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

Under the double-entry system of book-keeping, how are an increase in an asset and an increase in a liability recorded in the ledger?

• ADebit the asset account and credit the liability account
• BCredit the asset account and debit the liability account
• CDebit both the asset account and the liability account
• DCredit both the asset account and the liability account

A trader purchases office equipment on credit from Apex Ltd for MMK 2,500,000. Which journal entry correctly records this transaction?

• ADebit Office Equipment MMK 2,500,000; Credit Apex Ltd MMK 2,500,000
• BDebit Purchases MMK 2,500,000; Credit Apex Ltd MMK 2,500,000
• CDebit Apex Ltd MMK 2,500,000; Credit Office Equipment MMK 2,500,000
• DDebit Office Equipment MMK 2,500,000; Credit Cash MMK 2,500,000

Which of the following expenditures must be classified as capital expenditure rather than revenue expenditure?

• ADelivery and installation costs of a newly acquired manufacturing machine
• BAnnual property insurance premium paid on the factory building
• CRoutine oil replacement and minor servicing of delivery vans
• DCost of repainting the interior walls of an existing administrative office

A business purchases machinery for MMK 10,000,000 with an estimated useful life of 5 years and an expected residual value of MMK 1,000,000. Using the straight-line method, what is the annual depreciation charge?

• AMMK 1,800,000
• BMMK 2,000,000
• CMMK 2,200,000
• DMMK 1,820,000

A delivery vehicle was bought on 1 January Year 1 for MMK 8,000,000. Depreciation is provided at 20% per annum using the reducing balance method. What is the carrying amount (net book value) of the vehicle at 31 December Year 2?

• AMMK 5,120,000
• BMMK 4,800,000
• CMMK 6,400,000
• DMMK 5,400,000

A business sells a machine for MMK 5,200,000 cash. The machine originally cost MMK 12,000,000 and had accumulated depreciation of MMK 7,500,000 at the date of disposal. What is the gain or loss on disposal?

• AGain on disposal of MMK 700,000
• BLoss on disposal of MMK 700,000
• CGain on disposal of MMK 200,000
• DLoss on disposal of MMK 6,800,000

In a three-column cash book, what do the discount columns on the debit and credit sides record?

• ADebit side records discounts allowed; credit side records discounts received
• BDebit side records discounts received; credit side records discounts allowed
• CDebit side records trade discounts allowed; credit side records cash discounts received
• DBoth debit and credit sides record cash discounts allowed to trade debtors

A firm maintains a petty cash book under the imprest system with a float of MMK 150,000. During the month, petty cash vouchers total MMK 112,000, leaving MMK 38,000 in cash. What amount of cash must the chief cashier reimburse to restore the float?

• AMMK 112,000
• BMMK 38,000
• CMMK 150,000
• DMMK 74,000

A trader's cash book shows a debit balance of MMK 1,450,000. On comparing with the bank statement, the trader discovers bank service charges of MMK 30,000 and a direct debit for insurance of MMK 120,000 not yet recorded in the cash book. What is the updated cash book balance?

• AMMK 1,300,000 debit
• BMMK 1,600,000 debit
• CMMK 1,300,000 credit
• DMMK 1,340,000 debit

A bank statement shows a credit balance of MMK 2,100,000. Unpresented cheques amount to MMK 450,000 and uncredited lodgments (deposits in transit) amount to MMK 650,000. What is the adjusted cash book balance?

• AMMK 2,300,000 debit
• BMMK 1,900,000 debit
• CMMK 3,200,000 debit
• DMMK 2,300,000 credit

A Myanmar trading business is investigating an unequal trial balance. Which error below would create the disagreement?

• AA sales invoice of MMK 50,000 was debited to the customer's account as MMK 500,000 but cr…
• BA credit purchase of goods for MMK 80,000 was completely omitted from the accounting reco…
• CA cash payment for motor repairs of MMK 30,000 was debited to the Motor Vehicles asset ac…
• DA payment of MMK 45,000 to creditor U Ba was debited to creditor Daw Hla's account

When a book-keeper extracts a trial balance, total debits exceed total credits by MMK 85,000. Where and how should this difference be temporarily recorded?

