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Briefing on ACT3121

Contents: Main aspects in the syllabus

Partnership Company Accounts

Past Exam questions Theory section Technical/Calculation section

Q & A Session

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Key areas:

Characteristics Advantages & Disadvantages Partnership Agreement

Partnership

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Key areas: Accounting for Partnership

Partnership Capital Account

Fixed Capital Method vs Fluctuating Capital Method Current Account Appropriation Account Accounting Treatments:

Drawings Interest on drawings Interest on capital Interest on loan Salaries to partners

Cont.

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Comprehensive Example The net profit for the partnership between Azlan and Chong for the year ended 31 December 20X8 was RM28,500. The capital accounts and current accounts for the partnership on 1 January 20X8 were as follow:

Capital accounts:

Azlan RM40,000

Chong RM50,000

Current accounts:

Azlan RM2,160

Chong RM1,500

In the year 20X8, Azlan has withdraws RM2,000 on 31 Mac 20X8. Azlan has been paid RM10,000 for his salary.

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Cont. The contents of the partnership agreement are as follow:

i. Interest on the initial capital is 5% per year

ii. Azlan would be paid RM12,000 per year for his salary

iii. 8% interest per year would be levied on withdrawals by the partners

iv. Azlan and Chong share a profit/loss in a ratio of 2:3

Prepare:

(a) The allocation of profit-loss using Profit-Loss Separation Account or Profit-Loss Separation statement for the year ending 31 December 20X8.

(b) Capital account and current account for each partner

(c) A balance sheet (equity section) as at 31 December20X8

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Key areas: Accounting for Partnership

Changes in Partnership Change in Profit Sharing Ratio Admission of a new partner Retirement/death of an existing partner

Cont.

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If this happened, 2 issues are considered:

Revaluation of assets

Goodwill

Amount is given

Account not to be maintained

Cont.

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Comprehensive Example: Admission Adil and Bistari are partners sharing profits and losses ratio of 3:2

respectively. Their Balance sheet on 30th June 2009 is:

Assets:

Land and buildings RM40,000

Machinery RM16,000

Inventories RM10,500

Debtors RM30,000

Liabilities and Equity:

Creditors RM15,000

Bank overdraft RM6,500

Capital:

Adil RM45,000

Bistari RM30,000

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Cont. On 1 July 2009 Adil and Bistari agreed to accept Cerdik as a new partner. Cerdik has to pay RM25,000 cash including RM5,000 as a premium on goodwill. He is to share 1/6 of the profits and losses. Adil and Bistari will share their profits as before.

The following assets were revalued upon admission of Cerdik as follows:

Land and buildings RM45,000

Inventories RM10,000

Machinery RM14,000

Provisions for doubtful debts is to be 1% on debtors.

Prepare:

(a) Goodwill account (not to be maintained)

(b) Revaluation account

(c) Capital account and current account for each partner

(d) A balance sheet (equity section) as at 1 July 2009

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Key areas:

Types of Companies Advantages & Disadvantages Forming a company

Memorandum of association (MA) Articles of association (AA)

Procedures to issue shares

Company Accounts

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Key areas:

Capital Equity Authorised/Nominal/Registered Capital Unissued Capital Uncalled Up Capital Paid up Capital

Debentures vs Shares

Cont.

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Key areas:

Capital Equity Authorised/Nominal/Registered Capital Unissued Capital Uncalled Up Capital Paid up Capital

Debentures vs Shares

Cont.

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Key areas:

Financial Reporting Framework Regulatory Framework

Companies Act 1965

Financial Reporting Act 1997 & Accounting Standards

Accountants Act 1967

Institutional Framework

MASB

Financial Reporting Foundation

Cont.

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Key areas:

Classes of shares Ordinary share capital vs Preference share capital Types of preference shares

Equity Financing

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Key areas: Issuance of shares

Directors have a number of options when issuing shares:

1. Choose to issue ordinary shares, preference shares or both

2. Issue shares at their par value, at a premium or at a discount

Cont.

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Key areas: Issuance of shares

3. Shares may be issued

I. Payable in full on application

II. Paying a deposit on application and the remainder on allotment

III. Part payment on application, part on allotment and the remainder in one or more installments (or calls)

Cont.

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Key areas: Issuance of shares

Installment Application Allotment Call(s) Forfeiture

Oversubscription Refund Pro-rata

Cont.

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Theory Part:

Normally account to 20% Cover all topics Different level of understanding

Past Exam Questions

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Examples: Partnership

Identify and explain two (2) advantages of a partnership.

(4 marks)

‘There is really no need for a partnership agreement since

all issues are covered in the Partnership Act 1961’. Do

you agree with this statement, explain?

(6 marks)

Cont.

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Examples: Company Accounting

Explain the significance of minimum shares subscription

threshold to company issuing equity shares to public.

(4 Marks)

Discuss the shareholding spread requirements for

Malaysia listed incorporated companies and foreign

companies in Malaysia.

(4 Marks)

Cont.

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Answer Scheme: Company Accounting

Refer to Word File

Cont.

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Technical/Calculation Part:

As shown in previous slides Refer to Word File

Past Exam Questions

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