ASSESSMENT TEST FOR NEW ACCOUNTING TEACHER

1 Bilal is a trader. He buys goods on credit and for cash. He sells goods on a cash basis only.

The following transactions took place in April 2020.

April 4 Bought goods on credit from Milly, list price $320, subject to a trade discount of 20%

5 Bought goods on credit from EHL Limited, $500

6 Bought stationery, $145, paying by cheque

8 Cash sales, $280, were paid immediately into Bilal’s bank account

10 Paid $128 cash to Milly

12 Cash sales, $110

13 Bought goods on credit, $250, from Todd who offers 4% cash discount for payments
made within 14 days

17 Bought office equipment, $500, paying by bank transfer

21 Paid by cheque for the goods purchased from Todd on 13 April after deducting the cash
discount

24 Paid $485 to EHL Limited by telephone transfer, having deducted 3% cash discount

28 Sold old office equipment for $50 cash

REQUIRED

(a) Prepare the purchases journal for April 2020.

Total the journal and indicate the ledger account to which the total would be posted.

Bilal
Purchases journal

Date Details $ $

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[4]

(b) Complete Bilal’s cash book on the page opposite.

Balance the cash book and bring down the balances on 1 May 2020.

© UCLES 2020
1
 Bilal
Cash Book

© UCLES 2020
Date Details Discount Cash Bank Date Details Discount Cash Bank
allowed received
2020 $ $ $ 2020 $ $ $

April 1 Balance b/d ................ 160 1960 ........... ......................................... ............... ............... …...........

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0452/23/M/J/20
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[12]

[Turn over
 (c) Name one accounting principle applied by Bilal in each of the following situations.

accounting principle
The double entry for the posting of the purchases journal
entries is completed by posting the individual amounts to
the purchases ledger.
The purchase of goods on 5 April did not include goods
costing $55 which Bilal bought for his own use.
The stationery purchased on 6 April had been recycled.
This is expected to improve the reputation of the business.
Reputation is not recorded in the accounting statements.
The value of office equipment shown in the financial
statements was based on its purchase price.
[4]

[Total: 20]

3
© UCLES 2020
4 Virat is a trader. His financial year ends on 31 January. He does not maintain a full set of accounting
records. He was able to provide the following information at 1 February 2016.

$
Premises at cost 58 500
Fixtures and fittings at cost 9 400
Inventory 9 700
Trade payables 7 100
Trade receivables 8 120
Loan from A Singh 15 000
Bank overdraft 5 300

REQUIRED

(a) Calculate Virat’s capital at 1 February 2016.

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During the year ended 31 January 2017:

Virat’s drawings amounted to $11 320.

Virat’s personal motor vehicle, valued at $15 200, was transferred into the business.
One third of the loan was repaid and it was agreed that the balance should be repaid in 2019.

Virat compared his assets and liabilities on 31 January 2017 with those on 1 February 2016 and
found:

Trade payables had increased by 6%

Trade receivables had increased by $3310
Inventory was valued at the selling price of $12 900 after a mark-up of 20%
Bank overdraft had increased by $3100
Cash in hand amounted to $100

On 31 January 2017 it was decided to:

Write off $130 as irrecoverable from the amount owed by trade receivables at that date.
Make a provision for doubtful debts of 2% of the remaining amount.

Provide for depreciation of fixtures and fittings at 20% per annum on cost.

Provide for depreciation of the motor vehicle at 25% on the valuation when transferred into
the business.

Maintain the premises at cost.

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© UCLES 2017 0452/22/M/J/17
REQUIRED

(b) Prepare a statement of affairs at 31 January 2017 showing the total capital at that date.

Virat
Statement of Affairs at 31 January 2017

$ $ $

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[14]
5
© UCLES 2017 0452/22/M/J/17 [Turn over
 (c) Prepare the capital account of Virat for the year ended 31 January 2017 to show the profit or
loss for the year.

Virat
Capital account

Date Details $ Date Details $

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[5]

Virat was disappointed with the results of his business for the year ended 31 January 2017. He
decided to try to obtain the financial statements of other businesses so that he could compare
their results with those of his own business.

REQUIRED

(d) Explain two factors Virat should consider when comparing his results with those of another
business.

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[Total: 24]

6
© UCLES 2017 0452/22/M/J/17
5 Sabir’s financial year ends on 30 September. The totals of the trial balance prepared on
30 September 2019 did not balance and Sabir opened a suspense account with a debit entry of
$7000.

Sabir used the trial balance to prepare draft financial statements for the year ended 30 September
2019.

After the preparation of these draft financial statements five errors were discovered.

REQUIRED

(a) Complete the table to show the entries required to correct each error.
The first one has been completed as an example.

Entry required to correct the error

Debit Credit
Error
account $ account $

1 The total of the sales returns journal, sales 990 suspense 1980
$990, had been posted to the credit of
the sales account. sales returns 990

2 A bad debt written off, $65, had been

credited to the account of Nadia
instead of the account of Nadira. ........................ ............ ........................ ............

3 No entry had been made for goods,

cost price $150, withdrawn by Sabir for
personal use. ........................ ............ ........................ ............

