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    Bookkeeping: June 2019

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    Kay
    The document provides instructions and questions for a bookkeeping exam. It includes multiple choice and written questions testing accounting concepts like preparing income statements, balance sheets, ledger accounts, and calculating VAT. It provides several business transaction examples to record and analyze.

    Copyright:

    © All Rights Reserved

    Bookkeeping: June 2019

    Uploaded by

    Kay
    53 views5 pages
    The document provides instructions and questions for a bookkeeping exam. It includes multiple choice and written questions testing accounting concepts like preparing income statements, balance sheets, ledger accounts, and calculating VAT. It provides several business transaction examples to record and analyze.

    Original Description:

    Bookkeeping

    Original Title

    Bookkeeping

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    © © All Rights Reserved

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    The document provides instructions and questions for a bookkeeping exam. It includes multiple choice and written questions testing accounting concepts like preparing income statements, balance sheets, ledger accounts, and calculating VAT. It provides several business transaction examples to record and analyze.

    Copyright:

    © All Rights Reserved
    53 views5 pages

    Bookkeeping: June 2019

    Uploaded by

    Kay
    The document provides instructions and questions for a bookkeeping exam. It includes multiple choice and written questions testing accounting concepts like preparing income statements, balance sheets, ledger accounts, and calculating VAT. It provides several business transaction examples to record and analyze.

    Copyright:

    © All Rights Reserved
    of 5

    BOOKKEEPING

    June 2019

    Time allowed
    Three hours

    Instructions
    • Write the question number next to each answer in your answer booklet.
    • You are not required to rewrite the question in your answer booklet.
    • Ensure that you pay particular attention to words in bold.

    Information
    • Different questions may carry a different number of marks.
    • Marks for each question are shown in [ ].

    Advice
    • Read each question carefully before you start to answer it.
    • Use the full time permitted and check all your answers.

    Materials
    • No other computer equipment, notes or books are permitted.
    • For those exams in which numeracy skills are required:
    a) Non-programmable calculators are permitted.
    b) All data tables are included at the back of the paper if required.

    © INSTITUTE OF COMMERCIAL MANAGEMENT


    ANSWER FIVE QUESTIONS FROM EIGHT.

    1. You work as an accountant to a small business called Jasmine’s. The following trial
    balance has been compiled on 31 May 2019:

    £DR £CR
    Sales 591000
    Purchases 159000
    Capital (01 06 18) 369000
    Bank 5000
    Cash 1000
    Accounts receivable (debtors) 33000
    Accounts payable (creditors) 19000
    Business rates, rent and insurance 68000
    Energy costs 46000
    Communication expenses 18000
    Advertising expenses 24000
    Distribution costs 19000
    Inventory (stock) at 01 06 18 21000
    Payroll costs 154000
    Interest paid 3000
    Drawings 38000
    Land and buildings 360000
    Equipment at cost 180000
    Depreciation a/c at 01 06 18 70000
    Long-term loan 80000
    ----------- -----------
    1129000 1129000
    ======= =======

    NOTES as at 31 May 2019:


    • Inventory (stock) was valued at £23000
    • Insurance costs prepaid amounted to £3000
    • Advertising expenses owing amounted to £1500
    • Payroll costs owing amounted to £5500
    • Equipment is to be depreciated at 25% per annum on cost
    (a) Prepare the income statement (trading and profit and loss account) for the
    year ended 31 May 2019. [12 marks]
    (b) Prepare the position statement (balance sheet) as at 31 May 2019. [8 marks]

    continued overleaf
    2. (a) Explain the purposes of a trial balance. [6 marks]
    (b) Explain what three internal control checks should be carried out on a purchase
    invoice before approval and posting to the ledger. [6 marks]
    (c) A business buys machinery for £30000 on 1 January 2015. It provides for
    depreciation at 20% per year on cost.
    Prepare the provision for depreciation account for this machine for the
    period 1 January 2015 to 31 December 2018 inclusive. [8 marks]