• ACredit side of a Suspense Account with MMK 85,000
• BDebit side of a Suspense Account with MMK 85,000
• CDebit side of the Capital Account with MMK 85,000
• DCredit side of the Profit and Loss Account with MMK 85,000

A credit purchase of goods for MMK 360,000 was correctly entered in the supplier's account but was posted to the debit of the Purchases account as MMK 630,000. What is the correcting journal entry?

• ADebit Suspense Account MMK 270,000; Credit Purchases Account MMK 270,000
• BDebit Purchases Account MMK 270,000; Credit Suspense Account MMK 270,000
• CDebit Purchases Account MMK 270,000; Credit Supplier Account MMK 270,000
• DDebit Supplier Account MMK 270,000; Credit Purchases Account MMK 270,000

At the year end, total trade receivables stand at MMK 5,000,000. It is decided to write off an irrecoverable debt of MMK 200,000 and then create an allowance for doubtful debts of 5% on remaining receivables. What is the required allowance balance?

• AMMK 240,000
• BMMK 250,000
• CMMK 260,000
• DMMK 230,000

A firm has an opening allowance for doubtful debts of MMK 180,000. At the end of the year, bad debts written off amount to MMK 150,000 and the required closing allowance for doubtful debts is calculated as MMK 240,000. What is the total charge in the statement of profit or loss for the year?

• AMMK 210,000
• BMMK 390,000
• CMMK 240,000
• DMMK 90,000

Under the accruals (matching) concept, how should an accrued expense existing at the end of the financial year be presented in the financial statements?

• AAdded to the relevant expense in the profit and loss statement and shown as a current lia…
• BDeducted from the relevant expense in the profit and loss statement and shown as a curren…
• CAdded to the relevant expense in the profit and loss statement and shown as a non-current…
• DShown only as a footnote disclosure without adjusting the profit and loss account

On 1 October Year 1, a business paid an annual commercial property insurance premium of MMK 2,400,000 covering the 12 months ending 30 September Year 2. If the accounting year ends on 31 December Year 1, what amount should be shown as prepaid insurance in the balance sheet?

• AMMK 1,800,000
• BMMK 600,000
• CMMK 1,200,000
• DMMK 2,000,000

A sole trader pays shop rent of MMK 400,000 per month. During the financial year ended 31 December, total rent payments debited to the rent account amounted to MMK 4,400,000. What year-end adjustment is required for rent?

• AAccrued rent of MMK 400,000 (liability)
• BPrepaid rent of MMK 400,000 (asset)
• CAccrued rent of MMK 800,000 (liability)
• DNo adjustment is needed as cash payments exceed MMK 4,000,000

The following information relates to the Sales Ledger Control Account for a period: Opening balance MMK 1,200,000; Credit sales MMK 8,500,000; Cash received from debtors MMK 7,800,000; Discounts allowed MMK 200,000; Bad debts written off MMK 100,000. What is the closing trade receivables balance?

• AMMK 1,600,000
• BMMK 1,900,000
• CMMK 1,400,000
• DMMK 1,700,000

In a Purchases Ledger Control Account, the opening balance is MMK 900,000 credit. During the month, credit purchases are MMK 6,200,000, payments to creditors are MMK 5,400,000, discounts received are MMK 150,000, and a contra settlement with the sales ledger is MMK 80,000. What is the closing balance of the control account?

• AMMK 1,470,000 credit
• BMMK 1,630,000 credit
• CMMK 1,550,000 credit
• DMMK 1,470,000 debit

When computing net profit from incomplete records using the capital comparison method, which formula is correct?

