Tampines Sec 4E Prelim 2023 Paper 1 (Questions)

This document consists of 9 printed pages © TPSS/7087/01/2023/SEC4E5NA/Prelims TAMPINES SECONDARY SCHOOL Secondary Four Express and Five (Normal Academic) PRELIMINARY EXAMINATION 2023 NAME CLASS REGISTER NUMBER PRINCIPLES OF ACCOUNTS 7087/01 Paper 1 13 September 2023 1 hour Candidates answer on the Question Paper. No Additional Materials are required. Additional Instructions READ THESE INSTRUCTIONS FIRST Write your name, class and register number on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any rough working. Do not use staples, paper clips, glue or correction fluid. The use of an approved calculator is allowed. Answer all questions. The businesses described in this question paper are entirely fictitious. The number of marks is given in brackets [ ] at the end of each question or part question. [Turn over O For Examiner’s Use

2 1 Answer all questions. Shirley is a sole trader. After preparing the accounts for the year ended 31 December 2022, she discovered the following errors. 1 Credit sales of $2 500 to Ling Ling was recorded in Ming Ming’s account. 2 Receipt of $300 cheque for commission income has been debited to the commission income account and credited to the cash at bank account. 3 $120 of utilities paid by cheque was recorded as $102 in both accounts. 4 Purchase of a delivery van for business use for $80 000 has been recorded in the fixtures and fittings account. The statement of financial performance for the year ended 31 December 2022 showed a profit of $12 360 before the errors were discovered. REQUIRED (a) Prepare the journal entries to correct errors 1 and 2. Narrations are not required. Debit $ Credit $ Error 1 Error 2 [4]

3 (b) Prepare a statement to show the adjusted profit for the year ended 31 December 2022. Shirley Statement to show adjusted profit for the year ended 31 December 2022 ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………..... ………………………………………………………………………………………………………………. …………………………………………………………………………………………………………….... …………………………………………………………………………………………………………….... ……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… …………………………………………………………………………………………………………..[3] [Total: 7] [Turn over

4 2 Carrie set up Flora Cosmetics on 1 April 2020. The opening balances were as follows. $ Fixtures and fittings 22 500 Office equipment 4 000 Inventory 20 100 Trade payables 15 600 Cash at bank 9 200 Dr Prepaid cleaning expense 1 800 Long-term bank loan 10 000 REQUIRED (a) Complete the following table by naming the source document that would be used to record each transaction (i) to (iii). Transaction Source document (i) Interest expense on bank overdraft. (ii) Purchase inventory on credit. (iii) Correct an undercharge for sales made to a credit customer. [3] (b) Explain, using a suitable accounting theory, why source documents are important. …………………………………………………………………………………………………………. …………………………………………………………………………………………………………. …………………………………………………………………………………………………………. ………………………………………………………………………………………………………[2] (c) Calculate the amount of equity at 1 April 2020. ………………………………………………………………………………………………………… ..………………………………………………………………………………………………………. ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ……………………………………………………………………………………………………...[3]

5 Flora Cosmetics has provided the following ledger account. Allowance for impairment of trade receivables account Date Particulars Dr ($) Cr ($) Balance ($) 2021 Apr 1 Balance b/d 5 700 Cr Jul 14 Trade receivable – Emily Trading 2 400 3 300 Cr 2022 Jan 5 Trade receivable – Chong & Co 1 300 2 000 Cr Mar 31 Impairment loss on trade receivables 760 2 760 Cr REQUIRED (d) Interpret the entries in the allowance for impairment of trade receivables account on: (i) 14 July 2021……………………………………………………………………………………. …………………………………………………………………………………………………… ………………………………………………………………………………………………..[1] (ii) 31 March 2022…………………………………………………………………………………. …………………………………………………………………………………………………… ………………………………………………………………………………………………...[1] (e) Explain, using an accounting theory, why it is necessary for a business to account for allowance for impairment of trade receivables. …………………………………………………………………………………………………………. …………………………………………………………………………………………………………. …………………………………………………………………………………………………………. ………………………………………………………………………………………………………[2] [Total: 12] [Turn over

6 3 The following information was extracted from the accounting records of Dannie’s business for the Y year ended 30 June 2022: $ Net sales revenue 250 600 Cost of sales 101 250 Gross profit 149 350 Operating expenses 91 380 Profit for the year 57 970 REQUIRED (a) Define profitability. ...………………………………………………………………………………………………………. ...………………………………………………………………………………………………………. ...……………………………………………………………………………………………………[1] (b) Calculate the following, giving your answers correct to one decimal place. (i) Gross profit margin ...…………………………………………………………………………………………………… ...…………………………………………………………………………………………………… ...…………………………………………………………………………………………………… ...………………………………………………………..……………………………………… [1] (ii) Profit margin ...…………………………………………………………………………………………………... ……………………………………………………………………………………………………. ……………………………………………………………………………………………………. …………………………………………………………..…………………………………….. [1]

7 Terrie’s business is a competitor of Dannie’s and it has the following information for the year ended 30 June 2022: Gross profit margin 51.7% Profit margin 28.9% REQUIRED (c) Using the above information, compare the performance of Dannie’s business with that of Terrie’s. ..