IGCSE Accounting O Level p1 Answers PDF
IGCSE Accounting O Level p1 Answers PDF
IGCSE Accounting O Level p1 Answers PDF
Paper 2
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O Level Sample Examination Paper
1 Christos is in business buying and selling goods on credit. The following details relate to the account
of his customer Michelle for the month of July 2011.
$
July 1 Michelle owed Christos 200
July 7 Christos sent an invoice to Michelle 150
July 16 Christos sent a credit note to Michelle 8
July 31 Michelle sent Christos a cheque 195
July 31 Christos allowed Michelle cash discount 5
REQUIRED
(a) Prepare the account of Michelle in the books of Christos. Bring down the balance on 1 August
2011
Christos
Michelle account
Dr Cr
......................................................................................................................................................
$ $
......................................................................................................................................................
July 1 Balance b/d 200 July 16 Sales returns 8
......................................................................................................................................................
July 7 Sales 150 July 31 Bank 195
......................................................................................................................................................
July 31 Discount Allowed 5
......................................................................................................................................................
July 31 Balance c/d 142
......................................................................................................................................................
350 350
......................................................................................................................................................
Aug 1 Balance b/d 142
.................................................................................................................................................[6]
(b) Name the book of prime entry in which Christos would record the transaction of 16 July
2011.
Sales returns journal
......................................................................................................................................................
.................................................................................................................................................[1]
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O Level Sample Examination Paper
$
Capital ?
Drawings 8 000
Office furniture 5 000
Provision for depreciation on office furniture 3 200
Inventory 4 150
Bank overdraft 250
Trade payables 2 950
Sundry expenses 10 600
Purchases 32 400
Provision for doubtful debts 350
Revenue (sales) 53 750
Trade receivables 6 250
REQUIRED
(c) Prepare the trial balance for Christos at 31 July 2011, including the balance on the capital account.
Christos
Trial Balance at 31 July 2011
Dr Cr
$ $
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O Level Sample Examination Paper
(d) State the item in the trial balance which would include the balance on Michelle’s account.
Trade receivables
......................................................................................................................................................
.................................................................................................................................................[1]
(e) State two differences between a trial balance and a balance sheet.
(Any one of the following) A trial balance contains all account balances including income and
1 ..............................................................................................................................................
expense accounts; account balances recorded in any order; contains account balances before any
......................................................................................................................................................
adjustments; proves if total debit balances = total credit balances in the double entry system.
......................................................................................................................................................
(Any one of the following) A statement of financial position includes only capital, liabilities and
2 ..............................................................................................................................................
assets (in order of their permanence and liquidity); contains net values for assets (e.g. non-current
......................................................................................................................................................
assets less accumulated depreciation; trade receivables net of provision for doubtful debts); proves
......................................................................................................................................................
agreement of the accounting equation (assets = capital + liabilities)
................................................................................................................................................ [4]
[Total: 18]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q1, October/November 2011
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O Level Sample Examination Paper
2 Majda prepared a trial balance on 31 August 2011. The trial balance failed to agree and a suspense
account was opened. It was discovered that all of the errors had been made in one of the trade
receivable accounts, M.H. Supplies Ltd.
1 On 10 August goods, list price $800, less 20% trade discount, were sold to M.H. Supplies Ltd. The
transaction was correctly recorded in the sales journal.
2 On 20 August a credit sale of goods, $1 200, to M.H. Supplies Ltd, was correctly entered in the
sales journal, but was posted to the account of M. Hardware Ltd.
3 On 23 August M.H. Supplies Ltd paid the balance on 1 August, less 2% cash discount. The
transaction was correctly recorded in the cash book.
REQUIRED
(a) Name the document sent to M.H. Supplies Ltd to record the transaction of 13 August 2011.
Credit note
......................................................................................................................................................
................................................................................................................................................ [1]
................................................................................................................................................ [1]
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O Level Sample Examination Paper
(c) Prepare the journal entries to correct the errors 1 to 3 above. Narratives are not required.
Journal
Dr Cr
$ $
2013
......................................................................................................................................................
Aug 31 M.H. Supplies Ltd 180
......................................................................................................................................................
Suspense 180
......................................................................................................................................................
Aug 31 M.H. Supplies Ltd 1 200
......................................................................................................................................................
