113 A Level Accounting Paper 3 (Topical & Yearly)

A
ACCOUNTING
Paper 3 (TOPICAL & YEARLY)
All Variants (2020 edition)
Article: 113
Muhammad Nauman Malik

FCMA, MS Accounting (Gold Medalist), MBA (Finance), PIPFA, DCMA, B.Com (Gold Medalist)
KIMS, Roots FWS, LACAS, GACS
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in
any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written
permission of the Author.
Cambridge International has not provided these questions or answers and can take no responsibility whatsoever for
their accuracy or suitability for the examinations.
Title A2-Level Accounting (Topical & Yearly)
Author Muhammad Nauman Malik

Cell: 0321-8414262, 0300-8414262
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3
PREFACE
The current edition has been completely updated to comply with revised CIE – 9706 (A level Accounting
syllabus) 2016-18. From May 2016, there will be only one paper (Paper 3) for A2 qualification and it
replaces both P3 and P4 of the old syllabus followed up to November 2014. Topics like ‘Manufacturing
Accounts’ and ‘Non Profit Organisations’ have been moved to Paper 3 (A 2 level). On the other hand, topics
of ‘Partnership changes’ and ‘Dissolution of partnerships’ have been shifted to AS Level. Moreover, topics
of ‘Redemption and reduction of capitals’ and ‘process costing’ have been removed from the new syllabus.
The other book available in the market is based on Singaporean exams and does not include exams taken
in Pakistan for November session. Moreover, the available book categorises Questions only on yearly basis
whereas the book under review categorises them on topical as well as on yearly basis.
In the book under review, the varying topics of last ten years Cambridge International Examination (CIE)
papers have been categorised in such a way that one can attain optimum skills in each of these.
It is, however, advised that students must supplement their studies with the textbooks recommended by
their teachers, since it is by no means a replacement for a good book.
I am indeed grateful to the students and the teachers who motivated me to undertake this task. In
particular I would like to thank Sajid Munir, Sheraz Sidiq and Waseem Zia for making many helpful
suggestions. Any further suggestions for improvement and intimation of errors will be much appreciated
and acknowledged.
Muhammad Nauman Malik,

Email: [email protected]
Mob: 0300-8414262
0321-8414262
4
Table of Contents (Topical)

CHAPTER 1 ACCOUNTS OF NON PROFIT ORGANISATIONS 14
QUESTION 1 MAY 2011 P21 Q2 .......................................................................................................................... 14
QUESTION 2 MAY 2011 P42 Q2 (A TO C) ............................................................................................................... 14
QUESTION 3 NOVEMBER 2011 P23 Q2 (B) ......................................................................................................... 15
QUESTION 4 NOVEMBER 2012 P21 Q2............................................................................................................... 16
QUESTION 5 MAY 2013 P21 Q1 .......................................................................................................................... 16
QUESTION 6 MAY 2014 P23 Q1 .......................................................................................................................... 17
QUESTION 7 MAY 2016 P31 Q1 .......................................................................................................................... 18
QUESTION 8 MAY 2016 P32 Q1 (A TO D) .............................................................................................................. 19
QUESTION 15 MAY 2018 P31 & P33 Q4 ................................................................................................................ 26
SOLUTION CHAPTER 1 27
QUESTION 1 MAY 2011 P21 Q2 .......................................................................................................................... 27
QUESTION 2 MAY 2011 P42 Q2 (A TO C) ............................................................................................................... 28
QUESTION 3 NOVEMBER 2011 P23 Q2 (B) ......................................................................................................... 29
QUESTION 5 MAY 2013 P21 Q1 .......................................................................................................................... 30
QUESTION 6 MAY 2014 P23 Q1 .......................................................................................................................... 31
QUESTION 7 MAY 2016 P31 Q1 .......................................................................................................................... 33
QUESTION 8 MAY 2016 P32 Q1 (A TO D) .............................................................................................................. 34
QUESTION 15 MAY 2018 P31 & P33 Q4 ................................................................................................................ 40
CHAPTER 2 ACCOUNTING FOR CONSIGNMENT 42
QUESTION 1 SPECIMEN 2016 P3 Q2 ................................................................................................................... 42
QUESTION 4 MAY 2018 P32 Q3 .......................................................................................................................... 43
QUESTION 4 MAY 2018 P32 Q3 .......................................................................................................................... 47
CHAPTER 3 ACCOUNTING FOR JOINT VENTURES 49
QUESTION 1 MAY 2016 P31 Q2 .......................................................................................................................... 49
QUESTION 2 MAY 2017 P31 & P33 Q3 ................................................................................................................ 49
5
QUESTION 1 MAY 2016 P31 Q2 .......................................................................................................................... 51
QUESTION 2 MAY 2017 P31 & P33 Q3 ................................................................................................................ 52
CHAPTER 4 DISSOLUTION & SALE OF BUSINESS 53
QUESTION 1 NOVEMBER 2013 P41 Q2 (A TO D)................................................................................................... 53
QUESTION 3 NOVEMBER 2014 P41 Q1 (A TO C) ................................................................................................... 54
QUESTION 5 MAY 2016 P32 Q3 .......................................................................................................................... 56
QUESTION 5 MAY 2016 P32 Q3 .......................................................................................................................... 63
CHAPTER 5 PURCHASE OF BUSINESS 67
QUESTION 1 NOVEMBER 2011 P43 Q1(A) .......................................................................................................... 67
QUESTION 2 MAY 2012 P43 Q2 (A & B) ............................................................................................................... 68
QUESTION 3 MAY 2014 P43 Q1 .......................................................................................................................... 69
QUESTION 4 MAY 2014 P43 Q1 (D TO F) .............................................................................................................. 71
QUESTION 6 MAY 2017 P32 Q4 .......................................................................................................................... 72
QUESTION 7 NOVEMBER 2017 P31 Q4 (E & F) .................................................................................................... 74
QUESTION 8 MAY 2018 P32 Q4 .......................................................................................................................... 74
QUESTION 1 NOVEMBER 2011 P43 Q1(A) .......................................................................................................... 75
QUESTION 3 MAY 2014 P43 Q1 .......................................................................................................................... 76
QUESTION 4 MAY 2014 P43 Q1 (D TO F) .............................................................................................................. 78
QUESTION 6 MAY 2017 P32 Q4 .......................................................................................................................... 79
QUESTION 7 NOVEMBER 2017 P31 Q4 (E & F) .................................................................................................... 80
QUESTION 8 MAY 2018 P32 Q4 .......................................................................................................................... 81
CHAPTER 6 FINANCIAL STATEMENTS OF COMPANIES 83
QUESTION 1 MAY 2011 P42 Q2 (D) ..................................................................................................................... 83
QUESTION 2 MAY 2011 P43 Q1 .......................................................................................................................... 83
QUESTION 3 NOVEMBER 2011 P42 Q2 ............................................................................................................... 83
QUESTION 4 MAY 2012 P41 Q1 (C & D) ............................................................................................................... 84
QUESTION 5 MAY 2013 P41 Q2.......................................................................................................................... 84
QUESTION 6 NOVEMBER 2013 P41 Q1 (C) .......................................................................................................... 85
QUESTION 7 NOVEMBER 2013 P42 Q3 (E) .......................................................................................................... 86
QUESTION 8 MAY 2014 P41 Q2 (A TO C) .............................................................................................................. 86
QUESTION 9 NOVEMBER 2014 P43 Q1(A &B) ..................................................................................................... 87
6
QUESTION 10 MAY 2015 P41 & P42 Q3(E & F) ...................................................................................................... 87

