Surname

Centre
No.

Initial(s)

Paper Reference

6 0 0 2

Candidate
No.

0 1

Signature

Paper Reference(s)

6002/01

Examiners use only

London Examinations GCE

Team Leaders use only

Accounting (Modular Syllabus)

Advanced Subsidiary/Advanced Level
Unit 2: Corporate and Management
Accounting
Thursday 20 January 2011 Morning
Time: 3 hours

Question Leave
Number Blank

1
2
3
4
5

Materials required for examination

Items included with question papers

Nil

Source booklet

Instructions to Candidates
In the boxes above, write your centre number, candidate number, your surname, initial(s) and signature.
Answer FIVE questions, choosing TWO from Section A and THREE from Section B.
Indicate which question you are answering by marking the box ( ).
If you change your mind, put a line through the box ( ) and then indicate your new question with
a cross ( ).
All calculations must be shown.
Write your answers in the spaces provided in this question paper.
Do not return the source booklet with the question paper.

Information for Candidates

The marks for individual questions and the parts of questions are shown in round brackets: e.g. (2).
There are 7 questions in this question paper. The total mark for this paper is 200.
There are 32 pages in this question paper. Any blank pages are indicated.
Calculators may be used.
The source material for use with questions 1 to 7 is in the enclosed source booklet.

Advice to Candidates
Write your answers neatly and in good English.

Total
This publication may be reproduced only in accordance with
Edexcel Limited copyright policy.
2011 Edexcel Limited.
Printers Log. No.

M37939A
W850/6002/57570 1/1/1/

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SECTION A
Answer TWO questions from this section.
If you answer question 1, put a cross in this box (

).

Source material for question 1 is on pages 2 and 3 of the source booklet.

1.

(a) Prepare the profit and loss account for Bangla Radios plc for the year ended
31 December 2010, using format 1 as required by the Companies Act 1985.
You must show all workings clearly labelled in arriving at your figures to be shown
in the published profit and loss account.
Note:
There is no need to show any of the notes required by the Companies Act 1985
Ignore all the exemptions permitted for small and medium-sized companies.
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(b) Evaluate the importance of the Directors Report that accompanies the financial
statements of a company.
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(12)
(Total 52 marks)
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*M37939A0632*

Q1

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*M37939A0732*

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If you answer question 2, put a cross in this box (

).

Source material for question 2 is on page 4 of the source booklet.

2.

(a) Calculate for the project the:

(i) payback period, showing your answer in years and months.
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(ii) net present value.

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(b) Evaluate the project for the company, using the calculations made and considering
any other relevant factors.
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(12)

Q2

(Total 52 marks)

*M37939A01132*

11

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If you answer question 3, put a cross in this box (

).

Source material for question 3 is on pages 5 to 7 of the source booklet.

3.

(a) A statement reconciling the net operating profit to the net cash flow from operating
activities for the year ended 31 December 2010.
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(12)

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(b) A cash flow statement for the year ended 31 December 2010 in accordance with
Financial Reporting Standard (FRS) 1 Cash Flow Statements (revised).
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*M37939A01332*

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(c) An analysis of the changes in bank and cash balances for the year ended 31 December
2010.
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(6)
(d) Evaluate how well the directors of Thames Technical Services Limited have managed
the liquidity of the business during the year ended 31 December 2010.
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*M37939A01532*

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(12)
(Total 52 marks)
TOTAL FOR SECTION A: 104 MARKS
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*M37939A01632*

Q3

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*M37939A01732*

17

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SECTION B
Answer THREE questions from this section.
If you answer question 4, put a cross in this box (

).

Source material for question 4 is on pages 8 and 9 of the source booklet.

4.

(a) Calculate for the year the:

(i) number of insurance policies needed to be sold to break even
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(ii) forecast profit or loss.

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*M37939A01932*

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The telephone company has offered Nicolopoulos Insurance Limited for the next year a
choice of two options:
Option 1: the same fixed rate charge of 3 000 for the year OR
Option 2: a measured system of charging according to usage at a rate of 0.5 pence per
minute.
Each sale is made after an average of 500 minutes telephone usage.
All other costs and prices will remain unchanged for the next year.
The company is expected to sell 2 400 policies next year.
(b) Using Option 2, calculate for the next year the:
(i) number of insurance policies needed to be sold to break even
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(4)
(ii) forecast profit or loss.
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(c) Evaluate the two options for the telephone charge, and recommend which option
should be chosen.
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(8)

Q4

(Total 32 marks)

*M37939A02132*

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If you answer question 5, put a cross in this box (

).

Source material for question 5 is on page 10 of the source booklet.

5.

(a) Calculate for November 2010 the:

(i) total material cost variance
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(ii) material price variance for one brick (in pence)
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(iii) actual cost paid per kilo of clay.

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(4)
The production director of South East Asia Brick Company decided for December 2010
to buy from a different supplier of clay, Earthworks Limited, at 2.20 pence per kilo.
Additional information:

The budget for December 2010 showed 2.5 kilos of clay to be used to produce one
brick
The actual total cost of clay for December 2010 was 7 392.

(b) Calculate for December 2010 the:

(i) total material cost variance
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(ii) material usage variance for one brick (in pence)

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(iii) actual amount of kilos of clay used to produce one brick.
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(c) Evaluate whether South East Asia Brick Company should use Chinclay plc or
Earthworks Limited as a future supplier of clay.
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Q5

(Total 32 marks)

*M37939A02532*

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If you answer question 6, put a cross in this box (

).

Source material for question 6 is on page 11 of the source booklet.

6.

(a) Calculate the:

(i) final dividend per share
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(ii) total amount that Bharti will receive as a final dividend
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(iv) dividend yield

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(v) earnings per share
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(vi) price/earnings ratio.
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(3)

*M37939A02732*

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Bharti is considering whether to sell her shares in the company.

(b) If Bharti sold her shares on 1 January 2011 for 1.97, calculate the average annual
capital return she has made from her shares.
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(c) Evaluate whether Bharti should sell her shares in Krishnanor Industrials plc.
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Q6

(Total 32 marks)

*M37939A02932*

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If you answer question 7, put a cross in this box (

).

Source material for question 7 is on page 12 of the source booklet.

7.

(a) Journal entries to show items (i)(v) above as recorded in the books of Gulf Marinas
plc. Dates and narratives are not required.
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The company is considering a rights issue to ordinary shareholders, to finance the

construction of a second marina.
The Sales Director asks you the following question. Can you explain the difference
between a rights issue of shares and a bonus issue of shares?
(b) Explain the difference between a rights issue of shares and a bonus issue of shares.
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As an alternative to issuing shares, the company is considering issuing debentures to

finance the second marina.
(c) Evaluate on behalf of the company, the issue of debentures to finance the second
marina.
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(8)
(Total 32 marks)
TOTAL FOR SECTION B: 96 MARKS
TOTAL FOR PAPER: 200 MARKS
END

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