FORM TP 2018102 PRINT your name on the line below and return this booklet with youranswersheet. Failure 0 | TEST CODE 01239010 so may reslt in dsqualiation. MAY/JUNE 2018 CARIBBEAN EXAMINATIONS COUNCIL CARIBBEAN SECONDARY EDUCATION CERTIFICATE® EXAMINATION PRINCIPLES OF ACCOUNTS Paper 01 — General Proficiency I hour 30 minutes 17 MAY 2018 (p.m.) READ THE FOLLOWING INSTRUCTIONS CAREFULLY. This test consists of 60 items. You will have 1 hour and 30 minutes to answer them. In addition to this test booklet, you should have an answer sheet. Each item in this test has four suggested answers lettered (A), (B), (C), (D). Read cach item you are about to answer and decide which choice is best. ‘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. Sample Item Prime cost is calculated by adding direct factory expenses to the Sample Answer (A) cost of goods sold ®@©C® (B) sale of fixed assets (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. If you want to change your answer, erase it completely before you fill in your new choice. When you are told to begin, turn the page and work as quickly and as carefully as you ean. If you cannot answer an item, go on to the next one. You may return to that item later. The use of silent, electronic calculators is allowed. DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO. Copyright © 2017 Caribbean Examinations Council All rights reserved, 01239010/F 20181 BE 2 A non-trading organization is MAINLY concerned with (A)__ importing goods for resale (B) trading only with wholesalers (C) making maximum profit for the proprietor BD providing various services for its members The term ‘accounting’ refers to the (A) use of information in making business decisions (B) use of special ways of recording business information WO) recording, analysing and inter- preting of business information (D) _journalizing, posting and balancing ‘of accounts in special books Rentexpense which isstill owingattheend of the period must be debited in the profit and loss account and shown in the balance sheet as a liability. Which accounting concept does this represent? WT Accrual (B) Consistency (© Going concern (D) Money measurement Which of the following accounts are nominal? (Wages and Rent (B) Stock and Debtors (©) Machinery and Plant (D) Creditors and Fixtures 01239010/F 2018 A public limited company issued a prospectus offering the shares described in the table below, for sale at par value. No. of Par Type ofShare| “Units | Value Ordinary 5% | 200 000 82 Preference 10000 SS ‘The issue was fully subscribed. How much capital did the company raise? (A) $ 40000 (B) 45000 $400 000 $450 000 Item 6 refers to the following information. A calculation to determine gross profit percentage is as follows 8185530 100 $5291800 * 7 =35.02% ‘What does the amount $529 800 represent? PY Total sales (B) Gross profit (©) Cost of sales (D) Total purchases GO ON TO THE NEXT PAGE,8. 235 ‘The summarized position of Foster and Scott Limited at 6 March 2015 was, $s Current Liabilities 60.000 Current Assets 100 000 Fixed Assets 200 000 Long-Term Liat 150000 What was the capital of Foster and Scott Limited at 6 March 2015? ‘A) $ 40000 $ 90.000 (©) $150.00 (D) $190 000 If the following lists of assets found on the balance sheet of a retail trader were to be arranged in order of liquidity, the sequence would be (A) motorvan, building, bank, fixtures, cash, debtors (B) cash, fixtures debtors, bank, building, motor van (C) cash, bank, fixtures, debtors, motor van, building cash, bank, debtors, motor van, fixtures, building 01239010/F 2018 9. 10. The items raw materials inventory, work- in-progress inventory and finished goods inventory are MOST likely seen together ‘on the balance sheet of a (A) garage shoe factory (C) supermarket (D) bus company Item 10 refer to the follo about two partners. Jane and Max are in partnership sharing profits in the ratio 3 and 3 respectively. ‘The following balances aretaken from their books. Net profit $23 500 Interest on capital Jane $2 000 Max $1 000 Salary: Max $2 500 Drawings: Jane $1 500 Max $1 400 Interest on drawings Jane S150 Max $s 140 How much money should Max receive as his share of the residual profits? $7316 () $6556 (©) $5964 (D) $3876 GO ON TO THE NEXT PAGE,as AL. Ina cooperative society, the daily affairs Item 12 refers to the following information are administered by from the books of a company. (A) the majority of shareholders ; (B) all members meeting together (©) the chairman of the board only eh Lee persons lest or appointed odo Se eee or Drawings 8.000 Cash purchases 12.000 Credit purchases | 20200 12. From the information above, what is the correct closing total for the sales account? (A) $59.00 HB $55 000 (© $49.00 (D) $4700 Item 13 refers to the following account. Appropriation Account $ 8 Taxation reserve 10 000.00 | By balance 894.50 Preliminary 250.00 | Net profit 26 106.50 “Transfer to general reserve | 4000.00 Preference share dividend 1200.00 Ordinary share dividend 6000.00 13. What conclusion could be drawn from the above appropriation account? 