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®
FORMTP2009105
CANDIDATE-PLEASE NOTE!
You must sign below and ["eturn this
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TESTCODE'.'01239010
MAY/JUNE 2009

CARIB)3EAN EXAMINATIONS COUNCIL

SECONDARY EDUCATION CERTIF1CATE
EXAMINATION
PRINCIPLES OF ACCOUNTS
PaperOI-General Proficiency
90minutes

(1s MAY 2009 (p.m.)) C.E.S.E.C.

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

I. This test co11sists of 60 items. You will have 90 minutes to answer them.

2. In addition to this test booklet, you should have an answer sheet.

3. Do not be concerned that the answer sheet provides spaces for more answers than there are items
in this test.

4.

5.
Each item in this test has four suggested answers lettered (A), (B ), (C), (D). Read each item you
are about to answer and decide which choice is best.

On your answer sheet, find the number which coJTesponds to your item and shade the space having
the same letter as the answer you have chosen. Look at how it is done in the sample item below.
-
Sample Item

Prime cost is calculated by adding direct factory expenses to the Sample Answer

(A)
(B)
(C)
cost of goods sold
sale of fixed assets
sale of finished goods
®®©• -
(D) cost of materials used

The best answer to this item is "cost of materials used", so answer space (DJ has been shaded.

6. . If you want to change your answer, erase it completely before you fill in your new choice.

7. When you are told to begin, turn the page and work as quickly and as carefully as you can. If you
cannot answer an item, omit it and go on to the next one. Your score will be the total number of
correct anS\.\'ers.

8. You may use silent non-programmable calculators to answer questions.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

CopyrightC 2008 Caribbean Examinations Council.•

All rights reserved.

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1. Which of the following is NOT an accounting s_ The working capital of A. Young and Sons is
transaction? $15 500,andCurrentAssetsis$16500. What
is the TOTAL current liabilities?
(A) Payment of taxes
(B) Day to day accumulation of interest (A) $ 1 000
(C) Physical wear and tear on machinery (B) $15500
and equipment (C) $16500
(0) Co1Tesponding with customers and (D) $32000
creditors

Item 6 refers to the following list of balances_

2_ Rent expense which is still owing at the end
of the period must be debited in the Profit and $
Loss Account and shown in the Balance
Sheet as a liability. Will ch accounting concept Motor vehicle 2 000
does this represent 0 Creditors 3 000
Debtors 2 000
(A) Accrual Capital 11 000
(B) Consistency Building 10000
(C) G<?ing cont:em
(D) Money measurement 6. What is the TOTAL of the assets?

(A) $12000
3_ The term 'book-keeping' can be defined as (B) $13000
the recording of a business's (C) $14000
(D) $15000
(A) profits
(BJ transactions
(C) closings tock 7_ How would the purchase of equipment on
(D) assets and liabilities credit affect a firm's balance sheet?

(A) Increase Asset; Increase Liability

4_ Which of the following states the conect (Bl Increase Asset; Decrease Liability
order of the stages in the accounting cycle? (C) Decrease Asset; Increase Liability
(D) Decrease Asset; Decrease Liability
(A) Journalizing, Trial Balance, Posting
to Ledger, Final Accounts
(B) Journalizing, Posting to Ledger, T1ial
Balance. Final Accounts
(C) Posting to Ledger, Journalizing, Trial
Balance. Final Accounts
(D) Posting to Ledger. Trial Balance,
Journalizing, Final Accounts

t
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- 8. The summarized position of Foster and

Scott Limited at March 6, 2009 was as
11. Credit notes issued for goods returned by a
customer will be entered firstly in the
follows:
$ (A) Returns Inward Boo1'
(B) Returns Outward Book
Current Liabilities 60 000 (Cl Sales Returns and Allowances
Current Assets 100 000 Account
Fixed Assets 200 000 (D) Purchases Returns and Allowances
Long Term Liabilities 150 000 Account

What was the capital of Foster and Scott

Limited at March 6, 2009? 12. A businessman offers a discount for prompt
payment for goods purchased. Under which
(A) $ 40000 column in his Triple Column Cash Book
(B) $ 90000 would this be entered?
(C) $150000
(D) $190000 (A) Bank Column
(B) Cash Column
(C) DiscountAllowedColunm
(D) Discount Received Column
9. A trader received an invoice for $4 000 less

25 % trade discount. Subsequently heretumed

~) of the goods. What amount

13. Mr. Harry, a grocer, bought a typewriter on
one eighth ( credit from Tan Company. Which of the
followingjournal ent1ies will be made for this
would be entered in his Returns Outwards
transaction in Nir. Harry's books?
Account?
(A) Dr Purchases Account
(A) $375 Cr Tan Account
'(B) Dr Typewriter Account
(B) $400
·- (C)
(D)
$450
$500 (Cl
Cr Cash
Dr Tan Account
Cr Purchases Account
(D) Dr Typewriter Account
10. Which of the following would NOT appear Cr Tan Company
in a Cash Book"

14. Ram Singh purchased goods valued at $500

I (A)
iB)
Sold goods for cheque
Payment for goods on credit He paid off his bill within the grace
I (C) Goods bought for cash period and received a I 0% cash discount

l (D) Goods sold on credit How much did he pay the firm?

