9706_w23_qp_21 - revisedeck

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Laila, a retailer, did not maintain a full set of accounting records for her business. She has provided the following information for the year ended 30 September 2023. Balances at 1 October 2022 $ Inventory 12 030 Non-current assets at carrying value 22 180 Other payables: light and heat Other receivables: insurance Trade payables 3 840 Trade receivables 4 540 Summary of bank account for the year ended 30 September 2023 $ $ Receipts: trade receivables 55 390 Balance b/d 1 220 Sale of non-current assets Payments: trade payables 46 280 Balance c/d 1 170 Insurance 2 560 Light and heat 3 510 Drawings 3 850 57 420 57 420 Balance b/d 1 170 The following information is also available at 30 September 2023. Laila has started to prepare her financial statements for the year ended 30 September 2023. The following figures are available to transfer to the statement of profit or loss with no adjustment. $ Insurance 2 720 Light and heat 3 880 Loss on disposal of non-current asset All sales are made at a mark-up of 25%. All sales and purchases are made on credit. The balance of trade receivables at 30 September 2023 was $3650. There were no additions to non-current assets during the year. All non-current assets are to be depreciated at 10% per annum using the reducing balance method. Laila was unable to physically count the inventory at 30 September 2023. The inventory was valued at $14 400 on 4 October 2023. Between 1 October 2023 and 4 October 2023, Sales were $3400 and Purchases were $1850. Calculate the value of closing inventory at 30 September 2023. Prepare the statement of profit or loss for the year ended 30 September 2023. Use the space provided on page 4 to show your workings. Laila Statement of profit or loss for the year ended 30 September 2023 Workings: Prepare the statement of financial position at 30 September 2023. Workings: Equity at 1 October 2022 Other receivables Trade payables Other payables Additional information Laila wishes to expand the business and is considering forming a partnership with her friend. State four provisions of the Partnership Act 1890 that would apply in the absence of a partnership agreement. State three possible disadvantages to a business of maintaining a full set of accounting records.

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

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

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Q Limited has been in business for a number of years. One of the directors is unsure of the difference between a capital reserve and a revenue reserve. Explain one difference between a capital reserve and a revenue reserve. Additional information The directors of Q Limited provided the following information for the year ended 30 June 2023. Balances at 1 July 2022 $ Share capital: ordinary shares of $0.50 each 30 000 Share premium 4 500 Revaluation reserve 6 000 Retained earnings 50 240 Total equity 90 740 8% debenture (2024) 40 000 At 1 July 2022, land, original cost $80 000, had a valuation of $86 000. No other non-current assets had been revalued. The following transactions took place during the year ended 30 June 2023. Date 1 August 2022 Made a bonus issue of one ordinary share for every six shares held. The directors maintained the reserves in the most flexible form. 1 October 2022 Paid a final dividend of $0.04 per share on all shares in issue at that date. 1 January 2023 Made a rights issue of two ordinary shares for every seven shares held at a price of $0.65 per share. The issue was fully subscribed. 1 April 2023 Paid an interim dividend of $0.02 per share on all shares in issue at that date. 30 June 2023 Land was revalued at $75 000. The draft profit for the year ended 30 June 2023 was $43 600. Prepare the statement of changes in equity for the year ended 30 June 2023. Q Limited Statement of changes in equity for the year ended 30 June 2023 Share capital $ Share premium $ Revaluation reserve $ Retained earnings $ Total $ At 1 July 2022 Additional information The directors of Q Limited have plans to expand the business at a total cost of $54 000 and are considering two options to raise finance. Option 1: Make a rights issue of four ordinary shares for every five shares held at a price of $0.75 per share. Option 2: Issue a 10% debenture (2026–2027) of $54 000. Advise the directors which option, if either, they should choose. Justify your decision.

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

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

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Yasmine has a retail business. She extracted a trial balance at 30 June 2023, the totals of which did not agree. State two types of error that will be revealed by a trial balance. Explain the meaning of each of the following types of error. Error of original entry Error of principle Error of commission Additional information The difference in the trial balance was posted to a suspense account to enable the financial statements to be produced. Yasmine discovered the following errors, correction of which would clear the difference. The sales journal total had been overstated by $300. The total of the purchases returns journal, $2450, had not been posted to the general ledger. Discounts allowed, $1660, had been posted to the credit of the discounts received account. The balance of the carriage inwards account at 30 June 2023, $3570, had been brought down as $3750. Prepare the suspense account to show the correction of the errors, clearly identifying the difference that was present in the trial balance before the errors were corrected. Suspense account $ $ Additional information Before discovering the errors, Yasmine had prepared a draft statement of profit or loss showing a profit for the year of $36 165. The suspense account balance was not included in the profit calculation. Calculate the revised profit for the year after correction of the errors. Increase $ Decrease $ $ Draft profit for the year 36 165 Error 1 Error 2 Error 3 Error 4 Revised profit for the year

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

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4

Javid manufactures a single product. He currently uses a system of absorption costing but is considering changing to marginal costing. The following budgeted information is available for one unit of the product. $ Selling price Direct material Direct labour Budgeted production 12 000 units per month Budgeted fixed overheads $36 000 per month At 1 August, Javid held no inventory. The following actual results are available. August September Sales 8 000 12 000 Production 10 000 10 000 Fixed overheads $36 000 $36 000 Prepare a profit statement for each of the months August and September using absorption costing. Javid Absorption cost profit statement August September $ $ $ $ Prepare a profit statement for each of the months August and September using marginal costing. Javid Marginal cost profit statement August September $ $ $ $ Prepare a statement reconciling the absorption cost profit for August with the marginal cost profit for August. Advise Javid whether or not he should change from absorption costing to marginal costing. Justify your answer. State two possible causes of over-absorption of overheads. Explain one difference between a cost centre and a cost unit. State how closing inventory is valued using each method of inventory valuation: first in first out (FIFO) weighted average cost (AVCO). Additional information Javid is investigating the just in time (JIT) method of inventory management. Explain a principle of the JIT method of inventory management.

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

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