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 7110/11 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 9 printed pages and 3 blank pages. I13 11_7110_11/4RP 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 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 3 In which book is a credit note from a supplier entered? purchases journal purchases returns journal sales journal sales returns journal 4 Sabena bought goods from Yasmin for 150 and received a 10% trade discount. How should Yasmin record this transaction? debit credit purchases 135 Yasmin 135 purchases 150 Yasmin discount received Sabena 135 sales 135 Sabena 150 sales 150 ULES /11/O/N/13

3 5 Which is both a book of prime entry and a ledger account? 3 cash book general ledger sales journal sales ledger control account 6 LWS Ltd expects to have a short-term financial crisis lasting for one month. Which type of finance should be arranged? bank loan bank overdraft issue of debentures issue of shares 7 bank statement showed a balance at bank of The value of unpresented cheques was 1200 and the value of uncredited deposits was 700. What was the debit balance in the cash book? Which journal entry records the transfer of the profit for the year,, to a sole trader s capital account? r r appropriation capital capital appropriation capital income statement income statement capital ULES /11/O/N/13 [Turn over

4 4 9 uring its first month of trading, a business had the following transactions. credit sales cash sales goods returned by credit customers 500 cash received from credit customers cash discounts allowed 650 How much did the credit customers owe the business at the end of the month? The following rent account appeared in ixon s ledger r r balance Jan 1 balance r Jan 30 bank r May 27 bank r Oct 26 bank r ec 31 income statement r Which statement is correct? ixon always pays his rent in advance. ixon always pays his rent in arrears. ixon both pays and receives rent. ixon sometimes pays his rent in arrears. 11 Why does a business prepare a trial balance? 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 ULES /11/O/N/13

5 12 Wayne rents premises. The monthly rent is On 1 pril 2012 Wayne had prepaid one month s rent. uring the year ended 31 March 2013 he paid rent totalling Which entry would Wayne make at the end of his financial year on 31 March 2013? debit credit income statement 3200 rent account 3200 income statement 3600 rent account 3600 income statement 4400 rent account 4400 income statement 4800 rent account uring the year N Ltd wrote off an unpaid invoice of 540. Which entries should N Ltd make at the end of the financial year? debit credit bad debts customer bad debts income statement customer bad debts income statement bad debts 14 Which is a capital receipt for Susan who owns a shoe shop? purchase of shoes by cheque purchase of shop fittings by cheque sale of old shop fittings for cash sale of shoes for cash 15 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. ULES /11/O/N/13 [Turn over

6 6 16 Imran depreciates his machinery at 20% per annum using the diminishing (reducing) balance method. His financial year ends on 31 July. On 1 ugust 2012 his ledger showed the following. machinery at cost provision for depreciation of machinery Which journal entry records the depreciation on machinery for the year ended 31 July 2013? r r income statement provision for depreciation of machinery income statement provision for depreciation of machinery provision for depreciation of machinery depreciation of machinery provision for depreciation of machinery depreciation of machinery 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 18 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 500 ULES /11/O/N/13

7 19 Which would be included in a sales ledger control account? 7 cash discount allowed interest charged by creditors purchase returns trade discount received 20 Tim s gross profit was Opening inventory was 8000, purchases were and closing inventory was. How much were the sales? What is added to owner s capital to calculate capital employed? current assets current liabilities non-current assets non-current liabilities 22 Rashid runs an advertising agency. He provided the following information. mount owed by clients at start of year 100 mount received from clients during the year mount prepaid by clients at end of year 300 How much would be entered in the income statement for the year? t the end of the financial year, a trader is owed commission. How will this be treated in the trader s financial statements? income statement balance sheet increase expenses increase assets increase expenses increase liabilities increase income increase assets increase income increase liabilities ULES /11/O/N/13 [Turn over

8 24 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? 8 receipts and payments account income and expenditure account balance sheet 25 trader s sales were The mark-up was 25%. What was the cost of sales? 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 27 Which is a direct cost to a manufacturer? factory cleaner s wages factory supervisor s salary machine operator s wages salesman s commission 28 Which will improve the gross profit as a percentage of sales? increasing expenses increasing selling price reducing expenses reducing selling price ULES /11/O/N/13

9 9 29 Fatima provided the following information. opening inventory closing inventory purchases What was the rate of inventory turnover? 0.19 times 0.20 times 4.93 times 5.33 times 30 Some items have such a low monetary value that it is not worth recording them separately. Which accounting principle is being applied? going concern historical cost materiality money measurement ULES /11/O/N/13

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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 /11/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 *9032842789* 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