ACCOUNTING SAMPLE PAPER 2010

QUESTIONS
1. Which TWO of the following information needs apply to the government and its agencies in relation to the business of a sole trader? The government and its agencies need information to: a. b. c. d. e. Establish levels of tax revenue Assess whether the business will continue in existence Produce national statistics Assess the owner’s stewardship Take decisions about their investment LO 1a 2. Which of the following definitions for the ‘going concern’ concept in accounting is the most accurate in the light of IAS 1 (revised) Presentation of Financial Statements? a. ‘The directors do not intend to liquidate the entity or to cease trading in the foreseeable future’ b. ‘The entity is able to pay its debts as and when they fall due’ c. ‘The directors expect the entity’s assets to yield future economic benefits’ d. ‘Financial statements have been prepared on the assumption that the entity is solvent and would be able to pay all creditors in full in the event of being wound up’ LO 3b 3. According to IAS 1 (revised) Presentation of Financial Statements, compliance with International Accounting Standards and International Financial Reporting Standards will normally ensure that: a. The entity’s inventory is valued at net realisable value b. The entity’s assets are valued at their break-up value c. The entity’s financial statements are prepared on the assumption that it is a going concern d. The entity’s financial position, financial performance and cash flows are presented fairly LO 1c, 3b 4. Johan plc enters into the following transactions in relation to Marius plc, a supplier which is also a customer. Which of Johan plc’s accounting records is affected by each of these transactions? Marius plc buys goods from Johan plc on credit terms a. Sales day book b. Purchase day book c. Payables ledger Johan plc agrees to make contra entries in Marius plc’s personal accounts in its accounting system. d. Sales day book e. Purchase day book f. Payables ledger LO 1b

A balanced trial balance means that transactions have been entered correctly into the ledger accounts b. Credit the suspense account with £110 b. This is incorrectly recorded in the trial balance as £9. Together these journals should a.890. A discount received from Bernard had been debited to discounts allowed but was correctly treated in the payables control account a.800 So his reported profit will c. Hywel plc’s trial balance includes a total for all the receivables ledger accounts as listed out at the year end. Identify whether or not each of the following errors would result in opening a suspense account for Ramp plc. Debit the suspense account with £86 c. Suspense account not opened Goods returned by Cranberry had been debited to Cranberry’s account in the receivables ledger and to the receivables control account but had been correctly treated in the sales account c. The difference is due to the following errors in Hywel plc's ledger accounts: 1. 2d 8. The receivables ledger is part of the double entry system. Three journals are drafted to correct these errors. Debit £1.800 b. To record the drawings he must: Adjust cost of sales a. A suspense account with a credit balance means that the total of credit balances on the trial balance initially exceeded the total of debit balances d. 3. Ewan. Which of the following statements about the trial balance is true? a.800 for his own use. The balance on Markham plc’s receivables ledger account is £9. a sole trader.5. Increase d. The trial balance fails to agree and a suspense account is opened. Suspense account opened d. has taken goods valued at £1. This has not been recorded in arriving at his draft reported profit figure. Credit £1. The trial balance is part of the nominal ledger c. Credit the suspense account with £46 Accounting Sample Paper 2010 Questions . Suspense account not opened LO 2a 7. Suspense account opened b. Decrease LO 2a. A trial balance may be used as the basis to produce an income statement and statement of financial position LO 1e 6.980 A discount allowed to Umberto of £33 was debited to his receivables ledger account The sales account is overcast by £110 2.

