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%b.
I?RINT your oamc on the linc belorv and return
this booklet with the ansrvcr sheei. Failure to do
so may result in disqualification.
TEST CODE 01239010
FORM TP 2016102 MAY/JLTNE 20I6

CARIBBEAN EXAMINATIONS COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE@
EXAMINATION
PRINCIPLES OF ACCOUNTS
Paper 01 - General Proficiency
I hotr 30 rninutes

19 MAY 2016 (p.m.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

I This test consists of 60 iterns. You will have I hour and 30 minutes to answer them.

2 In addition to this test booklet, you should have an answer sheet

3 Each item in this test has four suggested answers lettered (A), (B), (C), (D). Read each item
you are about to answer and decide which choice is best.

4 On your answer sheet, find the number which corresponds to your item and shade the space
having the same letter as the answer you have chosen. Look at the sample item below.
ffi
sEi.&
Sample Item
ffi Prime cost is calculated by adding direct factory expenses to the Sample Answer

(A)
(B)
cost ofgoods sold
sale of fixed assets
o
(c) sale of finished goods
(D) cost of materials used

The best answer to this item is "cost of materials used", so (D) has been shaded.

5. If you want to change your answer, erase it completely before you fill in your new choice.

6. When you are told to begin, turn the page and work as quickly and as carefully as you can.
If you cannot answer an item, go on to the next one. You may return to that item later.
7. The use of silent, electronic calculators is allowed.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

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Copyright O 2013 Caribbean Examinations Council
All rightS reserved.
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-- 01239010/F 2016

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SysTools PDF Watermark Demo Version
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1. A non-trading organization is MAINLY 3 Which of the following accounts are
concerned with nominal?

(A) importing goods for resale (A) Wages and Rent

(B) trading only with wholesalers (B) Stock and Debtors
(C) making maximum profit for the (c) Machinery and Plant
proprietor (D) Creditors and Fixtures
(D) providing various services for its
members
4. Howwouldyou classiff land and buildings
in a Balance Sheet?
2. The term 'Accounting'refers to the
(A) Fixed Assets
(A) use of information in making (B) Current Assets
business decisions (c) Current Liabilities
(B) use of special ways of recording (D) Long-Term Liabilities
business information
(C) recording,analysingandinterpreting
of business information 5 Which group of assets below is recorded
(D) journalizing, posting and balancing in the 'Order of Liquidity'?
ofaccounts in special books
(A) Cash, Plant and Muchinery Stock
(B) Cash, Stock, Buildings_.and Lands
(C) Vehicles, Cash, Buildings and
Lands
(D) Furniture,Vehicles,OfficeSupplies

Item 6 refers to the following balance sheet.

ASSETS $ CAPITAL $ $
Land 4 000 Add Net Profit t3 450
Motor vehicles 8 000 3 000
Fixtures 2 600 t6 450
Stock 300 Less drawings (l 000) t5 450
Debtors 4s0
Bank 2 000 Creditors 2 100
Cash 200
17 550 17 550

6. The value of TOTAL fixed assets is

(A) sl2 000

(B) $14 600
(c) $ls 3s0
(D) sl9 650

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012390108 2016
SysTools PDF Watermark Demo Version
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7 The summarized position of Foster and 10 Afirm sold 50 items at $80 each. Of these, 9
Scott Limited at 6 March 2015 was: items were returned. Which ofthe following
will the firm issue in respect of the items
$ returned?
Current Liabilities 60 000
Current Assets 100 000 (A) Debit note for $720
Fixed Assets 200 000 (B) Credit note for $720
Long Term Liabilities 1s0 000 (c) Receipt for $720
(D) Invoice for $720
What was the capital of Foster and Scott
Limited at 6 March 2015?

(A) $ 40 000 11 A trade discount may be described as an

(B) $ e0 000 allowance given
(c) $150 000
(D) $190 000
(A) to attract buyers
(B) for quick payment of accounts
(c) when goods are of a poor quality
8 If the following lists of assets found on the (D) to traders who buy in large
Balance Sheet of a retail trader were to be quantities
arranged in order ofliquidity, the sequence
would be
Item 12 refers to the following information
(A) Motor van, Building, Bank, from the books of a company. .,.
Fixtures, Cash, Debtors
(B) Cash, Fixtures, Debtors, Bank,
s
Building, Motor van l0 000
Cash sales
(C) Cash, Bank, Fixtures, Debtors, Credit sales 4s 000
Motor van, Building 40 000
Stock on hand
(D) Cash, Bank, Debtors, Motor van,
Drawings 8 000
Fixtures, Building
Cash purchases 12 000
Credit purchases 20 200
Item 9 refers to the following information
about the assets and liabilities ofMr Jones. 12. From the information above, what is the
correct closing total for the Sales Account?
s
(A) $47 000
Cash at bank 800 (B) $49 000
Inventory 400 (c) $ss 000
Accounts payable 600 (D) $s9 000
Accounts receivable 125
Bank overdraft 250
Cash in hand s00 13. Which ofthe following would NOT appear
in a cash book?
9 From the information above, Mr Jones'
capital amount is (A) Payment for goods $100
(A) (B) Goods sold on credit s100
$40s
(B) $4s0
(c) Goods sold for cheque s100
(c) (D) Goods bought for cash $r00
$8s0
(D) s97s

