MJR 4E5N PRE POA P1 2024

MANJUSRI SECONDARY SCHOOL 2024 PRELIMINARY EXAMINATION Name Class Index Number PRINCIPLES OF ACCOUNTS Secondary Four Express / Five Normal (Academic) Paper 1 Candidates answer on the Question Paper. 7087/01 26 August 2024 1 hour READ THESE INSTRUCTIONS FIRST Write your name, index number and class in the spaces at the top of this page. Write in dark blue or black pen. 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 entirely fictitious. The number of marks is given in brackets [ ] at the end of each question or part question. Parent’s / Guardian’s Signature: …………………….. For Examiner’s Use Q1 /11 Q2 /10 Q3 / 8 Q4 /11 Total /40 This document consists of 10 printed pages and 2 blank pages. [Turn over

2 7087/01/4E5N/POA/PRELIM/2024 Answer all questions. 1 Dillon operates an advertising business. His business makes an average annual profit of over $300 000. He decides that his business should treat purchases of office equipment costing less than $500 as revenue expenditure. REQUIRED (a) Name and explain the accounting theory applied when recording purchases of non- current assets of low value as revenue expenditure. Name ………………………………………………………………………………………. [1] Explanation …………………………………………………………………………………… ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………. [2] (b) State one difference between capital and revenue expenditure. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………. [2]

3 7087/01/4E5N/POA/PRELIM/2024 Dillon’s business bought a new equipment from Japan and trained staff to operate it. REQUIRED (c) Complete the following table by inserting a tick (√) to show whether each item of expenditure relating to the new equipment should be treated as capital or revenue expenditure. The first item has been completed as an example. Capital expenditure Revenue expenditure Installation cost √ Staff training √ Shipping cost from Japan to Singapore √ [2] During the financial year ended 31 May 2024, Dillon extended his office premises at a cost of $38 800, which included $3 000 for repairs to his existing office premises. The full amount of $38 800 was recorded in the statement of financial performance. (d) State the effect and amount of including the full cost of $38 800 on the business. (i) Profit for the year ended 31 May 2024 ……………………………………………………………………………………….. [2] (ii) Non-current assets on 31 May 2024 ……………………………………………………………………………………….. [2] [Total: 11] [Turn over

4 7087/01/4E5N/POA/PRELIM/2024 2 Naraen started a healthcare business, Naraen Wellness. On 1 April 2022, the business took a 5-year loan of $100 000 at 5% per annum to purchase equipment and furniture. The partial principal sum repayment and the interest payment are to be made every 31 March. The financial year of Naraen Wellness ends on 31 December. REQUIRED (a) Prepare the bank loan account for the years ended 31 December 2022 and 2023. Bank loan account Date Particulars Debit $ Credit $ Balance $ 2022 Apr 1 Cash at bank 100 000 [1] 100 000 Cr 2023 Jan 1 Balance b/d 100 000 Cr Mar 31 Cash at bank 20 000 [1] 80 000 Cr 2024 Jan 1 Balance b/d 80 000 Cr [1] [3] (b) Prepare an extract of the statement of financial performance for the year ended 31 December 2022. Naraen Wellness Extract of Statement of Financial Performance for the year ended 31 December 2022 ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………..… [1[1]

5 7087/01/4E5N/POA/PRELIM/2024 (c) Prepare an extract of the statement of financial position as at 31 December 2022. Naraen Wellness Extract of Statement of Financial Position as at 31 December 2022 ………………………………………………………………………………………………….. ……………………………………………………………………………………………..…… 45,000 [1] ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. borrowing 5 000 [1] ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. [3] (d) Name one stakeholder who would be interested in how a company borrows funds. Give a reason for your answer. Stakeholder ……………………………………………………………………………….. [1] Reason ………………………………………………………………………………………... ……………………………………………………………………………………………… [2] [Total: 10] Accrual basis of accounting [1]. It states that when the [Turn over

6 7087/01/4E5N/POA/PRELIM/2024 3 Tanisha Trading is a supplier of electronic equipment. It is evaluating whether to grant credit to two customers, Yi Electronics and Fan Enterprise. The following information was extracted from the statement of financial position of the two businesses of the same industry as at 31 March 2024. Yi Electronics Fan Enterprise $ $ Current ratio 2.52 1.71 Quick ratio 1.62 0.82 REQUIRED (a) Explain the importance of being liquid. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ……………………………………………………………………………………………… [2] (b) Compare and comment on the liquidity of the two businesses. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………………….. ………………………………………………………………………………………..…….. [3] Net credit sales revenue / Average net trade

7 7087/01/4E5N/POA/PRELIM/2024 (c) Should Tanisha Trading grant credit to both businesses? Support your answer with reasons. …………………………………………………………………………………………………. …………………………………………………………………………………………………. …………………………………………………………………………………………………. …………………………………………………………………………………………………. …………………………………………………………………………………………………. …………………………………………………………………………………………………. ……………………………………………………………………………………………… [2] (d) State one way to improve a business’ liquidity. …………………………………………………………………………………………………. ……………………………………………………………………………………………… [1] [Total: 8] [Turn over

8 7087/01/4E5N/POA/PRELIM/2024 4 Affan owns a shoe shop. He provided the following information from the business bank statement and cash at bank account for the month of June 2024. Cash at bank account Date Particulars Cheque Number Debit ($) Credit ($) Balance ($) 2024 Jun 1 Balance b/d 9 200 Dr 8 Fixtures and fittings 3130 2 600 6 600 Dr 12 Sales revenue 3 150 9 750 Dr 14 Insurance 3131 2 000 7 750 Dr 17 Utilities 3132 552 7 198 Dr 21 Stanley 1 130 8 328 Dr 25 Daryl 3133 500 7 828 Dr 30 Amber 1 560 9 388 Dr Jul 1 Balance b/d 9 388 Dr On 3 July 2024, Affan received the following bank statement from the bank. Bank Statement Date Particulars Withdrawal ($) Deposit ($) Balance ($) 2024 Jun 1 Balance b/d 11 300 Cr 5 Cheque 3129 2 100 9 200 Cr 12 Cash 3 150 12 350 Cr 15 Cheque 3130 2 600 9 750 Cr 18 Credit t