Damai Sec 2024 POA Paper 1 and 2 with Answers

DAMAI SECONDARY SCHOOLPreliminary Examination 2024CANDIDATE NAMECLASSINDEX NUMBERPRINCIPLES OF ACCOUNTSPaper 1 Secondary 4 Express / 5 Normal (Academic)Setter: Miss Cristy Lin7087/0123 August 20241 hour 40 MarksCandidates answer on the Question Paper.No Additional Materials are required.READ THESE INSTRUCTIONS FIRSTWrite your index number, name and class in the spaces at the top of this page. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. Answer all questions. The businesses described in this question paper are entirely fictitious. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 8 printed pages.[Turn over

2Answer all questions1Oppa Wen Hao sells snacks imported from South Korea and ends its financial year on 31 May. On 1 June 2021, the business had a capital balance of $50 000. The following transactions took place between 2021 and 2023. DateDescription of Transaction2021Aug 3The owner contributed $7 000 cash to the business bank account. 2022Apr 25The owner took $600 goods for personal use. May 31Profit for the year amounted to $89 400.Aug 24The owner contributed a chair $300 to the business. 2023May 31Loss for the year amounted to $2 570.REQUIRED(a)Explain the accounting theory behind the transaction on 3 August 2021. [2](b)Prepare the drawings account for the year ended 31 May 2022. DrawingsDateParticularsDebitCreditBalance$$$[2]

3(c)Prepare the capital account for the years ended 31 May 2022 and 31 May 2023. CapitalDateParticularsDebitCreditBalance$$$ [6](d)Explain any two reasons why the owner’s equity changed over the year ended 31 May 2022. [2][Total: 12]

42Yvonne runs a service business. The financial year end is 31 December. On 1 April 2023, the business obtained a bank loan of $300 000 at an interest rate of 3% per annum. The loan is to be paid equally over 10 years.The partial principal sum repayment and interest are to be made every year starting 31 March 2024. REQUIRED(a)Prepare journal entries to record the borrowing on 1 April 2023 and the interest expense incurred on 31 December 2023. Narrations are not required. JournalDateParticularsDebitCredit$$[3](b)Prepare an extract of the statement of financial position as at 31 December 2023, showing only the liabilities section. YvonneStatement of financial position as at 31 December 2023 (extract)$ [3][Turn over

5(c)Use a suitable accounting theory to explain why interest expense is recorded. [2][Total: 8]3Iris owns a business selling eyewear. For the year ended 31 August 2023, she had the following information pertaining to her rental expenses account. Rental expenseDateParticularsDebitCreditBalance2022$$$Sep 1Rent expense payable300300 Cr2023Aug 30Cash at bank 4 5004 200 DrAug 31Prepaid rent 6003 600 Dr?REQUIRED(a)State the account in which the amount of rent expense is transferred to at the end of the financial year. [1](b)Interpret the entries in the rental expense account on:(i)1 September 2022[1](ii)30 August 2023

6[1](iii)31 August 2023[1](c)Use an accounting theory to explain the recording on 31 August 2023.[2](d)Complete the following table by stating the effect ‘understated’ or ‘overstated’ on income and profit for the period when each item is not adjusted. ItemEffect on IncomeEffect on Profit for the Period(i)Commission income received in advance(ii)Income receivable[2][Total: 8]

7[Turn over4Cornelius is the owner of a trading business and has the following information extracted for the year ended 30 June 2024. $Inventory 30 600Sales revenue 250 000Sales returns 7 900Cost of sales185 000The inventory as at 1 July 2023 is $25 800.REQUIRED(a)Calculate the following for the year ended 30 June 2024. Show your answers to two decimal places. (i)Rate of inventory turnover[1](ii)Days sales in inventory[1](b)Evaluate Cornelius’ efficiency in inventory management against its competitor, Aman. Aman’s rate of inventory turnover is 10.00 times, and days sales in inventory is 36.50 days.

8[4][Turn over(c)State two non-accounting information to consider when determining which non-current asset to purchase. [2]Cornelius oversees authorising cheque payments of the business. REQUIRED(d)State the purpose of source documents. [1](e)State and explain one type of internal control over the handling of cash. [2](f)Explain objectivity. [1][Total: 12]End of paper

Sec 4E/5N Preliminary Examinations 2024 – Solutions and Mark Scheme for Paper 1Answer all questions1Oppa Wen Hao sells snacks imported from South Korea and ends its financial year on 31 May. On 1 June 2021, the business had a capital balance of $50 000. The following transactions took place between 2021 and 2023. DateDescription of Transaction2021Aug 3The owner contributed $7 000 cash to the business bank account. 2022Apr 25The owner took $600 goods for personal use. May 31Profit for the year amounted to $89 400.Aug 24The owner contributed a chair $300 to the business. 2023May 31Loss for the year amounted to $2 570.REQUIRED(a)Explain the accounting theory behind the transaction on 3 August 2021. According to the accounting entity theory [1], the activities of a business are separate from the actions of the owner. All transactions are recorded from the point of view of the business. [1][2](b)Prepare the drawings account for the year ended 31 May 2022. DrawingsDateParticularsDebitCreditBalance2022$$$Apr 25Inventory600 [1]600 DrMay 31Capital (Transfer)600 [1]-[2]

2(c)Prepare the capital account for the years ended 31 May 2022 and 31 May 2023. CapitalDateParticularsDebitCreditBalance2021$$$Jun 1Balance b/d50,000 Cr [1]Aug 3Cash at bank 7,000 [1]57,000 Cr2022May 31Drawings600 [1]56,400 CrIncome summary89,400 [1]145,800 CrJun 1Balance b/d145,800 CrAug 24Fixtures and fittings300 [1]146,100 Cr2023May 31Income summary 2,570 [1]143,530 CrJun 1Balance b/d143,530 Cr[6](d)Explain any two reasons why the owner’s equity changed over the year ended 31 May 2022. The owner had contributed cash $7,000 [0.5] which increased owner’s equity. [0.5]The owner took drawings $600 [0.5] which decreased owner’s equity. [0.5]The business made a profit of $89,400 [0.5] which increased owner’s equity. [0.5][Any 2 reasonable reasons for 2 marks.][2][Total: 12]