(A) $ SO
' (B) $450
"'t;_P..Sl SEcoNo
(C) $490
\)-1 LIBRARY "91>
0 636-2585 J_ (D) $550
CJ

C.E.S.E.C.

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012390 I OIF 2009
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15. From which of the following are the balances 17. When a proprietor withdraws cash or other
obtained in preparing the trial balance? assets from a business, what effect does it
have on drawings or capi_tal?
(A) Ledger
(B) Journal (A) Capital is decreased.
(C) Sales Book (B) Capital is increased.
(D) Purchases Book (C) Drawings are decreased.
(D) Neither drawings nor capital is
affected.
16. Which of the following is NOT a nominal
account?

(A) Carriage Inwards

(B) Discount Allowed
(C) Commission
(D) Furniture

Item 18 refers to the following information.

Cash Account

$ $
(Opening balance) 400.00 May03, 2007 50.00
May 01, 2007 Sales 150.00 May 07, 2007 20.00
May 05, 2007 Sales 75.00 May09, 2007 150.00
(Closing balance) 405.00

625.00 625.00

18. From the account above which of the following figures will
be posted to the trial balance?

(A) 625
(B) 405
(C) 400
(D) 150

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012390 I OIF2009
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19. Mr. Abel and Mr. Blue purchased goods on 22. In calculating the Gross Profit Percentage,
credit to the value of$50 and$7 5 respectively Gross Profit should be divided by
from Mr. Kane. Another customer paid cash
for goods amounting to $550. Mr. Kane took (A) Cost of Goods Sold
goods at cost for himself amounting to $500. (B) Net Purchases
Which of the following figures represents the (C) Net Profit
balance in Mr. Kane's Sales Account? (D) Net Sales
- (A) $125
Items 23 - 25 refer to the following balances
- (B)
(C)
(D)
$425
$675
$925
of J.Sanuny, a sole trader, at the end of the
financial period.

- 20. A business receives a rent of $5 000 and Land

$
7,000
deposits this sum into the business's bank Building 5,000
account. How will this transaction be Stock 1,100
recorded? Debtors 500
Bank overdraft 400
- (A)
(B)
Dr Bank? 000
Dr Rent 5 000
Cr Rent 5 000
Cr Bank 5 000
Creditors
Cash
700
200
(C) Dr Cash 5 000 Cr Rent 5 000 Capital (at start) 10,000
(D) Dr Rent 5 000 Cr Expense 5 000 Drawings 300
Net Profit 3,000

- 21 K. Khan, a debtor of A and B Enterprises,

settles his debt of $120, less 2Y2 % discount, 23. Calculate the business's current ratio (rounded
by cheque. How should the double entry be to 2 decimal places).

- recorded in the books of A and B Enterprises?

'(A) 1.45: I
(A) Dr K. Khan $117 (B) 1.64: I
Dr Discount Received $ 3 (C) 2.57: I
Cr Bank $120 (D) 3.14: I

(B) Dr K. Khan $117

24. Calculate the business's Acid Test Ratio
Dr Discount Allowed $ 3
(rounded to 2 decimal places).
Cr Bank $120

$117 (A) 0.64: 1

(C) Dr Bank
Dr Discount Allowed $ 3 (B) 1.57: I
Cr K. Khan $120 (C) 1.64: I
(D) I :I
(D) Dr Bank $117
Cr Discount Received $ 3 25. Calculate the R~tum on Capital Employed
Cr K. Khan $120
(ROCE) to the nearest whole number.

(A) 11 %
(B) 25%
(C) 28%
(D) 30%

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The following information was extracted 27. If total prepaid expenses equal total accrued
26.
from the books of sole trader, J _Kent expenses, then in the Balance Sheet

2004 2005 2006 L cun·ent assets are unchanged

$ $ $ IL current liabilities are unchanged
Opening Stock IIL working capital is unchanged
(Jan 01) 10000 14 000 16 000 IV. fixed assets are unchanged

Based on the information above, the average (A) I and II only

stock at December 31 is (B) I and III only
(C) II and IV only
(A) increased by $3 000 in 2005 over (D) III and IV only
2004
(B) increased by $3 000 in 2006 over
2005 28. Depreciation in accounting terms can be
(C) decreased by $3 000 in 2005 over defined as
2004
decreased by $3 000 in 2006 over (A) the increase in value of an asset over
(D)
2005 time
(B) cash saved to replace a fixed asset
(C) the cost ofusing a fixed asset for an
accounting period
(D) the straight line or reducing balance
method used by a business.