QUESTION 12 NOVEMBER 2015 P41 Q1 (A & B) ....................................................................................................... 89
QUESTION 13 NOVEMBER 2015 P43 Q1(A & B) .................................................................................................... 90
QUESTION 16 MAY 2017 P31 & P33 Q1 ................................................................................................................ 92
QUESTION 17 MAY 2018 P31 & P33 Q2 ................................................................................................................ 93
QUESTION 1 MAY 2011 P42 Q2 (D) ..................................................................................................................... 96
QUESTION 2 MAY 2011 P43 Q1 .......................................................................................................................... 96
QUESTION 4 MAY 2012 P41 Q1 (C & D) ............................................................................................................... 98
QUESTION 5 MAY 2013 P41 Q2.......................................................................................................................... 98
QUESTION 6 NOVEMBER 2013 P41 Q1 (C) ........................................................................................................ 100
QUESTION 7 NOVEMBER 2013 P42 Q3(E) ......................................................................................................... 100
QUESTION 8 MAY 2014 P41 Q2 (A TO C) ............................................................................................................ 101
QUESTION 9 NOVEMBER 2014 P43 Q1(A &B) ................................................................................................... 102
QUESTION 10 MAY 2015 P41 & P42 Q3(E & F) .................................................................................................... 102
QUESTION 12 NOVEMBER 2015 P41 Q1 (A & B) .................................................................................................. 103
QUESTION 14 MAY 2016 P31 Q3(A TO C) ............................................................................................................. 106
QUESTION 15 NOVEMBER 2016 P31 Q4 (A TO C) ................................................................................................. 107
QUESTION 16 MAY 2017 P31 & P33 Q1 .............................................................................................................. 108
QUESTION 17 MAY 2018 P31 & P33 Q2 .............................................................................................................. 109
QUESTION 18 MAY 2018 P32 Q2 (A & B) ............................................................................................................. 110
CHAPTER 7 ISSUE OF SHARES & DEBENTURES 111
QUESTION 1 MAY 2011 P42 Q1 (C) ................................................................................................................... 111
QUESTION 2 MAY 2012 P43 Q2 (C) ................................................................................................................... 111
QUESTION 3 NOVEMBER 2012 P43 Q2 (D)........................................................................................................ 111
QUESTION 4 MAY 2013 P43 1(D) ....................................................................................................................... 111
QUESTION 5 MAY 2013 P43 1 (A & F) ................................................................................................................ 111
QUESTION 6 MAY 2014 P41 Q2(D)/MAY 2014 P42 Q2(D) ................................................................................. 111
QUESTION 7 NOVEMBER 2014 P42 Q1 (A TO D)................................................................................................. 112
QUESTION 8 MAY 2015 P43 Q2 (C) ................................................................................................................... 112
QUESTION 9 SPECIMEN 2016 P3 Q3 (A TO C) ..................................................................................................... 112
QUESTION 10 NOVEMBER 2017 P32 Q2............................................................................................................. 113
QUESTION 1 MAY 2011 P42 Q1 (C) ................................................................................................................... 115
QUESTION 2 MAY 2012 P43 Q2 (C) ................................................................................................................... 115
QUESTION 4 MAY 2013 P43 1(D) ....................................................................................................................... 115
QUESTION 5 MAY 2013 P43 1 (A & F) ................................................................................................................ 115
QUESTION 6 MAY 2014 P41 Q2(D)/MAY 2014 P42 Q2(D) ................................................................................. 116
QUESTION 8 MAY 2015 P43 Q2 (C) ................................................................................................................... 117
QUESTION 9 SPECIMEN 2016 P3 Q3 (A TO C) ..................................................................................................... 117
7

CHAPTER 8 INTERNATIONAL ACCOUNTING STANDARDS 120
QUESTION 1 MAY 2012 P42 Q1 (C & D) ............................................................................................................. 120
QUESTION 2 NOVEMBER 2012 P41 Q1 (C TO G) ................................................................................................. 120
QUESTION 3 MAY 2013 P43 Q3(E) .................................................................................................................... 121
QUESTION 4 NOVEMBER 2013 P42 Q2(C) ........................................................................................................ 121
QUESTION 5 MAY 2014 P43 Q1 (F) ................................................................................................................... 121
QUESTION 6 NOVEMBER 2014 P41 Q1(D & E)................................................................................................... 121
QUESTION 7 NOVEMBER 2014 P42 Q1 (E) ........................................................................................................ 121
QUESTION 8 NOVEMBER 2014 P42 Q2 (G) ....................................................................................................... 122
QUESTION 10 MAY 2015 P43 Q1 (D) ................................................................................................................... 122
QUESTION 12 NOVEMBER 2015 P42 Q2 (B & C) .................................................................................................. 122
QUESTION 13 NOVEMBER 2015 P43 Q1(C TO E) .................................................................................................. 123
QUESTION 15 NOVEMBER 2016 P31 Q4 (D & E) .................................................................................................. 123
QUESTION 17 MAY 2017 P31 & P33 Q2 (A, B & E) ................................................................................................ 124
QUESTION 18 MAY 2017 P32 Q3 (A, C & D).......................................................................................................... 125
QUESTION 19 MAY 2018 P31 & P33 Q3 (B TO D) .................................................................................................. 125
QUESTION 2 NOVEMBER 2012 P41 Q1 (C TO G) ................................................................................................. 127
QUESTION 3 MAY 2013 P43 Q3(E) .................................................................................................................... 128
QUESTION 4 NOVEMBER 2013 P42 Q2(C) ........................................................................................................ 128
QUESTION 5 MAY 2014 P43 Q1 (F) .................................................................................................................... 128
QUESTION 6 NOVEMBER 2014 P41 Q1(D & E)................................................................................................... 128
QUESTION 8 NOVEMBER 2014 P42 Q2 (G) ....................................................................................................... 129
QUESTION 10 MAY 2015 P43 Q1 (D) ................................................................................................................... 129
QUESTION 12 NOVEMBER 2015 P42 Q2 (B & C) .................................................................................................. 129
QUESTION 13 NOVEMBER 2015 P43 Q1(C TO E) .................................................................................................. 129
QUESTION 15 NOVEMBER 2016 P31 Q4 (D & E) .................................................................................................. 130
QUESTION 17 MAY 2017 P31 & P33 Q2 (A, B & E) ................................................................................................ 131
QUESTION 18 MAY 2017 P32 Q3 (A, C & D).......................................................................................................... 131
QUESTION 19 MAY 2018 P31 & P33 Q3 (B TO D) .................................................................................................. 133
CHAPTER 9 AUDITING & STEWARDSHIP 134
QUESTION 1 SPECIMEN 2016 P3 Q3 (D & E) ...................................................................................................... 134
QUESTION 3 NOVEMBER 2016 P33 Q3 (A TO C & E) ........................................................................................... 134
QUESTION 4 MAY 2017 P31 & P33 Q2 (C & D) ................................................................................................... 135
QUESTION 5 MAY 2017 P32 Q3 (B & E) ............................................................................................................. 135
8

