These eleven questions cover classification, cost of sales, profit, capital, a statement of financial position, drawings, a cash comparison and an agreement check. They are original, use fictional businesses and are ordered 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. Record any slip in the mistake log and use the double-entry and ledger trainer to rebuild any entry you are unsure of.
Warm-up questions
1. For each item, say whether it appears in the income statement, the statement of financial position, or the capital section: (a) rent expense, (b) accumulated depreciation, (c) drawings, (d) discount received, (e) a bank loan repayable in 4 years, (f) closing inventory.
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(a) Income statement, as an expense. (b) Statement of financial position, deducted from the cost of the asset. (c) Capital section, deducted from capital. (d) Income statement, added to gross profit. (e) Statement of financial position, as a non-current liability. (f) Both: it is deducted in cost of sales and shown as a current asset.
2. Mei’s Tea Shop has opening inventory RM3,200, purchases RM21,800, carriage inwards RM400, returns outwards RM600 and closing inventory RM3,600. Revenue is RM34,000. Find cost of sales and gross profit.
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Cost of sales = 3,200 + 21,800 + 400 − 600 − 3,600 = RM21,200.
Check: 25,000 + 400 = 25,400; 25,400 − 600 = 24,800; 24,800 − 3,600 = 21,200.
Gross profit = 34,000 − 21,200 = RM12,800.
3. Mei’s has expenses of wages RM5,600, rent RM2,400, insurance RM1,200 paid of which RM300 is prepaid, depreciation RM700 and telephone RM520. Commission received is RM640. Using the gross profit from question 2, find profit for the year.
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Insurance for the year = 1,200 − 300 = 900. Total expenses = 5,600 + 2,400 + 900 + 700 + 520 = 10,120.
Gross profit 12,800 + commission 640 = 13,440. Profit = 13,440 − 10,120 = RM3,320.
Core questions
4. Mei opened the year with capital of RM14,000, introduced a further RM1,000 and took drawings of RM3,600. Using the profit from question 3, find closing capital.
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14,000 + 1,000 + 3,320 − 3,600 = RM14,720.
Check: 15,000 + 3,320 = 18,320; 18,320 − 3,600 = 14,720.
5. Kumar’s Bicycle Mart has, at 31 December 2025: equipment at cost 18,000, accumulated depreciation 7,200, inventory 5,400, trade receivables 4,100 (allowance of 5% to be deducted), bank 2,950, cash 150, trade payables 3,800, wages owing 450 and a bank loan repayable in 4 years 8,000. Prepare the net assets section of the statement of financial position, including working capital.
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Non-current assets: 18,000 − 7,200 = 10,800.
Allowance = 5% of 4,100 = 205, so receivables are 4,100 − 205 = 3,895. Current assets = 5,400 + 3,895 + 2,950 + 150 = 12,395.
Current liabilities = 3,800 + 450 = 4,250. Working capital = 12,395 − 4,250 = 8,145.
Net assets = 10,800 + 8,145 − 8,000 = RM10,945.
Check: total assets 10,800 + 12,395 = 23,195; 23,195 − 4,250 − 8,000 = 10,945.
6. Kumar’s capital: opening RM8,500, drawings RM4,400. What profit must the income statement show for the capital to agree with the net assets in question 5?
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Closing capital must be 10,945. So 8,500 + profit − 4,400 = 10,945, giving profit = 10,945 − 8,500 + 4,400 = RM6,845.
Check: 8,500 + 6,845 = 15,345; 15,345 − 4,400 = 10,945.
7. Sabrina’s Bakery: the owner withdrew RM1,500 in cash, took cakes that cost RM90 for her family and paid RM280 of her child’s tuition from the business bank account. Write the entries and total the drawings.
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Cash: debit Drawings 1,500, credit Bank 1,500 (or Cash).
Cakes: debit Drawings 90, credit Purchases 90.
Tuition: debit Drawings 280, credit Bank 280.
Total drawings = 1,500 + 90 + 280 = RM1,870. None of this is an expense.
8. Zahid’s Garage: opening capital RM24,000, closing capital RM31,200, drawings RM5,500, no capital introduced. Find the profit for the year.
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24,000 + profit − 5,500 = 31,200, so profit = 31,200 − 24,000 + 5,500 = RM12,700.
Check: 24,000 + 12,700 = 36,700; 36,700 − 5,500 = 31,200.
Harder questions
9. Lim’s Stationery: opening capital RM9,000, a loss of RM1,800 and drawings of RM2,400. Find closing capital, and explain in one sentence why capital fell by more than the loss.
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9,000 − 1,800 − 2,400 = RM4,800.
Capital fell by 4,200 because both the loss and the drawings reduce it. The loss alone explains only RM1,800 of the fall.
10. Dewi’s Laundry had cash sales of RM40,000 and credit sales of RM3,000 not yet collected. Expenses paid in cash were RM28,000. The year included depreciation of RM1,500 on a van bought for RM15,000 cash at the start of the year. Drawings were RM2,000 in cash. Find (a) profit and (b) the change in cash, and say why they differ.
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(a) Revenue 40,000 + 3,000 = 43,000. Profit = 43,000 − 28,000 − 1,500 = RM13,500.
(b) Cash in 40,000, less expenses 28,000, less van 15,000, less drawings 2,000 = cash falls by RM5,000.
Check: 40,000 − 28,000 = 12,000; 12,000 − 15,000 = −3,000; −3,000 − 2,000 = −5,000.
They differ because the van is a cash cost that is only expensed gradually, the credit sales are profit but not cash yet, and drawings reduce cash but not profit.
11. A student’s statement shows closing capital of RM35,880, worked as opening capital 30,000 + profit 9,700 − drawings 3,820. Net assets are RM36,420 and the Drawings account totals RM3,280. Find the error without adding a balancing figure.
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Difference = 36,420 − 35,880 = 540. Since 540 ÷ 9 = 60, suspect a transposition.
The capital working uses drawings 3,820, but the Drawings account shows 3,280: the digits 2 and 8 swapped.
Correct capital = 30,000 + 9,700 − 3,280 = RM36,420, which agrees with net assets. No plug is needed.
If you got these wrong
Use the type of error to choose what to revisit.
- Wrong layout or wrong block (questions 1 to 3): see build an income statement from adjusted data.
- Receivables, working capital or net assets (question 5): see prepare a statement of financial position, and the percentage-base explorer for the 5% calculation.
- Drawings treated as expense (question 7): see account for drawings separately from expense.
- Capital, loss or cash confusion (questions 4, 6, 8, 9, 10): see explain profit versus capital movement.
- A difference at the bottom (question 11): see check agreement without forcing a balancing figure.
Mark each answer honestly and repeat any question you missed a few days later. If the same errors keep returning, online one-to-one Accounting tuition gives a teacher the chance to watch your working as it happens.