HGV 2022 Prelim P1

HILLGROVESECONDARYSCHOOLPRELIMINARYEXAMINATION2022SECONDARYFOUR(EXPRESS)/ FIVE(NORMALACADEMIC) CANDIDATENAME ( ) CLASS - CENTRENUMBER S INDEXNUMBER PRINCIPLESOFACCOUNTSPaper1 CandidatesanswerontheQuestionPaper.NoAdditionalMaterialsarerequired. 7087/0117Aug20221hour11.40AMto12.40PM READTHESEINSTRUCTIONSFIRSTWriteindarkblueorblackpen.YoumayuseanHBpencil foranyroughworking.Donotusestaples,paperclips,glueorcorrectionfluid. Answer allquestions. Thenumberofmarksisgiveninbrackets[ ]attheendofeachquestionorpartquestion. For Examiner’sUseMarks123Parent’s/Guardian’sSignature:___________________ 4TOTAL Thisdocumentconsistsof 11printedpages.

2 1 PraiseTradingrecordsitstransactionsbasedonsourcedocumentsinaccordancetotheobjectivitytheoryandthehistorical costtheory. REQUIRED (a) Explaintheobjectivitytheory. [1] (b) Explainthehistorical costtheory. [1] PraiseTradingissuedaninvoicewhenitsoldgoods. REQUIRED (c) Explainthepurposeoftheinvoice. [1] PraiseTradingrecordedthefollowingtransactions. REQUIRED (d) State the sourcedocument that PraiseTradingusedtorecordeachtransaction. Donotuse‘receipt’ and‘bankstatement’ inyouranswer. (i) Receivedchequefromcreditcustomer (ii) Paidcreditsupplierbycheque [1] HGVPRELIMINARYEXAMINATION20224E/5NAPRINCIPLESOFACCOUNTSPAPER1

3 PraiseTradingimplementstheaccountingcycleandtheaccountinginformationsystem. REQUIRED (e) Fill inmissingstages. [1] (i) Theaccountingcycle (ii) Theaccountinginformationsystem Praise Trading does not record high staff morale in its books in accordance with themonetarytheory. REQUIRED (f) Explainthemonetarytheory. [1] Praise Trading prepares its financial statements at the end of every 12 months inaccordancetotheaccountingperiodtheory. REQUIRED (g) Explaintheaccountingperiodtheory. [1] [Total: 7] HGVPRELIMINARYEXAMINATION20224E/5NAPRINCIPLESOFACCOUNTSPAPER1

4 2 GoodFit andQuickStepareinthebusinessof buyingandsellingsafetybootsusedbyworkersworkinginconstruction,manufacturingandlogisticsindustries. Thefollowinginformationregardingtherateofinventoryturnoverisavailable. GoodFit QuickStep31March2021 31March2022 31March2021 31March20224.06times 6.64times 8.11times ? ThefollowinginformationaboutQuickStepsisavailable. $Costofsalesfortheyearended31March2022 850000Inventoryasat31March2022 92120Inventoryasat31March2021 94150 REQUIRED (a) State onenon-accountinginformationthatbusinessesconsiderwhendecidingwhichtypeofinventorytopurchasefromsuppliers. [1] (b) Calculate QuickStep’srateof inventoryturnover for theyear ended31March2022(totwodecimal places).Showallworkings. [2] HGVPRELIMINARYEXAMINATION20224E/5NAPRINCIPLESOFACCOUNTSPAPER1

5 (c) Evaluateefficiencyininventorymanagementfor bothbusinessesfor bothyears. [4] (d) Suggest onereasonforthetrendin(c). [1] HGVPRELIMINARYEXAMINATION20224E/5NAPRINCIPLESOFACCOUNTSPAPER1