150. PAYE and employees’ NIC deducted from gross pay which should be debited to the salaries expense account LO 2b 12. 2d 9.d. An invoice to Plion plc for £391 had been recorded in the sales day book as a credit note LO 2b 11. A cheque received from Ellie plc for £391 had been recorded on the debit side of Ellie plc’s account. A customer returned some goods to Osba plc on 30 November 20X7. The list of balances should be increased by £5. which are all paid to HMRC when due. Employer’s NIC which should be debited to the salaries expense account b. Debit the suspense account with £46 LO 2b.538 to its employees by bank transfer. In the payables control account reconciliation a.400 c. reconcile the two balances? a. Osba plc recorded a credit note in the sales day book which was debited to the customer’s account d. Limbo plc maintains its petty cash records using an imprest system. but a debit balance of £3. Correction of which of the following errors would. In March 20X6 Dredge plc paid £18. This balance represented: a.983 remained on the salaries control account. These had originally been invoiced at £782. It is discovered that the total of the purchase day book for January has been recorded as £11. the purchase of stamps was recorded as £12 and as a result a cheque for £108 was written to top up the petty cash float.750. Employer’s NIC which should be credited to the HMRC liability account c.400 LO 2b 10. The control account balance should be reduced by £5. At the end of January 20X7 Rock plc’s payables control account and its list of payables ledger balances fail to agree. The error made will result in which of the following? Accounting Sample Paper 2010 Questions . At 31 October 20X7 Osba plc had a receivables control account with a balance of £381. The total petty cash float is topped up monthly to £300. The correct figure is £17. Total PAYE and NIC owed to HMRC for March which should be debited to the salaries expense account d. During the month of August the following expenses were paid from petty cash: £ Stationery 36 Tea and coffee 60 Stamps 120 In error. The list of balances should be reduced by £5. Correct entries were made in the nominal ledger b.456 was debited to the salaries expense account. The control account balance should be increased by £5. Gross pay for the month of £28. The total column in the sales day book had been overcast by £782 c.400 b. Dredge plc makes only statutory deductions from employees’ pay.255. alone.400 d. This balance was £782 more than the total on its list of receivables balances at the same date.

The following items appear in the bank reconciliation at the year end. When the following errors were discovered and then rectified.760 LO 2b 15. An imbalance in the trial balance of £108 and the petty cash balance being £108 less than it should be b.990 10. In the adjustments columns on the extended trial balance Bark plc should make TWO entries of £1. £1. e. In respect of revenues in the year of £17.270 Unpresented cheques Uncleared lodgements A customer’s cheque for £2. b. Bark plc’s initial trial balance as at 30 June 20X8 has already been entered on the extended trial balance for the period. A cheque payment of £905 had been credited in the cash book but no other entry in respect of it had been made What was the original balance on the suspense account? a. £32.597 Credit £213 Credit LO 2b 14. The debit balance in Omar plc’s cash book at the year end is £42. b. d.550.230 d. As at 31 December 20X4 Isambard plc’s trial balance failed to balance and a suspense account was opened.a.700 b. d. f. c. An understatement of expenses of £108 and the petty cash balance being £192 less than it should be c. £ 2. £37.510. An understatement of expenses of £108 and the petty cash balance being £108 less than it should be d. 2c Accounting Sample Paper 2010 Questions . The debit side of the trial balance was undercast by £692 2. £35. the suspense account balance was eliminated. £47. sales commission of 10% has not yet been paid.470 was returned unpaid by the bank before the year end. Debit the accruals account Debit the prepayments account Debit the distribution costs account Credit the distribution costs account Credit the prepayments account Credit the accruals account LO 1c. What was the balance in hand shown by the bank statement? a.320 c. An imbalance in the trial balance of £192 and the petty cash balance being £192 less than it should be LO 2a 13. 1.755: a. but this return has not been recorded in the cash book.597 Debit £213 Debit £1. c.