QUESTION 7 MAY 2018 P31 & P33 Q3 (A) ......................................................................................................... 136
QUESTION 1 SPECIMEN 2016 P3 Q3 (D & E) ...................................................................................................... 137
QUESTION 3 NOVEMBER 2016 P33 Q3 (A TO C & E) ........................................................................................... 138
QUESTION 4 MAY 2017 P31 & P33 Q2 (C & D) ................................................................................................... 138
QUESTION 5 MAY 2017 P32 Q3 (B & E) ............................................................................................................. 139
QUESTION 7 MAY 2018 P31 & P33 Q3 (A) ......................................................................................................... 140
CHAPTER 10 COMPUTERISED ACCOUNTING 141
QUESTION 1 MAY 2016 P32 Q1 (E) ................................................................................................................... 141
QUESTION 3 MAY 2018 P31 & P33 Q3 (E) ......................................................................................................... 141
QUESTION 1 MAY 2016 P32 Q1 (E) ................................................................................................................... 142
QUESTION 3 MAY 2018 P31 & P33 Q3 (E) ......................................................................................................... 142
CHAPTER 11 RATIO ANALYSIS 143
QUESTION 1 NOVEMBER 2011 P41 Q2 ............................................................................................................. 143
QUESTION 2 NOVEMBER 2011 P43 Q1(B & C) ................................................................................................... 144
QUESTION 3 NOVEMBER 2011 P43 Q2 (C & D) .................................................................................................. 144
QUESTION 7 MAY 2013 P43 Q2 (D & E).............................................................................................................. 148
QUESTION 10 MAY 2015 P43 Q2 (D & E) ............................................................................................................. 149
QUESTION 11 SPECIMEN 2016 P3 Q4 ................................................................................................................. 150
QUESTION 12 MAY 2016 P31 Q3(D) .................................................................................................................... 151
QUESTION 13 MAY 2016 P31 Q4 ........................................................................................................................ 152
QUESTION 14 MAY 2016 P32 Q4 ........................................................................................................................ 153
QUESTION 16 MAY 2017 P31 & P33 Q4 .............................................................................................................. 155
QUESTION 17 MAY 2017 P32 Q2 ........................................................................................................................ 156
QUESTION 20 MAY 2018 P32 Q1 ........................................................................................................................ 158
QUESTION 2 NOVEMBER 2011 P43 Q1(B & C) ................................................................................................... 160
9

QUESTION 12 MAY 2016 P31 Q3(D) .................................................................................................................... 168
QUESTION 13 MAY 2016 P31 Q4 ........................................................................................................................ 168
QUESTION 14 MAY 2016 P32 Q4 ........................................................................................................................ 169
QUESTION 16 MAY 2017 P31 & P33 Q4 .............................................................................................................. 171
QUESTION 17 MAY 2017 P32 Q2 ........................................................................................................................ 172
QUESTION 20 MAY 2018 P32 Q1 ........................................................................................................................ 176
CHAPTER 12 STATEMENTS OF CASH FLOWS 177
QUESTION 1 MAY 2011 P42 Q1 (A, B & D) .......................................................................................................... 177
CHAPTER 13 MANUFACTURING ACCOUNTS 196
QUESTION 1 MAY 2012 P22 Q1 ........................................................................................................................ 196
QUESTION 2 MAY 2012 P42 Q1 ........................................................................................................................ 197
QUESTION 5 MAY 2013 P23 Q1 ........................................................................................................................ 199
QUESTION 6 MAY 2014 P21 Q1 (B & C) ............................................................................................................. 200
QUESTION 8 MAY 2015 P23 Q1 ........................................................................................................................ 202
QUESTION 10 MAY 2016 P32 Q2 ........................................................................................................................ 204
QUESTION 13 MAY 2017 P32 Q1 ........................................................................................................................ 207
QUESTION 15 MAY 2018 P31 & P33 Q1 .............................................................................................................. 209
10

QUESTION 1 MAY 2012 P22 Q1 ........................................................................................................................ 211
QUESTION 2 MAY 2012 P42 Q1 ........................................................................................................................ 211
QUESTION 5 MAY 2013 P23 Q1 ........................................................................................................................ 215
QUESTION 6 MAY 2014 P21 Q1 (B & C) ............................................................................................................. 216
QUESTION 8 MAY 2015 P23 Q1 ........................................................................................................................ 217
QUESTION 10 MAY 2016 P32 Q2 ........................................................................................................................ 220
QUESTION 13 MAY 2017 P32 Q1 ....................................................................................................................... 223
QUESTION 15 MAY 2018 P31 & P33 Q1 .............................................................................................................. 225
CHAPTER 14 ABSORPTION COSTING 227
CHAPTER 15 BUDGETING 230
QUESTION 1 MAY 2011 P41 Q3 ........................................................................................................................ 230
QUESTION 2 MAY 2011 P43 Q3 ........................................................................................................................ 231
QUESTION 4 MAY 2012 P42 Q3 (A, B, C, E & F).................................................................................................... 232
QUESTION 5 MAY 2013 P41 Q3 ........................................................................................................................ 233
QUESTION 6 MAY 2013 P42 Q3 ........................................................................................................................ 233
QUESTION 8 MAY 2014 P43 Q3 ........................................................................................................................ 235
QUESTION 11 MAY 2015 P41 & P42 Q1 .............................................................................................................. 238
QUESTION 12 NOVEMBER 2015 P42 Q2(A) ........................................................................................................ 240
QUESTION 17 MAY 2018 P31 & P33 Q5 .............................................................................................................. 243
QUESTION 1 MAY 2011 P41 Q3 ........................................................................................................................ 245
QUESTION 2 MAY 2011 P43 Q3 ........................................................................................................................ 245
QUESTION 4 MAY 2012 P42 Q3 (A, B, C , E & F) ................................................................................................... 247
QUESTION 5 MAY 2013 P41 Q3 ........................................................................................................................ 248
QUESTION 6 MAY 2013 P42 Q3 ........................................................................................................................ 249
QUESTION 8 MAY 2014 P43 Q3 ........................................................................................................................ 252
11

QUESTION 11 MAY 2015 P41 & P42 Q1 .............................................................................................................. 256
QUESTION 12 NOVEMBER 2015 P42 Q2 (A) ........................................................................................................ 258
QUESTION 17 MAY 2018 P31 & P33 Q5 .............................................................................................................. 263
CHAPTER 16 STANDARD COSTING 265
QUESTION 1 MAY 2012 P41 Q3 (A TO D) ............................................................................................................ 265
QUESTION 3 MAY 2013 P42 Q1 ........................................................................................................................ 266
QUESTION 4 MAY 2013 P43 Q3(A TO D) ............................................................................................................. 267
QUESTION 9 MAY 2016 P32 Q6 ........................................................................................................................ 270
QUESTION 11 MAY 2017 P31 & P33 Q5 .............................................................................................................. 271
QUESTION 12 MAY 2017 P32 Q5 ........................................................................................................................ 272
QUESTION 15 MAY 2018 P32 Q6 ........................................................................................................................ 274
QUESTION 2 NOVEMBER 2012 P42 Q3) ........................................................................................................... 276
QUESTION 3 MAY 2013 P42 Q1 ........................................................................................................................ 277
QUESTION 6 NOVEMBER 2015 P42 Q3 ................................................................................................................ 281
QUESTION 9 MAY 2016 P32 Q6 ........................................................................................................................ 285
QUESTION 11 MAY 2017 P31 & P33 Q5 .............................................................................................................. 287
QUESTION 12 MAY 2017 P32 Q5 ........................................................................................................................ 288
QUESTION 15 MAY 2018 P32 Q6 ........................................................................................................................ 292
CHAPTER 17 CAPITAL INVESTMENT APPRAISAL 295
QUESTION 2 MAY 2012 P43 Q3 ........................................................................................................................ 295
QUESTION 3 MAY 2014 P41 Q3, MAY 2014 P42 Q3 .......................................................................................... 295
QUESTION 4 NOVEMBER 2014 P42 Q2(A TO F) .................................................................................................. 296
QUESTION 5 NOVEMBER 2014 P43 Q3(C TO F) .................................................................................................. 297
QUESTION 6 MAY 2015 P41 & P42 Q3(A TO D)................................................................................................... 298
QUESTION 8 MAY 2016 P31 Q6 ........................................................................................................................ 299
12

