London Examinations GCE Accounting Ordinary Level Thursday 6 January 2011 Morning Time: 3 hours

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1 Centre No. Candidate No. Surname Signature Paper Reference(s) 7011/01 London Examinations GCE Accounting Ordinary Level Thursday 6 January 2011 Morning Time: 3 hours Materials required for examination Nil Paper Reference Items included with question papers Source booklet Initial(s) Examiner s use only Team Leader s use only Question Number Blank Instructions to Candidates In the boxes above, write your centre number, candidate number, your surname, initial(s) and signature. Answer BOTH questions in Section A and ALL questions in Section B. All calculations must be shown. Write your answers in the spaces provided in this question paper. Do not return the insert with the question paper. Information for Candidates The marks for individual questions and the parts of questions are shown in round brackets: e.g. (2). There are 6 questions in this question paper. The total mark for this paper is 200. There are 24 pages in this question paper. Any pages are indicated. Calculators may be used. The source material for use with questions 1 to 6 is in the enclosed source booklet. Advice to Candidates Write your answers neatly and in good English. This publication may be reproduced only in accordance with Edexcel Limited copyright policy Edexcel Limited. Printer s Log. No. M36651A W850/7011/ /1/1/ *M36651A0124* Total Turn over

2 SECTION A Answer BOTH questions in this section. Source material for use with question 1 can be found on pages 2 and 3 of the source booklet. 1. (a) Prepare the ledger accounts in the books of Freda Payne for the month of October 2010, using the information provided in the books of original entry and in the cash book. Balance these accounts and bring the balances down on 1 November Capital Account Purchases Account Purchases Returns Account 2 *M36651A0224*

3 VAT Account Vileda Supplies Account Happy Mops Account Shop Fittings Account Fitter Shops Ltd Account *M36651A0324* 3 Turn over

4 Sales Account Business Rates Account Drawings Account Rent Account (30) 4 *M36651A0424*

5 (b) Prepare a trial balance at 31 October Freda Payne Trial Balance As at 31 October 2010 Account Debit Credit (14) *M36651A0524* 5 Turn over

6 Freda Payne has been told that as long as her trial balance totals are equal she can assume that her accounts are correct. (c) State, with reasons, whether you agree or disagree with this statement. (6) Q1 (Total 50 marks) 6 *M36651A0624*

7 BLANK PAGE *M36651A0724* 7 Turn over

8 Source material for use with question 2 can be found on pages 4 and 5 of the source booklet. 2. (a) Prepare journal entries to correct the errors and omissions listed on page 4 of the source booklet. Date your entries 31 December 2010 and include suitable narratives. Date Narrative F Debit ( ) Credit ( ) (25) 8 *M36651A0824*

9 (b) Prepare the amended trading and profit and loss account for the year ended 31 December Ahmed Khan Trading and Profit and Loss Account Year ended 31 December 2010 (11) *M36651A0924* 9 Turn over

10 (c) Using the adjustments for accruals and prepayments as an example, evaluate the importance of the prudence concept in the preparation of the final accounts. (10) Q2 (Total 46 marks) TOTAL FOR SECTION A: 96 MARKS 10 *M36651A01024*

11 SECTION B Answer ALL questions in this section. Source material for use with question 3 can be found on pages 6 and 7 of the source booklet. 3. (a) Prepare the profit and loss account for the year ended 30 June Sandip Ltd Profit and Loss Account For year ended 30 June 2010 (18) *M36651A01124* 11 Turn over

12 (b) Prepare the appropriation account for the year ended 30 June Sandip Ltd Appropriation Account For year ended 30 June 2010 (7) 12 *M36651A01224*

13 BLANK PAGE *M36651A01324* 13 Turn over

14 (c) Prepare the balance sheet (with relevant sub headings) at 30 June Your balance sheet must show clearly: working capital shareholders funds Sandip Ltd Balance Sheet As at 30 June *M36651A01424*

15 (Total 50 marks) (25) Q3 *M36651A01524* 15 Turn over

16 Source material for use with question 4 can be found on page 8 of the source booklet. 4. (a) Calculate for both 2009 and 2010: (i) gross profit (ii) net profit (iii) gross profit margin (iv) net profit margin *M36651A01624*

17 (v) return on capital employed (10) *M36651A01724* 17 Turn over

18 (b) Evaluate William s claim (giving reasons backed up with figures) that the financial performance of the business in 2010 was superior to that of In your answer you are expected to make equal reference to profitability and liquidity. (10) Q4 (Total 20 marks) 18 *M36651A01824*

19 Source material for use with question 5 can be found on pages 9 and 10 of the source booklet. 5. (a) For the year ended 31 December 2010, you are required to prepare: (i) The profit and loss appropriation account Harsha, Omid and Jasmine Profit and Loss Account Appropriation Account Year ended 31 December 2010 (2) *M36651A01924* 19 Turn over

20 (ii) The partners capital accounts Capital Account (Harsha) Date Narration Date Narration Capital Account (Omid) Date Narration Date Narration Capital Account (Jasmine) Date Narration Date Narration (4) 20 *M36651A02024*

21 (iii) The partners current accounts Current Account (Harsha) Date Narration Date Narration Current Account (Omid) Date Narration Date Narration Current Account (Jasmine) Date Narration Date Narration (8) *M36651A02124* 21 Turn over

22 At the beginning of their second year in partnership, the partners decided to prepare a profit sharing agreement which would take account of the following points: Harsha carries more responsibility for the day to day running of the business than the other two partners. Omid s drawings tend to be higher than the other two partners. Jasmine s capital contribution is greater than the other two partners. (b) Outline the changes that could be included in the new agreement to take account of these points. (3) (c) Describe the accounting double entries required to record these changes. (3) Q5 (Total 20 marks) 22 *M36651A02224*

23 Source material for use with question 6 can be found on page 11 of the source booklet. 6. (a) Prepare the subscriptions account for the year ended 31 December 2010 clearly showing the amount to be transferred to the Club s income and expenditure account. Balance the account on 31 December 2010 and bring the balances down. Subscriptions Account Date Narration Date Narration (b) Explain the treatment of subscriptions in advance and subscriptions in arrears in the balance sheet of the Keswick Sports Club. (5) Q6 END (9) (Total 14 marks) TOTAL FOR SECTION B: 104 MARKS TOTAL FOR PAPER: 200 MARKS *M36651A02324* 23

24 BLANK PAGE 24 *M36651A02424*

Paper Reference. Paper Reference(s) 6002/01 London Examinations GCE

Paper Reference. Paper Reference(s) 6002/01 London Examinations GCE Centre No. Candidate No. Surname Signature Paper Reference(s) 6002/01 London Examinations GCE Accounting (Modular Syllabus) Advanced Subsidiary/Advanced Level Unit 2: Corporate and Management Accounting