850. A balance for prepayment of rent at 1 July 20X8 of £4.251 On 31 May 20X9 Jared plc paid its quarterly rent in advance of £7. c. £19.880.850 £26. and for rent in advance at the same date of £7.013 b. £43. d. Its initial trial balance includes: 1. c.000 £427.000 £531. 3c Accounting Sample Paper 2010 Questions .720.080 £37. In Jared plc’s income statement for the year ended 30 June 20X9 the figure for administrative expenses will be a.000. £35. £45.515 c.064 2.064 d. Purchases in the period were £686. b. having prepared an initial trial balance.000. d. and carriage outwards of £29. Muse plc commences trading on 1 January 20X8 and has zero inventories at that date. During 20X8 it has purchases of £455.000.16. b. What amount will appear for rent under other income in Brindal plc’s income statement for the year ended 31 May 20X5? a.446 £723. £686. In Platoon plc’s income statement for the year ended 30 April 20X1 the figure for cost of sales will be: a.000. Inventories were valued at £18.608 LO 3c 18.000 LO 3c 19.490.915 LO 3c 17.200.081 on 1 May 20X0. Jared plc is preparing its financial statements for the 12-month reporting period ended 30 June 20X9.000 £432. Platoon plc is preparing its financial statements for the year ended 30 April 20X1.880 £687.647 on 30 April 20X1. £456.340 LO 2c. In the income statement for the year ended 31 December 20X8 the cost of sales figure is: a. Brindal plc has a credit balance on its rent receivable account in its initial trial balance as at 31 May 20X5 of £22. In the adjustments column of the extended trial balance there are entries for rent in arrears as at 31 May 20X5 of £4. Closing inventories at 31 December 20X8 are valued at £52. Brindal plc acquired five apartments on 1 June 20X4 and immediately rented them out to different tenants. A balance for administrative expenses paid in the reporting period (including rent) of £44. £44.620 £22. c. b. d. incurs carriage inwards of £24.314 £686. and at £18.

875 Inventory was counted on 31 May 20X3 and its cost has been established at £572. d.904. but Moon plc believes an allowance of 40% of this amount is necessary. Charge for irrecoverable debts of £2. You are told that: 1.860 to the trade receivables account LO 2c.486 to the allowance for receivables account A debit entry of £1.486 to the allowance for receivables account A credit entry of £1. an allowance for receivables in respect of Cusack plc as at 1 August 20X0 of £1. At its year end of 31 July 20X1 Hussar plc has in its draft financial statements a figure for trade receivables of £578.340 and trade receivables net of allowance of £577.340 and trade receivables net of allowance of £578.485 is damaged and is estimated to have a net realisable value Accounting Sample Paper 2010 Questions . 3c 21.395 d. Charge for irrecoverable debts of £2.451 and trade receivables net of allowance of £578.650. Extended trial balance (extract) Irrecoverable debt expense Allowance for receivables as at 1 November 20X0 Trade receivables Trial balance £ £ 6.395 b.200 and a charge for irrecoverable debts expense of £3.546 251. In the adjustments columns on the extended trial balance Moon plc should make THREE entries: a.251 and trade receivables net of allowance of £578. Blenheim owes £12. inventory costing £27.606 c. b.290. Cusack plc’s account was settled in full in the year 2. Quince plc’s initial trial balance as at 31 May 20X3 has already been entered on the extended trial balance for the 12 month reporting period. e. Of this.860 to the trade receivables account A credit entry of £374 to the irrecoverable debt expense account A credit entry of £1. c. Charge for irrecoverable debts of £3.645. Moon plc’s initial trial balance as at 31 October 20X1 has already been entered on the extended trial balance for the period.760 As at 31 October 20X1 Grundle’s balance to Moon plc of £1. Charge for irrecoverable debts of £2. f. Extended trial balance (extract) Opening inventory (at 1 June 20X2) Closing inventory (at 31 May 20X3) Trial balance £ £ 456.395 LO 3c 22. an allowance of £250 is required against the account of Dancer plc 3. a cheque for £89 was received at 31 July 20X1 in respect of an amount written off two years previously.860 is irrecoverable.20. but only the cash book has been updated for this In its completed financial statements as at 31 July 20X1 Hussar plc will show: a. A debit entry of £374 to the irrecoverable debt expense account A debit entry of £1.

