This set covers consistency, prudence, concept conflicts, ethical pressure, evidence in automated ledgers, and checking syllabus scope. All businesses and figures are fictional, and the questions are written for practice, not copied from any paper.
Attempt each question on paper first, then open the answer. Work in order, because the questions get harder. Record any slip in the mistake log and retest queue so you can retest it later.
Questions and worked answers
Question 1. Name the concept that each statement relates to: (a) an owner takes RM200 of goods for home use; (b) a business uses the same depreciation method every year; (c) inventory is valued at the lower of cost and net realisable value; (d) a RM20 pencil sharpener is charged straight to expenses.
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(a) Business entity. The goods are drawings, not a business expense.
(b) Consistency.
(c) Prudence.
(d) Materiality. The amount is too small to justify treating it as a non-current asset.
Question 2. Teratai Print bought a machine for RM9,000 and depreciates it at 20% a year. Profit before depreciation is RM14,000 in both years. In year 1 it uses straight line on cost. In year 2 it switches to reducing balance. Calculate reported profit for each year, then profit for year 2 if the year 1 method had been kept.
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Year 1: depreciation = 9,000 × 20% = 1,800. Profit = 14,000 − 1,800 = RM12,200.
Year 2 reported: carrying amount = 9,000 − 1,800 = 7,200. Depreciation = 7,200 × 20% = 1,440. Profit = 14,000 − 1,440 = RM12,560.
Year 2 consistent (straight line): depreciation 1,800, profit RM12,200.
Effect of the change = 12,560 − 12,200 = 360. Check: 1,800 − 1,440 = 360.
Question 3. Dapur Murah has: 20 kettles (cost RM40, NRV RM55), 12 fans (cost RM70, NRV RM50) and 8 lamps (cost RM25, NRV RM25). Find the inventory valuation and the write-down.
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Kettles: lower of 40 and 55 = 40, so 20 × 40 = 800.
Fans: lower of 70 and 50 = 50, so 12 × 50 = 600.
Lamps: 8 × 25 = 200.
Valuation = 800 + 600 + 200 = RM1,600.
Cost = 800 + (12 × 70 = 840) + 200 = 1,840. Write-down = 1,840 − 1,600 = RM240. Check: 12 fans × RM20 lower = 240.
Question 4. Receivables are RM12,000. A debt of RM600 is written off. The business sets an allowance of 5% of the remaining receivables. The allowance in the previous year was RM400. Find the new allowance, the increase, and the total charge to profit.
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Remaining = 12,000 − 600 = 11,400. Allowance = 11,400 × 5% = RM570.
Increase = 570 − 400 = RM170.
Total charge to profit = bad debt 600 + increase 170 = RM770.
Question 5. Ladang Kecil pays RM1,800 on 1 November for rates covering six months (November to April). The year end is 31 December. Find the expense for the year and the prepayment. Which concept explains your answer?
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Months in the year = 2. Expense = 1,800 × 2/6 = RM600.
Prepayment = 1,800 − 600 = RM1,200. Check: 600 + 1,200 = 1,800.
The concept is matching: the four months of cost belong to next year.
Question 6. A trader says: “Prudence means I should make profit as low as I can.” Write two sentences correcting this.
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Prudence means profits and assets are not overstated, and likely losses are recognised, but only on the basis of evidence. Deliberately reducing figures below what the evidence supports is understatement, which gives an unfair picture and is not what prudence asks for.
Question 7. Hijau Trading spent RM6,000 on advertising to launch a product next year. Profit before advertising is RM30,000. The owner wants to show the advertising as an asset. Calculate profit under each treatment and say which is more suitable.
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As an asset: profit = RM30,000. As an expense: profit = 30,000 − 6,000 = RM24,000. Difference = RM6,000.
The expense treatment is more suitable. There is no reliable evidence that the advertising creates a lasting asset the business can sell or control, so prudence supports expensing it.
Question 8. On 2 January 2026, Cahaya Mart sells goods to a customer for RM2,500. The goods cost RM1,500. The owner asks the bookkeeper to date the sale 30 December 2025 so that it appears in the 2025 accounts. The year end is 31 December. What is the effect on 2025 profit if the bookkeeper agrees, and what should the bookkeeper do?
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Profit would be overstated by the gross profit on the sale: 2,500 − 1,500 = RM1,000. Receivables would also be overstated by RM2,500 and inventory understated by RM1,500.
The sale belongs to 2026, when the goods were supplied. The bookkeeper should refuse to backdate, record it on its true date and, if pressed, raise it with a responsible person. This is an ethical issue as well as a concept issue.
Question 9. A bank feed starts at RM3,000. It shows a receipt of RM900 (invoice found), a receipt of RM450 (no document), a payment of RM700 (invoice found), a payment of RM1,250 (no document) and a payment of RM120 (receipt found). Find the closing balance and the total of unsupported entries. State why a balanced ledger would not reveal them.
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Receipts = 900 + 450 = 1,350. Payments = 700 + 1,250 + 120 = 2,070.
Closing = 3,000 + 1,350 − 2,070 = RM2,280.
Unsupported entries = 450 + 1,250 = RM1,700.
A balanced ledger shows debits equal credits. It does not show that a document exists, that the account coding is right or that the transaction is a business one.
Question 10 (hardest). Put these steps in a sensible order for deciding whether a technology topic from a video is part of your Accounting revision: (a) sort the topic as listed, not listed or not sure; (b) confirm your exam series with your exam centre; (c) find the syllabus document for that series on the Cambridge page; (d) compare the topic with the content list. Then explain why the video alone is not enough.
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Order: (b), (c), (d), (a).
The video may be written for a different year, qualification or opinion about the future. The syllabus for your series is the document that decides what is assessed, and your exam centre confirms your series.
If you got these wrong
Find your error type below and return to the matching lesson.
| What went wrong | Go to |
|---|---|
| Changed method between years or did not recalculate for comparison (Q2) | Apply consistency to a fictional comparison |
| Wrong inventory valuation, wrong allowance, or “lowest figure is prudent” (Q3, Q4, Q6) | Explain prudence without deliberate understatement |
| Named the wrong concept or could not weigh two concepts (Q1, Q5, Q7, Q8) | Identify a conflict in a reporting scenario |
| Trusted a balanced ledger or missed unsupported entries (Q9) | Evaluate an automated ledger output for missing evidence |
| Treated a video or friend as the syllabus (Q10) | Check the applicable 2027 scope |
The double-entry and ledger trainer lets you rebuild the entries behind Questions 4, 5 and 9, and the percentage-base explorer checks percentage allowances. Return to the module overview for the full study route. Our online one-to-one Accounting tuition can go through your own working if the same slip keeps returning.