Woodlands Sec 4NA POA Prelim Paper 1 QP with ANS

NORMAL ACADEMIC NORMAL ACADEMIC NORMAL ACADEMIC Name: ___________________________________( ) Class: ___________ WOODLANDS SECONDARY SCHOOL PRELIMINARY EXAMINATION 2022 NORMAL ACADEMIC Level: Sec 4 Normal Academic Marks: 40 Subject: Principles of Accounts Day: Friday Paper: 7086/01 Date: 5 August 2022 Duration: 1 hour Time: 10 45 – 11 45 READ THESE INSTRUCTIONS FIRST ___________________________________________________________________ Write down your name; register number and class on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. DO NOT TURN THE PAGE UNTIL YOU ARE TOLD TO DO SO. This document consists of 9 printed pages and 1 blank page.

2 NORMAL ACADEMIC NORMAL ACADEMIC NORMAL ACADEMIC 1 The following balances as at 31 March 2022 were extracted from the business of Shi Ting. $ Trade receivables 12 260 Bank loan 10 000 Commission income receivables 180 Trade payables 11 430 Inventory 12 850 Capital ? REQUIRED (a) State the accounting equation. [1] (b) Explain the meaning of each of the following terms: (i) assets [1] (ii) liabilities [1] (c) Using the accounting equation, calculate the value of capital as at 31 March 2022. [1]

3 NORMAL ACADEMIC NORMAL ACADEMIC NORMAL ACADEMIC Shi Ting’s accountant wrongly recorded her personal car maintenance expenses of $230 into the motor vehicle expenses account. REQUIRED (d) Prepare a journal entry to correct this error. A narration is required. Journal Date Particulars DR CR 2022 $ $ Mar 31 [3] (e) State the effect of this error on profit for the year. [1] (f) State the two professional ethics that Shi Ting’s accountant should adhere to. [2] [Total: 10]

4 NORMAL ACADEMIC NORMAL ACADEMIC NORMAL ACADEMIC 2 Raja buys and sells jeans on credit and started his business on 1 January 2020. Raja uses the FIFO (First in First Out) method of inventory valuation. The following transactions took place in January 2020. Jan 3 Bought 20 pairs of jeans costing $100 on credit from Cebu. Jan 5 Bought 10 pairs of jeans costing $60 on credit from Bambi. Jan 8 Bought 30 pairs of jeans costing $200 on credit from Shifu. Jan 10 Sold 30 pairs of jeans to Canva for $650. Jan 13 Bought 40 pairs of jeans costing $280 on credit from Pondy. Jan 15 Raja returned 40 pairs of jeans to Pondy. REQUIRED (a) Calculate the cost of sales. [1] (b) Calculate the ending inventory on 31 January 2020. [1]

5 NORMAL ACADEMIC NORMAL ACADEMIC NORMAL ACADEMIC (c) Prepare the inventory account for the month ended 31 January 2020. [6] (d) State two factors Raja should consider when purchasing inventory from credit suppliers. [2] [Total: 10]

6 NORMAL ACADEMIC NORMAL ACADEMIC NORMAL ACADEMIC 3 Wei Wei buys and sells photo frames. The following transactions took place in the business: 2016 Dec 12 Received a cheque of $1230 from credit customer, Jonathan. Dec 13 Issued a cheque of $580 to pay for advertising expenses. Dec 14 The cheque received from Jonathan was rejected by the bank. REQUIRED (a) Name the source documents for the transactions that occurred on: (i) 12 December 2016 [1] (ii) 13 December 2016 [1] (iii) 14 December 2016 [1] (b) Prepare a journal entry to record the transaction on 14 December 2016. A narration is required. Journal Date Particulars DR CR 2016 $ $ Dec 14 [3]

7 NORMAL ACADEMIC NORMAL ACADEMIC NORMAL ACADEMIC (c) Give two possible reasons why the cheque from Jonathan was rejected by the bank. [2] (d) State two internal control measures Wei Wei can implement for his business. [2] [Total: 10]

8 NORMAL ACADEMIC NORMAL ACADEMIC NORMAL ACADEMIC 4 Centrepoint Cleaning Agency is a business that cleans the office spaces of their clients. Its financial year ends on 31 July every year. The following ledger account was provided. Cleaning service fee revenue Date Particulars Debit Credit Balance 2018 $ $ $ Jul 1 Bal b/d 16 000 CR Jul 16 Trade receivables 140 16 140 CR Jul 24 Cash at bank 3 900 20 040 CR Jul 31 Cleaning service fee revenue received in advance 1 300 18 740 CR Jul 31 Income summary 18 740 - REQUIRED (a) State whether Centrepoint Cleaning Agency is a trading business or service business. [1] (b) Interpret the following entries on: (i) 16 July 2018 [1] (ii) 24 July 2018 [1] (iii) 31 July 2018 – Cleaning service fee revenue received in advance [2]

9 NORMAL ACADEMIC NORMAL ACADEMIC NORMAL ACADEMIC (c) Explain the term ‘cleaning service fee revenue’. [1] (d) Interpret the amount of cleaning service fee revenue to be recorded in the statement of financial performance for the year ended 31 July 2018. [1] (e) State where cleaning service fee revenue received in advance would be recorded in the statement of financial position as at 31 July 2018. [1] (f) Explain how accrual basis of accounting accounts for the cleaning service fee revenue. [1] (g) Define revenue recognition theory. [1] [Total: 10] END OF PAPER

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