QUESTION 11 MAY 2017 P32 Q6 ........................................................................................................................ 301
QUESTION 13 MAY 2018 P32 Q5 ........................................................................................................................ 303
QUESTION 2 MAY 2012 P43 Q3 ........................................................................................................................ 305
QUESTION 3 MAY 2014 P41 Q3, MAY 2014 P42 Q3 .......................................................................................... 305
QUESTION 4 NOVEMBER 2014 P42 Q2(A TO F) .................................................................................................. 306
QUESTION 5 NOVEMBER 2014 P43 Q3(C TO F) .................................................................................................. 307
QUESTION 6 MAY 2015 P41 & P42 Q3 (A TO D) .................................................................................................. 308
QUESTION 8 MAY 2016 P31 Q6 ........................................................................................................................ 310
QUESTION 11 MAY 2017 P32 Q6 ........................................................................................................................ 312
QUESTION 13 MAY 2018 P32 Q5 ........................................................................................................................ 314
CHAPTER 18 ACTIVITY BASED COSTING 316
QUESTION 1 MAY 2016 P31 Q5 ........................................................................................................................ 316
QUESTION 2 MAY 2016 P32 Q5 ........................................................................................................................ 316
QUESTION 4 MAY 2017 P31 & P33 Q6 .............................................................................................................. 318
QUESTION 7 MAY 2018 P31 & P33 Q6 .............................................................................................................. 319
QUESTION 1 MAY 2016 P31 Q5 ........................................................................................................................ 321
QUESTION 2 MAY 2016 P32 Q5 ........................................................................................................................ 322
QUESTION 4 MAY 2017 P31 & P33 Q6 .............................................................................................................. 324
QUESTION 7 MAY 2018 P31 & P33 Q6 .............................................................................................................. 326
SPECIMEN 2016 PAPER 03 329
2016 MAY PAPER 31 & 33 334
2016 MAY PAPER 32 340
NOVEMBER 2016 - PAPER 31 346
MAY 2017 - PAPER 31 & 33 362
MAY 2017 - PAPER 32 367
13

MAY 2018 - PAPER 31 & 33 388
MAY 2018 - PAPER 32 393
INDEX (YEARLY) 398
MAY 2018 - PAPER 32 401
MAY 2019 PAPER 32 412
Chapter 1 14 Accounts of Non Profit Organisations
CHAPTER 1 ACCOUNTS OF NON PROFIT ORGANISATIONS

QUESTION 1 MAY 2011 P21 Q2
The Welcome Cricket Club has the following assets and liabilities.
30 April 2011 1 May 2010
$ $
Equipment (at cost) 104 000 40 000
Equipment – depreciation provision 14 400 4 000
Café inventory 4 800 6 500
Cash at bank ? 12 800
Subscriptions outstanding 3 600 2 200
Subscriptions paid in advance 3 500 5 000
Café staff wages accrued 4 000 500
Loan from cricket association 20 000 –
Loan interest ? –
The receipts and payments for the year ended 30 April 2011 are:
Receipts $
Café revenue (sales) 90 000
Subscriptions 34 000
Loan from cricket association 20 000
Donations 450
Ticket sales 14 560
Payments $
Equipment 64 000
Rent 21 000
Heating and lighting 18 000
Wages of café staff 28 800
Café purchases for resale 36 000
Additional information:
1 Wages are a direct cost of the café and are charged to the trading account.
2 The rent and heating and lighting are apportioned 40% to the café and 60% to the rest of the club.
3 The loan from the cricket association was received on 1 November 2010. Interest is payable at 10% per year.
4 Depreciation is charged to the income and expenditure account.
REQUIRED
(a) Prepare the café income statement to show the gross profit and the profit for the year (net profit) made by
the café during the year ended 30 April 2011. [8]
(b) Prepare the income and expenditure account of Welcome Cricket Club for the year ended 30 April 2011.[14]
(c) Prepare the balance sheet of the Welcome Cricket Club at 30 April 2011. [8]
QUESTION 2 MAY 2011 P42 Q2 (a to c)

The Top Hat Sports Club is a not-for-profit organisation which runs a gym and operates a café.
The treasurer is experienced and for many years has prepared a receipts and payments account.
The club president read a book about the importance of accruals and prepayments. He decided to take the receipts
and payments account prepared by the treasurer and to adjust the figures. He produced the following:
Income and expenditure account at 31 December 2010
$ $ $
Opening bank balance 4 320
Café takings 12 260
Depreciation 4 610
Annual subscriptions $ $
received during the year 39 300
arrears at 1 January 2010 450
prepaid at 1 January 2010 300
arrears at 31 December 2010 750
prepaid at 31 December 2010 150 40 950
62 140
Rent 12 000
General expenses 4 620
Heat, light and power 8 240
Wages 18 600
Purchase of equipment 5 300
Cost of refreshments
payments during the year 8 140
owing at 1 January 2010 700
owing at 31 December 2010 760 9 600 58 360
Closing bank balance 3 780
Further information is as follows:
1 The club president made depreciation the balancing figure. The treasurer was surprised to see it appear
with income.
2 The club president was unaware that there was an unpaid invoice for $910 for heat, light and power at the
year end.
3 Asset valuations were:
1 January 2010 ($) 31 December 2010 ($)
Café inventory 420 800
Equipment 17 200 19 500
4 The club has two members of staff. One was paid $10 600 for the year and worked in the gym and
the other earned $8000 and worked in the café.
5 The club has 265 members who each pay an annual subscription of $150.
On 1 January 2010 the managing committee decided to allow the admission of life members, each paying $1 600.
This would be transferred to income over 20 years. Three people took up life membership during 2010. The club
president omitted life subscriptions from his statement.
REQUIRED
(a) Prepare the corrected income and expenditure account. [9]
(b) Prepare a balance sheet at 31 December 2010. [15]
(c) Explain three differences between the financial statements of a not-for-profit organisation and the financial
statements of a public limited company. [6]
QUESTION 3 NOVEMBER 2011 P23 Q2 (B)

The treasurer of Hamilton Social Club has provided the following information for the year ended 31 March 2011.
31 March 2010 31 March 2011
$ $
Café inventory at cost 3 400 3 950
Café trade payables 1 570 880
Subscriptions in arrears 240 120
Equipment (net book value) 5 400 9 360
Stock of stationery at cost 110 85
Cash at bank 1 800 340
5% loan (repayable 2015) – 5 000
Equipment costing $5000 was purchased on 1 April 2010. It was financed by the 5% loan. At the year-end 31 March
2011, no payment of interest had been made.
Included in the café inventory at 31 March 2011 were items costing $120 that were out of date. They had a net
realisable value of $30.
REQUIRED
Prepare a statement of financial position for Hamilton Social Club at 31 March 2011. Show clearly the surplus or
deficit for the year. An income and expenditure account is not required. [10]
QUESTION 4 NOVEMBER 2012 P21 Q2

