Single Entry & Incomplete Records

For some small retail stores, the owners merely keep record of cash receipts and payments, as well as accounts receivable and payable. Which system do they use to keep their books?

• Centralized system

• Single entry system

• Decentralized system

• Double entry system

Incomplete business records will affect financial records in the following ways, except ______.

• business profits cannot be determined accurately because entries for income or expenditure are not made

• confusion arises between personal records and business records because the owner lacks knowledge in accounting

• statements of financial position will not give a true description as there may be missing entries or the values of entries are not actual figures

• performance comparisons, for certain duration of business activities, are hard to be determined as the business is unable to prepare accurate financial reports

Single-entry recording may differ from double-entry recording in one of the following ways:

• The profit and loss statement is prepared

• Financial position can be easily determined

• The records are kept properly by the owners

• Recording is based on debit and credit entries in ledger

Many small businesses, especially retail shops, may only use the single-entry recording for their transactions because _______.

• it results in the same profit figure as double-entry recording

• it enables the business to avoid tax payment

• the owner has no knowledge in accounting

• the business records have gone missing

Mr Wu, a sole trader, did not keep proper books of account, but he could provide the following information:

Drawings for the year was RM2,300. FInd the profit or loss for the year 2010.

• Gain RM 12,600

• Gain RM 14,900

• Loss RM 4,600

• Loss RM 6,900

Answer explanation

Opening Capital = RM28,000 - RM19,200

= RM8,800

Closing Capital = RM32,000 - RM10,600

= RM21,400

Net Profit = Closing Capital + Drawings - Opening Capital

= RM21,400 + RM2,300 - RM8,800

= RM14,900

The capital of a business was RM 19,000 at the beginning of an accounting year and RM 22,000 at the end of the period. The owner withdrew RM 3,000 during the year. Find the profit made for the year.

• RM 3,000

• RM 6,000

• RM 10,000

• RM 12,000

Answer explanation

Net profit = Closing capital + Drawings - Opening Capital

= RM 22,000 + RM 3,000 - RM 19,000

= RM 6,000

A sole trade did not keep proper books of accounts. Which of the following formulae can be used to calculate his net profit or loss for a certain year?

• Opening capital + Drawing - Additional Capital - Closing Capital

• Closing capital + Drawing - Additional Capital - Opening Capital

• Opening capital - Drawing + Additional Capital - Closing Capital

• Closing capital - Drawing + Additional Capital - Opening Capital

A firm's capitals in the beginning and at the end of 2009 were RM 25,000 and RM 35,000 respectively. The proprietor's drawings during the year totalled RM3,500, and he brought in his RM 6,000 worth of private car for business use. Calculate the firm's net profit or net loss for the year.

• RM 7,500 (Net Loss)

• RM 7,500 (Net Profit)

• RM 13,500 (Net Loss)

• RM 13,500 (Net Profit)

Answer explanation

Net Profit = RM 35,000 + RM 3,500 - RM 6,000 - RM25,000

= RM 7,500

If the balance of accounts receivable at 1 June 2012 was RM 18,620 and RM 10,970 at 30 June 2012 and the amount received from accounts receivable in this month was RM 21,330, then the sales for the month of June are _____.

• 39,950

• 28,980

• 13,680

• 8,260

Answer explanation

Put the figures in the appropriate sides (debit & credit), find the Balancing Figure: Sales

Given that opening Accounts Payable was RM 23,000, purchases RM 96,000, payments to creditors RM 65,000 and discounts received RM 1,350, what should the closing Accounts Payable be?

• RM 55,350

• RM 52,650

• RM 9,350

• RM 6,650

Answer explanation

Put the figures in appropriate side (debit & credit), Find the Balancing Figure: Balance c/d