• ANet Profit = Closing Capital - Opening Capital + Drawings - Additional Capital Introduced
• BNet Profit = Closing Capital - Opening Capital - Drawings + Additional Capital Introduced
• CNet Profit = Opening Capital - Closing Capital + Drawings + Additional Capital Introduced
• DNet Profit = Closing Capital + Opening Capital - Drawings - Additional Capital Introduced

A sole trader who keeps incomplete records started the year with net assets of MMK 3,000,000 and ended the year with net assets of MMK 4,500,000. During the year, the owner withdrew MMK 1,200,000 for personal use and introduced MMK 500,000 of personal savings into the business bank account. What was the net profit for the year?

• AMMK 2,200,000
• BMMK 800,000
• CMMK 1,800,000
• DMMK 2,700,000

A trader's records reveal: Opening inventory MMK 800,000; Purchases MMK 4,200,000; Closing inventory MMK 1,000,000. If the trader consistently prices goods at a mark-up of 25% on cost, what is the sales revenue for the period?

• AMMK 5,000,000
• BMMK 4,800,000
• CMMK 5,333,333
• DMMK 5,250,000

If a retailer achieves a gross profit margin of 20% on sales revenue, what is the corresponding mark-up on cost of goods sold?

• A25%
• B20%
• C16.67%
• D30%

A business owner takes goods costing MMK 80,000 from inventory for personal family consumption. How should this transaction be recorded in the general journal?

• ADebit Drawings Account MMK 80,000; Credit Purchases Account MMK 80,000
• BDebit Purchases Account MMK 80,000; Credit Drawings Account MMK 80,000
• CDebit Drawings Account MMK 80,000; Credit Sales Account MMK 80,000
• DDebit Inventory Account MMK 80,000; Credit Drawings Account MMK 80,000

At the reporting date, an inventory batch has an original purchase cost of MMK 1,500,000. Due to physical damage, its estimated selling price is MMK 1,600,000, and further repair costs to complete and sell the goods are estimated at MMK 250,000. Under IAS 2 / standard valuation rules, at what value should this inventory be recognized in the statement of financial position?

• AMMK 1,350,000
• BMMK 1,500,000
• CMMK 1,600,000
• DMMK 1,250,000

What is the primary difference in accounting treatment between a trade discount and a cash (settlement) discount?

• ATrade discount is deducted on the invoice and not recorded in the ledger; cash discount i…
• BTrade discount is recorded in the cash book; cash discount is recorded only on the invoice
• CTrade discount is an operating expense; cash discount is a capital reduction
• DTrade discount is granted for prompt payment; cash discount is granted for bulk buying

How are Carriage Inwards and Carriage Outwards treated in the financial statements of a trading business?

• ACarriage inwards is added to purchases in the trading account; carriage outwards is an op…
• BCarriage inwards is an operating expense in profit and loss; carriage outwards is deducte…
• CBoth carriage inwards and carriage outwards are added to purchases in the trading account
• DBoth carriage inwards and carriage outwards are treated as administrative expenses in pro…

A trading firm presents the following figures for the year: Opening inventory MMK 600,000; Purchases MMK 5,000,000; Returns outwards MMK 200,000; Carriage inwards MMK 150,000; Closing inventory MMK 750,000. What is the Cost of Goods Sold (COGS)?

• AMMK 4,800,000
• BMMK 4,650,000
• CMMK 5,000,000
• DMMK 4,500,000

What is the primary accounting purpose of creating a General Reserve from retained earnings?

• ATo retain profits within the business to strengthen financial stability and fund future e…
• BTo set aside liquid cash in a separate bank account specifically for tax payments
• CTo write down overvalued non-current assets to their liquidation value
• DTo provide for anticipated losses from bad debts on specific customer balances

A purchase of a new office computer for MMK 1,000,000 was mistakenly debited to the Office Equipment Repairs account. How does this error affect the financial statements before correction?

• ANet profit is understated by MMK 1,000,000 and non-current assets are understated by MMK…
• BNet profit is overstated by MMK 1,000,000 and non-current assets are understated by MMK 1…
• CNet profit is understated by MMK 1,000,000 and non-current assets are overstated by MMK 1…
• DNet profit and total assets remain unaffected because total debits match total credits

Which accounting principle states that revenue and profits should not be anticipated, but full provision should be made for all known losses and liabilities?

