PRINCIPLES OF ACCOUNTS – EXAM 1

INSTRUCTIONS: Please READ the instructions carefully and answer each question appropriately.

Exam length: 1 hour

1. Jerry owns a grocery store. The business’s opening statement of financial position (balance sheet)
on October 2021 was as follows as follows:

Jerry
Statement of Financial position (balance sheet) at 1 October 2021
$ $

ASSETS CAPITAL 17,100

Fittings 8,600

Bank 7,800

Cash 700

17,100 17,100

The following transactions occurred during October:

Oct 4 Purchased goods for resale and paid $500 in cash

6 Purchased goods for resale on credit, value $4,240

7 Cash sales totalled $990

11 Paid rent for he month by cheque for $770

12 Jerry withdrew $110 cash for private use

15 Sales on credit totalled $440

18 Sold some unwanted fittings with a value of $300 and received cash for this amount

22 Paid an account payable $3000 by cheque

25 Received cash $210 from the receivable

29 Jerry withdrew a cheque for $390 for private use

Record this information in suitable ledger accounts (T accounts), including a separate account for
drawings. (20 marks)

1
2. Andy owns a business selling bicycles and bicycle accessories. The following information is
available about his business’s assets and liabilities on 28 February 2021.

Equipment 78,000

Cash at bank 15,000

Accounts payable 24,000

Inventory 33,000

Cash in hand 6,000

Bank loan 42,000

Accounts receivable 9,000

a. Calculate the total value of assets. (5marks)

b. Calculate the total value of liabilities. (5marks)

c. Use the accounting equation to calculate the business’s capital. (5marks)

d. Prepare a simple statement of financial position (balance sheet) at 28 February 2021. (15marks)

(Total 30 marks)