Transcript AS Accounting

AS Accounting
Unit 1
Past Examination Paper
June 2009
By the end of this lesson
You will
Have marked
your answers to
all questions
Write notes on
areas to
improve
Decide on three
improvement
targets
Q1
(a) Explain three reasons for keeping accounting
records.
Possible reasons include:
• Legal requirement – business records are required to be
kept for up to 5 years
• Helps preparation – e.g. Double entry entered automatically
by one entry
• To determine how profitable a business is
• To help determine a valuation for the business
• To provide record of a transaction that in the future may
need clarification
• To keep track of where money is going (to check its not
being stolen)
6 marks
Q1
(b) Explain the following terms
Accrued expenses:
An expense that should have been
paid in the current accounting period but has not been paid in that
accounting period and therefore is still owing.
Treated as a
current liability and added onto the expense paid in the
Income Statement.
Prepaid expenses:
An expense that relates to a future
accounting period and that has been paid in the current
accounting period. Treated as a current asset and deducted
from the expense paid in the Income Statement.
Depreciation:
The reduction in the economic value of an
asset over time caused by wear and tear or obsolescence.
Treated as an expense in the Income Statement and deducted
from the asset in the Balance Sheet.
6 marks
Q2
(a) Enter the difference in the trial balance totals in the
suspense account below. Make any necessary entries in the
suspense account to correct the errors
Suspense account
31 May Dis rec
200
31 May Bal b/d
31 May Rent received
700
31 May General exps
36
31 May Dis all
65
31 May Wages
200
31 May Drawings
200
900
399
900
(4) (5)
ThisRent
errorreceived
does notisaffect
the
an
income
(6)
Need
totoremove
the
entry
fromofthe
(1)suspense
Need
increase
the
amount
discount
account
asb/d
theis–correct
amounts
(3)
Discount
allowed
an expense
Calculate
balance
account
and
therefore
the
entry
wages
account
so Dr wages
Cr Suspense.
received
– Draccount
Suspense
Cr
Discount
(as
dis
(2)
Expense
undercast
by
36
– Dr
have
been
entered,
just
to
the
wrong
account,
therefore
to
increase
it we
difference
between
debit
and
should
have
been
to
credit
the
Then
need
to
makeCractual
entry
Dr
received
is
income
therefore
increase
it is
general
expenses
Suspense
account.
The
correction
will
be
Dr
motor
need
to
Dr
dis
all
Cr
Suspense
credit
balances
account.
Thus
DrCr
Suspense
700 Cr
drawings
(expense
a/c)
suspense
achieved
by
crediting
the
account)
repairs
P&M 700
10 marks
rentCr
received
(b) Complete the following table to identify the amount, if any,
by which the net profit of Joshua Rose would be affected by
the correction of the errors of page 4
Q2
Error
(1)
Increase NP
Reduce NP
200
36
65
(2)
(3)
(4)
(5)
(6)
No effect on NP
No effect
750
200
(5) Rent received account should
have
credited,
butthus
it has
(3)(6)
Discount
Crbeen
Wages
allowed
account,
is an
expense,
(4)
No
amounts
need
toneed
be changed,
(2)
The
amount
of
total
expenses
is tobeen
be
been
debited
so
we
to
(1)this
Discount
rec
is
income,
there
has
increasing
correctiontotal
will wages
therefore
amount
increase
and
justcredit
correction
to the
t-accounts
increased,
therefore
reducing
NP
it
by
700
which
increase
more
income
therefore
NPreducing
will
increase
total
total
expenses
expenses,
and
NP
NP as this is income
7 marks
Q3
(a) Prepare a profit and loss account for Abdul Miraz
for the year ended 31 April 2009.
Profit and Loss account of A Mira for the year ended 30/04/09
Gross profit
Discount allowed
General expenses
Add accrued
Motor expenses
MV depreciation
Rent and rates
Less prepayment
76510
310
12420
400
24700
1340
Total expenses
New profit
12820
18730
3280
23360
58500
18010
Key points:
• REMEMBER to give final accounts their title...EASY marks!!
• Label TB in qu...Dr column = asset or expense Cr column = liability or income
13 marks
Q3
(b) Prepare a balance sheet for A Miraz at 30 April 2009
Balance sheet of A Miraz at 30 April 2009
ASSETS
Fixed assets
Premises
Motor vehicles
Provision for depreciation (3280+3280)
95000
16400
6560
9840
104840
Current assets
Prepayments
1340
Debtors
8790
Stock
Key points:
24850
34980
139820
• Current assets need to be in order of inverse liquidity (least liquid first)
Q3
(b) Prepare a balance sheet for A Miraz at 30 April 2009
Balance
sheet of A Miraz at 30 April 2009
Key
points:
LIABILITIES
• Drawings
need to be increased by £2000, bank needs to be reduced by £2000
Ownership
• Bank loan is repayable in the next accounting period and therefore is a current
Capital
71500
liability
Net profit
18010
Less drawings
18180
71670
Long-term liabilities
Mortgage on premises
37500
Current liabilities
Accruals
Bank loan
400
4100
Bank
14630
Creditors
11860
30990
139820
21 marks
Q4
(a) Prepare a sales ledger control account for May 2009
Sales Ledger Control a/c
Balance b/d
33459
Returns Inward
Sales
48144
Bank
Discount received
1136
42912
Discount allowed
992
Bank (DC)
169
Contra
214
Balance c/d
82739
1635
36817
82739
9 marks
Q4
(b) Explain how the balance on James Shea’s sales
ledger control account verifies the accuracy of his sales
ledger.
The total of the individual
debtors balances should match
with the balance brought down
of £36 817 on the sales ledger
control account.
2 marks
Q4
(c) Explain two types of error that would not be identified
by preparing a sales ledger control account.
Remember there are 4 types of error that may not be detected
when comparing the sales ledger control account closing balance
with the closing total on the debtors schedule
Possible errors:
• Error of commission – failure to make the correct entries. Due to (for
example) mixing up debtors names ..Harish is mistaken for Harris
• Original error – £200 has been entered in the Sales Day Book (instead of
£2000) and the incorrect £200 is also entered in the debtors account
• Error of omission – transaction completely omitted, this would not cause
disagreement as no double entry has been made
• Compensating error– by chance two separate mistakes cancel each other out
because they happen to be the same number
6 marks