2022 GMSS POA 4E5N PRELIM PAPER 1 ANSWERS

2022POA4E5NPrelimPaper 1Answers1 Layla operates a supermarket, Best Grocer. When preparing thebusinessfinancial statementsfortheyearended30June2022,heraccountantdiscoveredthefollowingerrors. 1 Invoiceof$2000receivedfromcreditsupplierAlex,hadbeenrecordedinAllen’saccount. 2 Chequepaymentof$500forutilities,hadbeenrecordedas$5000. 3 Cashof $600receivedfor goodssold, hasbeendebitedtothesalesrevenueaccountandcreditedtocashinhandaccount. REQUIRED (a) Stateonepurposeofsourcedocument. Sourcedocumentprovidesevidencetocaptureoccurrenceofatransaction. OR Sourcedocumentcontainsdetailsofabusinesstransactionthatareneededfor recording. [1] (b) Preparethejournal entrytocorrecterror 1.Anarrationisnotrequired. Date Debit$ Credit$2022Jun30 Tradepayable–Allen [1] 2000 Tradepayable–Alex [1] 2000 [2] (c) Prepareastatement of adjustedprofit for theyear ended30June2022. Theunadjustedprofitwas$5000. BestGrocer Statementofadjustedprofitfortheyearended30June2022$ Unadjustedprofit 5000 Error1:Noeffect - [1] Error2:Add(utilitiesexpensewasoverstated) 4500 [1]Error3:Add(salesrevenuewasunderstated) 1200 [1] Adjustedprofitfortheyear 10700

GMS(S)/POA/P1/PRELIM2022/4E5N(A) [3](d) Stateoneroleofaccountantsinbusiness. Accountantsarestewardsofbusinesseswhosetuptheaccountinginformationsystemtoprovideinformationtostakeholdersfordecision-making. [1] (e) Name one stakeholder and the decision that he/she might make by using the businessfinancial statements.Employeesuse the businessfinancialstatementsto decidewhetherto continueworking atthebusiness. [2] Otheralternatives: Stakeholders DecisionstakeholdermaymakeOwnersandshareholders Whethertocontinuetoinvestinthebusinessorsellthebusiness,dependingontherisksandreturnsrelatedtothebusinessManagers WhethertoconsiderwaystoimprovetheperformanceofthebusinessEmployees WhethertocontinueworkingatthebusinessLenders Whethertograntloanstothebusiness,dependingonthebusiness’abilitytorepaytheloanprincipalandpayinterestSuppliers Whethertoselltothebusinessoncredit,dependingonitsabilitytopayCustomers Whethertobuyfromthebusiness,dependingonthebusiness’abilitytoprovidethegoodsand/orservicesthattheyneedandgoodafter-salesserviceGovernment WhetherthebusinesscomplieswiththetaxregulationsanddecidestheamountoftaxtocollectfromthebusinessCompetitors Whethertheyarecomparabletothebusinessandhowtoimprovetheirownperformance (f) Ineachgivenscenario,identifytheaccountingtheoryapplied: Scenario Accountingtheory (i) Kayla paidrent inadvancefor themonthof July2022. Shehasnot recordedthisaspartofrentalexpensefortheyearended30June2022. Accrual basis of accountingtheoryorMatchingtheory 2

GMS(S)/POA/P1/PRELIM2022/4E5N(A) (ii) Theexcellentshoplocationandskillsofemployeesarenotrecorded. Monetarytheory [2] [Total:11] 2 ThefollowinginformationwasextractedfromthebooksofClaireHomeSuppliesasat31July2020to2022. 2020 2021 2022$ $ $Motorvehicles 130800 124640 152800Cashatbank 41300 21800 -Tradereceivables 10120 22260 28330Inventory 12300 19800 35200Prepaidrent 1000 2500 4400Tradepayables 16