1. The company is engaged in profitable enter II. The company is not doing too well. IIL. More dividends ean be given to the ordinary shareholders. (A) Tonly (B) only Land Ill only (D) Mand itl only GO ON TO THE NEXT PAGE 01239010/F 201814. 15. 16. 17. 253 Which ofthe following accountsare usually transferred to the trading and profitand loss account? (A) Rent, premises, drawings (B) Drawings, rent, purchases H@ Commission received, rent, purchases (P) Purchases, furniture, commission received On 2 March 2017, L. Lan bought goods worth $630 on credit. He received a 3% trade discount on this amount. The invoice also stated 2% 20 days, net 30 days. How much would L. Lan pay for the goods if he pays on 8 March 2017? (A) $595.00 @ vn $611.10 (D) $630.00 When a proprietor withdraws cash or other assets from a business, what effect does it have on drawings or capital? e © oO) Capital is inereased. Drawings are decreased. Neither drawings nor capital is affected. The total credit of the bank column of a three-column cash book is greater than the total debit. The MOST likely reason for this situation is that there was an overdraft (B) transactions were omitted from the debit side (©) some figures were overstated on the credit side (D) the incorrect transactions were entered on the credit side 01239010/F 2018 18. 19. 20. 2. If the stock turnover ratio is 5 times and average stock is $28 000, what is the cost of goods sold? (A) $ 5.600 (B) —$ 70000 $ 140 000 (D) $280 000 ‘The proprietor ofa business paid a personal car repair bill from the bank account of the business. The amount was debited to the Miscellaneous Expense Account. Which of the following concepts was violated by posting the bill to the Miscellaneous Expense Account? (A) Matching (B) Prudence (C)_ Going concern Business entity Which of the following documents acknowledges a loan to a company at a fixed rate of interest? BD Debenture (B) Licence (©) Fliers () Stock A motor van was credited from A.G Motors for use in the business. How should the buyer record this transaction? (A) Debitmotorvehicleaccount; Credit bank account (B) Debit motor van expense account: Credit bank account (C) Debit purchases account; Credit A.G Motors account Debit motor vehicle account; Credit A.G Motors account GO ON TO THE NEXT PAGE,Item 22 refers to the following balance sheet. Balance Sheet of Boots’ Sports Store as at 31 December 2012 s $ Capital 12.000 Land and building 9.000 Add net profit 4.000 Motor van 5000 16 000 Fixtures and fittings 600 Less drawings (500) Inventory 450 15500 Debtors 250 Creditors 2100 Bank 2.000 Cash 300 17.600 17600 22. What is the amount of total fixed assets? () $9000 $14.00 $14 600 $15 050 23. M.K. Trucking Company receivedacheque Item 24 refers to the following data which from MrsHenry. Howmustthis transaction are taken from the records of a hardware be recorded in M. K. Trucking’s books? store at the end of its fiscal year. 1. Credit the cash book $ II. Credit Mrs Henry’s account Sales 83 868 IIL, Debit the bank account Sales returns 1570 Discount allowed ou (A) Tand Tony Inventory at start 9.850 (B) Land It only Inventory at close 11075 Wand Il only Purchases 52.640 (D) 1, Mand iit Purchases returns 762 24, What is the gross profit of the hardware 01239010/F 2018 store? (A) $25625 WB) 831645 (©) $33215 (D) $34023 GO ON TO THE NEXT PAGE25. An increase in drawings will result in (A) an increase in long-term liabilities a decrease in capital (©) am increase in capital (D) _adecrease in capital Item 26 refers to the following information. 40-Plus Golf Club oO for the month ended 31 December 2010 s s Rent 1.000 Profit from bar 1500 Electricity 500 co) 500 Trips to Miami 5 500 + Subs. due (end) 500 4.000 Surplus 3.000 7.000 7.000 26. Which of the following BEST describe (I) and (II) shown in the table? (A) @) @ ©) © ay oO ay oO ay oO ay 01239010/F 2018 Profit and Loss A/c Rent Received Trading Ale Subscription Received Income and Expenditure A/e Subscription Received Profit and Loss A/e Subscription Received GO ON TO THE NEXT PAGE21. 