Accounting

100 marks
1.
(a)For each of the parts (i) to (x) there are four possible answers, A, B, C and D and 1 mark
each.

(i)A motor van originally cost $11 500 and had been depreciated by $9000. The van was sold
for $2750.

How should the profit or loss on the sale of the van be shown in the disposal account?

A $250 credit cost-cashbook-total dep

11500-2750-9000=
B $250 debit
C $2500 credit
D $2500 debit

(ii) Emma provided the following information at the end of her financial year.

fees receivable from clients 78 000

rent received 11 000
office expenses 20 000
motor expenses 9 000
drawings 2 000
What was her profit for the year?

A $47 000 B $49 000 C $58 000 D $60 000

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(iii)A trader provided the following data.

total purchases 25 301

purchase returns 1 945
carriage inwards 748
goods taken for own use 1 425

What was the net figure for purchases in the income statement?

A $21 931 B $22 679 C $23 356 D $24 104

(iv) Ada bought goods on credit from Zuri. Later, she returned some of the goods to Zuri.

How did Ada record the return in her books?

account debited account credited

A purchases returns Zuri

B sales returns Zuri
C Zuri purchases returns
D Zuri sales returns

(v)How is interest on drawings recorded in the books of a partnership?

debit credit

A appropriation account partner’s capital account

B appropriation account partner’s current account
C partner’s capital account appropriation account
D partner’s current account appropriation account

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(vi)Paula’s trial balance contains errors.

debit credit
$ $

fixtures and fittings 4 000

light and heat 600
purchases 11 200
insurance 1 200
sales 16 500
trade payables 3 500
trade receivables 5 500
bank overdraft 1 000
capital 3 500
drawings 2 000
23 500 25 500

What is the corrected trial balance total?

A $23 500 B $24 500 C $25 500 D $26 500

(vii)A partner is charged interest on the drawings he made during a financial year.

How is this recorded in the partner’s accounts?

A credit the partner’s capital account

B credit the partner’s current account
C debit the partner’s capital account
D debit the partner’s current account

3
 (viii) A trader has capital of $24 400. His non-current assets are $16 100 and his current liabilities
are $4500. There are no non-current liabilities. What is the amount of his current assets?

A $8300 B $11 600 C $12 800 D $28 900

16100 24400+4500=28900

(ix) A business uses the straight line method of depreciation. The following information is
provided. motor vehicles at cost $30 000
Anticipated useful life 4 years
residual value $2 000 30000-2000/4

What is the annual depreciation charge for motor vehicles?

A $ 2 000
B $ 5 000

C $ 7 000
D $ 7 500
(x) Albert maintains a provision for doubtful debts account. Where is the closing balance on the
account included in the financial statements?
A as an expense in the income statement
B as a revenue in the income statement
C in the current assets section of the statement of financial position
D in the current liabilities section of the statement of financial position

4
 (b)Gary is a manufacturer of kitchen equipment. His financial year ends on 30 September.

On 1 August 2019 Ed, a credit customer, was declared bankrupt and the balance of his account
of $326 was written off as irrecoverable.

No other debts were written off during the year.

(i) Prepare a journal entry to write off the amount owed by Ed.

A narrative is required

Gary
General Journal

Date Details Debit Credit

$ $
2019
irrecoverable debt
.............. ....................................................... ...................... ......................
ed
.............. ....................................................... ...................... ......................
writing off irrecoverable debts
.............. ....................................................... ...................... ......................

.............. ....................................................... ...................... ......................

[3]

2.5

(ii)Gary maintains a provision for doubtful debts of 2½% of the trade receivables at the
end of each financial year. He provided the following information.

Trade receivables at 30 September 2018 owed $36 400 c/d

Trade receivables at 30 September 2019 owed $38 000

Prepare the provision for doubtful debts account for the year ended 30 September 2019.
Balance the account and bring down the balance on 1 October 2019.
38000 x 2.5%=950
36400 x 2.5= 910 oct 1 2018
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 Gary
Provision for doubtful debts account

Date Details $ Date Details $

950 b/d 910
............. ............................ ............. ............. ............................ .............
i/s 40
............. ............................ ............. ............. ............................ .............

............. ............................ ............. ............. ............................ .............

............. ............................ ............. ............. ............................ .............

............. ............................ ............. ............. ............................ .............

............. ............................ ............. ............. ............................ .............

[5]
(c)state two advantages of dividing the Ledger: [2]
Prevention of fraud
……………………………………………………………………………………………………………………………………………………
more convenient to use/ can use as a reference
……………………………………………………………………………………………………………………………………………………

Total=20

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2.
(a)Abiola receives commission from another trader when Abiola’s customers purchase goods
from his shop.

Abiola provided the following information.

$
2018
September 1 Commission receivable outstanding 350

The following amounts of commission were received by bank transfer.

2018
September 30 350

2019
January 31 425
April 30 395
July 31 470

On 31 August 2019 commission receivable outstanding amounted to $310.

(i)Prepare the commission receivable account in the ledger of Abiola for the year ended
31 August 2019.Balance the account and bring down the balance on 1 September 2019.

7
 Abiola
b/d prepaid
Commission receivable account

Date Details $ Date Details $

b/d accrued 350 bank 350
........... ............................... ............. ........... ............................... .............
i/s 425
........... ............................... ............. ........... ............................... .............
395
........... ............................... ............. ........... ............................... .............
470
........... ............................... ............. ........... ............................... .............
c/d 310
........... ............................... ............. ........... ............................... .............
310
b/d
........... ............................... ............. ........... ............................... .............

........... ............................... ............. ........... ............................... .............

........... ............................... ............. ........... ............................... .............

