The University of the South Pacific Serving the Cook Islands, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Samoa, Solomon Islands, Tokelau, Tonga, Tuvalu, and Vanuatu. THE REGIONAL CENTRE FOR CONTINUING AND COMMUNITY EDUCATION COURSE TITLE: CCE001-PREPARATORY ACCOUNTING FINAL EXAMINATION SEMESTER 1, 2009 Time Allowed: Three Hours (An Extra 10 minutes is allowed for reading this paper) Total Marks: 100 (40 % of the final grade) Instructions 1 There are five sections in this paper. All sections are compulsory. 2 Write your answers in the answer booklet provided. 3 Show all relevant working as partial marks will be awarded for incorrect answers with correct working. 4 Calculators is allowed. CCE 001 Final Examination Page 1 of 6 Semester 1 2009
Section A [Multiple Choice Questions] SECTION A : MULTIPLE CHOICE 1. Business properties owned by a company are called a) assets b) equities c) debtors d) liabilities [30 Marks] 2. The function of journals is to a) record transactions as they occur b) remove ledger accounts from records c) classify and record transactions d) balance accounts and prepare trial balance 3. Bank charges will appear in a) sales journal b) cash receipts journal c) purchases journal d) cash payments journal 4. Stock at the end of the year is a) current asset b) sold goods c) left over purchases d) all of the above 5 Which of the following is true of Chart of Accounts? a) it is an index of accounts b) it is grouping of accounts into A,E,L,P and R c) gives each account a number of reference d) all of the above 6. Income in Advance on the balance day is a) an asset b) a liability c) a revenue d) a capital item 7. Drawing account is closed off to a) balance sheet b) capital c) expenses d) profit & loss account 8. Which of the following is classified as a current liability in a Balance Sheet? a) cash at bank b) stock on hand c) accounts payable d) accounts receivable CCE 001 Final Examination Page 2 of 6 Semester 1 2009
9. If the owner of a business drew a cheque of $50 for his own use, the two ledger accounts affected in this transactions are a) sales account and drawings account b) drawings account and purchases account c) cash at bank and capital account d) drawings account and cash at bank account 10. Those whom the business owe money are known as a) customers b) suppliers c) creditors d) debtors 11. Goodwill is a) item of productive value that the business keeps for long period of time b) classified as revenue in the Profit & Loss Statement c) classified as intangible asset in the Balance Sheet d) another term for non-current assets 12. Cost of Goods Sold is a) calculated as Opening Inventory plus Purchases less Closing Inventory b) calculated as Opening Inventory plus Purchases less Closing Inventory less Freight Inwards and Customs Duty c) calculated as Opening Inventory plus Net Purchases plus Freight Inwards and Customs Duty less Closing Inventory d) another names for selling expenses 13. Which of the following statements relating to the general journal is incorrect? a) the debit and credit effects of each transaction are shown together b) it is referred to as a book of original entry c) it provides a record of transactions in date order d) none of the above is incorrect 14. Select the correct order in the decision making process 1. choose a course of action 2. establish goals 3. gather available information 4. evaluate the consequences of the various alternatives a) 1,2,3,4 b) 2,4,3,1 c) 2,3,4,1 d) 4,3,2,1 15. Another term for Inventory is a) capital b) stock c) asset d) goods (30 marks) CCE 001 Final Examination Page 3 of 6 Semester 1 2009
SECTION B PART A: SHORT ANSWER QUESTIONS I. Clarify the reason for creating a drawings account within a business. II. Explain the double entry rule. III. What is the balancing amount in the Profit and Loss Account? IV. Write an equation to represent the Balance Sheet. V. Discuss the control issues relating to a stock take. PART B : VOCABULARY I. Chart of Accounts II. Credit Note III. Mortgage IV. Bad Debts V. Discount Allowed SECTION C: FINANCIAL ACCOUNTING JOURNALISATION Refer to the following transactions and answer the questions below. Leo Tarr started business on 1 st August 2009 with the following: Cash at Bank $6000 Loan $600 The following transactions took place during the month of August: Aug 2 Sold goods to Syndey $100 3 Bought goods from Peter $150 5 Returned goods to Peter $30 6 Cash Sales $400 8 Cash Purchases $350 10 Sold goods to Neil $200 12 Neil returned goods $60 14 Bought goods from James $300 15 Repaid loan $250 Returned goods to James $70 16 Syndey paid $100 less 5% discount 19 Sold goods for cash $500 20 Issued a tax invoice to Parriot $250 22 Issued a credit note to Parriot $100 24 Received a tax invoice from Sheliot $300 25 Credit note received from Sheliot $100 Prepare i. Sales Journal ii. Purchases Journal iii. Purchases Returns Journal iv. Sales Returns Journal (16 marks) Distinguish between Cash Receipts Journal and Cash Payments Journal (4marks) CCE 001 Final Examination Page 4 of 6 Semester 1 2009
SECTION D: ACCOUNTING REPORTS PART A: PROFIT & LOSS ACCOUNT Given below are the ledger account balances of Satala s Book Shop as at 3o th April 2009. Ledger Accounts Amount $ Cartage Inwards 580 Purchases 38575 Salaries and Wages 9800 Electricity and Water 1256 Telephone and Internet 899 Sales 69992 Debtors 965 Opening Stock 9850 Insurance Premiums Paid 860 Discount Allowed 87 Cartage Outwards 699 Business License 225 Discount Received 54 Creditors 784 Rent Received 600 Additional information i. Closing stock $10800 ii. Gross profit $31787 Use the information given above to prepare the Profit & Loss account of Satala s Book Shop for the year ended 30 th April,2009 CCE 001 Final Examination Page 5 of 6 Semester 1 2009
PART B: BALANCE SHEET Trial Balance of Texas Ltd as at 31 st December 2009 DR ($) CR ($) Accounts Receivable 10000 Advertising 6000 Bad debts 1000 Cash 6000 Drawings 18000 Electricity 8000 Interest 4500 Inventory 12000 Property, Plant and 45000 Equipment Purchases 95000 Rent 32000 Sales Returns 5000 Wages & Salaries 22000 Accounts Payable 9000 Capital 50000 Discount Received 2500 Purchases Returns 3000 Sales 200000 264500 264500 A stock take on 31 st December 2009 determined an inventory value of $20000 Use the following information to prepare a fully classified Balance Sheet. SECTION E: ESSAY WRITING Discuss some internal controls relating to source documents. THE END CCE 001 Final Examination Page 6 of 6 Semester 1 2009