• APrudence (conservatism) concept
• BBusiness entity concept
• CGoing concern concept
• DConsistency concept

A sole trader calculated a draft net profit of MMK 6,500,000. Subsequently, two errors were discovered: closing inventory had been overstated by MMK 400,000, and accrued electricity charges of MMK 150,000 had been completely omitted. What is the corrected net profit?

• AMMK 5,950,000
• BMMK 6,250,000
• CMMK 6,750,000
• DMMK 7,050,000

How is the working capital of a commercial enterprise formally defined?

• ACurrent assets minus current liabilities
• BTotal assets minus total liabilities
• CNon-current assets minus non-current liabilities
• DCash in hand plus bank balances

What is the fundamental economic problem faced by all human societies?

• AScarcity of economic resources relative to unlimited human wants
• BInability of governments to balance annual budgets
• CPersistent inflation and currency depreciation in international trade
• DUnequal distribution of aggregate national income

When the price of a good increases from MMK 1,000 to MMK 1,200, the quantity demanded falls from 500 units to 400 units. What is the point price elasticity of demand?

• A-1.00
• B-0.80
• C-1.25
• D-0.50

Using the midpoint (arc) elasticity formula, what is the price elasticity of demand when the price of a commodity rises from MMK 40 to MMK 50 and quantity demanded falls from 120 units to 80 units?

• A-1.80
• B-1.33
• C-0.75
• D-2.25

If the cross-price elasticity of demand between Good X and Good Y is +1.5, how are the two goods related?

• AThey are substitute goods
• BThey are complementary goods
• CThey are independent (unrelated) goods
• DThey are inferior goods

An empirical study determines that the income elasticity of demand for a staple grain is -0.6. How should this product be classified?

• AAn inferior good
• BA luxury normal good
• CA necessity normal good
• DA Giffen good

What does the Law of Diminishing Marginal Utility state?

• AAs a consumer consumes successive units of a good, the additional satisfaction derived fr…
• BTotal utility decreases continuously with every additional unit of a good consumed
• CAs price rises, consumers buy less of a normal good
• DAs income increases, the proportion of income spent on food increases

Why are standard consumer indifference curves convex to the origin?

• ADue to the diminishing marginal rate of substitution between goods
• BBecause consumers prefer extreme combinations over balanced bundles
• CDue to the law of increasing marginal returns to scale
• DBecause both goods are perfect complements with zero substitution

In cardinal utility theory, what is the equilibrium condition for a utility-maximizing consumer choosing between two goods, X and Y?

• AMUx / Px = MUy / Py
• BMUx * Px = MUy * Py
• CMUx / MUy = Py / Px
• DTUx / Px = TUy / Py

What does the Law of Diminishing Returns state regarding short-run production?

• AAs successive units of a variable factor are added to a fixed factor, the marginal produc…
• BTotal output decreases immediately when any additional worker is hired
• CDoubling all inputs leads to less than a doubling of total output in the long run
• DAverage cost rises whenever total revenue decreases

A firm incurs a total fixed cost of MMK 500,000 when output is zero. When producing 100 units of output, total cost is MMK 1,200,000. What is the average variable cost (AVC) at 100 units?

• AMMK 7,000
• BMMK 12,000
• CMMK 5,000
• DMMK 17,000

What is the geometric relationship between the marginal cost (MC) curve and the average total cost (ATC) curve?

• AMC cuts the ATC curve from below at the minimum point of ATC
• BMC cuts the ATC curve from above at the maximum point of ATC
• CMC lies entirely below ATC at all levels of output
• DMC is horizontal and intersects ATC at zero output

If a manufacturing plant increases all its productive inputs simultaneously by 20% and its total output increases by 30%, what production phenomenon is demonstrated?

• AIncreasing returns to scale
• BConstant returns to scale
• CDecreasing returns to scale
• DThe law of diminishing marginal returns