Anderson Sec Prelim 2022 P1 - ANSWER SCHEME

Setter: Mdm June Liau O ANDERSON SECONDARY SCHOOL Preliminary Examination 2022 Secondary Five Normal Academic CANDIDATE NAME: ANSWER SCHEME CLASS: / INDEX NUMBER: PRINCIPLES OF ACCOUNTS Paper 1 Candidates answer on the Question Paper. 7087/01 25 August 2022 1 hour No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your name, class and index number on all the work you hand in. Write in dark blue or black pen on both sides of the paper. Do not use staples, paper clips, highlighters, glue or correction fluid/tape. The use of an approved calculator is allowed. Answer all the questions. Where layouts are to be completed, you may not need all the lines for your answers. The businesses described in this question paper are entirely fictitious. 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. This document consists of __ printed pages. 40

2 PRELIM 5NA POA 2022 7087/01 Qn 1 (a) (i) Amounts owing from credit customers. [1] (ii) Amount of debts estimated to be uncollectible from credit customers. [1] (b) Prudence theory states that the accounting treatment chosen should be the one that least overstates assets and profits. Recording allowance for impairment of trade receivables as a deduction against trade receivables will ensure that trade receivables balance (asset) is not overstated. OR Matching theory states that expenses incurred must be matched against income earned in the same period to determine profit for that period. The business is to record the impairment loss on trade receivables (expense) in the same financial period as the credit sales revenue earned. [2] (c) Date Dr Cr 2021 $ $ Aug 10 Cash at bank (3500 x 20%) [1] 700 Allowance for impairment of trade receivables [1] 2 800 Trade receivable – Jacky Trading [1] 3 500 OR Date Dr Cr 2021 $ $ Aug 10 Cash at bank (3500 x 20%) [1] 700 Trade receivable – Jacky Trading [0.5] 700 Aug 10 Allowance for impairment of trade receivables [1] 2 800 Trade receivable – Jacky Trading [0.5] 2 800 [3] (d) Allowance for impairment of trade receivables = 22 700 x 10% = 2 270 Impairment loss on trade receivables = 2 270 – (3 450 – 2 800) = 2 270 – 650 = 1 620 Date Dr Cr 2021 $ $ Sep 30 Impairment loss on trade receivables [1] 1 620 Allowance for impairment of trade receivables [1] 1 620 [2] [Total: 9]

3 PRELIM 5NA POA 2022 7087/01 Qn 2 (a) Explain the difference between a trading business and a service business. [2] A trading business earns its main income from buying and selling goods while a serv