Myanmar Accountancy Council Diploma in Accountancy Part I Examination (MAC)

Under the fundamental rules of double-entry book-keeping, how are increases in asset accounts and increases in liability accounts recorded?

• AAsset increases are debited; liability increases are credited
• BAsset increases are credited; liability increases are debited
• CBoth asset and liability increases are debited
• DBoth asset and liability increases are credited

What is the primary function of extracting a trial balance at the end of an accounting period?

• ATo test the arithmetical accuracy of the double-entry ledger postings
• BTo calculate the exact net profit or loss generated by the business
• CTo value the non-current assets at their current market values
• DTo detect all accounting errors including errors of omission and principle

When a sole proprietor introduces 5,000,000 MMK of personal cash into the business bank account, how does this transaction affect the accounting equation?

• ABank asset increases by 5,000,000 MMK and Proprietor's Capital increases by 5,000,000 MMK
• BBank asset increases by 5,000,000 MMK and Trade Payables increase by 5,000,000 MMK
• CProprietor's Capital decreases by 5,000,000 MMK and Cash asset increases by 5,000,000 MMK
• DBank asset increases by 5,000,000 MMK and Drawings increase by 5,000,000 MMK

Which source document is issued to a customer when they return faulty merchandise that had previously been sold on credit?

• ACredit note
• BDebit note
• CSales invoice
• DRemittance advice

Under the straight-line method of depreciation, how is the annual depreciation expense calculated?

• A(Historical Cost - Estimated Residual Value) / Estimated Useful Life in years
• BNet Book Value at start of year multiplied by a fixed percentage rate
• CHistorical Cost multiplied by the prevailing commercial bank lending rate
• D(Net Book Value - Estimated Residual Value) / Remaining Useful Life squared

In an imprest petty cash system, how is the periodic reimbursement amount determined?

• AIt equals the exact total of approved vouchers paid out during the period
• BIt is an arbitrary lump sum determined by the chief cashier each Monday
• CIt equals the original float plus any cash discounts received from suppliers
• DIt is 50% of the total monthly sales revenue of the enterprise

A business purchased manufacturing machinery on 1 January for 12,000,000 MMK. It paid 1,000,000 MMK for transport and 1,000,000 MMK for installation. The estimated scrap value is 2,000,000 MMK after a useful economic life of 6 years. Using the straight-line method, what is the annual depreciation charge?

• A2,000,000 MMK
• B1,666,667 MMK
• C2,333,333 MMK
• D2,500,000 MMK

A commercial van was bought for 10,000,000 MMK on 1 January Year 1. Depreciation is charged at 20% per annum using the reducing balance method. What is the net book value (carrying amount) of the van at 31 December Year 2?

• A6,400,000 MMK
• B6,000,000 MMK
• C7,200,000 MMK
• D8,000,000 MMK

At 31 December, a firm's trade receivables balance stands at 16,000,000 MMK, which includes a confirmed bad debt of 1,000,000 MMK that must be written off immediately. The firm maintains an allowance for doubtful debts of 5% on remaining receivables. If the opening balance of the allowance was 450,000 MMK, what amount should be charged to the income statement for the year?

• A1,300,000 MMK
• B750,000 MMK
• C300,000 MMK
• D1,000,000 MMK

A trader's cash book shows a debit bank balance of 4,800,000 MMK on 30 June. Upon inspecting the bank statement, the trader discovers bank service charges of 50,000 MMK and a direct customer bank transfer of 650,000 MMK that have not yet been entered in the cash book. What is the updated, correct cash book balance?

• A5,400,000 MMK
• B4,200,000 MMK
• C5,500,000 MMK
• D4,100,000 MMK

Which of the following describes an 'error of principle' in double-entry book-keeping?

• ARecording the purchase of an office computer as a debit to the Office Repairs Expense acc…
• BPosting a credit purchase from U Ba to the personal account of U Hla
• CCompletely omitting a cash sale transaction from both the cash book and sales ledger
• DEntering a transaction of 54,000 MMK as 45,000 MMK in both debit and credit entries

How should accrued wages of 350,000 MMK at the end of the financial year be presented in the final financial statements of a sole trader?

• AAdded to wages expense in the income statement and shown as a current liability in the ba…
• BDeducted from wages expense in the income statement and shown as a current asset in the b…
• CShown only as a deduction from owner capital without affecting the income statement
• DAdded to wages expense in the income statement and shown as a non-current liability

On 1 October, an enterprise paid an annual fire insurance premium of 1,200,000 MMK covering the 12-month period to 30 September of the following year. The accounting year ends on 31 December. What are the insurance expense and the prepaid insurance balances for the financial year ending 31 December?

