2022 GMSS POA 4E5N PRELIM PAPER 1

GeylangMethodistSchool(Secondary)PreliminaryExamination2022 CandidateName Class IndexNumber PRINCIPLESOFACCOUNTSPaper 1 NoAdditional Materialsarerequired 7087/01Sec4Express/Sec5Normal (Academic) 1hour READTHESEINSTRUCTIONSFIRST Writeyour indexnumber andnameinthespacesat thetopof thispage.Writeindarkblueor blackpen.Donot usestaples, paper clips, glueor correctionfluid/tape.Theuseof anapprovedcalculator isallowed. Answer all questions. Thebusinessesdescribedinthisquestionpaper areentirelyfictitious. Thenumber of marksisgiveninbrackets[ ] at theendof eachquestionor part question. Thetotal marksfor thispaper is40marks. Thisdocument consistsof 8printedpages. 1 Layla operates a supermarket, Best Grocer. When preparing thebusinessfinancial statementsfortheyear ended30June2022, her accountant discoveredthefollowingerrors. 1 Invoiceof $2000receivedfromcredit supplier Alex, hadbeenrecordedinAllen’saccount.

GMS(S)/POA/P1/PRELIM2022/4E5N(A) 2 Chequepayment of $500for utilities, hadbeenrecordedas$5000. 3 Cash of $600 received for goods sold, has been debited to the sales revenue account andcreditedtocashinhandaccount. REQUIRED (a) Stateonepurposeof sourcedocument. [1] (b) Preparethejournal entrytocorrect error 1. Anarrationisnot required. Date Debit$ Credit$ [2] (c) Prepare a statement of adjusted profit for the year ended 30 June 2022. The unadjustedprofit was$5000. [3] (d) Stateoneroleof accountantsinbusiness. 2

GMS(S)/POA/P1/PRELIM2022/4E5N(A) [1] (e) Name one stakeholder and the decision that he/she might make by using the businessfinancial statements. [2] (f) Ineachgivenscenario, identifytheaccountingtheoryapplied: Scenario Accountingtheory (i) Layla paid rent in advance for the month of July2022. She has not recorded this aspart of rentalexpensefor theyear ended30June2022. (ii) Theexcellent shoplocationandskillsofemployeesarenot recorded. [2] [Total: 11] [Turnover2 The following information was extracted fromthe books of Claire Home Supplies as at 31 July2020to2022. 2020 2021 2022$ $ $Motor vehicles 130800 124640 152800Cashat bank 41300 21800 -Tradereceivables 10120 22260 28330Inventory 12300 19800 35200 3

GMS(S)/POA/P1/PRELIM2022/4E5N(A) Prepaidrent 1000 2500 4400Tradepayables 16000 28400 30880Current portionof long-termborrowings 5000 5000 5000Bankoverdraft - - 4400 Current ratio 3.08 1.99 ?Quickratio 2.45 1.32 ? REQUIRED (a) Distinguishbetweenbankloanandbankoverdraft. [2] (b) Explaintheimportanceof beingliquid. [1] (c) Calculatethefollowingratiosasat 31July2022. Showyour answerstotwodecimal places: Current ratio QuickratioWorkings Answer [2] (d) Evaluate the liquidity of Claire HomeSuppliesover theperiodof threeyears. Usethegiveninformationandyour answer to(c). 4

GMS(S)/POA/P1/PRELIM2022/4E5N(A) [5] (e) Recommendonewaytoimproveliquidityof ClaireHomeSupplies. [1] [Total: 11] [Turnover 3 The following trade receivable account was extracted from the books of Alan LandscapeServicesfor June2022. Tradereceivable–EllieGardens 5

GMS(S)/POA/P1/PRELIM2022