RM 52,000. Opening was RM 45,000.
Dividends paid were RM 8,000. Find the profit for the year.
Show answer
Increase in retained profit: 52,000 − 45,000 = 7,000. Add back dividends: 7,000 + 8,000 = RM 15,000. Check: 45,000 + 15,000 − 8,000 = 52,000.
Question 6
A company has 120,000 shares of RM 1 each. It pays total dividends of RM 7,200. Find the dividend per share and the dividend as a percentage of nominal value.
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Per share: 7,200 ÷ 120,000 = RM 0.06, which is 6 sen. Nominal value is RM 120,000, so 7,200 ÷ 120,000 = 0.06, which is 6%. They match because each share is RM 1.
Question 7
Profit for the year is RM 18,000 and dividends are RM 4,500. Find the percentage of profit paid out and the amount retained this year.
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Paid out: 4,500 ÷ 18,000 = 0.25, so 25%. Retained: 18,000 − 4,500 = RM 13,500, which is 75%.
Question 8
During the year a company makes a profit of RM 20,000. Inventory increases by RM 9,000, dividends of RM 6,000 are paid and RM 3,000 of the loan is repaid. Assuming nothing else affects cash, find the change in cash and explain why it differs from profit.
Show answer
20,000 − 9,000 − 6,000 − 3,000 = RM 2,000 increase in cash. Profit is RM 20,000, but RM 9,000 is now tied up in inventory, RM 6,000 left as dividends and RM 3,000 repaid the lender. Profit and cash are different measures.
Question 9
Bakawali Ltd had revenue RM 90,000, cost of sales RM 54,000 and expenses RM 21,000. It has a loan of RM 10,000 at 8%, with a full year’s interest charged.
Opening retained profit is RM 6,000 and dividends are RM 4,000. Prepare the income statement down to profit for the year, and the closing retained profit.
Show answer
Gross profit: 90,000 − 54,000 = RM 36,000. Operating profit: 36,000 − 21,000 = RM 15,000. Loan interest: 10,000 × 8/100 = RM 800. Profit for the year: 15,000 − 800 = RM 14,200.
Retained profit: 6,000 + 14,200 − 4,000 = RM 16,200.
Question 10
Bakawali Ltd has share capital of RM 40,000, the retained profit from Question 9, a loan of RM 10,000, and total assets of RM 76,000. The current liabilities are trade payables RM 9,000 and loan interest owed. Show that the statement of financial position balances.
Show answer
Equity: 40,000 + 16,200 = RM 56,200. Loan interest owed is RM 800, so current liabilities are 9,000 + 800 = RM 9,800.
Equity and liabilities: 56,200 + 10,000 + 9,800 = RM 76,000, which equals total assets. It balances with no balancing figure.
Question 11
Kasturi Ltd made a profit for the year of RM 25,000 and paid dividends of RM 10,000. A student writes: “Kasturi pays 40% of its profit as dividends, so it is a good investment.” Find the issue and rewrite the comment.
Show answer
The 40% is correct (10,000 ÷ 25,000 = 0.4). The issue is the leap to “good investment”, which one year of fictional figures cannot support.
Better: “Kasturi Ltd paid 40% of its RM 25,000 profit as dividends and retained RM 15,000. The statements do not show its plans or its cash position.”
If you got these wrong
| Where the error was | Questions | Go to |
|---|---|---|
| Putting a loan in equity, or interest as a dividend | 1, 2, 3 | Distinguish share capital from a loan |
| Retained profit workings or reading it as cash | 4, 5, 8 | Interpret retained profit |
| Dividend per share, percentage or payout share | 6, 7 | Explain a dividend from supplied statements |
| Statement order, dividend in the wrong place, imbalance | 9, 10 | Prepare a simple company statement within scope |
| Comment that gives a verdict instead of evidence | 11 | Avoid presenting fictional records as investment advice |
The double-entry and ledger trainer and percentage-base explorer both suit this set. If the same step is missed repeatedly even after review, online one-to-one Accounting tuition lets a teacher watch you work a question from the first line.