MSHS 2024 POA P1 QP

[Turn over ClassCentre No. / ‘O’ Level Index No.Name MARIS STELLA HIGH SCHOOLPRELIMINARY EXAMINATIONSSECONDARY FOURPRINCIPLES OF ACCOUNTS7087/01Paper 115 August 2024 Students answer on the Question Paper. 1 hourNo Additional Materials are required.READ THESE INSTRUCTIONS FIRSTWrite your class, index number and name 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.The total number of marks for this paper is 40.For Examiner’s Use40This document consists of 9 printed pages and 1 blank page.

2Answer all questions.1Gerrard started his business as a sole trader on 1 June 2023. The following transactions occurred in the first week of trading.1Bought a new machine on credit from David Ltd.2A credit customer was undercharged.3Received cash for commission earned.REQUIRED(a)Name the source document for the 3 transactions. TransactionSource document123 [3](b)Name one principle of professional ethics and explain the meaning.Principle: ………………………………………………………………………..………………..Explanation: …………………………………………………………………..………………....………………………………………………………………………………..……………….…..……………………………………………………………………………….………….……..[2](c)Assist Gerrard by completing the order of the accounting information system.OrderAccounting information system1Source documents2Journals34Trial balance5Adjustments6Statement of financial performance and position[1](d)Name the accounting theory that Gerrard is applying by preparing the financial statements on the basis that his business will continue to operate indefinitely. ……………………………………………………………………………….………….….…..[1][Total: 7]

3 [Turn over 2Moritz is a trader. His business employs an accountant. On 1 April 2023, Moritz’s capital account had a balance of $50 000. The following transactions took place in his business for the year ended 31 March 2024:2023Jun 14Moritz took out some goods costing $500 from the business for personal use.Aug 19Moritz contributed $10 000 to the business bank account.Dec 25Moritz contributed his personal car worth $40 000 to the business for delivery purposes.2024Feb 16Moritz paid for his personal insurance costing $2 500 from his business bank account.Mar 31Profit for the financial year was $28 000.REQUIRED(a)State the effect of drawings on the profit for the year and the equity of a business. ………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..……………………………………………………………………………….…………….…..[2](b)Prepare the drawings account for the year ended 31 March 2024, including the closing entry.………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..……………………………………………………………………………….…………….…..[3]

4(c)Prepare the capital account for the year ended 31 March 2024.………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..……………………………………………………………………………….…………….…..[5](d)Explain the meaning of ‘stewardship’ as it applies to the role of accountants.………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..……………………………………………………………………………….…………….…..[1][Total: 11]

5 [Turn over 3The following information has been provided for two restaurants for the year ended 31 December 2023. WOWJoy Eatery$$Current assetsTrade receivables65 00053 000Inventory60 00010 000Prepaid rent expense35 000-Cash at bank- 36 000Cash in hand 1 000 2 000Current liabilitiesTrade payables50 00054 000Bank overdraft30 000-Rent expense payable- 22 000Current ratio?1.33Quick ratio?1.20REQUIRED(a)Calculate to two decimal places for WOW’s:(i)current ratio,…………………………………………………………………………………..………………………………………………………………………………………………..………………………………………………………………………………………………..………………………………………………………………………………………………..………………………………………………………………………………………………..…………………………………………………………………………………………..……………...[1](ii)quick ratio.…………………………………………………………………………………..………………………………………………………………………………………………..………………………………………………………………………………………………..………………………………………………………………………………………………..………………………………………………………………………………………………..…………………………………………………………………………………………..……………...[1]

6(b)Evaluate the liquidity of WOW and Joy Eatery for the year ended 31 December 2023.………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..……………………………………………………………………………….…………….…..[6](c)Suggest two ways for WOW to improve its liquidity position.………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..………………..[2][Total: 10]

7 [Turn over 4Ethan Vans is a delivery business. The following is the service fee revenue account of Ethan Vans for the month ended 30 June 2024.Service fee revenue accountDateParticularsDebitCreditBalance2024$$$Jun 1Bal b/d25 00025 000 Cr Jun 1Service fee revenue received in advance (1) 6 00031 000 Cr14Cash at bank 4 00035 000 Cr20Trade receivable – Shawn (2) 2 00037 000 Cr30Service fee revenue received in advance (3)5 00032 000 Cr-REQUIRED(a)Interpret entry (1). ………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..……………………………………………………………………………….…………….…..[1](b)Interpret entry (2). ………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..……………………………………………………………………………….…………….…..[1](c)Interpret entry (3).………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..……………………………………………………………………………….…………….…..[1]

8(d)Explain the effects on profit and current liabilities if the business did not record the entry on 30 June.………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..……………………………………………………………………………….…………….…..[2](e)State and explain one accounting theory applied in the recording of the entry on 30 June. ………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………………..…………………..………………………………………………………………………