Herepath plc handed over a cheque to the seller for £19. b. On 1 January 20X4 Joffa plc purchased a new machine at a cost of £96. Franz plc is a manufacturer. Debit £456.100 1. There is no expected change to the residual value at the end of its life.400 units of the material Zobdo.875 to the opening inventory account Credit £545. 3c 25. in final settlement. How much depreciation will be charged in respect of this machine in Joffa plc’s income statement for the year ended 31 December 20X6? a. f. d. In the adjustments columns on the extended trial balance Quince plc should make TWO entries: a.228 £65.875 to the opening inventory account Debit £545.835 profit c.660 and internal administration costs of £9.419 to the closing inventory account Credit £560. d.419 to the closing inventory account Debit £572.000. b. On 1 April 20X7 the Foxy was part exchanged for a Vizgo car. c. On 1 April 20X5 Herepath plc bought a Foxy car for £23. £7. valued at £10.of only £15.419 to the closing inventory account Credit £572. e.350.460 LO 1c. g. c. What was Herepath plc’s profit or loss on the disposal of the Foxy? a. £2.200. Joffa plc decides on 1 January 20X6 that the machine only has one remaining year of useful life.720.000 £15.898 £33. £5.904 to the closing inventory account Credit £456. In the year to 31 July 20X5 there were the following inventory movements of Zobdo: 14 November 20X4 28 January 20X5 7 May 20X5 Sell Purchase Sell 900 units 1. when it would have no value.150 loss b.100 LO 1c 24. At 1 August 20X4 it held inventory of 2. c.450 were incurred. which had a purchase price of £28. The company’s depreciation policy for cars is 30% per annum using the reducing balance method. Delivery costs were £3.700 £9. £11. h.500.800 units What was the value of Franz plc’s closing inventory of Zobdo at 31 July 20X5? a.665 loss Accounting Sample Paper 2010 Questions . d.904 to the closing inventory account LO 1c 23. Its 12 month reporting period ends on 31 July and it adopts the average cost (AVCO) method of inventory usage and valuation. b. At that time Joffa plc planned to replace the machine in 5 years.00 each.200 units for £20.419 to the closing inventory account Debit £560.032 £60. £58.075 £35. and to depreciate the machine on a straight line basis.

On 1 April 20X6 the company makes a 1 for 3 bonus issue.000 LO 1c.091 1. 3c Accounting Sample Paper 2010 Questions . Muncher plc includes profits and losses on disposal of non-current assets in administrative expenses in its income statement.970 £308.898 LO 1c 27.913 LO 1c.584 £2. c.000 on 1 July 20X3 were sold for £150.000 £550. The carrying amount of plant and equipment in Redruth plc’s financial statements as at 31 March 20X5 was £399. and a balance on share premium of £750. b. £1.898 Credit £1.960.960 £257. Depreciation is charged on plant and equipment monthly at an annual rate of 25% straight line. Its initial trial balance shows the following balances: £ Tax payable at 1 January 20X1 Tax paid regarding 20X0 in 20X1 (as finally agreed with HMRC) 2. Redruth plc commenced trading on 1 April 20X3.000 £850.835 £299.595 LO 3c 28. On 31 March 20X6 an asset costing £11. b. b. £450. c. Debit £1. d. b. In Monksford plc’s income statement for the year ended 31 December 20X1 the figure for tax expense will be: a.255 £2. In the administrative expenses account Muncher plc must: a. 1d 29.584. Monksford plc is preparing its financial statements for the year ended 31 December 20X1. The carrying amount of Redruth plc’s plant and equipment in its statement of financial position at 31 March 20X6 is: a.000 of 50p equity shares in issue.500. Depreciation is charged on fixtures and fittings at 20% using the reducing balance method.500 was acquired. The cost of these assets was £614. There are no residual values. c.450 Credit £1.000. d.000 £650.269 £2.450 Debit £1. The balance on Pigeon plc’s share premium account at 31 December 20X6 is: a. £254. On 1 January 20X6 Pigeon plc has £300. On 1 July 20X6 some fixtures that cost £4.250 loss LO 1c 26. d.762 The estimated tax due for the year ended 31 December 20X1 is £2. c. d. £6.d.