• AInsurance expense: 300,000 MMK; Prepaid insurance: 900,000 MMK
• BInsurance expense: 900,000 MMK; Prepaid insurance: 300,000 MMK
• CInsurance expense: 1,200,000 MMK; Prepaid insurance: 0 MMK
• DInsurance expense: 400,000 MMK; Prepaid insurance: 800,000 MMK

According to standard accounting conventions, at what valuation should closing inventory be recognized in the statement of financial position?

• ALower of historical cost and net realizable value
• BHigher of historical cost and replacement cost
• CCurrent estimated wholesale selling price
• DAverage acquisition cost plus expected net profit markup

What is the correct accounting treatment for 'carriage inwards' and 'carriage outwards' in financial statements?

• ACarriage inwards is added to purchases in cost of sales; carriage outwards is treated as…
• BBoth carriage inwards and carriage outwards are added to purchases in the trading account
• CCarriage inwards is an administrative expense; carriage outwards is deducted from gross s…
• DBoth carriage inwards and outwards are capitalized as non-current assets on the balance s…

A customer whose debt of 400,000 MMK was written off as bad in the prior year unexpectedly settles the debt in cash. What is the correct double-entry to record this recovery?

• ADebit Cash 400,000 MMK; Credit Bad Debts Recovered (Income) 400,000 MMK
• BDebit Bad Debts Expense 400,000 MMK; Credit Cash 400,000 MMK
• CDebit Cash 400,000 MMK; Credit Trade Receivables Control 400,000 MMK without reopening th…
• DDebit Allowance for Doubtful Debts 400,000 MMK; Credit Cash 400,000 MMK

A merchant's total sales revenue for the year was 25,000,000 MMK. The merchant prices all goods by applying a uniform markup of 25% on cost. Opening inventory was 3,000,000 MMK and closing inventory was 4,000,000 MMK. What was the merchant's total cost of goods sold (COGS) and total purchases for the year?

• ACost of goods sold: 20,000,000 MMK; Purchases: 21,000,000 MMK
• BCost of goods sold: 18,750,000 MMK; Purchases: 19,750,000 MMK
• CCost of goods sold: 20,000,000 MMK; Purchases: 19,000,000 MMK
• DCost of goods sold: 21,000,000 MMK; Purchases: 22,000,000 MMK

A trial balance failed to agree, with total debits exceeding total credits by 180,000 MMK, leading to a credit balance of 180,000 MMK in a Suspense Account. Subsequent investigation revealed that a credit sale of 90,000 MMK to Daw Mya was correctly debited to her account but completely omitted from the Sales account. What journal entry will correct this error and clear the suspense account?

• ADebit Suspense Account 180,000 MMK; Credit Sales Account 180,000 MMK
• BDebit Suspense Account 90,000 MMK; Credit Sales Account 90,000 MMK (leaving 90,000 MMK fo…
• CDebit Sales Account 180,000 MMK; Credit Suspense Account 180,000 MMK
• DDebit Daw Mya Personal Account 90,000 MMK; Credit Suspense Account 90,000 MMK

An enterprise purchased equipment for 8,000,000 MMK. At the date of disposal, accumulated depreciation on this equipment stood at 5,500,000 MMK. The equipment was sold for 3,200,000 MMK in cash. What is the net financial gain or loss on the disposal of this equipment?

• AGain on disposal of 700,000 MMK
• BLoss on disposal of 700,000 MMK
• CGain on disposal of 3,200,000 MMK
• DLoss on disposal of 2,300,000 MMK

On 1 January, a sole trader's capital was 10,000,000 MMK. During the year, the business earned a net profit of 4,500,000 MMK. The owner withdrew 1,800,000 MMK in cash and took 200,000 MMK worth of goods for personal family use. On 1 September, the owner introduced additional capital of 1,000,000 MMK. What is the proprietor's closing capital at 31 December?

• A13,500,000 MMK
• B13,700,000 MMK
• C12,500,000 MMK
• D14,500,000 MMK

What does the economic Law of Demand state regarding the relationship between the price of a good and the quantity demanded?

• AThere is an inverse relationship between price and quantity demanded, holding all other f…
• BThere is a direct positive relationship between price and quantity demanded as price sign…
• CQuantity demanded changes independently of changes in the market price of the good
• DTotal expenditure on the good remains strictly constant regardless of any price movement

In fundamental economic theory, how is 'opportunity cost' defined?

