AISS 4E POA Prelims P1 with ANS

AISS PRELIMS 7087/01/2022 AHMAD IBRAHIM SECONDARY SCHOOL GCE O-LEVEL PRELIMINARY EXAMINATION 2022 SECONDARY 4 EXPRESS & 5 NORMAL (ACADEMIC) Name: Class: Register No.: PRINCIPLES OF ACCOUNTS 7087 / 01 Paper 1 Candidates answer on Question Paper. No Additional Materials are required. 30 August 2022 1 hour READ THESE INSTRUCTIONS FIRST Write your name, index number and class in the spaces at the top of this page. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, highlighters, glue or correction fluid. Question Marks 1 2 3 Total 40 Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question.

2 AISS PRELIM 7087/01/2022 This paper consists of 8 printed pages. Answer all questions. 1 Stanley owns a business selling books. The business has the following balances on 1 July 2021. $ Prepaid advertising expense 700 Commission income receivable 580 Additional information (i) Business paid $3 000 for advertising by cash and received $5 000 cheque for commission income. (ii) Monthly advertising expense amounts to $500. (iii) As at 30 June 2022, there is a commission income received in advance of $390. REQUIRED (a) Prepare the journal entries for advertising expense for the year ended 30 June 2022. ……………………………………………………………………………………………………….. ……………………………………………………………………………………………………….. ……………………………………………………………………………………………………….. ……………………………………………………………………………………………………….. ……………………………………………………………………………………………………….. ……………………………………………………………………………………………………….. ……………………………………………………………………………………………………….. ……………………………………………………………………………………………………….. ……………………………………………………………………………………………………….. ……………………………………………………………………………………………………….. ……………………………………………………………………………………………………….. …………………………………………………………………………………………………..…[4] (b) Calculate the amount of commission earned for the year. ………………………………………………………………………………………………………… ……………………………………………………………………………………….……………….. ……………………………………………………………………………………............................ ……………………………………………………………………………………........................[2] [Turn over

3 AISS PRELIM 7087/01/2022[Turn over (c) Prepare the extract of the statement of financial position as at 30 June 2022. ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ……………………………………………………………………………………............................ ……………………………………………………………………………………............................ ……………………………………………………………………………………........................[2] (d) State the effect on profit and current asset if the commission income received in advance is not adjusted at the end of the year. Profit: ………………………………………………………………………………………………[1] Current asset: …………………………………………………………………………………….[1] Stanley also has business with a supplier, Mr Tan. The transactions between them are shown below. Date Transactions 2022 Mar 1 Amount owed to Mr Tan is $4 000. 5 Business received an invoice of $2 000. 8 Business paid amount owing on 1 March 2022 by cheque after receiving a 10% discount. 10 Business bought goods on credit from Mr Tan amounting to $3 000, with a trade discount of 20%. 12 Business returned goods worth $400 which were purchased on 10 March 2022 as the goods were faulty. REQUIRED (e) Prepare the account of Mr Tan in Stanley’s books for the month ended 31 March 2022. ………………………………………………………………………………………………………… ……………………………………………………………………………………............................ ………………………………………………………………………………………………………… ……………………………………………………………………………………............................ ……………………………………………………………………………………............................ ……………………………………………………………………………………............................ ……………………………………………………………………………………............................ ……………………………………………………………………………………............................ ……………………………………………………………………………………........................[7]

4 AISS PRELIM 7087/01/2022 [Total: 17] 2 Goody Stuff Ltd, a company selling cooking ware, provided the following information for the financial year ended 31 December 2021. $ Net sales revenue 630 580 Cost of sales 479 430 Gross profit 151 150 Total operating expenses 53 580 Profit for the year 97 570 Equity, 1 January 2021 340 590 Equity, 31 December 2021 ? Additional information (i) Goody Stuff Ltd has issued share capital of 200 000 shares at $4.00 each which were fully sold and paid up. (ii) During the year, Goody Stuff Ltd declared dividend of $0.50 per share, to be paid on 15 January 2022. REQUIRED (a) Calculate the following profitability ratios of Goody Stuff Ltd for the year ended 31 December 2021. Show your answers correct to two decimal place. [5] Goody Stuff Ltd Mark-up on cost Gross profit margin Profit margin

5 AISS PRELIM 7087/01/2022[Turn over Return on equity Liam is an investor who is interested to invest in the cooking ware business. He is considering between Goody Stuff Ltd and its competitor, Jiajia Pte Ltd. The profitability ratios of Jiajia Pte Ltd, a direct competitor are provided. Mark-up on cost 40% Gross profit margin 30% Profit margin 20% Return on equity 10% Additional information: (i) Jiajia Pte Ltd did not declare dividend for the year. (b) Comment on the profitability of Goody Stuff Ltd against Jiajia Pte Ltd. ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ……………………………………………………………………………………............................ ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ……………………………………………………………………………………............................ ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ……………………………………………………………………………………............................

6 AISS PRELIM 7087/01/2022 ………………………………………………………………………………………………………… ……………………………………………………………………………………............................ ………………………………………………………………………………………………………… ……………………………………………………………………………………............................ ………………………………………………………………………………………………………… ……………………………………………………………………………………........................[6] (c) Which business should Liam invest in? Support your answers with reasons. ……………………………………………………………………………………............................ ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ……………………………………………………………………………………........................[2] [Total: 13]

7 AISS PRELIM 7087/01/2022[Turn over 3 The cash at bank account and bank statement of Leon’s business for the month of January 2022 were as follows: Cash at bank account Date Particulars Cheque Number Dr Cr Balance 2022 $ $ $ Jan 1 Balance b/d 1 450 Dr 5 Utilities 104 850 600 Dr 8 Cash in hand 1 300 1 900 Dr 15 Rent 105 800 1 100 Dr 18 Betty 760 1 860 Dr 30 Andy 1 800 3 660 Dr 31 Bank charges 120 3 540 Dr Feb 1 Balance b/d 3 540 Dr Bank statement Date Particulars Payments Receipts Balance 2022 $ $ $ Jan 1 Balance b/d 1 660 Cr 2 Cheque 103 210 1 450 Cr 8 Cash 1 300 2 750 Cr 20 Cheque deposit 760 3 510 Cr 21 Cheque 105 800 2 7