9706_s06_qp_1 - revisedeck

9706_s06_qp_1

A paper of Accounting, 9706

Questions:

30

Year:

2006

Paper:

1

Variant:

0

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1

Which item should be treated as capital expenditure?

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

1. Financial accounting (AS Level) → 1.3. Accounting for non-current assets

Open

2

The accounting year end of a business is 31 October. On 1 April the business rents out part of its warehouse for an annual rent of $6000 receivable in equal instalments on 1 April, 1 July, 1 October and 1 January. At 31 October what would the final accounts show?

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

1. Financial accounting (AS Level) → 1.3. Accounting for non-current assets

Open

3

The following information is taken from the stationery account of a business. $ stock of stationery at beginning of the year cash paid for stationery during the year invoice not yet received for stationery stock of stationery at end of year How much should be debited to the Profit and Loss Account for stationery?

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

Open

4

On 30 September 2005 a manufacturer’s current assets totalled $28 000. The next day only two transactions took place. 1 Stock bought for cash. The list price of $2000 was subject to a trade discount of 20 % and a cash discount of 5 %. Payment was made immediately. 2 A bad debt of $400 was written off. What was the total of current assets on 2 October 2005?

1. Financial accounting (AS Level) → 1.3. Accounting for non-current assets

Open

5

A business uses the straight line method to provide for depreciation of equipment. Why should it continue to use this method in subsequent years?

1. Financial accounting (AS Level) → 1.3. Accounting for non-current assets

Open

6

Stock has been damaged. The stock cost $1200. It would have sold for $1800 when perfect. It can be sold for $1700 if repairs are undertaken at a cost of $600. To replace the stock would cost $1000. At what value should the damaged stock be shown...

1. Financial accounting (AS Level) → 1.3. Accounting for non-current assets

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

2. Cost and management accounting (AS Level) → 2.1. Costs and cost behaviour

Open

7

Which accounting policies illustrate the matching principle?

1. Financial accounting (AS Level) → 1.3. Accounting for non-current assets

Open

8

The following information is extracted from the records of a business. $ At 31 December 2004: Rent paid in advance 4 000 During the year ended 31 December 2005: Rent paid 41 000 At 31 December 2005: Rent paid in advance 7 000 How much will be debited for rent in the Profit and Loss Account for the year ended 31 December 2005?

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

4. Cost and management accounting (A Level) → 4.3. Budgeting and budgetary control

Open

9

What would not appear in a Sales Ledger Control account?

1. Financial accounting (AS Level) → 1.4. Reconciliation and verification

1. Financial accounting (AS Level) → 1.2. The accounting system

Open

10

A sole trader has calculated a draft net profit of $56 750. He then discovers the following mistakes: Discounts Received of $580 and Discounts Allowed of $665 have been recorded on the wrong sides of the Discounts Received and Allowed accounts. What is the corrected draft net profit?

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

4. Cost and management accounting (A Level) → 4.3. Budgeting and budgetary control

1. Financial accounting (AS Level) → 1.4. Reconciliation and verification

Open

11

The closing balance on a Purchases Ledger Control account is $163 762. The purchase day book has been undercast by $1000. What should be the correct closing balance on the Purchases Ledger Control account?

1. Financial accounting (AS Level) → 1.2. The accounting system

1. Financial accounting (AS Level) → 1.4. Reconciliation and verification

Open

12

A draft Balance Sheet shows a bank balance of $1400. The following information is now available. $ cheques issued but not yet cleared by the bank bank charges not in the cash book lodgements in the cash book but not on the bank statement What is the figure shown...

1. Financial accounting (AS Level) → 1.4. Reconciliation and verification

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

Open

13

How should goodwill be treated in the accounts of a limited company?

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

3. Financial accounting (A Level) → 3.3. Business acquisition and merger

1. Financial accounting (AS Level) → 1.3. Accounting for non-current assets

Open

14

Stocks should be valued at the lower of cost and net realisable value. The table shows data about four products. product W $ X $ Y $ Z $ cost realisable value selling expenses At how much should the total stocks be valued?

2. Cost and management accounting (AS Level) → 2.2. Traditional costing methods

Open

15

A partnership maintains both capital and current accounts for its partners. What is the correct accounting entry for recording interest on capital for partner X?

1. Financial accounting (AS Level) → 1.5. Preparation of financial statements

Open

16

At the end of a financial year the following information is available. $ sales 200 000 opening stock 15 000 closing stock 18 000 If the business makes a standard mark-up of 25 %, what were the purchases?

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

2. Cost and management accounting (AS Level) → 2.1. Costs and cost behaviour

1. Financial accounting (AS Level) → 1.2. The accounting system

Open

17

A trader does not keep double-entry records. At the beginning of a period, suppliers are owed $43 600. Payments of $197 320 were made in the period. Suppliers are owed $35 390 at the end of the period. What are the total purchases for the period?