28. 29. -85 Item27 refersto the following information. On 1 January 2016, $10 000 was paid ‘towards an advertising campaign. Of this amount, $7 000 was used by 31 December 2016. What wastheamount of advertising prepaid at year’s end? ys 3000 (B) $7000 (©) $10 000 (D) $17 000 During the year, a company bought stationery for $220 and used $120 worth of it. What is the expenditure for stationery that would be posted to the Profit and Loss Account? (A) $340 B) $220 $120 (D) $100 ‘To which account should depreciation of office machines be transferred? (A) Trading (B) Manufacturing io Profit and Loss (D) Appropriation 01239010/F 2018 30. 31 32. Item 30 refers to the following information provided by a business. Current Assets Current Liabilities Acid Test Ratio 5:1 $6 000 $1 100 ‘The value of closing stock is S$ 500 (B) $5500 (©) $6500 (D) $7200 Item31 refersto the following extract from a trading account. s Opening inventory 200 Sales 900 Purchases 500 Closing inventory 300 What is the gross profit? (A) $100 (B) $300 $500 $800 When a trial balance fails to agree, the difference is entered in the Provision account Suspense account (©) Reserve account (D) Control eecount A) GO ON TO THE NEXT PAGE,=o 33. How does an increase in bad debt affect a sole trader’s financial statements? (A) Decrease the gross profit (B)_. Increase the gross profit Decrease the net profit (D) Increase the net profit 34. A trader had an opening capital of $3 900. If drawings were $900 and closing capital ‘was $4 860, what was the net profit? () $ 900 B) $ 960 B $1 860 ©) — $3000 35. Ina partnership, which of the following transactions is compulsory? @B) © @) Sharing of profits or losses Interest on drawings Interest on capital Paying of salaries 36. M. Brown wishes to increase his provision for bad debts from 8% to 10%. 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 and loss A/e Cr provision for bad debts A/c (B) —_Drprofit and loss A/e Cr provision for bad debts A/e (©) Drprofit &and loss Ale Cr profit and loss A/e [@) Dr profit and loss Ale Cr provision for bad debts A/e 01239010/F 2018 $720 $800 $1000 $200 $720 $800 $1 000 $200 GO ON TO THE NEXT PAGE,=10- Item 37 refers to the following information which was extracted from the cash book of Dandy Dare. s Balance per cash Book 560 ‘Total unpresented cheques 120 Lodgement not entered on bank statement 150 37. What is the balance per Bank Statement? (A) $120 (B) $150 $340 $530 Items 38-39 refer to the following balance sheet information provided for a firm as at 1 January 2017. $ $ 2017 Bank 3.000 1 January Debtors © Stock 1000 Creditors 500 ay 5500 38. What sum of money is represented by (I)? g $1000 $2,000 © $3000 (@) $6000 39. Which of the following accounts is represented by (I)? A) Liability a Capital © Cash () Loan 01239010/F 2018, 40. a. The following information relates to Harvard Sports Club for 2017. Number of members 50 ‘Annual subscriptions se per member Subscriptions owing at the beginning of the year Lee Subscriptions owing at oe the end of the year How much should be credited to the club's income and expenditure Accountas TOTAL subscriptions for the year? (A) $ 450 (B) $1500 $1950 o 2s W, X, Y and Z are partners sharing profits and losses in proportion to their capital. ‘The capital of each partner is shown below. Parties Profit (8) w 300 x 200 v 100 Zz 300 What is Z’s share of a profit of $7 200? @ $2400 iC $1 800 © $1 200 @) $800 GO ON TO THE NEXT PAGE,42. 43. 44. 45. Stites Which of the following accounts shows how profits and losses are shared among, partners? (A) Current a Appropriation Profit and loss (D) Income and expenditure The income and expenditure account shows the (A) expenditure ineurredand liabilities ‘owed for the period BW income earned and expenditure curred for the period (©) income earned and assets owned for the period (D) assests owned and liabil for the petiod Which feature is associated with private limited companies? (A) They are family owned. @ Shares are not sold publicly. (©) __ Financial statements are published. (D) Government agencies purchase shares. Item 45 refersto the following information. s Inventory at | January 2013 | 1.500 Purchases during the month | 1 200 Cost of goods sold 1400 What is the inventory at the end of January? (A) $ 300 (B) $ 500 (©) $ 700 ® 51300 01239010/F 2018 A businessman incurred