Peirce Sec 7087 POA 4E PRELIM 2022 P1

PEIRCE SECONDARY SCHOOL PRELIMINARY EXAMINATION 2022 SECONDARY 4 EXPRESS Principles of Accounts 7087/01 25 August 2022 Paper 1 1 hour INSTRUCTIONS TO CANDIDATES Write your name, class and register number on all the work you hand in. Write in dark blue or black pen on both sides of the paper. Write your answers and working on the separate answer paper provided. You may use a pencil for rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. The use of an approved calculator is allowed. Answer all questions on the question paper. The businesses described in this question paper are fictitious. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 7 printed pages and 1 blank page. Final Copy by Ms Jasmine Yap [Turn over] Candidate Name ________________________________________ Class Register Number FOR EXAMINER’S USE USE /40 USE PARENT’S SIGNATURE

2 1 Samantha intends to start a business to sell homemade cupcakes. She is not trained in accounting and requires an explanation of the following financial terms. REQUIRED (a) Explain one professional ethic an accountant must have to fulfil the stewardship role of accounting. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………….…… [2] (b) State one purpose of using source documents . Support your answer with an appropriate accounting theory. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………. [2] (c) Indicate the basic accounting equation. ……………………………………………………………………………………………………….…… [1] (d) State two purposes of preparing a trial balance. ……………………………………………………………………………………………………………...... ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ………………………………………………………………………………………………………….… [2] (e) State two causes of depreciation. ……………………………………………………………………………………………………………...... ……………………………………………………………………………………………………………. [2] [Total: 9]

3 2 1 Dynamics Durians provided the following information. 1 July 2021 $ Prepaid utilities 1 080 Additional information: 1. The business paid $500 for utilities by cheque during the year. 2. The annual utilities amounted to $1 630. REQUIRED (a) Explain how a business should account for its cost and other expenses using one accounting theory. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ………………………………………………………………………..……….………………………..... [2] (b) Prepare journal entries to account for utilities for the year ended 30 June 2022 without the closing entry. Narrations are not required. General Journal Date Particulars Debit $ Credit $ [6] [Total: 8]

4 3 The cash at bank account of Efficient Wheels Leasing had the following entries. 2022 April Cheque number Dr $ Cr $ Bal $ 1 Balance b/d 2 480 Dr 5 Sales revenue 5 200 7 680 Dr 8 Alexis 102 170 7 510 Dr 12 Sarah 103 1 000 8 510 Dr 16 Belinda 104 460 8 050 Dr 19 Utilities 105 1 800 6 250 Dr 25 Chris 4 000 10 250 Dr 29 Rent 106 2 400 7 850 Dr May 1 Balance b/d 7 850 Dr The business received the bank statement for the month of April on 4 May 2022. Withdrawals Deposits Balance 2022 $ $ $ April 1 Balance b/d 3 960 Cr 3 Cheque 101 1 480 2 480 Cr 6 Deposit 5 200 7 680 Cr 13 Deposit 1 000 8 680 Cr 14 Cheque 102 170 8 510 Cr 18 Standing instruction: Insurance 1 500 7 010 Cr 20 Cheque 103 1 000 6 010 Cr 26 Cheque 104 640 5 370 Cr 27 Cheque 105 1 800 3 570 Cr 29 Credit transfer: Bee 1 600 5 170 Cr 30 Bank charges 200 4 970 Cr Cheque number 104 was wrongly recorded by the bank as $640. REQUIRED (a) State two purposes of preparing a bank reconciliation. .……………………………………………………...……………………………………………..………... ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ………………………………………………………………………..……….………………………..... [2] (b) Suggest two reasons why a cheque maybe dishonoured. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ………………………………………………………………………..……….………………………..... [2]

5 (c) Prepare the adjusted cash at bank account for April 2022. Cash at bank account Date Particulars Dr $ Cr $ Balance $ [5] (d) Prepare the bank reconciliation statement as at 30 April 2022. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ……………………………………………………………………………………………………………….. ………………………………………………………………………………………………………….… [5] [Total: 14]

6 4 Bling Bling Rocks started business on 1 April 2020. The following information was provided by the business. 31 March 2021 31 March 2022 $ $ Trade receivables 36 890 17 420 Additional information: 1. The business provides an allowance for impairment of trade receivables based on 10% of the trade receivables balance at the end of each financial year. 2. There were no debts written off for both financial years ended 31 March 2021 and 2022. REQUIRED (a) Prepare the journal entries to adjust the balance of allowance for impairment of trade receivables for the years ended 31 March 2021 and 2022. Narrations are not required. General Journal Date Particulars Dr $ Cr $ [4] The business has the following credit policy: 1. Credit limit is $80 000. 2. Credit period is 40 days. 3. Cash discount of 2% is given if payment is made within 30 days.

7 Recently, Sparkling Stones, from ABC country, wants to buy gemstones from Bling Bling Rocks on credit. The latter did some research and found the following: 1. ABC country is a developing country. Its economic growth varies with the global economic environment. In ABC country, the average credit period is around 50 days. 2. Rare gemstones are a form of status in ABC country and is a luxury item which only the wealthy could afford. 3. Sparkling Stones is popular in ABC country. Its sales revenue averages $500 000 per annum. 4. Sparkling Stones has been in operation for the past 10 years and has a good reputation amongst its suppliers for prompt payment. REQUIRED (b) Advise Bling Bling Rocks if the business should sell on credit to Sparkling Stones. Support your answer with two reasons. Advice: …………………………………………………………………………………………………. Reasons: …………………………………………………………………………………………….... ...………………………………………………………………………………………………………… ………………………………………………………………………………...………………………… ……………………………………………………………………………...…………………………… …………………………………………………………………………...……………………………… …………………………………………………………………………………………………………... ...………………………………………………………………………………………………………… ………………………………………………………………………………...………………………… ……………………………………………………………………………...…………………………… …………………………………………………………………………...……………………………… ………………………………………………