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01239010tF 2016
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l4 On l2 January20l5,a merchant purchased 18. The ABC Company deposited a cheque
goods amounting to $120 on the following for $300 received from Mr Murray. How
terms: 5olo cash discount if paid within 30 shouldthis transaction be recorded inABC's
days. He settled his debt on 28 February books?
2015. How much did he pay?
I. Debit the Cash Account.
(A) $112 II Debit the Bank Account.
(B) $l 14 III Credit Murray's Account.
(c) sl2o
(D) $126 (A) I and II only
(B) I and III only
(c) II and III only
15. When proprietor withdraws cash or other
a (D) I, II and III
assets from a business, what effect does it
have on drawings or capital?
t9 Which of the following is NOT a nominal
(A) Capital is decreased. account?
(B) Capital is increased.
(c) Drawings are decreased. (A) Furniture
(D) Neither drawings nor capital is (B) Commission
affected. (c) Carriage Inwards
(D) Discount Allowed.

16. On 2 March 2015 L. Lan bought goods on

credit worth $630. He received a3Yotrade 20 An asset purchased for $ I 000 is depreciated
discount on this amount. The invoice also at the rate of L0%o per annum using the
stated2oh 20 days, net 30 days. How much reducing balance method. The book value
would L. Lan pay for the goods if he pays of the asset at the beginning of the third
on 8 March 2015? year is

(A) $59s.00 (A) $ 800

(B) $s98.88 (B) s 810
(c) $611.10 (c) $ 900
(D) $661.12 (D) $l 190

17. When money is taken from cash and paid 21. A mechanic starts his business with
into abankaccount, the recording is referred $10 000 worth of tools. What entries
to as should be made to record this transaction?

(A) the imprest (A) Dr. Capital A/c; Cr. BankA/c

(B) a contra entry (B) Dr. BankA/c; Cr. Capital Nc
(c) cash takings (C) Dr. Tools Nc;Cn Capital A/c
(D) personal drawings (D) Dr. Capital Nc;Cr. Tools A/c

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22 Goods were sold on credit to John Brown. Item 24 refers to the following information.
Whichofthe following is the correctdouble
entry to record this transaction? Number Invoice Market
of Items Price per Unit Price per Unit
(A) Debit John Brown's A./c $ $
Credit Sales A/c r00 60 64
80 100 90
(B) Debit Sales A/c 50 84 90
Credit John Brown's A-lc 75 84 80

(c) Debit John Brown's A/c

Credit Cash A/c 24. What is the value of the inventory (stock)?
(D) Debit Cash A/c (A) $23 r00
Credit John Brown's A./c (B) $23 400
(c) $24 roo
23.
(D) S24 s00
M. K. Trucking company received a cheque
from Mrs Henry. How must this transaction
be recorded in M. K. Trucking's books? An increase in drawings will result in
25

I. Credit the Cash Book. (A) an increase in long-term liabilities

II. Credit Mrs Henry's Account. (B) a decrease in capital "r
III. Debit the BankAccount. (C) a decrease in current liabilities
IV. Debit Mrs Henry's Account. (D) an increase in capital

(A) I and III only

(B) I and IV only
(c) II and III only
(D) II and IV only

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01239010tr. 2016
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Items26-27 refer to the following information.

s s s

Capital s0 000 Fixed Assets

Machinery 25 000
Long-term Liabilities Vehicles 20 000 45 000

Bank loan rs 000

Current Liabilities Current Assets

Creditors s 000 Stock 4 000

Debtors 6 000
Bank ls 000 2s 000

$29 00q $70 000

26. What is the working capital?

(A) $20 000

(B) $2s 000
(c) $50 ooo
(D) s7o ooo

27 If $2 000 worth of stock is sold on credit at cost, what would be the new working capital?

(A) $20 ooo

(B) S2s 000
(c) $so ooo
(D) s7o ooo

28. During the year, a company bought stationery for 5220 and used $120 worth of it. What is the
expenditure for stationery that would be posted to the Profit & Loss Account?

