Johan Trading

Statement of Comprehensive Income for the year ended 31 December 2015.

RM RM
Sales

Cost of Sales
Inventory 1 December 2015 140,358
Purchases 569,375
Carriage Inwards 1,830
Cost of Purchases 571,205
711,563
Closing inventory -150,258
Cost of Goods Sold

Revenue

Income
(none)

Expenses
Depreciation Expense
i) Motor Vehicle 10300
ii) Plant and Machinery 18500 28800
Rental 84,000
Telephone Charges 15760
Provision of Doubtful Debt Expense 316
Printing and Stationery 960
Insurance 12080
Salaries 136152
Electricity and Water 27000

Profit
Johan Trading

RM
975,000

561,305

413,695

305068

108,627
 Johan Trading
Statement of Financial Position as at 31 December 2015.
RM RM RM
Non Current Asset
Motor Vehicle 103,000
(Accumulated Depreciation) -10300
92,700

Plant and Machinery 185,000

(Accumulated Depreciation) -55500
129,500
222,200
Current Asset
Cash 1320
Bank 46075
Accounts receivable 45800
(Provision of Doubtful Debts -946
Closing Inventory 150258
242507
464,707

Owners Equity
Capital 300000
Drawings -1500
Profits 108,627
407127

Current Liability
Accounts Payable 55580
Electricity and Water Accrued 2000
57580
464707
Johan Trading
1 a) Provide four (4) differences between ordinary shares and preference share

Items

Dividen Rate

Divident Payout

Voting right in company AGM

Solvency, Receivership Share Claims

Cumulative shares

b) Explain why management cannot indiscriminately switch from one costing method to anoth

Principles of consistency
2 Business expenditure is classified into capital and revenue expenditure. Differentiate capita

Capital

Capital expenditures represent major

investments of capital that a company
makes to maintain or, more often, to
expand its business and generate
additional profits. Capital expenses are for
the acquisition of long-term assets, such
as facilities or manufacturing equipment.
Because such assets provide income-
generating value for a company for a
period of years, companies are not
allowed to deduct the full cost of the asset
in the year the expense is incurred; they
must recover the cost through year-by-
year depreciation over the useful life of
the asset. Companies often use debt
financing or equity financing to cover the
substantial costs involved in acquiring
major assets for expanding their business.

3 Explain the importance of Statement of Cash Flow with Two (2) examples each for the sourc

A Statement of Cash Flows serves as a map that tells where cash came from and where it
In addition to reporting cash flow from operations, the cash flow statement can highlight ot
A cash flow statement shows if a business is running out of money, even if it is profitable a
A cash flow statement will tell if the owners are taking too much money out of the business
A cash flow statement makes clear how much money was used to purchase property and e
A cash flow statement can tell you how loan payments affect cash in the bank. While inter
If cash flow from operations is declining, too small, or even negative, it is important to eval

Example
Accounts Receivable How many days does it take, from the datea product isshipped or a

Inventory How many times a year does inventory turn over? Selling inventory more quick
en ordinary shares and preference share

Ordinary Share

No fixed based on financial performance

Only received payout once preffered share holders received their

dividens

Have a chance to cast vote based on the number of shares in

hand

Can only be received once preffered shareholders received their

claims

No rights to get the previous years dividen payout.

indiscriminately switch from one costing method to another.

 into capital and revenue expenditure. Differentiate capital expenditure and revenue expenditure with an examp

Revenue

Revenue expenses are shorter-term expenses

required to meet the ongoing operational costs of
running a business, and thus are essentially the
same as operating expenses. Unlike capital
expenditures, revenue expenses can be fully tax-
deducted in the same year the expenses occur. In
relation to the major asset purchases that qualify as
capital expenditures, revenue expenditures include
the ordinary repair and maintenance costs that are
necessary to keep the asset in working order
without substantially improving or extending the
useful life of the asset. Revenue expenses related to
existing assets include repairs and regular
maintenance as well as repainting and renewal
expenses. Revenue expenditures can be considered
to be recurring expenses in contrast to the one-off
nature of most capital expenditures.

ent of Cash Flow with Two (2) examples each for the sources of fund and uses of fund respectively.

s as a map that tells where cash came from and where it went, and is a crucial planning tool for any businesss
from operations, the cash flow statement can highlight other key factors to consider in a business's strategy.
business is running out of money, even if it is profitable at the same time. Fast growing businesses often show
he owners are taking too much money out of the business, which is not something you would see on the income
ar how much money was used to purchase property and equipment, another thing you wont find on the income
u how loan payments affect cash in the bank. While interest payments are reported on the income statement, p
clining, too small, or even negative, it is important to evaluate the following areas of business for improvement.

days does it take, from the datea product isshipped or a service performed, to receive payment? If this numb

ar does inventory turn over? Selling inventory more quickly requires less cash because there is less inventory o
 Prefrence Share

Fixed Rate regardless making profit or loss.