Item 29 refers to the following table.

Period of Debt Amount Provision for Bad Debts

Over 3 years $6 000 3% of Debtors
Over 2 years $4000 2 % of Debtors
Over 1 year $8 000 1% of Debtors

29. What is the TOTAL provision for bad debts for the year?

(A) $180
(B) $ 340
(C) $400
(D) $500

1A
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30. A company received $1 000 in advance for Item 34 refers to the following information.
goods they are to supply to the customertwo
months from that date. The $I 000 will be
shown in the balance sheet under V. Jones $

(A) current assets as a prepayment Net Pay l 200

(B) cmTent liabilities as an accrual Income Tax 300
(C) current assets as unearned revenue National Insurance so
(0) current liabilities as unearned
revenue 34. What is Mr Jones' gross pay?

(A) $ 8SO
31. Machinery was purchased for $164 000. Its (B) $ 9SO
useful life is 8 years and its disposal value is (C) $14SO
$16 000. It is depreciated using the straight (0) $1SSO
line method.

What is the Net Book value of the asset after 35. A bookkeeper, by mistake, posted $64.00 to
3 years? the Sales Account instead of$54.40. Which
of the following entries in the General Journal
(A) $ SS SOO would correct the mistake?
(B) $102SOO
(C) $108SOO I. Dr Sales NC
(0) $14SSOO II. Cr Sales NC
III. Dr Suspense NC
IV. Cr Suspense NC
32. Control accounts are kept in order to assist
management in (A) I and II only
(B) I and III on! y
(A) locating errors (C) land IV only
(B) limiting drawings (D) II and III only
(C) increasing profits
(0) limiting expenditure
36. At the start of the financial year, a trader has
creditors of$3 200. He paid cash of$14900
33. A standing orderof$2S for insurance appears to them during the year, and at the end of the
in the debit column of the bank statement. year the balance of his debt was $2 800.
This amount does not appear in the Cash What was the trader's total credit purchases
Book. How is this item treated in order to for the year?
update the Cash Book?
(A) $12100
(A) Subtract the $2S from the bank (B) $14SOO
statement balance. (C) $1S300
(B) Add $2S to the bank statement (D) $17700
balance.
(C) Credit the bank account with $2S.
(0) Debit the bank account with $2S.

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37. Mr. Smith does not keep properrecords. He Item 38 refers to the following infonnation
began business with $10 000 in the business provided by a trader.
bank account. He uses his vehicle and
building worth $6 000 and $15 000 $
respectively as part of his business. Debtors at start of
Customers owe him $4 000. He withdrew the year 8 200
$1 500 for personal use and owed creditors n Cash received from
$2000. debtors during year 17 400
Debtors at end of
What is the closing capital of the business? the year 9 300

(A) $25500
(B) $28500 38. What was the amount of his credit sales for
(C) $31500 the year?
(D) $33000
(A) $16300
(B) $18500
(C) $25600
(D) $26700

ltem39 refers to the following information.

Mohammed Patel
Statement of Affairs
As at December 31, 2006
$ $ $
Fixed assets 2 500 Capital at beginning 3 000

Current assets 3 000 +Net profit ')

- Drawings _flQQ)

Capital at end

Liabilities l 500

5 500 5 500

39. What is Patel's net profit for the year?

(A) $1300
(B) $1500
(C) $1600
(D) $1800
_J
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40. Mr A. Jones paid$250.00cash forrepairs to 42. The table below shows how R & H Winsome
machinery. This transaction was entered in have combined their interests into a
the Cash Book and posted to the Ledger. The partnership.
double entry involved would be

(A) debit Cash NC Capital R. Winsome $60 000

-
\!
l (B)
credit Repairs NC

debit Cash NC
Capital H. Winsome $30 000

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11
credit Machinery NC Interest on capital was agreed at 5% per
annum. What is the TOTAL amount of
(C) debit Repairs NC interest on capital earned by the partners?
credit Cash NC
(A) $1500
(D) debit A. Jones NC (B) $2500

- credit Cash NC (C)

(D)
$3000
$4500

41. Tom, Percy and John formed a partnership

and agreed that profits were to be shared in 43. W,X, Y and Zare partners sharing profits and
the ratio 1:1:2respectively. The net profit for losses in proportion to their capital. The
the year was $18 900. What was John's capital of each partner is shown in the table
share of the profit? below.

(A) $ 4 725
(B) $ 9450 W's Capital $300
(C) $14175 X's Capital $200
(D) $18900 Y's Capital $100
Z's Capital $300

What is Z's share of a profit of $7 200?

