Level: Intermediate
Intermediate Worked Examples: Accounting for Internal Control
Six graded examples covering cash control (imprest system), the Bank Reconciliation Statement (with and without updating the Cash Book), and the Cash Budget, all with realistic figures.
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Example 1: Example 1: Petty Cash Book (Imprest System)
Question
Solution plan
The receipt (float RM300) is entered on the debit side. Each payment is entered in the Total Payments column and cross-analysed into the correct analysis column. The analysis columns must sum to total payments (245). Balance c/d = 300 - 245 = 55. At the start of the next month, RM245 is reimbursed to restore the float to RM300.
| Received | Date | Particulars | Total Payment | Postage | Transport | Stationery | Sundry |
|---|---|---|---|---|---|---|---|
| 300 | 1 May | Balance b/d (Float) | |||||
| 3 May | Stamps | 25 | 25 | ||||
| 8 May | Taxi fare | 40 | 40 | ||||
| 14 May | A4 paper | 60 | 60 | ||||
| 20 May | Vehicle fuel | 55 | 55 | ||||
| 26 May | Sugar & coffee | 35 | 35 | ||||
| 29 May | Cleaning materials | 30 | 30 | ||||
| Total Payments | 245 | 25 | 95 | 60 | 65 | ||
| 31 May | Balance c/d | 55 | |||||
| 300 | Total | 300 |
1 June: Balance b/d RM55; the float is reimbursed with a receipt of RM245 to restore it to RM300.
Answer
Total petty payments are RM245 (Postage RM25, Transport RM95, Stationery RM60, Sundry RM65). Balance c/d on 31 May is RM55. On 1 June, RM245 is reimbursed to restore the float to RM300.
Where marks are usually lost
Example 2: Example 2: Bank Reconciliation (Updating the Cash Book)
Question
Solution plan
Update the Cash Book for items the bank has recorded but the trader has not: add dividend (250), deduct bank charges (60) and insurance (340). Adjusted balance = 4,200 + 250 - 60 - 340 = 4,050. The unpresented cheque and deposit in transit are timing differences, so they go only into the reconciliation: 4,050 + 1,600 - 500 = 5,150 (Bank Statement balance).
| Particulars | Debit (RM) | Particulars | Credit (RM) |
|---|---|---|---|
| Balance b/d | 4,200 | Bank charges | 60 |
| Dividend | 250 | Insurance (standing order) | 340 |
| Balance c/d | 4,050 | ||
| Total | 4,450 | Total | 4,450 |
| Particulars | RM |
|---|---|
| Balance as per Cash Book (updated) | 4,050 |
| Add: Unpresented cheque | 1,600 |
| 5,650 | |
| Less: Uncredited deposit | 500 |
| Balance as per Bank Statement | 5,150 |
Answer
The adjusted Cash Book balance is RM4,050. The Bank Reconciliation Statement reconciles this to the Bank Statement balance of RM5,150, confirming both records are accurate.
Where marks are usually lost
Example 3: Example 3: Bank Reconciliation (Without Updating)
Question
Solution plan
Without-updating method: all items go into the reconciliation. Start from Cash Book balance RM3,600. Add items that make the bank balance higher: interest (180, already credited by bank) and unpresented cheque (950). Deduct items that make the bank balance lower: bank charges (45) and deposit in transit (1,200). Bank Statement balance = 3,600 + 180 + 950 - 45 - 1,200 = 3,485.
| Particulars | RM |
|---|---|
| Balance as per Cash Book | 3,600 |
| Add: Interest received by bank | 180 |
| Add: Unpresented cheque | 950 |
| 4,730 | |
| Less: Bank charges | 45 |
| Less: Uncredited deposit | 1,200 |
| Balance as per Bank Statement | 3,485 |
Answer
Using the without-updating method, the Bank Statement balance as at 31 August 2025 is RM3,485.