000.600 £5.600 £4. What is the figure for retained profits in Saracen Ltd’s balance sheet as at the year end. Which of the following sets of entries would be made to record this transaction? a. Credit Share premium £387.55 each for cash.500 c. Debit Bank £887. Credit Share capital £250. d.695.500. £4.204 £2.733 Of the accruals at 1 September 20X5.000.500.600 £5.994. Debit Share premium £387. The following balances have been extracted from Saracen Ltd’s trial balance at 31 December 20X8: Debit Credit £ Retained profits at 1 January 20X8 10% debentures issued in 20X5 Debenture interest paid £ 4.929.500.215. Debit Bank £887. Debit Share capital £250. d.000. 31 December 20X8? a. Credit Share capital £500. Credit Bank £887. Diamond Ltd issues 250.500 b. 1d.500 LO 1c.000 Operating profit for the year ended 31 December 20X8 is £520. £362 related to interest payable. In Zenia plc’s income statement for the 12 month reporting period ended 31 August 20X6 the finance costs will be: a. Credit Bank £887. having prepared an initial trial balance which includes the following balances: £ Accruals at 1 September 20X5 Interest paid 948 2. Corporation tax for the year has been estimated at £156.733 £2. c. c. b.790 LO 1c.000.000 equity shares with a nominal value of £2 each at a price of £3.059. Debit Share capital £500. At 31 August 20X6 accruals will include £419 related to interest payable. Zenia plc is preparing its financial statements for the 12 month reporting period ended 31 August 20X6. 3c Accounting Sample Paper 2010 Questions .000. b.30.000.500 d.600 LO 1c. £2. Credit Share premium £637.300.676 £2. 2d 32. 3c 31.500.600 1.000 65. Debit Share premium £637.

a cheque for £180 from a customer has been returned unpaid by the bank.468 £60. a. c. preparing financial statements as at 31 August each year and sharing profits 4:3:1. He has not yet prepared a full set of financial statements.624 £90. Sayhan retired on 30 April 20X2. Debit Sales £12.498 during the period and paid expenses in cash of £19. identify his profit for the 12 month reporting period to 30 November 20X4 and his net assets at the end of the period on an accrual basis.248. 3b 36. 2d 34. Fixed assets Share premium Drawings Dividends paid Profit for the year LO 3c 35. The business’s profit for appropriation (arising evenly over the 12 months to 31 August 20X2) was £121. d. and has no fixed assets or stock.113. c. Errol and Alev are in partnership. d. Credit Cash £180 Debit Bad debts expense £180.726 LO 1c.000. For the year to 31 August 20X2 Errol’s profit share is a. Credit Cash £180. £30. net assets of £1.726.113. b.312 £45. Sayhan.726 Net profit of £14. No entries have been made in the accounting records for the return of the cheque 2. 30 November 20X4.726.936 LO 1d Accounting Sample Paper 2010 Questions . Debit Sales £24. Which THREE of the following could be found in the financial statements of a partnership? a.113 Net profit of £11. Debit Debtors £156. does not keep a debtors control account or a sales day book and is not registered for VAT. b. net assets of £1. d. Sunil started business on 1 December 20X3 with cash of £5.000 in the period. he has cash at bank of £1.113 Net profit of £14.387. and Errol and Alev continued. He made sales of £33. e. net assets of £4. d. b. a credit note for £12 was sent to a customer but was mistaken for an invoice by Samantha’s accounts clerk when recording it Which of the following journals will be entered in Samantha’s nominal ledger accounts in order to correct these items? a. c. Credit Sales £24 Debit Debtors £168.33. The bookkeeper has discovered the following errors and omissions in Samantha’s accounting records: 1. Credit Debtors £156. Samantha. a sole trader. sharing profits 3:1 respectively.385. Assuming Sunil made no other capital injections but took drawings of £15. Credit Sales £24 LO 1c. He has no outstanding creditors at the end of the period. but one customer owes him £2. Net profit of £11. As at the end of his first reporting period. net assets of £4. Credit Cash £180 Debit Cash £180. b.726. c. Debit Debtors £24.