The PPE Rowing Club prepares its accounts annually on 31 March.
The summary of the Receipts and Payments Account for the year ended 31 March 2012 is shown below.
Receipts $ Payments $
Balance b/d 3 000 Competition prizes 3 100
Subscriptions received 84 400 Dinner dance – hire of band 2 400
Competition receipts 12 200 Dinner dance – catering 5 200
Dinner dance ticket sales 14 000 Insurance 9 800
Donations 1 500 Clubhouse maintenance 10 300
Sale of equipment 24 000 Equipment 46 000
Electricity 1 600
Transfer to deposit account 20 000
Additional information
1 The remaining assets and liabilities of the club at the beginning and end of the year were:
1 April 2011 31 March 2012
$ $
Clubhouse 150 000 150 000
Equipment 160 000 140 000
General expenses owing 800 400
Subscriptions due and unpaid 2 600 3 100
Subscriptions paid in advance 6 300 4 500
Inventory of competition prizes 800 300
Deposit account - 20 000
2 During the year equipment with a book value of $26 000 was sold for $24 000.
3 Of the subscriptions due on 1 April 2011, $280 remains unpaid. This is to be treated as a bad debt.
4 On 1 October 2011, $20 000 was transferred from the Receipts and Payments Account to a short-term
deposit account. This transfer is shown in the summarised Receipts and Payments Account above. Interest
of 5% per annum is earned on the deposit account. This interest has not yet been recorded.
REQUIRED
(a) Prepare the subscriptions account for PPE Rowing Club for the year ended 31 March 2012. [7]
(b) Prepare the income and expenditure account for PPE Rowing Club for the year ended 31 March 2012. Clearly
identify the profit or loss on the dinner dance and competitions. [13]
(c) Prepare the statement of financial position for PPE Rowing Club at 31 March 2012. [10]

The Klassik Music Society produced the following receipts and payments summary for the year ended 31 March 2013.
Receipts $
Sales of food and drink 50 000
Bank loan 30 000
Income from concerts 116 800
Sale of surplus equipment 30 000
Payments $
Balance, 1 April 2012 12 000
Purchase of new equipment 10 000
Hire of hall for concerts 27 000
Printing 14 000
Equipment maintenance and repairs 8 000
Purchases of food and drink 23 000
Salaries 45 000
Cost of concerts 83 500
Sundry expenses 760
Sponsorship 1 000
Balance, 31 March 2013 ?
Additional information:
31 March 2012 31 March 2013
1 Salaries in arrears 2 800 1 600
Subscriptions owing 1 600 2 600
Subscriptions prepaid 1 000 400
Printing accrued 2 600 2 800
Equipment (cost $200 000), at NBV 160 000 ?
Food and drink inventory 15 400 13 200
2 The bank loan was received on 1 July 2012. Interest is charged at 12% per annum. No interest had
been paid by the year end.
3 The equipment sold was purchased on 1 June 2011 and had a NBV of $32 000.
4 Depreciation is provided at 20% on cost for equipment in use at the year end.
REQUIRED
(a) Prepare the trading section of the income statement for the year ended 31 March 2013. [2]
(b) Calculate the gross profit percentage, to one decimal place, made on sales of food and drink. [2]
(c) The prices of food and drink sold had been planned to obtain a gross margin of 70%. Compare this figure
with the figure calculated in (b) and state two reasons why these figures may differ. [4]
(d) Prepare the income and expenditure account of the Klassik Music Society for the year ended 31 March 2013.
[12]
(e) Prepare the statement of financial position of the Klassik Music Society at 31 March 2013. [10]

The treasurer of the Ocean Fishing Club has prepared the following receipts and payments account for the year
ended 31 March 2014.
Balance at 1 April 2013 6 570 Payments to trade payables 2 974
Subscriptions received 7 400 Shop wages 3 670
Donations 1 450 Administration expenses 2 790
Receipts from annual family day 2 300 New equipment 5 600
Shop takings 7 690 Repairs to equipment 2 500
Transfer to deposit account 7 000
_____ Balance c/d 876
25 410 25 410
1 April 2013 31 March 2014

$ $
Shop inventory 975 859
Trade payables for shop 560 784
Deposit account 6 000 13 000
Equipment at cost 9 800 ?
Provision for depreciation 2 940 ?
Repairs to equipment owing 420 370
Shop wages due 250 195
Shop fittings at net book value 750 640
1 The donations are to be capitalised.
2 There are 350 members who pay an annual subscription of $20.
At 1 April 2013, 30 members had paid in advance for the coming year but 24 members had not yet paid for
the year ended 31 March 2013.
At 31 March 2014, 10 members had yet to pay and some members had paid in advance but the treasurer
has not yet calculated how many.
3 Interest of 5% per annum is credited to the deposit account by the bank on 31 March each year. This has
not yet been entered in the books.
The transfer of $7 000 to the deposit account was made on the 31 March 2014.
4 Equipment is depreciated at 15% per annum using the reducing (diminishing) balance method. A full year’s
depreciation is charged in the year of purchase.
REQUIRED
(a) Prepare the shop trading account for the year ended 31 March 2014. [4]
(b) Prepare the income and expenditure account for the year ended 31 March 2014. [6]
(c) Prepare the statement of financial position at 31 March 2014. [11]
The club wishes to buy a new boat for use by members. It will cost $12 500.
REQUIRED
(d) Suggest three ways the club could raise the finance to purchase the new boat. [3]
(e) State one advantage and one disadvantage of each method you have suggested. [6]

The Pavey Sports and Social Club is a not for profit organisation. Accounts are prepared annually to 31 March. The
membership has been constant for some years at 350 members paying an annual subscription of $100.
A life membership scheme was introduced to try to boost membership. On 1 April 2015, there were 25 new members
who joined under this scheme, each paying $750. It was agreed that the life membership fund would be transferred
to the income and expenditure account over 15 years.
The following receipts and payments account was prepared for the year ended 31 March 2016.
Balance b/d 12 120 Purchase of fixtures and fittings 34 500
Annual subscriptions 34 000 Payments to restaurant suppliers 6 950
Life membership 18 750 Restaurant wages 5 450
Donations 8 500 Administrative expenses 4 750
Restaurant takings 17 450 Balance c/d 39 170
Balance b/d 90 820 90 820
The following information is available for the year ended 31 March 2016.
1 1 April 2015 31 March 2016
Number of members Number of members
Subscriptions in advance 4 3
Subscriptions in arrears 10 ?
2 Restaurant suppliers owing 845 955
Restaurant wages owing – 280
Administrative expenses owing – 350
Administrative expenses prepaid – 200
3 No inventories of restaurant supplies were held.
4 Fixtures and fittings acquired on 1 April 2013 had cost $20 000. Depreciation is charged at 20% per annum
using the reducing balance method. A full year’s depreciation is charged in the year of acquisition.
5 All donations are capitalised.
6 The opening balance on the accumulated fund at 1 April 2016 was $24 675.
REQUIRED
(a) Distinguish between the terms ‘capital’ and ‘accumulated fund’. [2]
(b) Prepare the income and expenditure account for the year ended 31 March 2016, clearly identifying the
profit or loss from the restaurant within the account. [14]
(c) Explain why a club may capitalise donations received from its members. [2]
The club is considering modernising the pavilion which will cost $75 000.
REQUIRED
(d) (i) Compare and contrast two sources of finance which the club could use. [4]
(ii) Advise the club members which source of finance would be most appropriate. Justify your answer.
[3]
QUESTION 8 MAY 2016 P32 Q1 (a to d)
The Seagulls Boating Club is a small not for profit organisation which generates income from members’ subscriptions
and a café.
REQUIRED
(a) State two differences between the financial statements of a not for profit organisation and those of a limited
company. [2]
The following information is available for the café for the year ended 31 March 2016.
1 The café takings were $25 750 and $8 850 was paid to suppliers.
2 An assistant received monthly wages of $600. On 31 March 2016, the assistant also received a bonus of 10%
of the annual café takings.
3 The following balances were available:
1 April 2015 31 March 2016

$ $
Café inventory 3 875 3 423
Café trade payables 2 831 2 952
REQUIRED
(b) Prepare the café trading account for the year ended 31 March 2016. [5]
The club has 310 members who pay an annual subscription of $80.
The following information was available for members’ subscriptions.