    3. The following credit sales took place during May 2019:


    May 01 Invoice for goods £800 to Axel
    May 01 Invoice for goods £500 to Bisham
    May 04 Invoice for goods £400 to Cloe
    May 06 Invoice for goods £700 to Axel
    May 09 Invoice for goods £300 to Axel
    May 12 Invoice for goods £800 to Cloe
    May 16 Invoice for goods £500 to Bisham
    May 19 Invoice for goods £600 to Cloe
    May 28 Invoice for goods £1000 to Bisham
    May 30 Invoice for goods £900 to Axel
    All the above sales invoices need 20% VAT (sales tax) added to the goods’ values.
    On 1 May 2019 the following balances were in the ledger:
    £
    Sales account 25000 cr
    VAT account 2600 cr
    Axel 1400 dr
    On 21 May 2019 a cheque amounting to £2360 was received from Axel.
    (a) Fully record the above transactions in the sales day book. [10 marks]
    (b) Record the above transactions in the following ledger accounts:
    (i) Sales account [3 marks]
    (ii) VAT account [3 marks]
    (iii) Axel’s account [4 marks]

    continued overleaf
    4. The following balances relate to the accounts of Nurudeen who has many credit
    customers, and will shortly be preparing the annual final accounts:

    £
    1 May total debtors (accounts receivable) 144000
    1 May opening debit balance – Kuwornu 1200
    1 May credit balance – provision for doubtful debts 3900

    Transactions in May:
    Cash sales 8700
    Credit sales 158000
    Discounts allowed 2600
    Returns inwards 1900
    Bad debt of Kuwornu written off in May 1200
    Receipts from debtors (accounts receivable) 147500
    Contras (set offs) 3200
    Increase in provision for doubtful debts 400

    (a) Write up the sales ledger control account for May. [8 marks]
    (b) Write up the account for Kuwornu as at the end of May. [4 marks]
    (c) Write up the provision for doubtful debts as at the end of May. [4 marks]
    (d) List four sources of long-term finance available to a medium-sized limited
    company. [4 marks]

    5. The following are the first 12 transactions of a new business:


    May 01 The business owner paid £40000 into the business account.
    May 01 Bought goods for resale £7000, paying by cheque.
    May 01 Bought a vehicle for £15000, paying by cheque.
    May 02 Paid rent £3000, paying by cheque.
    May 03 Paid insurance £2200, paying by cheque.
    May 04 Bought goods for resale £6000, paying by cheque.
    May 05 Sold goods for £4500, and immediately banked the cheque.
    May 06 Paid wages £2400, paying by cheque.
    May 07 Bought goods for resale £8000, paying by cheque.
    May 08 Sold goods for £6500, immediately banking the cheque.
    May 10 Paid business rates £3900, paying by cheque.
    May 11 Sold goods for £2000, immediately banking the cheque.
    (a) Write up the above transactions in the appropriate ledger accounts. [12 marks]
    (b) Prepare a trial balance as at the close of business on May 11. [4 marks]
    (c) The above business carried out a stocktake at the end of business on May 11.
    The value of inventory (stock) was £10000. Calculate the gross profit for the
    first eleven days of trading. [4 marks]

    continued overleaf
    6. (a) A business has agreed to sell the following:
    10 units at £2.00 each
    50 units at £4.00 each
    20 units at £12.00 each
    The business allows a trade (quantity) discount of 10%.
    VAT is to be charged at 20%.
    Calculate the invoice total (show your workings). [6 marks]
    (b) List five services of a bank. [5 marks]
    (c) A business had the following closing debtors (accounts receivable):
    £
    On 31 May 2017 12000
    On 31 May 2018 14000
    On 31 May 2019 18000
    The policy is to make a provision for doubtful debts of 5% of closing debtors.
    The balance on the provision for doubtful debts account on 1 June 2016 was £650.
    Prepare the provision for doubtful debts account for the period 1 June 2016 to
    31 May 2019 inclusive. [9 marks]

    7. (a) During a VAT period the following transactions occurred:


    £
    Total sales (outputs) 60000
    Total purchases (inputs) 35000
    Both these figures are net of 20% VAT.
    Calculate the VAT liability at the end of the period (show your workings). [6 marks]
    (b) List the five principal day books. [5 marks]
    (c) Outline the function of the following documents:
    (i) Petty cash voucher
    (ii) GRN
    (iii) Bank reconciliation statement [9 marks]

    8. (a) Discuss the needs of four ‘users’ of accounting information – often referred
    to as interested parties or stakeholders. [8 marks]
    (b) Explain the features of Hire Purchase (HP). [8 marks]
    (c) List four duties normally carried out by the financial accountant. [4 marks]

    END OF QUESTIONS

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