Debit £3. A credit customer paying by cheque Raw materials being purchased on credit Non-current assets being purchased on credit Personal petrol being paid for out of the business’s petty cash LO 1c. d. John and Chris are in partnership. In the adjustments columns on his extended trial balance Leonard should make TWO entries of £38. Debit column of the balance sheet d. c. Credit column of the profit and loss account c. Helen retired on 30 September 20X6.37.000. Leonard’s initial trial balance as at 30 April 20X9 has already been entered on the extended trial balance for the period. sharing profits 5:3 respectively.250 LO 1d 40. preparing financial statements as at 31 January each year and sharing profits 5:3:2. b. c. Goodwill as at 30 September 20X6 (not to be retained in the accounts) was valued at £50. The capital of a sole trader would change as a result of: a. d. Hermione’s final net profit figure will appear in which TWO of the following columns? a. Debit column of the profit and loss account b.250 Credit £3. The net entry to John’s capital account to include and then eliminate goodwill is: a.100: a. On her extended trial balance. d. and John and Chris continued. Credit column of the balance sheet LO 2c 39. 3a Accounting Sample Paper 2010 Questions . b. c.100 in total have been debited to the other expenses account in error. Helen. b.750 Debit £16.750 Credit £16. Leonard’s drawings of £38. Debit the capital account Credit the capital account Debit the other expenses account Credit the other expenses account LO 2c 38.

D . As they were debited to receivables the same situation arises. the debit side of the trial balance would exceed the credit side and a suspense account with a credit balance would be opened (A). it is not part of the ledger itself (B).C 7. The trial balance is used as the starting point for producing an income statement and statement of financial position (D) when the ETB technique is being used. Since both sides of the entry were debits. The trial balance lists out all the balances on the ledger accounts. so only the payables ledger (F) can be at issue here. this is really only an issue for company owners. Whether the business will continue as a going concern (B) is an issue for the sole trader. the purchases figure in cost of sales should be reduced or credited (B). According to IAS 1 (revised) paragraph 25. D 6. A. customers and employees. A. Probably only the sole trader is interested in their own stewardship (D) of the business’s resources.ACCOUNTING SAMPLE PAPER 2010 ANSWERS 1. but for the adjustment made to the suspense account by the correcting journal. and a suspense account with a credit balance would be opened (C). not Marius plc’s. Discount received should have been credited to an income statement account and debited to payables. D 4. going concern relates to whether the entity will continue in operational existence without liquidating. This question is not asking for the balance on the suspense account. its suppliers. Contra entries are made in ledger accounts. even if the final adjustments and corrections have not yet been put through. Goods returned by a customer should have been debited to sales and credited to receivables.C 8. Johan plc sells them to it so only the sales day book (A) can be at issue. As some items have been drawn out by the owner rather than sold or carried forward as inventory. A lower cost of sales figure means an increased reported profit (C). B. as is (E). When Marius plc buys goods on credit. When there is a credit balance on a suspense account this means that the total of debit balances initially exceeded the total of the credit balances (C). not books of original entry. A single journal to correct all these errors would be: £ CR Receivables (90 + 66) DR Sales 110 £ 156 2. and errors of commission and of principle in the ledger accounts. IAS 1 (revised) paragraph 15 Note that the question is asking about Johan plc’s books of original entry. A 3. F 5.C Both tax and national statistics are mentioned in the Framework in relation to the needs of government and its agencies. ceasing trading or being unable to avoid these things (A). A. Even if the trial balance balances (A) there may still be compensating errors.