(A) $100
(B) $120
(c) $220
(D) s34o

29 Atrader started with capital of $20 000 in the bank. If $12 000 of it was used to purchase building
and plant, the balance of $8 000 would be

(A) drawings
(B) total assets
(C) working capital
(D) cunent liabilities

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01239010tF 2016
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30. The formula for working capital is 32. When a Trial Balance fails to agree, the
difference is entered in the
(A) total assets less total liabilities
(B) flxed assets less current assets (A) Control Account
(c) fixed assets less current liabilities (B) Suspense Account
(D) current assets Iess current liabilities (c) Reserve Account
(D) Provision Account

Item 31 refers to the following extract from

a trading account. 33 How does an increase in bad debt affect a
sole trader's fi nancial statements?
$
Opening inventory 200 (A) Decrease the gross profit
Sales 900 (B) Increase the gross profit
Purchases 500 (C) Decrease the net profit
Closing inventory 300 (D) lncrease the net profit

31. What is the gross profit? 34. A debt is considered a 'bad debt' if the
debtor
(A) 5100
(B) $300 (A) pays late
(c) $soo
(D) Ssoo (C) clears the debt in parts
i}

(D) does not use money to pay

Item 35 refers to the following information.

Dr. Insurance A/c Cr.

20ls $ 2015 $

2 January Balance b/d 700 3l December Profit & Loss A/c 8 100
15 January Bank 8 000 3l December Balance c/d 600

!-z9a !199

35. What is the amount of insurance prepaid at the end of the year?

(A) $ 600
(B) S 700
(c) $8 000
(D) s8 100

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01239010rf. 2016
SysTools PDF Watermark Demo Version
For Full Version Visit: http://www.systoolsgroup.com/pdf-watermark

36 M. Brown wishes to increase his provision for bad debts from 8%o to I0olo. Accounts Receivable
at the end of the year totalled $10 000, whilst the balance in the provision for bad debts account
is presently $800. Which of the following would be the correct entries to record the provision for
the year?

(A) Dr. Profit & Loss A./c, $ 720

Cr. Provision for Bad Debts A,/c s 720

(B) Dr. Profit & Loss A./c, $ 800

Cr. Provision for Bad DebtsA/c s 800

(c) Dr. Profit & Loss A./c, $1000

Cr. Profit & Loss A/c s1000

(D) Dr. Profit & Loss A/c, s 200

Cr. Provision for Bad Debts A/c s 200

Item 37 refers to the following information Item 39 refers to the following data
which was extracted from the Cash Book
of Dandy Dare. I' $
Debtors with credit balances l 100
s Creditors with debit balances 700
Balance per Cash Book s60 Amount received recorded as
Total unpresented cheques 120
an overpayment in error 200
Lodgement not entered on
Bank Statement 150 39 The amount to be shown asa set-off in the
Debtors Ledger Control Account is
37. What is the balance per Bank Statement?
(A) $ 200
(A) $ r20 (B) s 700
(B) $ 1s0 (c) $ 900
(c) $340 (D) $ I 100
(D) ss30

40. Which of the following items can be

38. In a partnership, which of the following used to adjust the Cash Book balance
transactions is compulsory? before preparing a Bank Reconciliation
Statement?
(A) Paying of salaries
(B) Interest on capital (A) Direct transfers and bank
(C) Interest on drawings lodgements
(D) Sharing of profits or losses (B) Direct transfers and dishonoured
cheques
(C) Banklodgementsandunpresented
cheques
(D) Dishonoured cheques and
unpresented cheques

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0r239010tF 2016
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4t On I June, P. Shark, a sole proprietor, owed 44. At the end ofthe yearthe capital ofabusiness
creditors $4 300. During the month he was $33 000. At the beginning of the year
paid $13 100 by cheque and at the end of the capital was $28 000. During the year
the rnonth his balance owing was $2 700. the owner withdrew $2 000 for personal
Cash purchases for the month are $3 500. use. What is his net profit for the year?
What is P. Shark's total purchases for the
rnonth? (A) $ s 000
(B) S 7 000
(A) s 8000 (c) $30 oo0
(B) sll 500 (D) $61 000
(c) sls 000
(D) $ls 800
Item 45 refers to the following information.