M. Hardware Ltd 1 200
......................................................................................................................................................
Aug 31 Suspense 66
......................................................................................................................................................
M.H. Supplies Ltd 66
......................................................................................................................................................
Error 1: Full price $800 less 20% trade discount gives a net price of $740 but only $460 was debited
......................................................................................................................................................
to the MH Supplies Ltd account for the sale. Total debits to the account will therefore be understated
......................................................................................................................................................
by $180 ($740 - $460). To correct, debit an additional $180 to MH Supplies Ltd account and credit
......................................................................................................................................................
the suspense account.
......................................................................................................................................................
Error 2 : Total debits understated on MH Supplies Ltd account by $1 200 and overstated on MH
......................................................................................................................................................
Hardware Ltd account. To correct the error, debit $1 200 to MH Supplies Ltd and credit $1 200 to
......................................................................................................................................................
MH Hardware Ltd.
......................................................................................................................................................
Error 3 : The 2% cash discount allowed has been posted as a debit instead of as a credit against the
......................................................................................................................................................
balance on the account. Therefore total debits are overstated by $33 and total credits are understat-
......................................................................................................................................................
ed by $33. To correct a total of $66 must be credited to the account. Therefore, debit suspense $66
......................................................................................................................................................
and credit MH Supplies Ltd.
................................................................................................................................................ [6]
(d) Prepare the suspense account, clearly showing the original difference on the trial balance.
Suspense account
Dr Cr
......................................................................................................................................................
$ $
......................................................................................................................................................
Aug 31 Difference on trial balance 114 Aug 31 M.H. Supplies Ltd 180
......................................................................................................................................................
M.H Supplies Ltd. 66
......................................................................................................................................................
180 180
......................................................................................................................................................
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O Level Sample Examination Paper
Note: from the journal above, total debits to suspense account were $180 and total credits were $66.
......................................................................................................................................................
If there were no further errors then the balance on the suspense account for the difference on the
......................................................................................................................................................
trial balance before the correction of errors must have been a debit balance of $114 ($180 Dr - $66 Cr).
......................................................................................................................................................
This is entered to the credit side of the suspense account to make the two sides equal.
................................................................................................................................................ [4]
(e) Calculate the correct balance owed by M.H. Supplies Ltd to Majda on 31 August.
$ $
......................................................................................................................................................
Balance on account at 31 August before correction of errors 466 Dr
......................................................................................................................................................
add Trade discount error ($180 Dr) 180
......................................................................................................................................................
add Correction of error of commission ($1 200 Dr) 1 200
......................................................................................................................................................
1 380
......................................................................................................................................................
less Correction of discount allowed posting error ($66 Cr) (66)
......................................................................................................................................................
Corrected debit balance on account 1 780 Dr
......................................................................................................................................................
................................................................................................................................................ [4]
(f) Majda uses Information and Communications Technology (ICT) book-keeping software to
prepare her accounts.
......................................................................................................................................................
Speed and accuracy of accounting calculations is improved
2 ..............................................................................................................................................
(Or, large volumes of financial information can be searched rapidly; transactions can be analysed,
......................................................................................................................................................
reports prepared and summaries produced quickly; Data security may be improved)
................................................................................................................................................ [4]
[Total: 20]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q2, October/November 2011
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O Level Sample Examination Paper
3 The treasurer of the Sandbury Sports Club did not keep full accounting records. The following
information was available at 31 October 2011:
Additional information
1 Balances
1 November 2010 31 October 2011
$ $
Inventory of refreshments 2 200 700
Operating expenses Prepaid 100 Prepaid Accrued 250 Accrued
Equipment (net book value) 3 200 2 700
Subscriptions in advance 175 310
Subscriptions in arrears 270 90
2 Subscriptions not collected for the year ended 31 October 2010 are to be considered as irrecoverable on 31
October 2011.
REQUIRED
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O Level Sample Examination Paper
(b) Prepare the refreshments trading account for the year ended 31 October 2011.
Sales 25000
......................................................................................................................................................
less Cost of sales:
......................................................................................................................................................
Opening inventory 2 200
......................................................................................................................................................
add Purchases 19 000
......................................................................................................................................................
21 200
......................................................................................................................................................
less Closing inventory 700
......................................................................................................................................................