• AThe value of the next best alternative foregone when making a choice
• BThe total monetary cash outflow required to undertake a business investment
• CThe accounting depreciation recorded on fixed capital assets over time
• DThe sunk cost that cannot be recovered once an economic expenditure is committed

In a free competitive market, at what price level does market equilibrium occur?

• AWhere the quantity demanded by consumers exactly equals the quantity supplied by producers
• BWhere the market price is set by statutory government price ceilings
• CWhere producers earn maximum possible economic supernormal profit
• DWhere total consumer surplus is reduced to zero

Using the standard expenditure approach, which formula correctly calculates Gross Domestic Product (GDP)?

• AGDP = C + I + G + (X - M)
• BGDP = C + I + G + (M - X)
• CGDP = C + S + T + (X - M)
• DGDP = Wages + Rents + Interest + Profits

How does an increase in consumer income affect the demand for a 'normal good' versus an 'inferior good'?

• ADemand for a normal good rises, whereas demand for an inferior good falls
• BDemand for both normal and inferior goods increases proportionally
• CDemand for a normal good falls, whereas demand for an inferior good rises
• DDemand for both normal and inferior goods remains completely unaffected

Which statement best defines 'inflation' in macroeconomics?

• AA sustained and continuous increase in the general price level of goods and services acro…
• BA temporary one-off spike in the price of seasonal agricultural vegetables
• CAn increase in the total nominal money supply without any change in real economic output
• DA persistent decline in the foreign exchange rate of the national currency

When the retail price of a commodity increases from 1,000 MMK to 1,200 MMK, the monthly quantity demanded drops from 500 units to 400 units. Using the standard percentage formula, what is the price elasticity of demand (PED)?

• A-1.0 (Unitary elastic)
• B-0.5 (Inelastic)
• C-2.0 (Elastic)
• D-0.8 (Inelastic)

A statistical study finds that an average household income increase of 10% leads to a 15% increase in purchases of premium packaged cooking oil. What is the income elasticity of demand (YED) and how is this commodity classified?

• AYED = +1.5; Normal and luxury (superior) good
• BYED = +0.67; Normal and necessity good
• CYED = -1.5; Inferior good
• DYED = +1.0; Normal and unitary good

How is 'consumer surplus' graphically represented and defined on a standard microeconomic supply and demand diagram?

• AThe area below the demand curve and above the equilibrium market price line
• BThe area below the equilibrium market price line and above the supply curve
• CThe rectangular area representing total consumer expenditure (Price multiplied by Quantit…
• DThe entire triangular area between the demand curve and the horizontal quantity axis

What does the Law of Diminishing Marginal Returns state in short-run production theory?

• AAs successive units of a variable factor are added to fixed factors, the addition to tota…
• BAs an enterprise expands its overall scale of production in the long run, average costs o…
• CTotal production output begins to decrease immediately from the very first worker hired
• DThe total revenue earned by a competitive firm diminishes whenever the market price incre…

In short-run cost analysis, at what point does the Marginal Cost (MC) curve cross the Average Total Cost (ATC) curve?

• AThe MC curve intersects the ATC curve at the minimum point of the ATC curve
• BThe MC curve always lies strictly above the ATC curve at all levels of output
• CThe ATC curve intersects the MC curve at the maximum point of the MC curve
• DThe MC curve is entirely horizontal while the ATC curve is vertical

Which combination of characteristics distinguishes a perfectly competitive market structure?

• AA large number of buyers and sellers, homogeneous products, and free entry and exit in th…
• BA single dominant producer, unique products with no close substitutes, and insurmountable…
• CA small number of interdependent firms engaging in strategic non-price advertising compet…
• DDifferentiated products, significant brand loyalty, and substantial government licensing…

Why does a 'natural monopoly' typically emerge in utility industries such as municipal water supply and national electricity grids?

• AEnormous fixed capital setup costs create economies of scale that allow one single firm t…
• BGovernment legislation prohibits any private company from purchasing utility distribution…
• CConsumers naturally prefer dealing with a state enterprise regardless of price or service…
• DThe marginal cost of producing additional utility units is exceptionally high and rises e…

What policy measures constitute an 'expansionary fiscal policy' designed to stimulate aggregate demand during an economic recession?

• AIncreasing government expenditure on public infrastructure and reducing personal and corp…
• BIncreasing benchmark central bank policy interest rates and selling government bonds in o…
• CDecreasing government expenditure and raising direct consumption and business taxes
• DRestricting commercial bank lending by raising compulsory commercial bank reserve require…

Which scenario is a primary cause of 'cost-push inflation' in a developing national economy?

