* 1 4 8 5 9 9 3 4 4 0 * PRINCIPLES OF ACCOUNTS Paper 2 7110 Pre Mock 2019 2 hours Candidates answer on the Question Paper. No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use an HB pencil for any diagrams or graphs. Do not use staples, paper clips, glue or correction fluid. DO NOT WRITE IN ANY BARCODES. Answer all questions. You may use a calculator. Where layouts are to be completed, you may not need all the lines for your answer. The businesses mentioned in this Question Paper are fictitious. 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. [Turn over 2 1 (a) (i) Explain the difference between book-keeping and accounting. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... .......................................................................................................................................[2] (ii) Explain the accounting prudence concept. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... .......................................................................................................................................[2] Fashran sells goods to Hajar. On 1 April Hajar owed Fashran $2100. The following transactions occurred in April 2014. 5 April 7 April 18 April Fashran sold goods on credit to Hajar, list price $2000. Hajar returned goods purchased on the 5 April, list price $240. Hajar paid the balance of her account at 1 April. REQUIRED (b) Prepare the account of Hajar in the ledger of Fashran for April 2014. Balance the account and bring down the balance. Hajar account Date Details $ Date Details $ [5] [Turn over 3 (c) Name and explain the Users of accounting information. User Explanation 1 2 3 [3] [Turn over 4 The following balances were extracted from the books of Fashran on 30 April 2014. $ 6 450 Trade payables Trade receivables Revenue Purchases Inventory 1 May 2013 Expenses Bank overdraft Non-current assets Provision for depreciation – Non-current assets 9 230 68 400 29 800 5 100 22 350 830 24 000 7 800 REQUIRED (d) Prepare the trial balance showing Fashran’s capital at 30 April 2014. Fashran Trial Balance at 30 April 2014 Dr Cr $ $ Trade payables Trade receivables Revenue Purchases Inventory 1 May 2013 Bank overdraft Expenses Non-current assets Provision for depreciation – Non-current assets Capital [8] [Total: 20] [Turn over 5 2 Najla provided the following information for the year ended 31 March 2014. Revenue Inventory 1 April 2013 Inventory 31 March 2014 Purchases Trade receivables Trade payables Capital Bank $ 168 000 20 000 16 000 122 000 24 500 35 000 100 000 1 500 Dr REQUIRED Calculate the: (a) Cost of goods sold ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... (b) Gross profit ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... (c) Net Inventory ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... [Turn over 4 (d) Total Assets ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................[20] [Turn over 5 3. Atto Electrical had the following non-current assets on 31 March 2013. Premises (cost $50 000) Motor vehicles (cost $16 000) Computers Net book value $ 48 000 12 000 6 000 Atto Electrical has the following depreciation policy. Premises are depreciated at the rate of 2% per annum by straight-line method. Motor vehicles are depreciated at the rate of 25% per annum by diminishing (reducing) balance method. Computers are depreciated by revaluation method. A full year’s depreciation is charged on all non-current assets owned at the end of the financial year. Additional information 1 There were no purchases or sales of non-current assets during the year ended 31 March 2014. 2 The following purchases of non-current assets were made during the year ended 31 March 2015. Payments were made by cheque. Premises Motor vehicles Computers 3 $ 30 000 9 000 3 200 Computers were valued as follows: 31 March 2014 31 March 2015 $ 4 200 6 000 REQUIRED (a) Explain the term depreciation. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ...............................................................................................................................................[2] [Turn over 6 (b) State four cause of depreciation. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .................................................................................................................................................[8] [Turn over 7 (c) Complete the table to show the depreciation to be charged to the income statement for each of the years ended 31 March 2014 and 31 March 2015. Year ended 31 March 2014 $ Year ended 31 March 2015 $ Premises Motor vehicles Computers [10] ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... [Turn over 8 (d) Prepare the following ledger accounts for each of the years ended 31 March 2014 and 31 March 2015. Balance the accounts and bring down the balances on 1 April. Motor vehicles account Date Details $ Date Details $ [5] Motor vehicles provision for depreciation account Date Details $ Date Details $ [5] [Turn over 9 4. (a) Distinguish between capital and revenue expenditure.[2] ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... Napa Ltd took delivery of a microcomputer and printer on 1 July 20X6, the beginning of its financial year. The list price of the equipment was £4,999 but Napa Ltd was able to negotiate a price of £4,000 with the supplier. However, the supplier charged an additional £340 to install and test the equipment. The supplier offered a 5% discount if Napa Ltd paid for the equipment and the additional installation costs within seven days. Napa Ltd was able to take advantage of this additional discount. The installation of special electrical wiring for the computer cost £110. After initial testing certain modifications costing £199 proved necessary. Staff were sent on special training courses to operate the microcomputer and this cost £990. Napa Ltd insured the machine against fire and theft at a cost of £49 per annum. A maintenance agreement was ‘ entered into with Sonoma plc. Under this agreement Sonoma plc promised to provide 24 hour breakdown cover for one year. The cost of the maintenance agreement was £350. Required: (b) Calculate the acquisition cost of the microcomputer to Napa Ltd.[10] ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... [Turn over 10 The following costs were also incurred by Napa Ltd during the financial year ended 30 June 20X7: (1) Interest on loan to purchase microcomputer. (2) Cost of software for use with the microcomputer. (3) Cost of customising the software for use in Napa Ltd’s business. (4) Cost of paper used by the computer printer. (5) Wages of computer operators. (6) Cost of ribbons used by the computer printer. (7) Cost of adding extra memory to the microcomputer. (8) Cost of floppy disks used during the year. (9) Costs of adding a manufacturer’s upgrade to the microcomputer equipment. (10) Cost of adding air conditioning to the computer room. Required: (c) Classify each of the above as capital expenditure or revenue expenditure.[8] ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... [Turn over 11 [Turn over
