2024 BPGHS S5 POA P1 (MS)

Name of Candidate: …………………………………………… ( ) Class: …………… This paper consists of 6 printed pages [Turn over BUKIT PANJANG GOVERNMENT HIGH SCHOOL PRELIMINARY EXAMINATION 2024 SECONDARY 5 GCE 'O' LEVEL SYLLABUS PRINCIPLES OF ACCOUNTS Paper 1 7087/01 15 August, 2024 1 hour 0750 h – 0850 h READ THESE INSTRUCTIONS FIRST Do not turn over the cover page until you are told to do so. Write in dark blue or black pen on both sides of the paper. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper chips, glue or correction fluid. The use of an approved calculator is allowed. Answer all the 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. FOR EXAMINER’S USE Question 1 / 16 Question 2 / 8 Question 3 / 16 Total: / 40 Candidates answer on the Question Paper No Additional Materials are required. MARKING SCHEME

2 © BPGHS Preliminary Examination 2024 7087/01 1(a) Any one of the followings: [1 – capital expenditure, 1 – revenue expenditure] • Capital expenditure refers to the cost of buying and bringing the non-current assets to its intended use, while revenue expenditure refers to the costs to operate, repair and maintain the non-current asset in working condition. • Capital expenditure provide benefits for more than 1 year, while revenue expenditure provides benefits which will be used within 1 year. • Capital expenditure is recorded as non-current asset in the statement of financial position, while revenue expenditure is recorded as expense in the statement of financial performance. 1(b) Journal Date 2024 Particulars Debit $ Credit $ Jan 1 Motor vehicles (120 000 + 6 500 + 2 800) 129 300 [1] Cash at bank 129 300 [1] Road tax expense 1 250 [1] Cash at bank 1 250 [1] 1(c) (i) Net book value = Cost – Accumulated depreciation = $62 000 – $32 000 = $30 000 [1] (ii) Gain/loss on sales of NCA = Sales proceeds – NBV = $27 000 – $30 000 = $(3 000) loss [1] Note: Student must show whether is it a gain or loss on sales of NCA to be awarded the mark.

3 © BPGHS Preliminary Examination 2024 7087/01 [Turn over 1(d) Journal Date 2024 Particular Debit $ Credit $ Jun 30 Income summary 3 000 Sales of non-current asset 3 000 1(e) Net book value of remaining motor vehicles = $(275 000 – 92 250) – $30 000 = $152 750 [1] Depreciation expense for year ended 30 June 2024 = 20% x $152 750 = $30 550 [1] 1(f) Accounting theory Matching theory [1] Explanation The cost of using the non-current asset is recorded as depreciation expense and matched against the income earned from using the non-current assets in the same accounting period to determine the profit for that period. [1] OR Accounting theory Prudence theory [1] Explanation Depreciation is charged to the non-current asset as it gets exposed to wear and tear. This will then ensure that profits and assets are not overstated. [1] 1(g) The choice of the method of depreciation is dependent on its usage pattern [1]. Motor vehicles provides more benefits in its earliest years of its useful life and hence, reducing method is used instead [1].

4 © BPGHS Preliminary Examination 2024 7087/01 2(a) Commission income receivable refers to the commission income earned as services are provided but the amount have yet to be received. [1] 2(b) According to accrual basis of accounting theory, expenses should be recorded in the period where services have been used, regardless of whether they have been paid or not [1]. Hence, prepaid advertising expense should be deducted from the other expenses from the current period and the services used in the business later should be recorded as current assets [1]. 2(c) (i) Profit for the year will be overstated by $7 900. [1] Note: Mark will still be awarded if the value is omitted (ii) Current assets will be overstated by $7 900. [1] Note: Mark will only be awarded if students specify current assets. General answer like ‘assets’ will not be awarded. 2(d) Yee Lin Extract of Statement of Financial Performance for the year ended 31 July 2024 $ Add: Other income Commission income (–1 600 + 4 000 – 1 500) 900 [1] Rental income (7 000 + 800) 7 800 [1] Less: Other expenses Advertising expense (7 900 + 6 860 + 900) 15 660 [1]

5 © BPGHS Preliminary Examination 2024 7087/01 [Turn over 3(a) The purpose is to check the business’ records (cash at bank account) against the bank’s record (bank statement) so as to deter fraud. [1] 3(b) Cash at bank Date Particular Debit Credit Balance 2022 $ $ $ May 31 Balance b/d 1 680 Dr 31 Trade receivable – Ah Tan Trading [1] 540 2 220 Dr 31 Rent income [1] 600 2 820 Dr 31 Interest expense [1] 20 2 800 Dr Jun 1 Balance b/d 2 800 Dr 3(c) Bank reconciliation statement as at 31 May 2022 $ Balance as per bank statement 1 670 Add: Deposits in transit Trade receivable – Iman Shoot Studio [1] 1 000 Trade receivable – Micheal Kor Kor [1] 780 Bank error (900 – 800) [1] 100 Less: Cheques not yet presented Trade payable – Hui Loft Houses (Cheque no: 24002) [1] (750) Adjusted balance as per cash at bank account [1] 2 800

6 © BPGHS Preliminary Examination 2024 7087/01 3(d) Year ended 30 June 2022 Year ended 30 June 2023 Workings Average inventory = (20 200 + 24 570) / 2 = $22 385 𝐷𝑎𝑦𝑠 𝑠𝑎𝑙𝑒𝑠 𝑖𝑛 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠 × 365 𝑑𝑎𝑦𝑠 = 22 385 89 280 × 365 𝑑𝑎𝑦𝑠 = 91.52 days [1] Average inventory = (24 570 + 25 480) / 2 = $25 025 𝐷𝑎𝑦𝑠 𝑠𝑎𝑙𝑒𝑠 𝑖𝑛 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠 × 365 𝑑𝑎𝑦𝑠 = 25 025 100 560 × 365 𝑑𝑎𝑦𝑠 = 90.83 days [1] 3(e) • The days sales in inventory of Wei Xun’s business has improved from 91.52 days to 90.83 days from 2022 to 2023 respectively. [1] • This means that on average, Wei Xun takes 90.83 days to sells its inventory in a year which was an improvement from 91.52 days by 0.69 days. [1] • This suggests that in 2023, Wei Xun’s business takes a shorter time now to sell its inventory. Hence, it is becoming more efficient in managing its inventory. [1] 3(f) Any two of the followings: [1 – per point] • Reducing selling price for slow-moving goods (unpopular products). • Provide trade discount to customers to encourage bulk purchase. • Attract more customers through marketing campaign. • Use technology to improve accuracy prediction about customer demand so that business can know when and how much inventory to buy.