Osborne Books sample material

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1 2 AS Accounting for AQA AS ACCOUNTING UNIT 1: Introduction to Financial Accounting ADDITIONAL QUESTIONS CHAPTERS 1-6: DOUBLE-ENTRY PROCEDURES; BUSINESS DOCUMENTS The questions in this section deal with the basics of accounting. They cover topics such as: keeping accounting records stakeholders in a business business documents double-entry book-keeping subsidiary books the trial balance The reason for grouping them together is that often at this early stage of accounting, examination questions typically cover more than one topic. For later chapters, individual questions have been identified which relate to a particular chapter. 1. Al Porter has started a new business which is financed by 20,000 from his personal savings and a bank loan of 10,000. (a) Explain two reasons why Al should keep accounting records. Reason 1

2 additional questions - Unit 1, Chapters Reason 2 (b) Identify three external stakeholders in Al s business. State the interest they will have in the accounting records. Stakeholder 1 Stakeholder 2 Stakeholder 3

3 4 AS Accounting for AQA 2. Alcaria is a wholesale business. At 1 May 20X4, Sam Brass owed Alcaria 745. During May 20X4, the following transactions took place: 7 May Alcaria sold goods to Sam Brass for May Sam Brass returned goods valued at 84 to Alcaria. 24 May Sam Brass sent a cheque, after deducting a cash discount of 18, to Alcaria to clear the balance owing at 1 May. (a) Identify the source document used by Alcaria to record each of the above transactions. Transaction Source document Alcaria sold goods to Sam Brass for 275 Sam Brass returned goods valued at 84 to Alcaria Sam Brass sent a cheque, after deducting a cash discount of 18, to Alcaria to clear the balance owing at 1 May (b) Complete the account of Sam Brass in the books of Alcaria for the month of May 20X4. Dr Sam Brass Cr Date Details Date Details

4 additional questions - Unit 1, Chapter 7 5 CHAPTER 7: THE MAIN CASH BOOK 1. Al Porter has started a new business and has opened a business bank account. Explain the meaning of each of the following terms in relation to Al s bank account. (i) Direct debit (ii) Standing order

5 6 AS Accounting for AQA 3. Emma Maxwell uses a three-column cash book as part of her double-entry bookkeeping system. The following details relate to March 20X3. March 1 Balance in cash account 200 Overdrawn bank balance 1,898 2 Bank payment made to Lindum Supplies in settlement of an invoice for Cheque from Court Ltd paid into bank 1, Paid rent by cheque BACS transfer received from H Sweeney. Discount of 10 had been taken by the customer Cash sales Paid wages of part-time employee in cash Cash sales 786 A bank statement received on 28 March revealed the following additional items. 20 Standing order to Wyvern Council Interest charged by bank BACS transfer received from Mills and Co Ltd 477 On 31 March, all cash in hand, except a float of 200, was paid into the bank. REQUIRED (a) Prepare the cash book, shown on the next page, for the month of March 20X3 from the information provided above. (b) Balance the cash book at the end of the month and bring down the balances at 1 April 20X3. (c) Post the discounts to the general ledger accounts shown on the next page.

6 additional questions - Unit 1, Chapter 7 7 Dr Emma Maxwell Cash Book Cr Date Details Discount Cash Bank 20X3 Date Details Discount Cash Bank 20X3 Dr Discount Allowed Account Cr Date Details 20X3 Date Details 20X3 Dr Discount Received Account Cr Date Details 20X3 Date Details 20X3

7 2 AS Accounting for AQA AS ACCOUNTING UNIT 2: Financial and Management Accounting ADDITIONAL QUESTIONS CHAPTER 13: BUSINESS ORGANISATIONS 1. Erica owns a shop selling children s clothes. She is a sole trader. She is considering converting her business to a private limited company with herself as the only shareholder. Explain two advantages and two disadvantages, to Erica, of converting her business to a private limited company. Advantages Disadvantages

8 additional questions - Unit 2, Chapter Jane and Scott are proposing to start a new business together which requires capital of 70,000. Jane and Scott can contribute 15,000 each. There is a good chance of making significant profits, but there is also a chance that the business could fail. A friend has advised that they form a private limited company. Discuss two reasons why Jane and Scott should not form a private limited company.

