4E5N CHIJ Katong Prelim 2022 Sol

CHIJ KATONG CONVENT Prelim Examination 2022 Secondary 4 Express / 5 Normal Suggested Answer Scheme – Paper 1 & 2 P1 / Q1 Total [12] (a) Wages expense reported on the statement of financial performance = 25200 [1] – 850 [1] + 1030 [1] = $25 380 [3] (b) Journal 2022 DR ($) CR ($) Apr 30 Wages expense E+ 1 030 [1] Wages payable L+ 1 030 [1] [2] (c) Working If wages owed to staff is adjusted If wages owed to staff is NOT adjusted Journal entries raised: Dr Cr Wages expense E+ 1030 Wages payable L+ 1030 Profit = Income – Expenses = 0 – (+1030) = -1030 No journal entries are raised. Profit = Income – Expenses = 0 – 0 = 0 Profit will be overstated [1] by $1030 [1] if wages owed to staff on 30 April 2022 is not adjusted. [2] (d)(i) The business had provided the service in the last period but had not yet received the payment in the last period. Hence, the commission receivable of $570 adjusted in the last period is reversed in this period. [1] (d)(i) The business received a cheque of $9760 for commission income. [1] (d)(iii) The business had provided the service in this period but would be receiving the payment in the next period. [1] (e) [Any one of the following] Accrual basis of accounting [1] Business activities are to be recorded in the accounting period they occur regardless of whether cash is paid or received in the same period or not [or the definition found in the TB ]. Hence, commission for services already provided this year but not received yet should be included in this year’s income. [1] OR Revenue recognition [1] Revenue is earned when goods have been delivered, or services have been provided. Hence, commission for services already provided this year should be included in this year’s income. [1] OR Matching concept [1] Income should be recorded in the period it is earned and expenses recorded in the period it is incurred. Hence, commission for services earned this year should be included in this year’s income. [1] [2]

P1 / Q2 Total [5] (a) [Trend] Gross profit margin has worsened by 7% from 2021 to 2022. The business has become less efficient in trading in 2022. [Cause] This could be because the business reduced its selling price in 2022 to clear slow- moving goods. The business also might have bought goods at a higher price in 2022 when Pitas reduced amount bought and did not enjoy trade discount. [3] (b) [Trend] Profit margin has improved by 3% from 2021 to 2022. The business has become more efficient in managing its expenses. [Cause] The improvement in profit is not caused by higher gross profit since gross profit margin has worsened. The improvement is therefore due to a better management of expenses in 2022. The business could have laid off excess staff in 2022 to reduce salaries / relocated to a location with cheaper rental, etc. [2]

P1 / Q3 Total [9] (a) Invoice [1] (b) Pieces of yoga pants sold