PSS 2024 POA 4E5N Paper 1 Prelim 4E5N_Answer Key

EXP/NA PUNGGOL SECONDARY SCHOOL SECONDARY 4/5 EXPRESS / NORMAL ACADEMIC 2024 PRELIMINARY EXAMINATION ANSWER KEY NAME CLASS INDEX NUMBER Principles of Accounts Paper 1 7087/01 26 August 2024 1 hour READ THESE INSTRUCTIONS FIRST Write your class, register number and name on all the work you hand in. Write in dark blue or black ink on both sides of the paper. You may use a soft pencil for any diagrams, graphs, tables or rough working. Do not use staples, paper clips, glue or correction fluid. Answer ALL questions. Write your answers in the spaces provided. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. The use of an approved scientific calculator is expected, where appropriate. For Examiner’s use Parent’s Signature - - - - - - Total /40 This paper consists of 8 printed pages and 0 blank page. Setter(s) : Vetter :

2 Answer all questions. 1 The following information was extracted from the books of Jayden Fishery Pte Ltd. Advertising expense account Date Particulars Debit ($) Credit ($) Balance ($) 2023 Aug 1 Advertising expense payable (i) 5 200 5 200 CR Nov 7 Cash at bank (ii) 19 000 13 800 DR 2024 Apr 9 Cash at bank 22 000 35 800 DR Jul 31 Prepaid advertising expense (iii) 2 800 33 000 DR Income summary 29 000 - REQUIRED (a) Define Expense payable. payments that a business owes to a supplier or vendor for goods or services but haven't received an invoice for those costs yet. [1] (b) Explain the following transactions. (i) 1 August 2023 Advertising expense of $5200 was incurred but not yet paid for in the last financial year ended 31 July 2022[1]. As such, it is now reversed and deducted from this year’s advertising expense as it is not this year’s advertising expense. [1] (ii) 7 November 2023 Advertising expense of $20 000 was paid by cheque for the year ended 31 July 2022. [1] (iii) 31 July 2024 Advertising expense amounting to $2 800 was paid but not yet incurred for the year ended 31 July 2024[1]. As such, it is recorded as a current asset and deducted from this year’s advertising expense [1].

3 (c) Explain, using an appropriate accounting theory, the need to adjust for prepaid advertising expense for the year ended 31 July 2022. Accrual basis of accounting states that business activities that have occurred, regardless of whether cash is paid or received, should be recorded in the relevant accounting period[1]. As such, since prepaid advertising expense had not yet been incurred, it is deducted from advertising expense account and recorded as a current asset instead [1]. [Total