9 4 AS Accounting for AQA CHAPTER 15: FURTHER ASPECTS OF FINANCIAL STATEMENTS (FINAL ACCOUNTS0 1. Lily s trade receivables (debtors) at 31 October 20X8 were 21,040. The provision for doubtful debts at 1 November 20X7 was She has been advised that she should adjust the provision for doubtful debts to 3% of trade receivables (debtors) at 31 October 20X8. (a) Calculate the provision for doubtful debts at 31 October 20X8. (b) Calculate the effect the change in the provision will have on Lily s profit (net profit) for the year ended 31 October 20X8. (b) Calculate the net amount of trade receivables (debtors) to be shown in Lily s balance sheet at 31 October 20X8.

10 additional questions - Unit 2, Chapter Karen is a sole trader. The following information was extracted from her ledger accounts at 1 January 20X3: vehicles at cost 74,000 provision for depreciation 33,500 machinery at cost 37,000 provision for depreciation 12,250 Karen s depreciation policies are: vehicles are depreciated at a rate of 30% per year using the reducing balance method machinery is depreciated at a rate of 20% per year on cost using the straight-line method There were no purchases or sales of vehicles and machinery during the year ended 31 December 20X3. (a) Calculate the amount of depreciation on (i) vehicles (ii) machinery to be included in the income statement (profit and loss account) for the year ended 31 December 20X3.

11 6 AS Accounting for AQA CHAPTER 18: RATIO ANALYSIS 1. Samantha owns a clothes shop. She is concerned that her closing inventory (stock) is much higher than her opening inventory (stock) and that the business is becoming inefficient. Last year, her rate of inventory (stock) turnover was 8 times. She provides the following extract from her income statement for the current year: Revenue (Sales) 117,950 Opening inventory (stock) 10,350 Purchases 77,550 Closing inventory (stock) 14,150 Cost of sales (Cost of goods sold) 73,750 Gross profit 44,200 REQUIRED (a) Calculate the rate of inventory (stock) turnover for the current year. State the formula used. Formula Calculation

12 additional questions - Unit 2, Chapter 19 7 CHAPTER 19: BUDGETS AND BUDGETARY CONTROL 1. Ela runs a catering company. She would like to buy some new kitchen equipment in April at a cost of 3,000. However, she is not sure whether she will have enough cash available. She provides the following budgeted information. March April Sales 6,200 5,800 Purchases of supplies 3,200 2,800 Operating expenses 1,550 1,360 Additional information (1) Sales are made on the basis of 20% cash and 80% credit. Credit customers will pay one month after the sale. (2) All purchases of supplies are on credit. Ela pays her suppliers one month after the purchase of supplies. (3) Operating expenses are paid in the month in which they are incurred. (4) Ela depreciates all kitchen equipment at 20% per annum on cost. She depreciates her existing equipment by 250 per month. (5) Ela calculates that the bank balance at 31 March will be 1,855.

13 8 AS Accounting for AQA REQUIRED Prepare a cash budget for April only and state if Ela can afford the kitchen equipment. Cash budget for April Can Ela afford the kitchen equipment?

14 additional questions - Unit 2, Chapter 20 9 CHAPTER 20: THE IMPACT OF COMPUTER TECHNOLOGY IN ACCOUNTING 1. Progress Limited is planning to introduce an integrated computer accounting system. The Operations Director has been told about all the advantages by the software company but is anxious to know about about the possible disadvantages. You are to state two possible disadvantages of this proposal and explain how they could cause problems within the company. disadvantage 1... disadvantage 2...

15 10 AS Accounting for AQA (b) Comment on the change in the rate of inventory (stock) turnover and explain to Samantha whether or not her business is becoming less efficient.

Paper Reference(s) 7011/01 London Examinations GCE. Friday 15 May 2009 Afternoon. Source booklet for use with Questions 1 to 6.

Paper Reference(s) 7011/01 London Examinations GCE Accounting Ordinary Level Friday 15 May 2009 Afternoon Source booklet for use with Questions 1 to 6. Do not return the insert with the question paper.