the following expenses. $ Factory repairs 6 000 Machinery repairs 2.000 ‘New machine 3.000 ‘New vehicle 7000 What is his TOTAL capital expenditure? (A) $ 6000 (B) $7000 (© $8000 @ == $10000 Amalgamated Components was a private company until it admitted additional shareholders by selling shares on the stock exchange. Amalgamated Components can now be described as a (A) partnership (B) statutory corporation public limited company (D) private limited company ‘The main reason why a sole proprietor may consider joining with one or more persons to form a partnership is (A) the business would attract more customers (B) the business would be recognized by the government (C) he can work less if many people are involved in the business WH the business would get additional capital and management skills GO ON TO THE NEXT PAGE,=e 49. In order to avoid writing numerous 51. A business with more than one owner cheques for small amounts, a firm may set records the division of profit in which of upa the following accounts? general ledger (A) Capital Account 8 petty cash fund (B) Trading Account (©) general journal Appropriation Account (D) standing order with a bank DS Profit and Loss Account 50. Which of the following accounts BEST 52. P. Amos is employed by a construction describe the final accounts ofa non-trading company at a rate of $7 per hour. D organization? the week of 6 April, he worked basic week of 40 hours. The income tax due on I. Receipts and payments is $20, and he is also liable to pay Il. Income and expenditure security contributions of 5% of his IIL. Trading and profit and loss gross pay. What is his net pay? WD and tony ay 3246 (B) Land If only (B) $260 (©) Wand Il only ©) $266 ©) Mand iit () $280 Item 53 refers to the following information provided by a business. $ $ Bank balance at August 2016 700 | Inventory at 31 July 2017 2.000 Purchase of refreshments 300 | Donations to charity 200 Purchase of furniture 500 | Depreciation of furniture 50 Sale of equipment 600 | Proceeds from raffle 1500 53. What is the bank balance in the receipts and payments account for the year ended 31 July 2017? (A) $ 900 $1600 ©) $2850 () $3550 GO ON TO THE NEXT PAGE, 01239010/F 201834. 55. =13 Item 54 refers to the following list of balances. J. Baynes Manufacturing Account for Period Ended 31 December 2017 Inventory of raw materials 1 January 2017 Purchases of raw materials during year Less closing inventory of raw materials 31 December 2013 Productive wages Fuel and power Lubricants Rent and rates Insurance $ 800 4500 5300 1400 3.900 1300 900 100 400 200 6800 s Balance carried forward 6 800 6800 From the list of balances above, what is the cost of goods produced? (A) $3900 (B) $5200 (© $6100 WI 56 800 Item 55 refers to the following list of balances. s Work-in-progress 1 January 1.600 Work-in-progress 31 December 1 700 Cost of materials used 3.000 Indirect expenses 3.200 Factory wages 5.000 From the list of balances above, what is the cost of goods produced? (A) $8000 (B)_ $8700 = $11 100 $11 200 01239010/F 2018 56. Abusiness receives $5 000 forrentrevenue and deposits this amount into its bank account. How will this transaction be recorded? (A) Drrent $5 000; Cr bank $5 000 Dr bank $5 000; Cr rent revenue $5 000 (©) Dr cash $5 000; Cr rent revenue $5 000 (D) Dr rent revenue $5 000; Cr rent expense $5 000 GO ON TO THE NEXT PAGE57. 58. -14- S & B Limited’s net income for the year was $89 000. Of this amount, $8 000 was transferredtothe general reserve, preference dividend paid was $2 400 and ordinary dividend proposed was $6 500. The value of the retained profits for the year was Es 72 100 (B) $80 100 (©) $81 000 (D) — $89.000 P. Hawk has a manufacturing business. ‘The cost of his raw materials was $1 900. Rates and rent totalled $2 000, and factory ‘wages amounted to $2 500. The number of units produced is 640. What was the cost of ONE unit? @ $4 ®) $6 @ so @) $13 59. 60. Item 59 refers to the following data which pertain to Tarisha Ali, an employee of a bank. Monthly salary Overtime $3 500 $ 800 Income tax rate: 25% on every dollar above $2,000 of monthly salary 30% on overtime earned The TOTAL income tax to be deducted from Tarisha Ali is MMs ois @) $740 © $875 ©) $1075 An employee works for 45 hours ina given week. The rate for a 40-hour week is $4 per hour. Overtime is paid at time and a half, What is his gross weekly wage? $180 $190 C) $240 ©) $270 END OF TEST IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST. 01239010/F 2018