Where marks are usually lost
Example 4: Example 4: Reconciliation with Dishonoured Cheque & Error
Question
Solution plan
Update the Cash Book: add interest (220) and the error correction (360, because the overstated payment wrongly reduced the balance); deduct bank charges (90), standing-order rent (1,500) and the dishonoured cheque (650). Adjusted balance = 6,800 + 220 + 360 - 90 - 1,500 - 650 = 5,140. Then reconcile: 5,140 + unpresented cheque 1,450 - deposit in transit 2,300 = 4,290.
| Particulars | Debit (RM) | Particulars | Credit (RM) |
|---|---|---|---|
| Balance b/d | 6,800 | Bank charges | 90 |
| Interest | 220 | Rent (standing order) | 1,500 |
| Correction (purchases overstated) | 360 | Dishonoured cheque | 650 |
| Balance c/d | 5,140 | ||
| Total | 7,380 | Total | 7,380 |
| Particulars | RM |
|---|---|
| Balance as per Cash Book (updated) | 5,140 |
| Add: Unpresented cheque | 1,450 |
| 6,590 | |
| Less: Uncredited deposit | 2,300 |
| Balance as per Bank Statement | 4,290 |
Answer
The adjusted Cash Book balance is RM5,140. The Bank Reconciliation Statement reconciles this to the Bank Statement balance of RM4,290.
Where marks are usually lost
Example 5: Example 5: Three-Month Cash Budget
Question
Solution plan
For each month: Balance b/d + total receipts = total cash available; less total payments = balance c/d. Each month's balance c/d becomes the next month's balance b/d. August shows a cash deficit due to the RM4,000 furniture purchase, but the balance stays positive.
| Particulars | July (RM) | August (RM) | September (RM) |
|---|---|---|---|
| Balance b/d | 2,000 | 3,500 | 1,900 |
| Receipts | |||
| Cash sales | 8,000 | 9,500 | 10,000 |
| Collections from debtors | 3,000 | 3,500 | 4,000 |
| Total cash available | 13,000 | 16,500 | 15,900 |
| Payments | |||
| Purchases | 5,000 | 6,000 | 6,500 |
| Salaries | 2,500 | 2,500 | 2,500 |
| Rent | 1,200 | 1,200 | 1,200 |
| General expenses | 800 | 900 | 850 |
| Purchase of furniture | 0 | 4,000 | 0 |
| Total Payments | 9,500 | 14,600 | 11,050 |
| Balance c/d | 3,500 | 1,900 | 4,850 |
Answer
Closing cash balances (c/d): July RM3,500, August RM1,900, September RM4,850. August records a monthly deficit (receipts RM13,000 below payments RM14,600) due to the furniture purchase, yet the overall balance stays positive.
Where marks are usually lost
Example 6: Example 6: Four-Month Cash Budget (Comprehensive)
Question
Solution plan
Arrange receipts (including the loan) and payments (including the van purchase and loan repayment) in the month the cash flow occurs. Balance b/d + receipts = cash available; less payments = balance c/d, carried to the next month. March shows a large outflow (van RM25,000) but February's loan covers it, so the balance stays positive.
| Particulars | Jan (RM) | Feb (RM) | Mar (RM) | Apr (RM) |
|---|---|---|---|---|
| Balance b/d | 5,000 | 8,800 | 33,050 | 13,750 |
| Receipts | ||||
| Cash sales | 12,000 | 13,000 | 15,000 | 14,000 |
| Collections from debtors | 6,000 | 6,500 | 7,000 | 7,500 |
| Bank loan | 0 | 20,000 | 0 | 0 |
| Total cash available | 23,000 | 48,300 | 55,050 | 35,250 |
| Payments | ||||
| Stock purchases | 8,000 | 9,000 | 10,000 | 9,500 |
| Salaries | 3,500 | 3,500 | 3,500 | 3,500 |
| Premises rent | 2,000 | 2,000 | 2,000 | 2,000 |
| Utilities | 700 | 750 | 800 | 780 |
| Purchase of van | 0 | 0 | 25,000 | 0 |
| Loan repayment | 0 | 0 | 0 | 1,000 |
| Total Payments | 14,200 | 15,250 | 41,300 | 16,780 |
| Balance c/d | 8,800 | 33,050 | 13,750 | 18,470 |
Answer
Closing cash balances (c/d): January RM8,800, February RM33,050, March RM13,750, April RM18,470. The RM20,000 loan in February ensures sufficient cash for the RM25,000 van purchase in March without a negative balance.
Where marks are usually lost
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