42. MrJones'business beganthe month with an s

overdraft of$ I 200. During the month, total Inventoryat January2013
1 I s00
deposits were $2 000 and total payments Purchases during the month I 200
were $600. What was the Cash Book Cost of goods sold I 400
Balance at the end of the month?
45. What is the inventory at the end ofJanuary?
(A) Debit balance of $200
(B) Credit balance of $200 (A) s 300
(c) Credit balance of $600 (B) s 500
(D) Debit balance of $l 400 (c) $ 700
(D) $ I 300

43. Mr Smith does not keep proper records. He

began his business with $ 10 000 in its bank 46. The main reason why a sole proprietormay
account. He uses his vehicle and building consider joining with one or more persons
worth $6 000 and $15 000 respectively as to form a partnership is
part of his business. Customers owe him
$4 000. He withdrerv $l 500 for personal (A) the business would attract more
use and owed creditors $2 000. customers
(B) the business would be recognized
What is the closing capital ofthe business? by the government
(C) he can work less if many people
(A) $2s s00 are involved in the business
(B) S28 s00 (D) the business would get additional
(c) $31 500 capital and management skills
(D) $33 000

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47 Mrs Louis invested S20 000, Mrs Monroe 50 A business with more than one owner
invested $5 000 and Mr Nanton invested records the division of profit in which of
$5 000 in the same business. The loss the following accounts?
sustained during the year was $l 000. The
'partnership agreement'is silent on the item (A) Capital Account
of losses, although profits are to be split in (B) Trading Account
the ratio 2:2:l in favour of Louis, Monroe (C) Appropriation Account
andNanton respectively. How much ofthe (D) Profit and Loss Account
loss must be borne by Mr Nanton?

(A) 5200 51 Which of the following accounts BEST

(B) $240 describes the FinalAccounts ofa non-trading
(c) s30o organization?
(D) 5400
I. Receipts and Payments
II. Income and Expenditure
48. A businessman incurred the following m. Trading and Profit and Loss
expenses.
(A) t and II only
$ (B) I and III only
Factory repairs 6 000 (C) II and III only
Machinery repairs 2 000 (D) I,II and III
New machine 3 000
New vehicle 7 000
52. The reward of profit received by a
shareholder in a limited company is called
What is his TOTAL capital expenditure?
(A) interest
(A) $6 000 (B) drawings
(B) $7 000 (c) dividend
(c) $8 000 (D) commission
(D) $10 000

49 Which of the following ratios are used

to analyse the financial position of a
partnership company?

I. Current ratio
il. Acid test ratio
III. Return on capital employed

(A) I and II only

(B) I and III only
(C) II and III only
(D) I,II and III

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Item 53 refers to the following information provided by a business.

$ s
Bank balance at August 2014 700 Inventory at 3l July 2015 2 000
Purchase of refreshments 500 Donations to charity 200
Purchase of furniture 500 Depreciation of furniture s0
Sale of equipment 600 Proceeds from raffie I 500

53. What is the bank balance in the Receipts and Payments Account for the year ended 3l July 2015?
(A) S e00
(B) Sl 600
(c) s2 8s0
(D) s3 5so

54. Acompany earned a net profit of $60 000 Item5Trefers to the following information.
for the year ending 30 September 2015.
Proposed dividends were: ordinary shares $
$10 000 and preference shares $15 000. Prime cost t0 000
The company decided to transfer $8 000 Overheads l6 000
to a general reserve. The retained earnings Work in progress I January. 3 000
on 30 September 2015 was Work in progress 3 I December 5 000

(A) S27 o0o

(B) S33 000 57 What is the year's cost of production of
(c) s3s ooo finished goods?
(D) Se3 000
(A) $r4 000
(B) $18 000
55 The Trading and Profit and Loss Account (c) s2l 000
is used when a cooperative is (D) $24 000

(A) paying dividends

(B) providing services 58. P. Hawk has a manufacturing business.
(C) setting aside revenues The cost of his raw materials was $l 900.
(D) buying and selling goods Rates and rent totalled S2 000, and factory
wages amounted to $2 500.

56. A business receives $5 000 for Rent The number of units produced was 640.
Revenue and deposits this amount into its What was the cost of ONE unit?
Bank account. How will this transaction
be recorded? (A) $4
(B) $6
(A) Dr. Rent $5 000; Cr. Bank $5 000 (c) $10
(B) Dr. Bank55 000; Cr. RentRevenue (D) $13
ss 000
(c) Dr. Cash $5 000; Cr. RentRevenue
$5 000
(D) Dr. RentRevenue $5 000; Cr Rent
expense $5 000

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59 Q. Baine is employed by a construction Item 60 refers to the following information

company at a rate of $7 per hour. During for V. Jones.
the week of 6 April 2015, he worked his
basic week of 40 hours. The income tax $
due on his pay is S20, and he is also liable Net Pay I 200
to pay social security contributions of 5% Income Tax 300
ofhis gross pay. National Insurance 50

What is Q. Baine's net pay? 60. What is the gross pay for V. Jones?

(A) $246 (A) $8 50

(B) $260 (B) $9 50
(c) s266 (c) sr4 50
(D) $280 (D) $l ssO

END OFTEST

IFYOU FINISH BEFORE TIME rS CALLED, CHECK YOUR WORK ON THIS TEST.

01239010/F 2016