1 April 2015 31 March 2016
Number of members Number of members
REQUIRED
(c) Prepare the subscriptions account for the year ended 31 March 2016. [4]
The following information is also available for the year ended 31 March 2016.
1 General expenses of $2 500 were incurred which included a paid insurance invoice for the period from 1
March 2016 to 31 May 2016 for $180.
2 Fixtures and fittings were acquired on 1 April 2013 at a cost of $16 000 and are depreciated at 25% using
the reducing balance method.
REQUIRED
(d) Prepare the income and expenditure account for the year ended 31 March 2016. [5]
International Dancing is a dance club charging an annual subscription of $500 per member.
A summary of its subscriptions account for the year ended 31 December 2015 was as follows:
Subscriptions account
2015 $ 2015 $
Jan 1 Balance b/d 2 000 Jan 1 Balance b/d 1 500
Dec 31 Income and expenditure a/c 106 500 Dec 31 Bank 105 500
Balance c/d 2 500 Balance c/d 4 000
111 000 111 000
1 The club’s only other receipts came from the sale of music CDs to members. These receipts amounted to
$5 800 for the year.
2 Payments for the year were as follows:
$
Rent 15 000
Staff costs 61 000
Insurance and administration 4 200
Purchase of music CDs for resale 2 600
Purchase of CDs for club use 4 000
3 The bank balance at 1 January 2015 was $13 500 debit. All receipts and payments are made through the
bank.
4 CDs purchased for club use are not considered to have a useful life of more than 12 months.
5 The club maintains an inventory of CDs for resale. This amounted to $180 at 1 January 2015 and $280 at 31
December 2015.
6 Equipment was valued at $17 200 at 1 January 2015 and $21 300 at the end of the year.
7 At 31 December 2015 prepaid insurance was $300 and accrued administration costs were $50.
REQUIRED
(a) Prepare the club’s income and expenditure account for the year ended 31 December 2015. [9]
In 2016 the club is given the opportunity to buy its premises for $142 000. If it is agreed that this purchase should go
ahead, three sources of finance would be used.
1 Half the balance at bank on 31 December 2015 would be used.
2 Life membership of the club would be introduced. The life membership fee would be $5 000 per person
and this would be credited to the income and expenditure account in equal instalments over a 10-year
period. It is expected that 10 existing members of the club would take up life membership, and the funds
raised would be used in the purchase.
3 A 5-year bank loan, at 10% interest per annum, would finance the balance of the purchase price.
REQUIRED
(b) (i) Calculate the bank balance at 31 December 2015. [2]
(ii) Calculate the amount of the loan which would be taken out. [3]
(c) Assess the effect the purchase of the premises would have on annual cash flows in future years. [4]
(d) Recommend to the managing committee of the club whether or not they should proceed with the purchase
of the premises. Justify your answer by discussing both advantages and disadvantages of the purchase. [7]

Sunshine Social Club runs a gift shop. Goods are sold only to members at a discount. Selected balances relating to
the gift shop at 31 December are as follows:
2015 2014
$ $
Net book value of shop equipment ? 55 000
Shop inventory 18 600 24 000
Shop trade payables 64 300 54 500
Insurance prepaid 1 660 1 400
Shopkeeper wages prepaid 3 200 –
Accrued expenses – water and electricity 2 000 2 700
– shopkeeper wages – 3 450
Summarised receipts and payments account of the club for the year ended 31 December 2015 is as follows:
$ $
Balance b/d 124 000 Shop suppliers 74 500
Annual subscriptions 345 000 Purchases of shop equipment 4 000
Life membership subscriptions 60 000 Shopkeeper wages 30 400
Annual ball tickets 68 000 Insurance 9 460
Shop takings 124 200 Water and electricity 14 800
Club administration 361 400
Hire of ballroom & band for annual ball 48 000
Food for annual ball 36 000
_______ Balance c/d 142 640
721 200 721 200
1 Expenses are allocated to the shop as follows:
Water and electricity 40%
Insurance 25%
2 Shop equipment is depreciated at 20% per annum using the reducing balance method. Equipment is
depreciated in the year of purchase but not in the year of sale.
REQUIRED
(a) State three differences between a donation and a member subscription received by a not-for-profit
organisation. [3]
(b) Prepare the club’s shop trading account for the year ended 31 December 2015. [15]
After reviewing the trading account of the gift shop, the chairman is not satisfied with the performance.
REQUIRED
(c) Discuss two ways to improve the performance of the gift shop. [4]
The chairman of the club undertook to cover 50% of the deficit arising from the 2015 annual ball.
The demand for payment was issued to the chairman on 31 December 2015.
REQUIRED
(d) Calculate the amount the chairman had to contribute to the club to cover the deficit. [3]

AB Cricket Club is a not-for-profit organisation.
REQUIRED
(a) State two reasons why the members of a not profit organisation do not receive a dividend. [2]
The treasurer of AB Cricket Club provided the following financial information:
1 At 1 September 2015 the assets and liabilities were:
$
Equipment at net book value 7 800
Subscriptions in advance 490
Subscriptions in arrears 270
Life membership fund 1 500
Trade payables for refreshments 265
Inventory of refreshments 420
Accumulated fund 7 825
2 The receipts and payments account for the year ended 31 August 2016 was as follows:
Receipts and payments account
$ $
Bank balance b/d 1 590 Groundsman’s wages 7 500
Subscriptions 11 200 Repairs to clubhouse 700
Sale of equipment 4 000 Purchase of equipment 2 500
Match ticket sales 6 400 Cost of refreshments 1 700
Refreshments 2 500 Awards to players 1 450
Life membership 800 Administration expenses 760
Donation 3 500 Bank balance c/d 11 880
_____ Savings account c/d 3 500
29 990 29 990
3 At 31 August 2016, the balances were:
$
Trade payables for refreshments 315
Inventory of refreshments 390
4 The donation of $3 500 is to be used for the purchase of a new clubhouse. It had been invested in a new
savings account and is to be capitalised.
5 The club depreciates its equipment at 10% on the net book value. A full year’s depreciation is charged in
the year of purchase. No depreciation is charged in the year of sale.
6 Equipment sold had a net book value of $3 640.
7 The life membership fund is transferred to the income and expenditure account over 10 years in equal
instalments.
8 For the year ended 31 August 2016 the club made a profit of $720 on the sale of refreshments.
REQUIRED
(b) Prepare the income and expenditure account for the year ended 31 August 2016. [11]
(c) Prepare the statement of financial position at 31 August 2016. [8]
(d) Explain why the club transfers life membership fund to the income and expenditure accounts over 10 years.
[4]
The EF Tennis Club generates revenue from member subscriptions by selling tickets for matches and operating a
club shop. It also receives income from renting out their catering facility.
The treasurer has provided the following figures for the year ended 31 December 2016:
Receipts and Payments Account
2016 $ 2016 $
Jan 01 Balance b/d 1 546 Dec 31 New equipment 1 400
Dec 31 Shop sales 8 960 Dec 31 Shop purchases 5 720
Match tickets 2 740 Dec 31 Printing & advertising for matches 3 765
Sale of old equipment 1 760 Dec 31 Ground staff wages 4 210
Rent of catering facilities 2 600 Dec 31 Shop staff wages 2 200
Subscriptions 3 600 Dec 31 Balance c/d 8 911
Donation 5 000 _____
26 206 26 206
2017
Jan 1 Balance b/d 8 911
Other balances are:

1 January 2016 31 December 2016
$ $
Shop inventory 975 826
Equipment at net book value 14 760 ?
Shop trade payables 1 210 1 450
REQUIRED
(a) Distinguish between the capital of a sole trader and the accumulated fund of a non-profit-making club or
society. [2]
(b) Prepare the shop income statement for the year ended 31 December 2016. [4]
1 Equipment is depreciated at 10% of net book value at the year end. Equipment which was sold had a net
book value of $1 900.
2 The rent received for the catering facility is $200 per month and commenced on 1 January 2016.
3 The annual subscription for the year ended 31 December 2016 was $9 per member. On 1 January 2017 it
was increased to $10 per member.
At 1 January 2016:
20 members had paid their subscription in advance for 2016.
There were 6 members in arrears for 2015. Their membership has been withdrawn and the amount
they owed is to be written off as a bad debt.
At 31 December 2016:
26 members paid their subscription in advance for 2017.
10 members were in arrears for 2016 and they had until 30 June 2017 to pay.
4 The donation of $5 000 was received specifically to start a new fund for a club-house. The treasurer would
like to invest this in a separate long-term savings account.
REQUIRED
(c) Prepare the income and expenditure account for the year ended 31 December 2016. [10]
(d) Prepare an extract from statement of financial position at 31 December 2016 to show the current assets
and current liabilities of the club. [4]
(e) Discuss whether or not the treasurer should invest the fund for the club-house in a separate long-term
savings account. Justify your answer. [5]

The GT Boating Club is a not-for-profit organisation which collects funds by subscriptions paid annually.
At 1 January 2016 the following assets and liabilities were held by the club:
$
Boathouse 240 000
Fixtures and fittings
Cost 15 000
Accumulated depreciation 10 000
Trade payables 1 750
Total inventory 1 100
Bank 6 150 debit
Insurance paid in advance 1 100
Electricity owing 450
1 The club runs a restaurant for the exclusive use of members and their guests. During the year ended 31
December 2016 the revenue of the restaurant was $45 000.
2 The opening restaurant inventory was 75% of the total club inventory. The closing restaurant inventory had
doubled at 31 December 2016.
3 During the year ended 31 December 2016 the club paid $28 350 for restaurant purchases.
All the club’s trade payables at 1 January 2016 related to the restaurant suppliers. This had risen by 20% at
31 December 2016.
4 The club paid insurance for the year of $4 800 and electricity of $2 000. Half of these costs are charged to
the restaurant.
At 31 December 2016 the club still owed $950 for insurance.
REQUIRED
(a) Prepare a statement to calculate the restaurant profit for the year ended 31 December 2016.
The statement should also clearly show the gross profit. [10]
Another local boating club runs a similar restaurant. Its latest accounts showed that the restaurant had achieved a
gross margin of 45%.
REQUIRED
(b) (i) Calculate the difference between the gross margins of both restaurants. [2]
(ii) Discuss three actions which the club could take to improve the gross margin. [6]
The club is now considering the introduction of a life membership subscription.
The annual subscription is $100 and the proposed life subscription would be $1 000.
Gurmukh, a retired gentleman, is considering joining the club and seeks your advice on whether or not he should
pay an annual subscription or the life membership.
REQUIRED
(c) Explain the accounting treatment of the life subscriptions. [2]
(d) Advise Gurmukh whether or not he should become a life member. Justify your advice. [5]

The RS Rowing Club is a not-for-profit organisation.
A summary of the club’s receipts and payments account for the year ended 31 March 2017 is as follows:
Receipts and payments account
$ $
Balance b/d 4 370 Purchases of sports equipment 1 624
Members’ subscriptions 10 300 Rent of boathouse 2 800
Sales of sports equipment 1 850 General expenses 1 379
Entry fees for annual boat race 4 200 Wages 3 500
Prizes for annual boat race 325
Expenses of annual boat race 2 456
_____ Balance c/d 8 636
20 720 20 720
1 The club owns boats which had originally cost $24 000. Accumulated depreciation at 1 April 2016 was $11
200. The depreciation policy is to charge 10% per annum using the reducing balance method.
2 The club also sells sports equipment to its members. Inventory of sports equipment was as follows:
$
1 April 2016 364
31 March 2017 429
3 Members’ subscriptions in arrears and paid in advance were as follows:
1 April 2016 31 March 2017
$ $
Members’ subscriptions in arrears 700 650
Members’ subscriptions in advance 350 450
4 The balance on the accumulated fund on 1 April 2016 was $40 614.
REQUIRED
(a) Identify four terms used only in the financial statements of a not-for-profit organisation with the
corresponding terms used in the financial statements of a profit-making business. [4]
(b) Prepare the income and expenditure account for the year ended 31 March 2017. [8]
(c) Prepare an extract from the statement of financial position at 31 March 2017 showing the accumulated
fund of the club at that date. [2]
The club has decided to introduce a scheme offering life membership for payment of $400. Annual subscription fees
are currently $50. The club members think that the life membership fees should be credited in full to the income
and expenditure account when received. The treasurer has suggested that the life membership payments should be
credited to income and expenditure account over a number of years.
REQUIRED
(d) Discuss the correct accounting treatment for the life membership. [4]
A former member has donated $35 000 to the club. The funds are to be invested and the investment income used
to encourage young people to train for national competitions. The club is considering two investment options.
1 Invest for 3 years at an annual fixed interest rate of 7.5%.
2 Use the funds to build its own boathouse. Part of the new boathouse could be rented to another local group
at an annual rent of $1250.
REQUIRED
(e) Recommend which option the club should select. Support your answer with reasons and relevant
calculations. [7]
QUESTION 15 MAY 2018 P31 & P33 Q4

A Social Club provides activities for the elderly. It also provides them with meals and organises coach trips.
The ledger accounts of the club for the year ended 31 December 2017 included the following:
Subscription account
Details $ Details $
Balance b/d 400 Balance b/d 100
Income and expenditure account 26 300 Bank 25 800
Balance c/d 50 Irrecoverable debts 250
_____ Balance c/d 600
26 750 26 750
Fixtures and fittings account

Details $ Details $
Balance b/d 12 000 Balance c/d 15 300
Bank 3 300 _____
15 300 15 300
Provision for depreciation of fixtures and fittings account

Details $ Details $
Balance c/d 3 930 Balance b/d 2 400
____ Income and expenditure 1 530
3 930 3 930
The following information was also available.