An overcast of the total of invoices in the sales day book means that £782 will be debited to the control account but not to the receivables ledger.755 is an accrued expense which should be credited to accruals (F). C.150 – £11. C 13. B 17. A 14. Thus the suspense account has a debit balance of £692 + £905 = £1. B Accounting Sample Paper 2010 Answers .750 = £5.760 Unpaid sales commission of £1.251 needs to be debited to administrative expenses.314 Cost of sales includes carriage inwards. so the remaining debit balance after gross pay has been charged cannot be these (C and D).880 – £18.400.510 (2. 16.270) 32. which is a cost incurred in bringing inventories to their present location. In both A and C the receivables ledger will be overdebited by (£391 x 2). The difference in the amount at which the purchase of stamps was recorded is £120 – £12 = £108.DR Suspense (9. F £ 42. A 18. Employees’ NIC and PAYE are not additional expenses. B is incorrect as it suggests that the debit balance on the control account should be credited to the liability account. The opening prepayment of rent of £4. Petty cash should have been topped up with (£36 + £60 + £120) = £216. A 12. As sales commission is a distribution cost it should be debited to this account (C).081 + £686. in D both the control account and the ledger will be overdebited by (391 x 2). instead it was debited to suspense.800 needs to be credited. As only £12 was recorded expenses have clearly been understated. and the closing prepayment of £7.200 x 2/3 = £4. which is understated by £5.597 10. As the understatement is in the purchase day book total it affects only the control account. so the £108 top-up is £216 – £108 = £108 too little (C).400 and so should be increased by that amount. Employer’s NIC is an expense to the business in addition to gross pay.980 – 9.515 Cost of sales is £18. B 11. If the debit side of the trial balance is undercast by £692 this amount is debited in the suspense account.990 (10.800 = £43. Total administrative expenses will therefore be £44. which is a distribution cost and included in the income statement after calculating gross profit. C The transposition error is £17.470) 40.251 – £4.890) + (2 × 33) – 110 46 156 156 The debit entry in the suspense account is £46 (D) 9.064 + £4. Closing inventories should be deducted in arriving at cost of sales. D Uncorrected cash book balance Dishonoured cheque Corrected cash book balance Unpresented cheques Uncleared lodgements Bank statement balance 15. so it should be debited to the salaries expense account from the control account (A).040 2. When the cheque payment of £905 was credited to cash it should have been debited to an expense account.647 = £686. but excludes carriage outwards.

This should be debited and credited to the closing inventory account.860 1.546 £ 6. The net debit to the irrecoverable debt expense account is therefore £1. and £1.850 4. A RENT £ 455.340 20.486 (B). G The value of closing inventory is (£572.546 Carried down (£12.200 B/d £ 1.860 needs to be credited to trade receivables (F).486 = £374 (A) ALLOWANCE FOR RECEIVABLES £ 5.290 22.904 – £27.486 374 1.340 £ 22.650 x 0.000) 427. A.290 £ Allowance Recovered debt Income statement 950 89 2.251 (A) and the figure for receivables is £578. the debit is for the statement of financial position and the credit is for the income statement Accounting Sample Paper 2010 Answers .290 Draft charge 3.720 Receipts received 19.060 1.4) Irrecoverable debts expense (B) Brought down Trade receivables Allowance decreased Income statement 21.620 Arrears 27. B.860 6.486 6.200 IRRECOVERABLE DEBT EXPENSE £ 3.000) = £560.419. we can see that the charge is £2.000 (52.000 Advances Income statement (bal fig) £ 7.200 1.251 3.490 27.645 – £250 = £578.546 IRRECOVERABLE DEBT EXPENSE £ 1.060 = £1.485 + £15.000 24.546 – £5.Purchases Carriage inwards Closing inventories Cost of sales 19.860 £ 1. C.395 (A) ALLOWANCE FOR RECEIVABLES £ C/d Irrecoverable debts 250 950 1. F The allowance needs to be debited with £6. A Using T accounts for the allowance and the charge.860 – £1.

