1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
Bharti owns a small business. The following information was extracted from her accounting records. Balances at 1 July 2021 $ Delivery vehicles cost 52 000 provision for depreciation 14 000 Extract from asset register Date of purchase Vehicle Cost $ 1 July 2019 DV1 18 000 1 July 2020 DV2 34 000 On 1 October 2021, Bharti purchased a new delivery vehicle (DV3) costing $26 000. She paid $14 500 by cheque and the balance was settled by part-exchange of the old delivery vehicle, DV1. Bharti depreciates delivery vehicles using the straight-line method on a month-by-month basis. The estimated useful life of all delivery vehicles is five years with no residual value. REQUIRED Prepare the following ledger accounts for the year ended 30 June 2022. Delivery Vehicles – Cost Date Details $ Date Details $ State one reason why non-current assets are depreciated, with reference to an appropriate accounting concept. Explain one difference between capital expenditure and revenue expenditure. State one example of a: capital receipt revenue receipt
9706_w22_qp_21
THEORY
2022
Paper 2, Variant 1
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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.
9706_w23_qp_21
THEORY
2023
Paper 2, Variant 1
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Questions Discovered
1775