1. Financial accounting (AS Level) → 1.2. The accounting system

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

Open

18

Dele and Iyabo are partners in a business and share profits in the ratio of 3:1. Their net profit is $80 000. The following information is available: Dele $ Iyabo $ interest on capitals 3 000 2 500 interest on drawings 1 000 How will the residual net profit be shared?

1. Financial accounting (AS Level) → 1.5. Preparation of financial statements

3. Financial accounting (A Level) → 3.5. Analysis and communication of accounting information

Open

19

What will increase the working capital and net assets and reserves of a company?

1. Financial accounting (AS Level) → 1.5. Preparation of financial statements

Open

20

At 1 January 2005 the capital structure of S Limited was as follows. $ issued share capital 100 000 ordinary shares of $1 each 100 000 share premium account 30 000 On 1 April 2005 the company made an issue of 20 000 shares for $36 000. On 1 June 2005 a bonus issue of one share for every six in issue was made. The share premium account was used for the purpose. What is the balance on the share premium account at 31 December 2005?

1. Financial accounting (AS Level) → 1.5. Preparation of financial statements

Open

21

A newly formed company issues 1 000 000 ordinary shares of $1 at $2.50 each $300 000 5 % debentures. Operating profit for the year was $465 000. The directors recommend an 8 % ordinary dividend for the year. What is the retained profit for the year?

1. Financial accounting (AS Level) → 1.5. Preparation of financial statements

Open

22

A company has issued 80 000 shares of $0.50 each. These are quoted on the stock exchange at $1.60 each. The company makes a rights issue on a 1 for 4 basis at a price of $1.20 each. What is the balance on the Share Capital account after the rights issue?

1. Financial accounting (AS Level) → 1.5. Preparation of financial statements

Open

23

The table shows an extract from a company’s final accounts: $ purchases 28 000 cost of sales 24 000 creditors 4 200 accruals 1 100 What is the creditors’ collection period for the year?

1. Financial accounting (AS Level) → 1.5. Preparation of financial statements

3. Financial accounting (A Level) → 3.5. Analysis and communication of accounting information

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

Open

24

A company has the following gross profit and net profit ratios for two years. Year 1 Year 2 gross profit % 26 % 29 % net profit % 13 % 10 % The company’s turnover has remained unchanged for both years. What is a correct interpretation of these ratios?

1. Financial accounting (AS Level) → 1.6. Analysis and communication of accounting information

3. Financial accounting (A Level) → 3.5. Analysis and communication of accounting information

Open

25

A firm has $10 000 in the bank and buys stocks for $6000 paying by cheque. What will be the effect on its current ratio and quick (acid test) ratio?

1. Financial accounting (AS Level) → 1.6. Analysis and communication of accounting information

1. Financial accounting (AS Level) → 1.3. Accounting for non-current assets

1. Financial accounting (AS Level) → 1.4. Reconciliation and verification

Open

26

The following information is given for a business. $ $ Sales 650 000 Less cost of sales Stock 1 January 19 000 Purchases 508 000 527 000 Stock 31 December 25 000 502 000 Gross Profit 148 000 Stock turnover 16 days Debtors 31 December $48 082 Creditors 31 December $44 537 What is the working capital cycle?

3. Financial accounting (A Level) → 3.5. Analysis and communication of accounting information

1. Financial accounting (AS Level) → 1.6. Analysis and communication of accounting information

2. Cost and management accounting (AS Level) → 2.1. Costs and cost behaviour

Open

27

What does the line between points X and Y on the break-even chart represent?

2. Cost and management accounting (AS Level) → 2.2. Traditional costing methods

2. Cost and management accounting (AS Level) → 2.1. Costs and cost behaviour

Open

28

The following figures are given for a factory’s overheads and machine hours worked. machine hours total overhead costs overhead absorption rate budgeted 122 000 $268 400 $2.20 actual 116 000 $261 000 $2.25 What was the under- or over-absorption of overhead for the quarter?

2. Cost and management accounting (AS Level) → 2.2. Traditional costing methods

4. Cost and management accounting (A Level) → 4.1. Activity based costing (ABC)

Open

29

A company manufactures a single product with a selling price of $75 per unit. The table shows the costs, based on sales and production volume of 8000 units. $ 000 prime costs variable manufacturing overheads fixed manufacturing overheads variable selling overheads fixed administration overheads If absorption costing is applied, what is the gross profit on each unit sold?

2. Cost and management accounting (AS Level) → 2.2. Traditional costing methods

2. Cost and management accounting (AS Level) → 2.1. Costs and cost behaviour

3. Financial accounting (A Level) → 3.1. Preparation of financial statements

Open

30

A company has two departments X and Y. Management provides the following information. department X department Y total power used 7 500 kwh 17 500 kwh 25 000 kwh area 30 000 square metres 20 000 square metres 50 000 square metres The power bill for the year is $20 000 and the rent is $100 000. What is the total amount for rent and heating to be attributed to department X?

2. Cost and management accounting (AS Level) → 2.2. Traditional costing methods

Open