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1. Financial accounting (AS Level)
A section of Accounting, 9706
Listing 10 of 1775 questions
Zahid owns a small retail business. He has not maintained a full set of accounting records. Zahid supplied the following information for the year ended 31 December 2023. All sales were made on a cash basis. Cash sales totalled $195 000. All goods were sold with a mark-up of 50%. Calculate the gross profit of the business for the year ended 31 December 2023. Additional information The following information is also available. Inventory and trade payables At 1 January 2023 $ At 31 December 2023 $ Inventory 16 400 22 460 Trade payables 13 500 15 600 All purchases were made on credit. Trade suppliers were paid $134 240 after deducting cash discounts totalling $560. Zahid took goods for his own use during the year. However, no record was made of the value of these goods. Calculate for the year ended 31 December 2023: purchases the value of goods taken for own use by Zahid. Additional information The following information is available for Zahid’s business. Non-current assets Non-current assets had the following values. $ 1 January 2023 194 000 31 December 2023 188 000 During the year ended 31 December 2023, a non-current asset was sold for $5600, resulting in a profit on disposal of $2400. Additional non-current assets were purchased for $9200. Income from rent receivable At 1 January 2023 Bank receipts during the year At 31 December 2023 owing to Zahid’s business $280 $5360 received in advance $600 Expenses At 1 January 2023 Bank payments during the year At 31 December 2023 Advertising prepaid $490 $5 960 accrued $610 General expenses accrued $570 $8 480 – Insurance prepaid $330 $4 510 prepaid $390 Wages – $12 400 accrued $470 Prepare an extract from the statement of profit or loss for the year ended 31 December 2023, starting with the gross profit calculated in . Workings: Zahid Statement of profit or loss for the year ended 31 December 2023 $ Gross profit Explain, with reference to an accounting concept, why Zahid made adjustments to his income and expenses when preparing the statement of profit or loss. Additional information Zahid plans to expand his business. This would mean he would no longer operate as a sole trader. He is considering the following options. Option A: form a partnership with Talha who currently owns a similar business. Option B: form a limited liability company with himself and Talha as shareholders and directors. Advise Zahid which option he should choose. Justify your answer by considering both the advantages and the disadvantages of each option.
9706_s24_qp_22
THEORY
2024
Paper 2, Variant 2
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J Limited’s financial year ended on 31 December 2023. At this date the following balances remained in the books of account from which the statement of financial position is to be prepared. $ 8% Debentures (2024) 90 000 Cash and cash equivalents (debit balance) 28 900 Furniture and equipment at carrying value 180 000 Inventory 84 000 Issued share capital: shares of $0.50 each 750 000 Property at valuation 1 060 000 Retained earnings 242 400 Revaluation reserve 70 000 Share premium 220 000 Trade and other payables 19 700 Trade and other receivables 39 200 The following errors have been discovered in the information shown. Inventory at 31 December 2023 had been undervalued by $3600. Furniture and equipment had been depreciated by 25% instead of 20%, using the reducing balance method of depreciation. Sales returns of $1100 had been recorded in the books of prime entry as purchases returns. The error affected the general ledger and the personal accounts of credit customers and credit suppliers. Calculate the corrected balance of retained earnings at 31 December 2023. Prepare the statement of financial position at 31 December 2023. J Limited Statement of financial position at 31 December 2023
9706_s24_qp_22
THEORY
2024
Paper 2, Variant 2
View
Questions Discovered
1775