Yuan Ching 2024 Prelim P1 and P2 Sol

N’Level Self-Revision Set 05 – Yuan Ching N’Level Prelim 2024 SOLUTIONS -PAPER 1- Question 1a Utilities expense for the year = Amount paid – Amount payable for previous year + Amount used but not paid for this year =2 780 – 260 [1] + 170 [1] = $2 690 [1] Question 1b 2024 Debit $ Credit $ Apr 30 Utilities expense [1] 170 Utilities expense payable [1] 170 Adjustment for $170 of utilities expense used but not paid yet at year end [1] Question 1c The profit for the year would be overstated[1] by $170 [1]. Question 1d (i) 15 May 2024 Aces Trading received a cheque of $4 500 [1] from credit customer David after giving David a discount of $330. [1] Question 1d (ii) 22 May 2024 Aces Trading sold goods to credit customer David for $2 700 on credit. [1] Question 1e 2024 Debit $ Credit $ Jun 11 Allowance for impairment of trade receivables [1] 2 700 Trade receivable, David [1] 2 700

Question 2a The previous accountant has violated the principle of objectivity [1] as he had caused the business to suffer a loss to make a personal gain. [1] (Student is to explain the conflict of interest as defined in the principle of objectivity.) Question 2b Employees, to know the career prospects of continuing to work for the business Credit suppliers, to know if the business has enough assets to repay the amount owing Government, to know if the business is complying with the laws and regulations (any other suitable answer, 1m for naming the stakeholder and 1m for explanation of the interest) Question 2c Effect of transaction on: Assets Liabilities Equity (i) Sims Trading bought $600 of goods for resale on credit. Inventory + $600 Trade payable + $600 (ii) Sims Trading repaid $10 000 of bank loan with the owner’s personal cheque. Bank loan - $10 000 [1] Capital + $10 000 [1] Question 2d To facilitate the preparation of financial statements [1] To check for arithmetic accuracy in recording [1] Question 2e Some errors affect both the debit and credit sides of the affected ledger accounts equally, so the trial balance cannot detect these errors. Question 2f 2024 Debit $ Credit $ May 31 Trade receivable Su Shan [1] 450 Trade receivable Susan [1] 450 May 31 Trade payable, Beng [1] 180 Inventory [1] 180 Question 2g Correcting Error 3 would increase [1] profit by $450 [1]

Question 3a • Capital expenditure refers to spending on buying non-current assets and any cost to get the non-current assets to a ready-to-use condition whereas revenue expenditure refers to spending to operate, repair and maintain non-current assets in working condition. • Capital expenditure are capitalised and recorded as non -current assets in the statement of financial position but revenue expenditure are expensed off and reported in statement of financial performance. • Benefits from capital expenditure las