2022_MSHS_Prelims_S4_POA_Paper 1_QP

Class/ Index Number / Centre Number/ ‘O’ Level Index Number / Name MARIS STELLA HIGH SCHOOL PRELIMINARY EXAMINATION SECONDARY FOUR PRINCIPLES OF ACCOUNTS 7087/01 Paper 1 16 August 2022 1 hour Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your class, index number, Centre number, O level index number and name in the spaces at the top of this page. Write in dark blue or black pen. You may use a HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. Answer all the questions. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. The total number of marks for this paper is 40. For Examiner’s Use This document consists of 7 printed pages. 40

2 Answer all questions. 1 Julian is a sole proprietor of a trading business. On 1 July 2021, the business had a capital balance of $42 500. The following transactions took place for the year ended 30 June 2022. 2021 Aug 15 Julian contributed his personal computer worth $1 380 to the business. Nov 28 Julian took goods costing $200 from the business for his personal use. 2022 Mar 11 Julian took $520 cash from the business for his own use. Jun 30 Profit for the year amounted to $9 300. REQUIRED (a) Name and explain the accounting theory behind the transaction on 28 November 2021. [2] (b) Prepare the drawings account for the year ended 30 June 2022. [3]

3 (c) Prepare the capital account for the year ended 30 June 2022. [4] Julian is considering changing his business into a private limited company. (d) State two advantages a private limited company has compared to a sole proprietorship. [2] (e) Explain the meaning of retained earnings. [2] [Total: 13]

4 2 On 1 May 2022, the inventory account of Jordan Trading showed a balance of $3 800 for 30 units of inventory. The business records inventory movement using the First -In-First- Out (FIFO) method. The following transactions took place during the month of May. 2022 May 8 Purchased 40 units at $6 400 from Hike Ltd on credit. 13 Purchased 20 units at $1 300 by cheque. 15 Sold 70 units for $12 000 to Jonathan. 21 Purchased 10 units at $900 by cash. 26 Purchased 30 units at $4 200 from Outdoor Ltd on credit. 29 Sold 30 units for $2 700 to Johnny. REQUIRED (a) Explain, using a relevant accounting theory, how inventory is valued. [3] (b) Calculate the cost of sales for the month