Greenridge 2024 4N P1 Answers

[Turn over This paper consists of 9 printed pages, including this cover page. GREENRIDGE SECONDARY SCHOOL 2024 PRELIMINARY EXAMINATION SECONDARY 4 NORMAL (ACADEMIC) CANDIDATE NAME ANSWERS CLASS - INDEX NUMBER Principles of Accounts 7086 Paper 1 7 August 2024 Setter: Ms Sabrina 1 hour Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your name, register number and class on this cover and all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any rough working. Do not use staples, paper clips, glue or correction fluid. The use of an approved calculator is allowed. Answer all questions. 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. The total of the marks for this paper is 40. For Examiner’s Use Total 40

2 Answer all the questions. 1 LX Trading provided the following balances as at 30 June 2024. $ Trade receivables 12 100 Trade payables 7 800 Bank overdraft 1 600 Inventory 13 300 Non-current assets 24 500 Loan from bank 10 000 REQUIRED (a) Define the following terms: (i) Assets Resources owned and controlled by the business that are expected to generate future benefits.[1] (ii) Liabilities Obligations owed by a business to others that are expected to be settled in the future.[1] (b) Calculate the capital as at 30 June 2024. Capital 30 June 2024 = Total assets – Total Liabilities = (12100 + 13300 + 24500) – (7800+1600+10000) = 49900 [1] – 19400 [1] = $30500 [1] (c) Explain the going concern theory. A business is assumed to have an indefinite economic life [1]unless there is credible evidence that it may close. [1]

3 The following transactions took place during the year ended 30 June 2024. REQUIRED (d) Name the source document used for each transaction. Source document A credit customer was undercharged. Debit note [1] Bought a computer on credit. Invoice [1] Cash purchases. Receipt [1] Bank charges. Bank statement [1] [4] [Total: 11]

4 2 Kelvin runs a trading business with a financial year of 31 December. On 1 April 2023, the business obtained a bank loan of $400 000. The loan is to be paid equally over 10 years. The first payment, together with interest, fell on 31 March 2024. The interest incurred for the year ended 31 December 2023 was $15 000. REQUIRED (a) State one difference between a bank loan and a bank overdraft. Bank loan Bank overdraft 1 The business borrows a fixed amount, and the cash is transferred to its bank account. The business withdraws more than what it has deposited in the bank acc