Outram Sec Prelim 2022 Ans

1 | Page OSS POA 4E5N PRELIM PAPER 1 & PAPER 2 2022 MARK SCHEME OUTRAM SECONDARY SCHOOL POA 4E5N PRELIM EXAM PAPER 1 2022 MARK SCHEME Question 1 (a) Cash at bank account 2022 Dr ($) Cr ($) Bal ($) Jul 31 Balance b/d 8 030 DR Jul 31 Utilities 170 [1] 7 860 DR Jul 31 Equipment (error) 80 [1] 7 940 DR Jul 31 Trade receivable, Anyang (Dis Chq) 2 220 [1] 5 720 DR Jul 31 Bank charges 60 [1] 5 660 DR Aug 1 Balance b/d 5 660 DR [1] [5m] (b) Busan Bank reconciliation statement as at 31 July 2022 $ $ Balance as per bank statement 6 110 [½] LESS: Cheques not yet presented [½] Trade payable, Sejong Trading (cheque 334363) (450) [1] Adjusted balance as per cash at bank account 5 660 [1] [3m] (c) The business refers to money kept with the bank as an asset. [1] The bank refers to the money that the business keeps with the bank as a liability. 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[1] 1 mark per suitable comment to a maximum of 3 marks. 2 This shows that the business is taking a longer time to collect payment from its credit customers this year as compared to last year. [1] 3 More significantly, the trade receivables collection period of 35.03 days on 31 August 2022 has exceeded the credit terms of the business of 30 days. [1] 4 By taking a longer than usual period to collect payment from its credit customers, Itaewon would have lesser cash, causing its liquidity position to worsen. [1] 5 Hence, Itaewon has become much less efficient at managing its trade receivables over the three years. [1] [3m] (c) 1 Improve billing efficiency by send out invoices as quickly as possible after completion of work and stating payment terms clearly. [1] 1 mark per suitable reason to a maximum of 2 marks. 2 Incentivise early payments by offering customers discounts or rewards for early payment of invoices. [1] 3 Take initial deposits or make progress bills to customers. A percentage of the total quote (20%, 50%) is to be paid prior to commencing work or at agreed stages throughout the job. [1] 4 Foster positive customer relationships through quality and timely work, and maintaining regular communication with customers. [1] 5 Invest in software system that monitors unpaid accounts and automatically send reminders, or assign a dedicated person to make phone calls for payments due. [1] 6 Engage customers proactively. Do not leave overdue payments for a long period of time. Make calls as soon as payment is overdue. 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