ESSS 2022 4E5N Prelim P1

EastSpringSecondarySchoolTowardsExcellenceandSuccess Name:………………………………………………………………………………( ) Class:………………. OLevelPreliminaryExamination2022Secondary4Express/ 5Normal(Academic) PrinciplesofAccountsPaper1 7087/01 25August2022 1hourThursday 1035–1135CandidatesanswerontheQuestionPaper.NoAdditionalMaterialsarerequired. READTHESEINSTRUCTIONSFIRSTWriteyourname,classandregisternumberinthespacesprovidedabove,andonalltheworkyouhandin.Writeindarkblueorblackpen.YoumayuseanHBpencilforanydiagramsorgraphs.Donotusestaples,paperclips,highlighters,glueorcorrectionfluid.Theuseofanapprovedcalculatorisallowed.DONOTWRITEONANYBARCODES. Answerallquestions.Thebusinessesdescribedinthisquestionpaperareentirelyfictitious.Thenumberof marksis givenin brackets[ ] attheendofeachquestionorpartquestion.

2 Thisquestionpaperconsistsof9printedpagesincludingthecoverpage.Question1Geremihasjuststartedabusinessandhassomequestionsonaccountingmattersthathewouldliketoclarify. REQUIRED(a) Whenatrialbalanceisbalanced,itdoesnotmeanthattherearenoerrorsintheaccounts.Explainthereasonforthis. [1] (b) Explainwhyitisimportanttohaveinternalcontrolsinabusiness. [2] (c) Statetwoexamplesofinternalcontrolprocedureovercash. [2] (d) Stateoneadvantageofoperatingabusinessasasoleproprietorshipinsteadofaprivatelimitedcompany. [1] (e) Stateonedisadvantageofoperatingabusinessasasoleproprietorshipinsteadofaprivatelimitedcompany. [1]

3 (f) Explainwhyabusinessneedstopreparefinancialstatementsatregulartimeintervalswiththesupportofanaccountingtheory. [2] [Total:9]

4 Question2ThefollowingservicefeerevenueaccountwasextractedfromthebooksofGetTogetherPteLtd,whichisaneventorganiser. ServicefeerevenueAccountDate Particulars Dr Cr Balance2022 $ $ $Mar1 Servicefeerevenuereceivedinadvance(1) 4,900 4,900CrMar6 Cashinhand 2,300Mar15 Cashatbank(3) 3,600Mar22 Tradereceivables(4) 7,300Mar31 Servicefeerevenuereceivedinadvance(2) 1,500 REQUIRED(a) Explainthedifferencebetweenentries(1)and(2). [2] (b) Statetheamountofservicefeerevenuetobepresentedinthestatementoffinancialperformanceforthemonthended31March2022. [1] (c) Explainthedifferencebetweentransactions(3)and(4). [2]

5 (d) Statetheeffectonthefollowingifnoadjustmentwasmadetoservicefeerevenueon31March2022. (i) Statementoffinancialperformance [2] (ii) Statementoffinancialposition [1] (e) GetTogetherPteLtdisaservicebusiness.Explainthedifferencebetweenaservicebusinessandatradingbusiness. [2] [Total:10]

6 Question3ThefollowinginformationisextractedfromthebooksofResilienceTradingfortheyearsended30June. 2021 2022$ $Salesrevenue 165,000188,600LessSalesreturns (4,200) (7,500)NetSalesrevenue 160,800181,100LessCostofsales (64,270)(71,200)Grossprofit 96,530 109,900 Endinginventory 18,200 25,700Dayssalesininventory 96.5 REQUIRED(a) Calculate,toonedecimalplace,thedayssalesininventoryfortheyearended30June2022. [2] (b) Commentonthechangeindayssalesininventoryoverthetwoyears. [3]

7 (c) Explainwhyefficiencyininventorymanagementisimportanttoabusiness.[2] (d) Suggesttwowaysinwhichthedayssalesininventorycanbeimproved.[2] Harhash,apotentialinvestorwhoisinterestedininvestinginResilienceTradinghascomputedthereturnonequity. REQUIRED(e) Explainthemeaningofreturnonequity. [1] (f) ExplainhowHarhashcanusethereturnonequitythathehascomputedtomakehisdecisiononwhethertoinvestinResilienceTrading. [2]

8 [Total:12] Question4Gonzalesstarteda businessto providedeliveryserviceson 1 May2020bypurchasingtwodeliveryvanscosting$12,000each,payingbycheque.Anothervancosting$15,000waspurchasedon 1 August2021on creditfromToyodaLtd.It wasthebusiness’policytodepreciatemotorvehiclesat20%perannumusingthereducingbalancemethod.REQUIRED(a) Explainwhy motorvehiclesneedto be depreciatedusinga relevantaccountingtheory.[2] (b) Nametwocausesofdepreciation. [2] (c) Calculatethedepreciationofmotorvehiclesfortheyearended30April2022usingthereducingbalancemethod. [3]

9 Besidesthereducingbalancemethod,anothermethodtodepreciatenon-currentassetsisthestraight-linemethod.REQUIRED(d) Explainthedifferencebetweenusingthetwodepreciationmethodsonprofitsfortheperiod [2] [Total:9] EndofPaper