UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS General Certificate of Education Ordinary Level

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1 * * UNIVERSITY OF MRIGE INTERNTIONL EXMINTIONS General ertificate of Education Ordinary Level PRINIPLES OF OUNTS 7110/12 Paper 1 Multiple hoice October/November 2013 dditional Materials: Multiple hoice nswer Key Soft clean eraser Soft pencil (type and H is recommended) 1 hour RE THESE INSTRUTIONS FIRST Write in soft pencil. o not use staples, paper clips, highlighters, glue or correction fluid. Write your name, entre number and candidate number on the nswer Sheet in the spaces provided unless this has been done for you. There are thirty questions on this paper. nswer all questions. For each question there are four possible answers,, and. hoose the one you consider correct and record your choice in soft pencil on the separate nswer Sheet. Read the instructions on the nswer Sheet very carefully. Each correct answer will score one mark. mark will not be deducted for a wrong answer. ny rough working should be done in this booklet. alculators may be used. This document consists of 10 printed pages and 2 blank pages. I13 11_7110_12/5RP ULES 2013 [Turn over

2 1 What is a benefit of using computers in book-keeping and accounting? 2 nyone with a computer can access the information. It is cheap to install. Large quantities of information can be stored. Staff require special training. 2 How is owner s equity calculated? money invested in the business by the owner, plus the net current assets money invested in the business by the owner, plus the non-current liabilities total of non-current assets and working capital, less the non-current liabilities total of non-current assets, long term liabilities and net current assets 3 Zafar returned goods bought on credit from Khalid. How was this recorded in Zafar s books? account to be debited account to be credited Khalid purchases returns Khalid sales returns purchases returns Khalid sales returns Khalid 4 In which book is a credit note from a supplier entered? purchases journal purchases returns journal sales journal sales returns journal ULES /12/O/N/13

3 5 shraf owed Yasmin 2000 for goods bought on credit. fter deducting cash discount of 2½% shraf paid Yasmin the balance owing by cheque. 3 Which entries record this in shraf s books? account to be debited account to be credited bank discount allowed Yasmin 2000 Yasmin 2000 bank discount allowed bank discount received Yasmin 2000 Yasmin 2000 bank discount received bank statement showed a balance at bank of The value of unpresented cheques was and the value of uncredited deposits was 700. What was the debit balance in the cash book? The following account appeared in a trader s ledger. equipment account 2013 details debit credit balance July 31 balance 4000 r ugust 2 bank 7500 What was the balance on the account on 2 ugust? 3500 credit 3500 debit credit debit ULES /12/O/N/13 [Turn over

4 8 Why does a business prepare a trial balance? 4 to calculate the profit or loss to check the arithmetical accuracy of the ledger to check the cash and bank balances to show the financial position of the business 9 shraf sublets part of his premises for 100 per month. t the end of the financial year the tenant had paid rent totalling Which journal entry would shraf make to record the transfer to the income statement? debit credit income statement rent income statement rent rent income statement rent income statement 10 In ecember 2012 Emma paid insurance, 30, in respect of January How would this be shown in the 2012 financial statements and in the insurance account in January 2013? financial statements for the year ended 31 ecember 2012 insurance account on 1 January 2013 accrual prepayment debit balance credit balance ULES /12/O/N/13

5 11 motor vehicle, book value 2400, was sold for How would this transaction be treated by the business? 5 capital receipt revenue receipt apital expenditure is treated in error as revenue expenditure. What effect will this have? The balance sheet will not balance. The expenses will be overstated. The expenses will be understated. The trial balance will not balance. 13 What would occur using the diminishing (reducing) balance method of depreciation? epreciation charged in year 2 is greater than depreciation charged in year 1. epreciation charged in year 2 is less than depreciation charged in year 1. epreciation charged in year 2 is the same as depreciation charged in year 1. epreciation charged in year 2 is zero. 14 machine was purchased for and depreciated by 20% per annum using the straight line method. Three years later it was sold for What was the profit or loss on sale? loss profit loss profit ULES /12/O/N/13 [Turn over

6 6 15 trial balance failed to balance. The difference was entered in a suspense account. It was discovered that the purchases returns journal had been undercast. Which entry should be made to correct this error? account to be debited account to be credited purchases suspense purchases returns suspense suspense purchases suspense purchases returns 16 Expenses accrued, 250, were treated as a prepayment in the income statement. What effect did this have on the profit for the year? overstated by 250 overstated by 500 understated by 250 understated by How can purchases be calculated? cost of goods sold closing inventory opening inventory cost of goods sold closing inventory + opening inventory cost of goods sold + closing inventory opening inventory cost of goods sold + closing inventory + opening inventory ULES /12/O/N/13

7 18 Limited provided the following information. 7 ordinary shares retained earnings debentures How much was the equity and the capital employed? equity capital employed lan s inventory consisted of the following. quantity goods cost per unit selling price per unit 100 large t-shirts small t-shirts 5 3 What was the value of the inventory? trader takes goods from the business for personal use. How is this recorded? account to be debited account to be credited drawings inventory drawings purchases inventory drawings purchases drawings ULES /12/O/N/13 [Turn over

8 21 t the end of the financial year, a trader is owed commission. How will this be treated in the trader s financial statements? 8 income statement balance sheet increase expenses increase assets increase expenses increase liabilities increase income increase assets increase income increase liabilities 22 t the end of a club s financial year, some members subscriptions were unpaid. Where would these unpaid subscriptions appear in the club s financial statements? receipts and payments account income and expenditure account balance sheet 23 trader provided the following information. opening inventory closing inventory sales for year Goods are sold at a mark up of 25%. What were the purchases? Which does not appear in the appropriation account of a limited company? directors salaries dividends paid on ordinary shares proposed ordinary share dividend retained profits ULES /12/O/N/13

9 9 25 limited company has an issued share capital of ordinary shares of 1 each of which are fully paid. There are also debentures of On 1 January 2012 the retained profits were Profit retained for the year ended 31 ecember 2012 was What was the total of the shareholders funds on 31 ecember 2012? business provided the following information at the end of its first year of trading. prime cost factory overheads closing work in progress What was the cost of production? Mark paid net wages, 5200, for the month of ugust after statutory deductions of. Which journal entry records this transaction? debit credit cash statutory deductions wages cash statutory deductions wages wages cash statutory deductions wages cash statutory deductions ULES /12/O/N/13 [Turn over

10 28 What is not included when calculating the quick (acid test) ratio? 10 balance at bank cash in hand inventory trade receivables 29 balance sheet included non-current assets at cost less depreciation. Which principle was being applied? accounting entity going concern materiality money measurement 30 bdul applies the accounting year principle. Why does he do this? to be able to compare his results with competitors to ensure that all transactions are recorded to ensure that non-current assets are not overvalued to maintain a full set of accounting records ULES /12/O/N/13

11 11 LNK PGE ULES /12/O/N/13

12 12 LNK PGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (ULES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of ambridge International Examinations is part of the ambridge ssessment Group. ambridge ssessment is the brand name of University of ambridge Local Examinations Syndicate (ULES), which is itself a department of the University of ambridge. ULES /12/O/N/13

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS General Certificate of Education Ordinary Level

UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS General Certificate of Education Ordinary Level *9934310559* UNIVERSITY OF MRIGE INTERNTIONL EXMINTIONS General ertificate of Education Ordinary Level PRINIPLES OF OUNTS 7110/11 Paper 1 Multiple hoice October/November 2013 dditional Materials: Multiple