[5]

Abiola rents premises at an annual rent of $6000, payable on the first of each month.

She provided the following information.

$
2018
September 1 Rent payable accrued 500

The following amounts of rent were paid by bank transfer.

2018
September 2 3000

2019
February 3 3000
August 6 1500
(ii)Prepare the rent payable account in the ledger of Abiola for the year ended 31 August
2019.Balance the account and bring down the balance on 1 September 2019.

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 Abiola
Rent payable account

Date Details $ Date Details $

........... ............................... ............. ........... ............................... .............

........... ............................... ............. ........... ............................... .............

........... ............................... ............. ........... ............................... .............

........... ............................... ............. ........... ............................... .............

........... ............................... ............. ........... ............................... .............

........... ............................... ............. ........... ............................... .............

........... ............................... ............. ........... ............................... .............

........... ............................... ............. ........... ............................... .............

[5]
(iii)Explain how the accounting principle of accruals (matching) was applied in the preparation of
the rent payable account.

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

...................................................................................................................................................

............................................................................................................................................. [2]

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 (b)Lydia is a trader. She keeps a full set of accounting records and prepares control accounts
at the end of each month.

(i) Name the book of prime (original) entry which Lydia would use to obtain the
following information when preparing her control accounts. [4]

Book of prime (original) entry

Returns by credit customers
Bad debts written off
contra
Cash received from credit customers
(ii) Suggest two reasons for the debit balance in the purchases ledger on 1 May 2018.

1 ................................................................................................................................................

...................................................................................................................................................

2 ................................................................................................................................................

............................................................................................................................................... [2]

(iii) state two advantages of Control Account

1 ................................................................................................................................................

...................................................................................................................................................

2 ................................................................................................................................................

............................................................................................................................................... [2]

Total=20

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3.
(a)Tumelo is a trader. He buys goods on credit from Azuel.

The traders exchanged various documents in July 2019.

(i)Complete the table by naming the person who issued each document.
Name the book of prime (original) entry in which each document would be recorded by each
trader.

If a document is not entered in a book of prime (original) entry, write ‘No entry’.

document name of book of prime (original) book of prime (original)

person issuing entry used by Tumelo entry used by Azuel
document
invoice
debit note
credit note
[9]
(ii) State one purpose of issuing a statement of account. [1]

...................................................................................................................................................

Sam’s book-keeper started to maintain a petty cash book on 1 April 2019. On that date
$150 was placed in the petty cash box. This was to be the monthly imprest which was to
be restored on the first day of each month.

At the end of April 2019 Sam discovered that only a few entries had been made in the
petty cash book for the month.

11
 The following information about the petty cash transactions for April 2019 is
available.

2019 $

April 11 Received refund from cleaner for overpayment in March 5

18 Paid Kelly, a credit supplier 35

21 Bought printer paper 23

30 Paid cleaner 56

Complete the entries for the transactions on 3 April and 6 April in the petty cash book on the
page opposite.

Enter the transactions for 11 April to 30 April in the petty cash book.

Balance the petty cash book on 30 April and bring down the balance on 1 May 2019.

Show the restoration of the imprest on 1 May 2019. [10]

12
13

Total=20
4.

(a)Prepare the income statement for the year ended 31 July 2019. [14]

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 Income Statement for the year ended 31 July 2019
………………………………………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………………………………..

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15
 (b) Name the accounting principle applied in each of the following situations.

Principle
A trader withdraws goods for his own use and
records this in the drawings account.
A book-keeper writes off debts which will not be paid to
the business.
An accountant does not include staff morale as an
asset in the statement of financial position.
A business uses the double entry system of book-
keeping to record transactions.
[4]

(c)

State which type of accounts are maintained in the sales ledger and purchases ledger.

Sales ledger .......................................................................................................................

Purchases ledger ...........................................................................................................[2]

Total=20

16
5.

Ann and Bindu have been in partnership for some years. Previously they had both
been sole traders.

(a) State three advantages to Ann and Bindu of being in partnership.

1.................................................................................................................................................

...................................................................................................................................................

2.................................................................................................................................................

...............................................................................................................................................[3]

On 1 March 2016 the balances on their current accounts were as follows.

$
Ann 5000 debit
Bindu 3000 credit

(b) (i)State one reason why a current account is maintained for each partner.

...........................................................................................................................................

.......................................................................................................................................[1]

(ii)State what the current account balance of each partner represents.

Ann .....................................................................................................................................

...........................................................................................................................................

Bindu ..................................................................................................................................

.......................................................................................................................................[2]

17
The partnership agreement provides for:

interest on capital of 10% per annum

a partnership salary for Ann of $4000 per annum
profits and losses to be shared between Ann and Bindu in a ratio of 3 : 2

The following additional information is available.

$

Capital accounts at 1 March 2016 – Ann 30 000

Bindu 25 000
For the year ended 28 February 2017
Profit for the year 24 500
Drawings – Ann 12 500
Bindu 10 000

(c) Prepare the partnership appropriation account for the year ended 28 February 2017.[5]

18
19
 (d) Prepare the partners’ current accounts for the year ended 28 February 2017. Balance
the accounts and bring down the balances on 1 March 2017. [6]
Ann and Bindu
Current accounts
date details Ann Bindu date details Ann Bindu

(e) State the purpose of:

(i)charging interest on the partners’ drawings

.......................................................................................................................................................

.................................................................................................................................................. [1]

(ii)paying interest on capital

....................................................................................................................................................

................................................................................................................................................... [1]

(iii)Suggest one reason for the debit balance on current account. [1]

………………………………………………………………………………………………………………

Total=20

*****End of question*****

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