4 The opening inventory, $4100, had not

been entered in the trial balance. ........................ ............ ........................ ..........

5 The total of the discount allowed

column in the cash book, $430,
had been posted to the credit of the
discount received account as $340. ........................ ............ ........................ ............

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[9]

(b) State whether all the errors in Sabir’s books have been discovered.

Give a reason for your answer.

Have all the errors been discovered? ..................................

Reason .....................................................................................................................................

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© UCLES 2019 0452/22/O/N/19
 (c) Complete the following statement to show the effect on the draft profit for the year of
correcting errors 1–5.
Calculate the corrected profit for the year.

If the error does not affect the profit place a tick (3) in the ‘No effect on profit’ column.

Sabir
Statement of corrected profit for the year ended 30 September 2019

Draft profit for the year before corrections $31 400

No effect Increase Decrease

on profit in profit in profit

Error 1 ......... $ ......... $.........

Error 2 ......... $......... $.........

Error 3 ......... $......... $.........

Error 4 ......... $......... $.........

Error 5 ......... $......... $.........

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$______ $______ ______

Corrected profit for the year $______

[9]

[Total: 20]

8
© UCLES 2019 0452/22/O/N/19 [Turn over
1 Sariah owns a business selling ladies’ clothing. She maintains a system of double entry
bookkeeping.

The following occurred during September 2020.

1 Purchased a motor vehicle on credit from Sharpe Motors $6350.

2 Ruhee, a credit customer, was declared bankrupt owing Sariah $1200. The debt is to be
written off.

REQUIRED

(a) Prepare journal entries to record the above transactions. Narratives are not required.

Sariah
Journal

Details Debit Credit

$ $
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[4]

Sariah is preparing her financial statements for the year ended 30 September 2020. She provides
the following information for fixtures and fittings.

2019 $
October 1 Fixtures and fittings at cost 28 600
Provision for depreciation of fixtures and fittings 6 185
2020
January 31 Sold fixtures and received a cheque 1 150
The fixtures had been purchased on 1 February 2018 for $1500
March 31 Purchased new fixtures paying by cheque 3 500

Sariah’s policy is to provide depreciation on fixtures and fittings at 10% per annum using the
reducing balance method. A full year’s depreciation is charged in the year of purchase but none in
the year of disposal.

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© UCLES 2020 0452/23/O/N/20
 REQUIRED

(b) Prepare the following accounts for the year ended 30 September 2020. Close the accounts
by balancing or by making an appropriate year end transfer.

Sariah
Fixtures and fittings account

Date Details $ Date Details $

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Provision for depreciation of fixtures and fittings account

Date Details $ Date Details $

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Disposal account

Date Details $ Date Details $

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[11]
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© UCLES 2020 0452/23/O/N/20 [Turn over
 Sariah is considering forming a partnership with her friend Emy who runs a similar business.

REQUIRED

(c) Advise Sariah whether or not she should form a partnership with Emy. Justify your answer
with two advantages and two disadvantages of forming a partnership with Emy.

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[Total: 20]

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© UCLES 2020 0452/23/O/N/20
1 Anika owns property which she rents out to university students. She has made a consistent profit
for each year she has been in business. Her trial balance at 31 August 2022 was as follows.

Debit Credit
$ $
Capital 400 000
Rent receivable 162 000
General expenses 26 500
Bank 39 400
Rates 38 200
Insurance 12 400
Repairs 32 000
Drawings 18 500
Non-current assets at cost
Premises 418 000
Fittings 90 000
Provision for depreciation of non-current assets
Premises 42 000
Fittings 71 000
675 000 675 000

Additional information

1 At 31 August 2022, rent received of $8100 has been paid in advance.

2 At 31 August 2022, general expenses of $1300 have been paid in advance and rates of
$3400 were owing.

3 The insurance includes $1800 paid for the 15 month period ending 30 November 2022.

4 Expenditure of $9000 for new fittings has been recorded in repairs.

5 Depreciation is to be provided as follows:

Premises by equal instalments on cost each year over a 50 year period

Fittings 20% per annum by the reducing balance method

A full year’s depreciation is charged on fittings during the year of purchase.

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© UCLES 2022 0452/21/O/N/22
 REQUIRED

(a) Prepare the income statement of Anika for the year ended 31 August 2022.

Anika
Income Statement for the year ended 31 August 2022

$ $

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[9]

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© UCLES 2022 0452/21/O/N/22 [Turn over
 (b) Prepare the capital account for the year ended 31 August 2022 showing the balance brought
down at 1 September 2022.

Anika
Capital account

Date Details $ Date Details $

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[3]

Anika plans to buy more property to rent out. She will need additional capital for this. She has
savings earning 3% per annum which she could use for the additional capital. Alternatively, she
could invite Janos, a builder, to provide the capital and join her to form a partnership.

REQUIRED

(c) Advise Anika on her plans and whether she should provide her own additional capital or form
a partnership with Janos. Justify your answer.

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© UCLES 2022 0452/21/O/N/22
14
 (d) Explain to Anika the difference between capital expenditure and revenue expenditure. Why is
this difference between the two important when preparing the financial statements?

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[Total: 20]

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© UCLES 2022 0452/21/O/N/22 [Turn over