• AA sharp rise in the global price of imported petroleum fuel and basic industrial raw mate…
• BRapidly rising consumer credit and excessive household spending on luxury imported goods
• CA substantial decrease in the national statutory minimum wage across all sectors
• DA fiscal surplus resulting from sharp reductions in government public sector spending

Which items are recorded in the 'Current Account' of a country's Balance of Payments?

• AMerchandise trade balance, trade in commercial services, net primary income, and net seco…
• BDirect foreign investments in domestic factories and cross-border commercial real estate…
• CTransactions in foreign exchange reserves held by the central bank and official gold bull…
• DPortfolio investments in corporate equities and sovereign government treasury bond purcha…

A market analyst notes that when the price of tea rises by 20%, the sales of coffee beans increase from 800 kilograms to 960 kilograms per week. What is the Cross-Price Elasticity of Demand (XED) between tea and coffee, and what economic relationship does it reveal?

• AXED = +1.0; Tea and coffee are substitute goods
• BXED = -1.0; Tea and coffee are complementary goods
• CXED = +0.5; Tea and coffee are unrelated independent goods
• DXED = +2.0; Tea and coffee are perfect complements

In a closed Keynesian macroeconomic model with no income taxes or imports, the Marginal Propensity to Consume (MPC) is 0.8. If the government increases public capital investment expenditure by 10 billion MMK, what will be the resulting total change in equilibrium National Income?

• AAn increase of 50 billion MMK
• BAn increase of 12.5 billion MMK
• CAn increase of 8 billion MMK
• DAn increase of 80 billion MMK

Why does a single-price unregulated monopoly generate a 'deadweight loss' of economic welfare compared to a perfectly competitive industry?

• AThe monopolist restricts output to where Marginal Revenue equals Marginal Cost (MR = MC),…
• BThe monopolist produces at the lowest point of its average total cost curve, exhausting a…
• CThe monopolist prices goods below marginal cost, causing market shortages and excess cons…
• DThe monopolist faces perfectly elastic demand, eliminating both producer and consumer sur…

Under a floating exchange rate regime, what automatic adjustment mechanism helps correct a persistent Current Account deficit?

• AExcess supply of the domestic currency on foreign exchange markets causes the currency to…
• BThe domestic central bank raises mandatory tariff duties on all imported capital machinery
• CThe government automatically passes a balanced budget law restricting private consumption
• DForeign central banks buy up surplus domestic currency to fix the exchange rate at purcha…

A trader borrows 1,000,000 MMK from a cooperative credit society at a simple interest rate of 10% per annum for a term of 3 years. What is the total interest payable and the final accumulated amount?

• ATotal interest: 300,000 MMK; Accumulated amount: 1,300,000 MMK
• BTotal interest: 331,000 MMK; Accumulated amount: 1,331,000 MMK
• CTotal interest: 100,000 MMK; Accumulated amount: 1,100,000 MMK
• DTotal interest: 250,000 MMK; Accumulated amount: 1,250,000 MMK

How is the 'Median' of a numerical data set defined in descriptive business statistics?

• AThe value that divides an ordered dataset into two equal halves such that half the observ…
• BThe value that occurs with the highest frequency in a given sample distribution
• CThe arithmetic sum of all observation values divided by the total number of observations
• DThe difference between the maximum and minimum observed numerical values in a dataset

What is the relationship between the variance and the standard deviation of a statistical distribution?

• AThe standard deviation is the positive square root of the variance
• BThe standard deviation is the square of the variance
• CThe standard deviation equals variance multiplied by the sample size (n)
• DThe standard deviation equals variance divided by the arithmetic mean

A commercial enterprise deposits 2,000,000 MMK in a fixed deposit bank account paying 10% per annum compound interest, compounded annually. What is the total compound interest earned after 2 years?

• A420,000 MMK
• B400,000 MMK
• C200,000 MMK
• D440,000 MMK

A discrete frequency distribution records sales orders (x) and the number of days observed (f): values x = [10, 20, 30, 40] with respective frequencies f = [2, 3, 4, 1]. What is the weighted arithmetic mean of this distribution?

• A24
• B25
• C22
• D28

The prices and base-year quantities of a basket of staple food items yield Sum(P1 * Q0) = 15,000 MMK and Sum(P0 * Q0) = 12,000 MMK. What is the Laspeyres Price Index number for the current year?

• A125.0
• B80.0
• C120.0
• D115.0

An investor expects to receive a lump sum of 1,331,000 MMK at the end of 3 years. If the prevailing market annual discount rate is 10% compounded annually, what is the Present Value (PV) of this future cash inflow?

• A1,000,000 MMK
• B1,100,000 MMK
• C1,200,000 MMK
• D950,000 MMK