(A) $ 800
(B) $1200
(C) $1800
(D) $2400

44. Profits of$2 400 have been shared in equal proportions between two partners, Debbie and Andrea.
Andrea, however, should only have received 40%. What must be the conecting ent1ies in the pannership
books?

(A) Dr Andrea's NC $960 Cr Debbie's NC $960.

(B) Dr Andrea's NC $240 Cr Debbie's NC $240
(C) Dr Appropriation NC $960 Cr Andrea's NC $960
(D) Dr Debbie's NC $240 Cr Andrea's NC $240

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45. What is the name of the document that is 48. A company declares a dividend of 15%.
usually under a company's seal and which What is the value of the dividend wanant
acknowledges a loan to the company at a sent to the shareholder who owns 1 500
fixed rate of interest'' one dollar ordinary shares?

(A) Stock (A) $ lOO

(B) Mortgage (B) $ 225
(C) Debenture (C) $1500
(D) Memorandum (D) $1515

46. A public limited company issued a prospectus 49. In a co-operative society, the daily affairs are
offering the shares described in the table administered by
below, for sale at par value.
(A) the majority of shareholders
No. of (B) all members meeting together
Tvoes of share Units Par Value (C) the chairman of the board only
,
(D) persons elected or appointed to do so
Ordinary 20000 $2.00
5% Preference 10000 $5.00
50. The MAIN objective of co-operatives is to

The issue was fully subscribed. How much (A) settle disputes
capital did the company raise? (B) maximize profits
(C) provide goods and services
(A) $30000 (D) maximize the welfare of members
(B) $40000
(C) $ 50000
(D) $90000 51. Jn a non-profit-making organization, the
excess of the income over the expenditure
is called

47. A company is allowed by law to sell l 00 000 (A) swplus

shares at$ l .00 EACH. Half of these shares (B) net profit
were bought by the public. (C) gross profit
(0) accumulated fund
What is the authorized capital?

(A) $100000 52. Charity-ls-We. a non-trading organization,

(Bl $ 80 000 hired an accountant to prepare a statement
(CJ $ 50000 showing all its expenses and revenues. The
\Dl $ 40000 statement to be prepared is called the

(A) profit and loss

(B) revenue and capital
(C) receipts and payments
(DJ income and expenditure

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53. The follovving information relates to Harva.rd I tern 55 refers to the follovving info~-n1ation.
Spolts Club for2008.

$
Number of members 50
Annual subscriptions $ 50
Opening inventory ofraw mate1ials 500
Purchases 2 000
Subscriptions owing at the $450
Closing inventory ofraw mate1ials l 000
beginning of the year
Direct labour 3 000
Subscriptions owing at the $150 Factory overheads 4 500
end of the year Opening inventory of work in progress 2 000
Closing inventory of work in progress 3 000
How much should be credited to the Club's
Income and Expenditure Account as TOTAL
subscription for the year 0 SS. From the above information, what is the cost
of goods manufactured?
(A) $ 450
(B) $1500 (A) $ 7 000
(C) $1950 (B) $ 8000
(D) $2500 (C) $ 9000
(D) $11000

54. The following information relates to the

Funloving Cultural Club.

$
Accumulated funds January 01, 2008 3 000
Ooerating Expenses l 000
Income from Barbeque 5 000
Income from Subscription l 000
Income from Garage Sale 3 000

What is the organization's accu1nulated fund

at the end of the year''

(A) $ 9 000
(B) $11000
(C) $12000
(D) $13000

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Items 56 - 58 refer to the following information.

J. Ba nes Manufacturin Account for eriod endino Dec 31, 2008

$ $
Inventory of raw materials January 01, 2008 800
Purchases of raw materials during year 4 500 Bal. c/d 6 800
5 300
Less closing inventory of raw
materials December 31, 2008 I 400
3 900
Productive wages 1 300
Fuel and power 900
Lubricants 100
Rent and rates 400
Insurance 200
6 800

56. What is the cost of raw materials available for 57. What is the prime cost?
production?_
(A) $3900
(A) $ 800 (B) $5200
(B) $3900 (C) $5300
(C) $4500 (D) $6800
(D) $5300

58. What is the cost of raw materials consumed?

(A) $ 800
(B) $1200
(C) $3900
(D) $4500

59. A company pays $4 per hour for a 40-hour 60. P. Amos is employed by a construction
week and time and a half for overtime. An company at a rate of$7 per hour. During the
employee worked45 hours fora week. What week of April 6, he worked his basic week of
is his gross weekly wage? 40 hours. The income tax due on his pay is
$20, and he is also liable to pay social security
(A) $180 contributions of 5 % of his gross pay. What is
(B) $190 his net pay?
(C), $240
(D) $270 (A) $246
(B) $260 ·
(C) $266
(D) $280

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

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