20 500
......................................................................................................................................................
Gross profit on refreshments 4 500
................................................................................................................................................ [4]
(c) Prepare the income and expenditure account for the year ended 31 October 2011.
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O Level Sample Examination Paper
(d) (i) State the section of Sandbury Sports Club’s statement of financial position on 31 October
2011 in which subscriptions paid in advance will appear. Give a reason for your answer.
Current liabilities
Section: ................................................................................................................................
Subscriptions received in advance are for services to be provided by the club in the
Reason: ................................................................................................................................
next year. Until the club delivers these services to these members and earns their subscriptions
..............................................................................................................................................
they must be treated as prepaid income or other payables.
........................................................................................................................................ [2]
(ii) State the section of Sandbury Sports Club’s statement of financial position on 31 October
2011 in which purchase of equipment will appear. Give a reason for your answer.
Non-current assets
Section: ................................................................................................................................
Reason: The purchase of equipment with a useful life of more than one accounting year is
................................................................................................................................
capital expenditure.
........................................................................................................................................ [2]
[Total: 24]
Cambridge O Level Principles of Accounts 7110, Paper 2, Q3, October/November 2011
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O Level Sample Examination Paper
4 Zaynah is in business buying and selling goods on credit. The following balances were extracted
from her books on 30 April 2010.
$
Revenue (sales) 200 000
Cost of sales 130 000
Expenses 65 000
Inventory (stock) at 1 May 2009 20 000
Inventory (stock) at 30 April 2010 60 000
Trade receivables (debtors) 16 000
Trade payables (creditors) 35 000
Loans repayable within 12 months 5 000
(Bank overdraft)
Closing capital 100 000
REQUIRED
(a) Calculate, to one decimal place, the following ratios for the year ended 30 April 2010. Clearly
show all workings.
..............................................................................................................................................
..............................................................................................................................................
........................................................................................................................................ [3]
..............................................................................................................................................
........................................................................................................................................ [4]
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O Level Sample Examination Paper
In the previous year, ended 30 April 2009, the business of Zaynah achieved the following ratios:
REQUIRED
(c) Suggest one possible reason for the change over the year ended 30 April 2010 in the:
The fall in the gross profit to revenue percentage from 50% to 35% may have been due to a
..............................................................................................................................................
reduction in selling prices (Or, an increase in the cost price of goods purchased for resale)
........................................................................................................................................ [2]
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O Level Sample Examination Paper
5 Thien has a retail business. The following balances were extracted from his books at the end of his
financial year on 31 March 2012.
$
Leasehold property – 25 years (cost) 50 000
Equipment (cost) 54 000
Provisions for depreciation:
Leasehold property 10 000
Equipment 17 000
6% Bank loan repayable 31 December 2015 25 000
Bank Dr 5 150 Dr
Trade receivables 6 750
Trade payables 4 010
Provision for doubtful debts 700
Revenue 78 580
Purchases 18 240
Purchase returns 1 600
Inventory at 1 April 2011 4 690
Equipment repairs 850
Equipment running expenses 2 650
General expenses 8 400
Wages 15 300
Insurance 3 640
Power and water 2 300
Advertising 5 100
Discount allowed 1 650
Discount received 330
Capital at 1 April 2011 50 000
Drawings 8 500
REQUIRED
(a) Prepare the income statement for the year ended 31 March 2012. [20]
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O Level Sample Examination Paper
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O Level Sample Examination Paper
Depreciation :
.....................................................................................................................................................................
Lease (v) 2 000
.....................................................................................................................................................................
Equipment (vi) 9 400
.....................................................................................................................................................................
51 190
.....................................................................................................................................................................
.....................................................................................................................................................................
Profit for the year 10 870
.....................................................................................................................................................................
(i) Decrease in doubtful debts of $160 treated as other income and calculated as difference between total
.....................................................................................................................................................................
provision carried from year ended 31 March 2012 ($700) and total provision for year ended 31 Mach 2013
.....................................................................................................................................................................
(8% of trade receivables = 0.08 x 6 750 = $500).
.....................................................................................................................................................................
(ii) Equipment running expenses $2 650 + accrued expenses $750 = $3 400 of running expenses incurred.
.....................................................................................................................................................................