898 DISPOSAL £ 4.75 13.8 x 0.000 B/d Additions C/d ACCUMULATED DEPRECIATION C/d £ 368.000 x 0.228 must be allocated as depreciation in 20X6 given the revision of the asset’s useful life. This means that the whole of the remaining carrying amount of £60.500 x 0. Note that no depreciation will be charged in the year to 31 March 20X6 for the asset acquired at the year end: COST £ 614.000 4.500 .152 was charged.540 153.(£23.985 Cost Accumulated depreciation £23. the carrying amount being £626. B b/f Sell Buy Sell c/f 2.00 10.835. A Units 8/X4 11/X4 1/X5 5/X5 7/X5 24.850 2.400) 11.952 150 1.660)/5 x 2 = £40.500 x 0. C The debit to administrative expenses is the loss on disposal of £1.100 (23.000 20.720 + £3.8)) Proceeds Administrative expenses (loss on disposal) £ 1.500 11.23.00 13.165 = £257.7 x 0.000 (9.000 – £368.00 £ 24.350) Loss on disposal (bal fig) 8.00 16.165 Accounting Sample Paper 2010 Answers B/d (614.200 2. B This is calculated using T accounts.400 (900) 1.960) Charge (614.100 35.000) 15.000 27.200 – £19. 25. so in the first two years’ depreciation of (£96.7) Part exchange value (£28.500 626.625 368.500 – 399.800) 900 Value £ 10.000 626.500 1.165 368.00 13.000 Cost Acc dep (£4.500 23.500 £ 11.165 .500 26.665 23.898 4.00 10. C DISPOSAL £ 23.8 x 0.000 – (£4.25) £ 214.700 The internal administration costs cannot be treated as part of the asset’s cost.700 (1.000 £ 626.

790 3.152 Cash Closing accrual Accrual reversed Income statement (bal fig) 31. Pigeon plc has 600. Instead it issues shares to existing shareholders at par value.1. which is debited to cash at bank.000) 4.500 32.091 2. B This is calculated using a T account: TAX Cash Carried down £ 1.000.584 4. It therefore issues 200.12.929.55 = £387.X8 Operating profit Debenture interest (£1.695.55 = £887.000 £100. 29.000 x £3. while the credit to share premium is 250. The journal to record this issue is: DR CR Share premium (200.28.000.762 2.000 (1/3 x 600. A Retained profits at 1.000 x £2 = £500.346 Brought down Income statement (bal fig) £ 2. The credit to share capital is 250.152 £ 362 2.733 419 3.000 x £1.600 So the net correcting journal (A) is £ DR Debtors 156 Accounting Sample Paper 2010 Answers £ .000 The share premium account is therefore reduced to £650. C When a company makes a bonus issue it receives no monies from shareholders. C Cash raised is 250.000 (130.346 30.600 520. D This is calculated using a T account: FINANCE COSTS £ 2.500.000) (156. crediting share capital and debiting share premium account (if there is insufficient share premium then retained earnings may be debited).000 ordinary shares in issue prior to the bonus issue.3m x 10%) Tax Retained profits at 31.X8 33. A The correcting journals in full are: £ DR CR DR CR Debtors Cash Sales (2 x 12) Debtors 180 180 24 24 £ £ 4.255 4.000 x 50p) Share capital £100. because each share has a 50p par value. again with a par value of 50p each.000) shares to shareholders.

while options B and C increase assets and increase liabilities. a net debit of £16.113 Closing net assets (1.000) 14. C Errol is a partner for the whole year.624 £121. John is credited with £50.248 x 4/12 x 3/4 = 37. which decrease capital. and 3/4 of the last 4 months after Sayhan’s retirement: £ 30.000 x 5/8 = £31. Profit for the year (E) can be found in any financial statements 35. A.248 x 8/12 x 3/8 = £121. A.000 (5. To remove the incorrect entry from other expenses the account needs to be credited (D). B Using the balance sheet equation: £ 4. 38. C. Partners take drawings (C) rather than dividends.D 39.DR CR Sales Cash 24 180 34. Fixed assets (A) is a UK GAAP term which can be seen in the financial statements of sole traders.250. partnerships or some limited companies.250 Petrol being paid in petty cash means assets decrease and drawings increase. B 40. D Accounting Sample Paper 2010 Answers .000. Option A is a switch between assets.000 x 3/10 = £15. On the ETB net profit is a debit to the profit and loss account (A) and a credit to the balance sheet (D).726 + 2.312 60.113 15.312 30. then debited with £50. receiving 3/8 of the first 8 months profit. D In the absence of a drawings account on the ETB the debit for drawings should be to capital. E Share premium (B) and dividends paid (D) are found only in company financial statements.387) (B) Drawings Opening net assets Net profit (B) 36. A. since it reduces the amount of the owner’s interest in the business (A).

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