6 QuickStepreviewsitstradereceivablesattheendofeachfinancial period. REQUIRED (e) Using an accounting theory, explain why Quick Step records impairment loss ontradereceivablesafteritsreview. [2] ThebalanceinQuickStep’sallowancefor impairment of tradereceivablesaccountwas$4000asat1April 2021. On7July2021, acredit customer, GreatConstruction,declaredbankrupt.$2800owingbyGreatConstructionwaswrittenoff. The balance in Quick Step’s trade receivables account was $30 000 as at 31 March2022. Uponreviewof itscredit customers, it estimatedthat6%ofthedebtswaslikelytobeuncollectible. REQUIRED (f) Prepare journal entry to record the write-off on 7 July 2021 in QuickStep’sbooks.Narrationisnotrequired. [2] HGVPRELIMINARYEXAMINATION20224E/5NAPRINCIPLESOFACCOUNTSPAPER1

7 (g) Prepare journal entry to adjust allowancefor impairment of tradereceivableson31March2022inQuickStep’sbooks.Narrationisnotrequired. [2] [Total: 14] 3 ThefollowingwereextractedfromthebooksofQuestPteLtd. Thefollowingwasextractedfromitsbooksfortheyearended31December2021. ShareCapital Date Particulars Dr($) Cr($) Bal ($)2021 Jan1 Bal b/d 500000 Cr Aug1 Cashatbank 35000 535000 Cr Dividends Date Particulars Dr($) Cr($) Bal ($)2021 Jun30 Cashatbank 25000 25000 Dr Dec21 Dividendspayable 53500 53500 DrDec31 Retainedearnings 78500 - HGVPRELIMINARYEXAMINATION20224E/5NAPRINCIPLESOFACCOUNTSPAPER1

8 RetainedEarnings Date Particulars Dr($) Cr($) Bal ($)2021 Jan1 Bal b/d 900000 Cr Dec31 Incomesummary 90000 990000 Cr Dec31 Dividends 78500 911500 Cr REQUIRED (a) Define‘dividends’. [1] (b) Define‘retainedearnings’. [1] (c) Describe the entry in the retained earnings account with the particulars ‘Incomesummary’. [1] (d) Describetheentryintheretainedearningsaccountwiththeparticulars‘Dividends’. [1] HGVPRELIMINARYEXAMINATION20224E/5NAPRINCIPLESOFACCOUNTSPAPER1

9 (e) Calculatetheamountofshareholders’ equityon1January2022. [2] Shareholders of Quest Pte Ltd need to decide if they want tocontinuetoinvest inthebusiness. To make this decision, the shareholders need the information of howmuchprofitthebusinesshasearnedfortheyearasitwill affectthedividendrate. REQUIRED (f) Other than shareholders, state oneother stakeholder whomaybeinterestedintheaccounting information of Quest Pte Ltd and the decision that this stakeholder willneedtomake. [1] (g) Explainwhat accountinginformationdoesthestakeholder needinordertomakethedecisionin(f)? [1] [Total: 8] HGVPRELIMINARYEXAMINATION20224E/5NAPRINCIPLESOFACCOUNTSPAPER1

10 4 Oliver providedthecashat bankaccount inhisbooksandthebankstatementreceivedforthemonthofMay2022. CashatBankDate Particulars ChequeNo. Dr($) Cr($) Bal ($)2022 May1 Bal b/d 6200 Dr5 Salesrevenue 34008 LeeYanLtd 1053 800014 Neil Trading 1054 428017 MinaEnterprise 720019 Inventory 1055 90027 Insuranceexpense 1056 230029 JaylynLtd 450030 KengTrading 1057 6100 280 Cr BankStatementforthemonthofMay2022Date Transactions Dr($) Cr($) Bal ($)2022 May1 Balanceb/d 6350 Cr1 Chequeno.1052 1505 Standingorder–Rent 13407 Chequedeposit 34009 Chequeno.1053 880011 Directdeposit–Commission 365016 Chequeno.1054 428019 Chequedeposit 720021 Chequeno.1055 90029 Chequeno.1056 230030 Refertodrawer(May19) 7200 4370 Dr Oliver’saccountantrecordedchequenumber1053wronglyinthebooksofthebusiness. REQUIRED (a) Otherthanbankreconciliation,stateanotherwayofinternal control overcash. [1] HGVPRELIMINARYEXAMINATION20224E/5NAPRINCIPLESOFACCOUNTSPAPER1