(iii) Loan interest = 6% of $25 000 = $1 500 payable over 3 x 12 months. Therefore, loan interest payable per
.....................................................................................................................................................................
month = $1 500 / 36 = $41.67. Loan interest payable per accounting year is therefore $41.67 x 12 = $500.
.....................................................................................................................................................................
(iv) Insurance paid for during year was $3 640 of which insurance prepaid and unused by the end of the year
.....................................................................................................................................................................
was $1 350. Therefore, insurance used up or incurred during accounting year = $3 640 - $1 350 = $2 290.
.....................................................................................................................................................................
(v) Annual depreciation charge for year on leasehold property = $50 000 / 25 years = $2 000 per year, using
.....................................................................................................................................................................
simple straight-line method over life of the lease.
.....................................................................................................................................................................
(vi) Net book value of equipment = equipment at cost – provision for depreciation = ($54 000 + $10 000) -
.....................................................................................................................................................................
$17 000 = $47 000. Therefore, annual depreciation charge on equipment = 0.2 x $47 000 = $9 400.
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
............................................................................................................................................................. [20]
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O Level Sample Examination Paper
Thien
.....................................................................................................................................................................
Statement of financial position at 31 March 2013
.....................................................................................................................................................................
Cost Accumulated depreciation Net book value
.....................................................................................................................................................................
$ $ $
.....................................................................................................................................................................
Non-current assets (a)
.....................................................................................................................................................................
Leasehold property (i) 50 000 12 000 38 000
.....................................................................................................................................................................
Equipment (ii) 64 000 26 400 37 600
.....................................................................................................................................................................
114 000 38 400 75 600
.....................................................................................................................................................................
Current assets (b)
.....................................................................................................................................................................
Inventory 3 870
.....................................................................................................................................................................
Trade receivables 6 750
.....................................................................................................................................................................
less provision for doubtful debts (iii) 540
.....................................................................................................................................................................
6 210
.....................................................................................................................................................................
Other receivables 1 350
.....................................................................................................................................................................
Bank
150
.....................................................................................................................................................................
11 580
.....................................................................................................................................................................
Current liabilities (c)
.....................................................................................................................................................................
Trade payables (iv) 9 010
.....................................................................................................................................................................
Other payables (v) 1 250
.....................................................................................................................................................................
10 260
.....................................................................................................................................................................
Net current assets (d) = (b - c) 1 320
.....................................................................................................................................................................
Total assets less current liabilities (a + d) 76 920
.....................................................................................................................................................................
Non-current liabilities (e)
.....................................................................................................................................................................
6% bank loan 25 000
.....................................................................................................................................................................
Net assets (a + d) – (e) 51 950
.....................................................................................................................................................................
Financed by:
.....................................................................................................................................................................
Capital at 1 April 2012 50 000
.....................................................................................................................................................................
add Profit for the year 10 870
.....................................................................................................................................................................
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O Level Sample Examination Paper
60 870
.....................................................................................................................................................................
less Drawings (vi) 8 950
.....................................................................................................................................................................
51 920
.....................................................................................................................................................................
Notes:
.....................................................................................................................................................................
You will need to combine a number of values from the list of balances in the table with values you calculated
.....................................................................................................................................................................
for the income statement in question (a) to complete the statement of financial position as follows:
.....................................................................................................................................................................
(i), (ii) Accumulated deprecation = provision for depreciation at 31 March 2012 + annual depreciation charge
.....................................................................................................................................................................
for year ended 31 March 2013. For leasehold property = $10 000 + $2 000 = $12 000. For equipment =
.....................................................................................................................................................................
$17 000 + $9 400 = $26 400.
.....................................................................................................................................................................
(iii) Provision at 8% of trade receivables = 0.08 x $6 750 = $540
.....................................................................................................................................................................
(iv) Trade payables of $4 010 plus $5 000 owed on for purchase of equipment on credit terms (see additional
.....................................................................................................................................................................
information note 6 in question).
.....................................................................................................................................................................
(v) Accrued equipment running expenses of $750 plus $500 of loan interest payable over the next
.....................................................................................................................................................................
accounting year.
.....................................................................................................................................................................
(vi) Drawings of $8 500 plus goods for own use of $450 (see additional information note 2).
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
............................................................................................................................................................. [20]
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