These eight questions are original and ramp from single adjustments to a combined profit recalculation. Write your own working first, then open each answer.
Use the timed original practice session builder if you want to attempt them against the clock. The notes for the whole chapter are at SPM Accounting adjustments.
Questions 1 to 4: single adjustments
Question 1. Electricity paid during the year was RM1 100. A bill of RM300 for the last month is unpaid. State the expense for the year and the year-end balance sheet item.
Answer
Expense = 1 100 + 300 = RM1 400. The unpaid RM300 is an accrued expense, shown as a current liability. The cash paid already covers eleven months, so the last month is added.
Question 2. On 1 October 2025 Kedai Hana paid RM2 400 for 12 months of insurance. The year ends on 31 December 2025. Find the expense and the prepayment.
Answer
Monthly amount = 2 400 ÷ 12 = RM200. Three months are used: expense = RM600. Nine months are still ahead, so prepaid insurance = RM1 800, a current asset.
Question 3. A motor van is bought for RM48 000. Its residual value is RM8 000 and its life is 5 years. Using the straight-line method, find the yearly depreciation and the carrying amount after 3 years.
Answer
Yearly depreciation = (48 000 − 8 000) ÷ 5 = RM8 000. After 3 years the accumulated depreciation is 3 × 8 000 = RM24 000. Carrying amount = 48 000 − 24 000 = RM24 000.
Question 4. Closing inventory is RM7 400. Opening inventory was RM6 000 and purchases were RM40 000. Find the cost of goods sold.
Answer
Cost of goods sold = 6 000 + 40 000 − 7 400 = RM38 600. Closing inventory is also shown as a current asset in the statement of financial position.
Questions 5 to 8: allowances and combined adjustments
Question 5. Trade receivables are RM18 000 and there is no old allowance. RM600 is written off as a bad debt, and an allowance of 5% is set on the remaining receivables. Find the total expense to the income statement.
Answer
Remaining receivables = 18 000 − 600 = RM17 400. Allowance = 5% × 17 400 = RM870. Total expense = 600 + 870 = RM1 470.
Question 6. The old allowance for doubtful debts is RM1 200. The new allowance needed is RM900. Explain the effect on profit.
Answer
The allowance falls by 1 200 − 900 = RM300. The decrease is credited to the income statement, so profit increases by RM300. Receivables are then shown less RM900.
Question 7. The owner took goods costing RM500 from the shop for personal use. Give the entry and its effect on profit.
Answer
Debit Drawings RM500, credit Purchases RM500. Purchases fall by RM500, so gross profit rises by the same amount. The drawings reduce the owner’s capital, which is why this is not a business expense.
Question 8. Net profit before adjustments is RM25 000. Adjust for wages owing RM700, prepaid rent RM400, depreciation RM1 500 and bad debts RM300. Find the adjusted net profit.
Answer
25 000 − 700 + 400 − 1 500 − 300 = RM22 900. Wages owing, depreciation and bad debts lower profit. Prepaid rent raises it, because part of the rent paid belongs to next year.
If you got these wrong
Match the pattern to the lesson and retry only those questions.
- Questions 1 and 2: adjusting accruals and prepayments.
- Question 3: accounting for depreciation.
- Questions 4 and 7: adjusting inventory and drawings.
- Questions 5 and 6: handling bad debts and allowances.
- Question 8: connecting adjustments to both financial statements.
If the same error returns, a teacher in one-to-one Accounting tuition can look at your working directly.