Paid first

No voting rights

There are first in line to received the claims

Reserved a right to claim previous year(s) payouts.

apital expenditure and revenue expenditure with an example

sources of fund and uses of fund respectively.

re it went, and is a crucial planning tool for any businesss long term success.
ht other key factors to consider in a business's strategy.
ble at the same time. Fast growing businesses often show a net income but have their cash tied up in accounts
ness, which is not something you would see on the income statement. Distributions should not exceed cash flo
nd equipment, another thing you wont find on the income statement.Its important to know the cash impact th
nterest payments are reported on the income statement, principal payments are not; both are reflected on the
evaluate the following areas of business for improvement.

or a service performed, to receive payment? If this number is too high, it can jeopardize the ability to remain a

quickly requires less cash because there is less inventory on hand at any particular time. Inventory turnover ap
sh tied up in accounts receivable or rely too heavily on bank financing.
uld not exceed cash flow from operations.
now the cash impact that fixed asset investments have, since net income can be significantly affected by depre
h are reflected on the cash flow statement. Knowing how much cash is needed every month to make monthly l

the ability to remain a going concern. Shorten the billing cycle by invoicing more frequently, calling customers

Inventory turnover applies to more than just the sale of a physical product. In the service industry, it can be ho
cantly affected by depreciation and amortization.
month to make monthly loan payments can help with better planning.

uently, calling customers regarding delinquent accounts after 30 days or offering sales discounts for quicker pay

vice industry, it can be how efficiently employees and equipment are utilized.
discounts for quicker payment.
i) Gross Profit Margin

(Revenue- COGS)/ Revenue

MOK S/B (850,000-589,665) x100% 30.62% Mindy S/B

850,000

ii) Mark up on cost

Sales Price / Cost of Sales

850,500/589665 x100% 44%

iii) Net Profit Margin

Net Profit/ Revenue

108505/850500 x100% 12.70%

iv) Expenses as percentage of sales

Selling Expenses/ Net Sales

86950/850000 x100% 10.20%

v) Stock Turnover Ratio

Sales/Inventory

850500/68340 12.4 days

vi) Current Ratio

Current assets / current liabilty

124565/36380 3.4:1
vii) Quick Ratio

Quick ratio = (current assets inventories) / current liabilities

(124565-68340)/36380 1.55:1
 (650,000-320260) x100% 50.70%
650,000

650,000/320260 x100% 102%

152010/650000 x100% 23.30%

105380/650000 x100% 16.21%

650,000/58390 11.13 days

159,840/33580 4.75:1
(159840-58390)/33580 3.02:1
 ZX Berhad
Income Statement for the year ended 31 December 2015.
RM RM
Gross Profit

Expenses
General Expenses 96,000
Rental 108,000
Directors Fees 360,000
Salaries & Wages 315,200
Depreciation Expenses
Motor Vehicle 37,600
Plant and Machinery 76,090 113,690
Provision of doubtful debt 2,187
Auditors Remuneration 24,000
Dividen payout
Ordinary 135,000
Preference 6,000 141,000
Debenture Interest 32000
Net profit
 ZX Berhad
December 2015. Statement of Changes in Equity for the year e
RM RM
1,560,350 Preffered Share
Opening Balance 100,000
Dividens 4,000
Profit
Retained Earnings

Closing Balance

Statement of Financial Positi

1,192,077 Non Current Asset

368,273.00 Premises
Motor Vehicle
Accumulated Dep
Plant and Machinery
Accumulated Dep

Current Asset
Cash
Bank
Trade Receivable
Doubtful Debts
Inventory
Total Assets

Owners Equity and Shares

Opening Balance
Retained Earnings
Profit
Dividens Paid
Debenture Intrest Paid
Closing Balance

Current Liability
Debentures
General Reserves
Rental Acrued
Trade Payable
 ZX Berhad
Equity for the year ended 31 December 2015.
RM RM
Ordinary Share Total
500,000 600,000
75,000 79,000
368,273.00
452,360

1,341,633.00

ZX Berhad
nt of Financial Position as at 31 December 2015.
RM RM RM

2,000,000
235,000
84600 150,400
380,450
152180 228,270
2,378,670

2500
125,630
165350
3307 162043
285315 575488
2,954,158

600,000
452,360
368,273
141,000
-31000
1,248,633

400,000
1,039,000
9,000
257525
1,705,525
2,954,158