ACSBR 2022 POA 4E5NA P1 and P2 Answers

2022 Principles of Accounts Preliminary Examination 4E / 5N(A) Paper 2 Answer Key 1 (a) Drawings DateParticulars Debit $ Credit $Balance $ 2021 Dec-15Cash in hand 360 2022 Jan-22Inventory 324 Aug-09Cash at bank 905 Oct-31Capital 1589 0 (b) Accounting Entity theory states that the transactions of a business should be separated from its owners. Hence, when an owner draws out cash or goods, drawings need to be recorded to represent a decrease in owner's capital. (c) No effect (d) 1. Easier and less expensive to set up and maintain. 2. Entire / 100% of the profit of the business belongs to the sole proprietor. (e) 1. The maximum amount that the shareholders lose is their investment. 2. Banks are more willing to lend to a company. 3. A company is also able to issue its shares to raise funds. 4. Easier for a shareholder in a company to transfer his ownership to another. It is especially easy for a listed company where the shares are traded on the stock exchange as there are many people willing to buy over his ownership of the company.

2 (a)To facilitate the preparation of financial statements (1) as this is a list of all account balances at a particular date and can also be a proof of arithmetic accuracy. (1) (b)A trial balance is not an absolute proof of accuracy of transactions recorded in ledger accounts (1) because there may be errors which would not affect the balancing of the trial balance and thus would not be revealed (1). (c) Profit is understated [1] by $54 [1]. (d) Integrity Integrity is being straightfoward and honest in all professional and business relationships.[1] or Objectivity Objectivity is not letting bias, conflict of interest or undue influence of others override professional judgement. (e)Going concern

3 (a) (i)The original cost of equipment sold in the period (ii)The total depreciation to date on the equipment sold in the period (iii)Disposal proceeds of the equipment sold on credit to DJ Equipment (iv) Loss made on sale of equipment in the year (b) (i)Profit for the year has been understated (1) by $17 000 (1) (ii)The value of non-current assets has been understated (1) by $17 000 (1)

2022 Principles of Accounts Preliminary Examination 4E / 5N(A) Paper 2 Answer Key 1 Ruth Pte Limited Statement of Financial Peformance for the year ended 31 July 2022 $ $ Sales revenue 337000 Less: Sales returns -12400 Net sales revenue 324600 Less: Cost of sales -93300 Gross Profit 231300 Add: Other Income Interest income(1000+800) 1800 233100 Less: Expenses Wages and salaries(79960+460) 80420 Machinery repairs(7600+2000) 9600 General expenses(37700-250) 37450 Depreciation of machinery(0.25 X 194000) 48500 Depreciation of motor vehicles (0.2 X 53760) 10752 Impairment loss on trade receivables 450 187172 Profit for the year 45928 Ruth Pte Ltd Statement of Financial Position as at 31 July 2022 Assets Non-current assets Cost Accum. Dep Net Book ValueMachinery (196000