TEST CODE 01239032

FORM TP 2008027 JANUARY 2008

CARIBBE AN EXAMIN ATIONS COUNCIL

SECONDARY EDUCATION CERTIFICATE
EXAMINATION
PRINCIPLES OF ACCOUNTS
Paper 03/2 - General Proficiency
I
1 2 hours

c 08 JANUARY 2008 (p.m.))

1. Answer ALL questions.

2. Answer the questions on the answer sheet provided and return it.

3. Silent electronic calculators may be used, but ALL necessary working should be clearly shown.

DO NOT TURN TillS PAGE UNTIL YOU ARE TOLD TO DO SO

Copyright © 2007 Caribbean Examinations Council ®.
All rights reserved.

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CASE

Two sisters, Joan and Yasmin are in business together. They are both well-trained and skilled
hairdressers. They offer services to both male and female clients. In addition to hair services, they also
offer services for the hands (manicure), feet (pedicure), and face (facial). They have posted the following
price list in an advertisement in the daily newspaper.
$
Braiding 140
Wash and set 50
Process and style 100
Hair cuts 30
Manicure 35
Pedicure 35
Facial 40

10 per cent discount offered on Braiding and Facials during the month of March.

1. Identify the type of business organization to which Joan and Yasmin's Beauty Salon belongs.
( 1 mark)

2. State the class of account into which advertising falls. ( 1 mark)

3. Suggest ONE reason why Joan and Yasmin may have offered 10 per cent cash discount on some
services. ( 1 mark )

During the month of March 2007, the following cash transactions took place.

Service Number of clients

Braiding 30
Wash and set 150
Process and style 100
Hair cuts 170
Manicure 140
Pedicure 100
Facial 40

4. Identify the class of accounts into which the services offered by the beauty salon falls.
( 1 mark)

5. Calculate the earnings made on EACH of the services offered during the month of March.
( 9 marks)

6. Name ONE day book, other than the cash book, which you would recommend for use by the
business. ( 1 mark )

7. Name ONE ledger, other than the cash book, which you would recommend for use by the
business. ( 1 mark)

GO ON TO THE NEXT PAGE

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In addition to the advertising cost of $700, the following expenses were incurred by the business
during the month.

Rent $1 000
Electricity 800
Wages 2 600
Purchase of supplies 3 500

All payments were made by cheque. There were opening balances of $12 000 in the bank and
$350 cash in hand on March 1, 2007. All cash, EXCEPT $500, is deposited in the bank at the
end of the month.

8. Prepare a three column CashBook for Joan and Yasmin's Beauty Salon for the month of March
2007. (10 marks)

9. Total and balance the Cash Book. ( 2 marks)

10. State ONE reason why Joan and Yasmin did NOT deposit all of the cash in the bank at the end
of the month. ( 1 mark )

11. Explain how the discount offered on braiding and facials will be treated in Joan and Yasmin's
Profit and Loss Account. ( 1 mark )

12. Prepare the Profit and Loss Account of Joan and Yasmin' s Beauty Salon for the month of March
2007. ( 8 marks)

Joan and Yasmin received a statement from their bank on March 31, 2007, the same day the
deposit was made. The balance on the bank statement did not agree with the cash book balance.

13. State THREE reasons why the bank statement balance might NOT agree with the business' cash
book balance. ( 3 marks)

Total 40 marks

END OF TEST

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