2022 Fajar 4E5N Prelims P2 V2

FAJAR SECONDARY SCHOOL 2022 PRELIMINARY EXAMINATIONS SECONDARY 4 EXPRESS / 5 NORMAL (ACADEMIC) CANDIDATE NAME CLASS INDEX NUMBER PRINCIPLES OF ACCOUNTS Paper 2 Setter: Ms Sabrina Additional Materials: Writing Paper 7087/02 Date: 29 August 2022 Duration: 2 hours 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. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. The total marks for this paper is 60. Do not open this document till permission is given. This document consists of 5 printed pages and 1 blank page O

2 Answer all questions. 1 The following balances were extracted from the books of TYH Trading on 31 July 2022. $ Sales revenue 289 400 Sales returns 10 000 Cost of sales 180 500 Fixtures and fittings 60 000 Motor vehicles 90 000 Accumulated depreciation: Fixtures and fittings 11 600 Motor vehicles 34 000 Trade receivables 8 400 Allowance for impairment of trade receivables 900 Commission income 5 200 Rent expense 19 200 Salaries expense 28 900 Advertising expense 4 000 Interest expense 800 Trade payables 7 850 Inventory 8 400 Cash at bank 6 200 5% Bank loan 20 000 Capital 51 950 Drawings 4 500 Additional information 1. Advertising expense, $700, has not been paid. 2. The rent expense was paid for 16 months up to November 2022. 3. Fixtures and fittings have a scrap value of $2 000 and are estimated to last 10 years. 4. Motor vehicles are to be depreciated at 10% per annum using the reducing balance method. 5. During the year, one of the trade receivables who owed $500 was declared bankrupt. The amount has yet to be written off. 6. The allowance for impairment of trade receivables is to be maintained at 5% of trade receivables. 7. Net realisable value of ending inventory was $7 000. 8. Interest on bank loan is at 5% per annum.

3 REQUIRED (a) Prepare the statement of financial performance for the year ended 31 July 2022. [10] (b) Prepare the statement of financial position as at 31 July 2022. [10] [Total: 20] 2 Yap purchases goods from its supplier on credit. The business uses the First -In-First-Out method to record its inventory. The business provided the following information for the year ended 31 August 2022. No. of units $ Inventory as at 1 September 2021 100 4 000 Purchases 12 October 2021 100 5 000 21 January 2022 100 5 600 8 April 2022 200 7 500 10 June 2022 200 6 200 1 August 2022 100 3 000 During the year, the business sold 500 units of goods for $50 100. REQUIRED (a) Calculate the following for the year ended 31 August 2022. i. Cost of sales [1] ii. Ending inventory [1] iii. Gross profit [1] iv. Rate of inventory turnover [1] v. Days sales in inventory [1]

4 The following information was provided for the financial year ended 31 August 2021 Rate of inventory turnover 5.50 times Days sales in inventory 85.15 days (b) Comment on the efficiency of inventory management of the businesses for the two years ended 31 August 2011 and 2022. [4] (c) Suggest two possible ways in which a business can improve its rate of inventory turnover. [2] (d) Explain how the change in rate of inventory turnover over the two years may affect the profitability of the business. [2] (e) State two types of profitability ratios. [2] [Total: 15] 3 The following balances were taken from the books of Davis Trading on 1 July 2021. $ Motor vehicles 120 000 Accumulated depreciation of motor vehicles 21 250 On 3 March 2022, the business sold one of its motor vehicles which cost $50 000 for $35 000 by cheque. The motor vehicle was bought on 1 January 2020. On 1 April 2022,the business bought a new motor vehicle for $60 000 by cheque. The business depreciates its motor vehicles at 10% per annum using the reducing balance method. A full year’s depreciation is charged in the year of purchase and none in the year of sale. The financial year of the business ends on 30 June. REQUIRED (a) Prepare the motor vehicles account for the year ended 30 June 2022. [4] (b) Calculate the gain or loss on the sale of non-current asset for year ended 30 June 2022. [2] (c) Calculate the depreciation expense for the year ended 30 June 2022. [3] (d) State two causes of depreciation. [2]

5 Yap Trading earns an average profit of $800 000 for the past five years. The business decided to buy carpets for $500. REQUIRED (e) Using an appropriate accounting theory, explain if the business should classify the carpets as capital expenditure or revenue expenditure. [3] [Total: 14] 4 Puvana is setting up a business as a sole proprietor. REQUIRED (a) State two advantages of a sole proprietorship. [2] (b) State two disadvantages of a sole proprietorship. [2] Puvana needs a delivery van to deliver goods to her customers. She is considering whether to buy or rent a delivery van. Buy van Rent van Price • $150 000 • 10% down payment, the remaining amount owed to be paid in 10 installments • Monthly rental: $5 000 Condition • New • Has been rented out previously for the past 6 months. Other information • Free servicing and maintenance in the first year. • Estimated useful life: 10 years • Can install compartments and shelves • Rental company arranges servicing and maintenance throughout contract period. • Lease period: 1 year • No modifications allowed REQUIRED (c) Recommend whether Puvana should buy or rent a delivery van. Justify your reason with three reasons. [7] [Total: 11] END OF PAPER

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