1 The club owned its own premises which had an original cost of $100 000. These were not depreciated.
2 On 1 January 2017 the bank account had a debit balance of $4 700 and the accumulated fund amounted to
$114 850.
3 The sale of meals to members during the year amounted to $21 500 and made a profit of $2 600. Inventory
of food remained constant at $250. No purchases of food were made on a credit basis. All receipts and
payments for meals were made through the bank account.
4 The club organised two coach trips every month. For each trip it hired a 50-seater coach (with driver) at a
cost of $1 000. During 2017 the club sold 620 coach trip tickets for $25 each.
All receipts and payments for trips were made through the bank account.
5 Other running costs paid during the year totalled $18 100. These included staff costs.
6 Staff costs of $200 were accrued at the end of the year.
REQUIRED
(a) State two differences between a club and a limited company. [4]
(b) Prepare the income and expenditure account for the year ended 31 December 2017. [7]
(c) Prepare the statement of financial position at 31 December 2017. [10]
The management committee of the club is considering increasing the price of the coach trip tickets to members.
(d) Advise the management committee whether or not it should increase the price of the coach trip tickets.
Justify your answer. [4]
SOLUTION CHAPTER 1
(a) Café income statement for the year ended 30 April 2011
$ $
Revenue (sales) 90 000
Cost of sales
Inventory at 1 May 2010 6 500
Purchases 36 000
Inventory at 30 April 2011 4 800
37 700
Add Direct wages ($28 800 + $4 000 – $500) 32 300 70 000
Gross profit 20 000
Overheads
Heating and lighting ($18 000 × 40%) 7 200
Rent ($21 000 × 40%) 8 400 15 600
Profit for the year (net profit) 4 400
(b) Income and Expenditure account for the year ended 30 April 2011
Incomes $ $
Profit on café 4 400
Subscriptions ($34 000 – $2 200 + $3 600 + $5 000 – $3 500) 36 900
Donations 450
Ticket sales 14 560 56 310
Expenses
Rent ($21 000 × 60%) 12 600
Heating and lighting ($18 000 × 60%) 10 800
Depreciation of equipment ($14 400 – $4 000) 10 400
Interest on loan ($20 000 × 10% × 6/12) 1 000 (34 800)
Surplus of incomes over expenditures 21 510
(c) Balance Sheet at 30 April 2011

$ $ $
Non-current assets Cost Depreciation NBV
Equipment 104 000 14 400 89 600
Current Assets
Inventory 4 800
Bank (balancing figure) 4 010
12 410
Current liabilities
Subscriptions prepaid 3 500
Loan interest 1 000
Wages accrued 4 000 (8 500) 3 910
93 510
Non-current liabilities
Loan 20 000
73 510
Represented By
Add Surplus 21 510 73 510
WORKINGS
Calculation of Accumulated Fund
Assets $ $
Equipment ($40 000 – $4 000) 36 000
Inventory 6 500
Bank 12 800
Subscriptions due 2 200 57 500
Less liabilities
Subscriptions paid in advance 5 000
Accrued wages 500 (5 500)
QUESTION 2 MAY 2011 P42 Q2 (a to c)

(a) Top Hat Sports Club
Income and expenditure account for the year ended 31 December 2010
INCOMES $ $
Annual subscriptions (265 × $150) 39 750
Life subscriptions ($1 600 × 3 /20) 240 39 990
EXPENSES
Café loss (See Workings) 3 560
Wages 10 600
Rent 12 000
Heat, light and power ($8 240 + $910) 9 150
Depreciation ($17 200 + $5 300 – $19 500) 3 000 42 930
Deficit 2 940
(b) Balance sheet as at 31 December 2010
NON-CURRENT ASSETS $ $ $
Equipment 19 500
CURRENT ASSETS
Inventory 800
Bank 3 780 5 330
CURRENT LIABILITIES
Café payables 760
Accrued heat, light and power 910
Subscriptions in advance 150 1 820 3 510
23 010
Accumulated Fund ($4 320 + $420 + $450 + $17 200 – $700 – $300) 21 390
Less Deficit (2 940) 18 450
Life members' fund [(3 × $1 600) – $240] 4 560
23 010
WORKINGS Café Trading Account for the year ended 31 December 2010
$ $
Café takings (Sales) 12 260
Cost of Sales
Opening inventory 420
Purchases ($8 140 + $760  $700) 8 200
Closing inventory (800) (7 820)
Gross Profit 4 440
Café wages (8 000)
Net Profit on Café 3 560
(c) Public limited company Not-for-profit organisation

(i) Prepares income statement Prepares income and expenditure account
(ii) Excess of total incomes over total expenses is Excess of total incomes over total expenses is
called profit called surplus
Excess of total expenses over total incomes is Excess of total expenses over total incomes is
called loss called deficit
(iii) Shows share capital and reserves Shows accumulated fund
(iv) Financial statements are published and Financial statements are not published
available for general view
(v) Prepares statement of cash flows Prepares receipts and payments account
QUESTION 3 NOVEMBER 2011 P23 Q2 (B)

Hamilton Social Club
Balance Sheet
As at 31 March 2011
Non-Current Assets $ $ $
Equipment 9 360
Current Assets
Café inventory [$3 950 – ($120 − $30)] 3 860
Inventory of stationery 85
Bank 340
4 405
Current Liabilities
Trade Payables 880
Loan interest due ($5 000 × 5%) 250 1 130 3 275
12 635
Non-Current Liabilities
5% loan (repayable 2015) 5 000
7 635
Financed by
Accumulated fund[$3 400+$240+$5 400+$110+$1 800–$1 570] 9 380
Deficit for the year (balancing figure) (1 745) 7 635

(a) Subscription Account
$ $
Balance (due) b/f 2 600 Balance (advance) b/d 6 300
Income and expenditure (balancing figure) 86 980 Bank (subscriptions received) 84 400
Balance (advance) c/d 4 500 Bad debts 280
_____ Balance (due) c/d 3 100
94 080 94 080
Balance (due) b/d 3 100 Balance (advance) b/d 4 500
(b) PPE Rowing Club

Income and Expenditure Account
For the year ended 31 March 2012
Income $ $
Subscriptions (“a” part) 86 980
Profit from competitions [$12 200 – ($800 + $3 100 – $300)] 8 600
Profit from dinner dance [$14 000 – ($2 400 + $5 200)] 6 400
Donations 1 500
Interest ($20 000 × 5%) 500 103 980
Expenditure $ $
Insurance 9 800
Clubhouse maintenance 10 300
General expenses ($30 200 + $400 – $800) 29 800
Electricity 1 600
Bad debts 280
Depreciation on equipment ($160 000 + $46 000  $26 000  $140 000) 40 000
Loss on Sale of fixed asset ($26 000  $24 000) 2 000 93 780
Surplus of income 10 200
(c) Statement of Financial Position

As at 31 March 2012
Non-current assets $ $
Clubhouse 150 000
Equipment 140 000 290 000
Current Assets
Stock of prizes 300
Subscriptions due and unpaid 3 100
Interest owing ($20 000 × 5%) 500
Deposit account 20 000
Bank (through bank account) 10 500
34 400
Current Liabilities
General expenses owing 400 4 900 29 500
319 500
Represented By
Accumulated Fund ($150 000 + $160 000  $800 + $2 600 
$6 300 + $800 +$3 000) 309 300
Surplus 10 200 319 500
(a) Income statement (trading section) for the year ended 31 March 2013
$ $
Revenue 50 000
Cost of sales
Inventory at 1 August 2012 15 400
Purchases 23 000
38 400
Inventory at 31 March 2013 (13 200) (25 200)
Gross profit 24 800
Gross Profit
(b) Gross Profit (%) = × 100
Sales revenue
$24 800
= × 100
$50 000
= 49.6%
(c) The obtained gross profit margin is worse than planned margin. This could be due to the following reasons.
 There may have been increase in the cost of purchases without corresponding increase in sales price.
 Loss of inventory by theft or fire not accounted for
 Undervaluation of closing inventory or overvaluation of opening inventory
 Reduction in selling price
(d) Income and Expenditure account

For the year ended 31 March 2013
INCOMES $ $
Profit on food and drink (“a” part) 24 800
Subscriptions ($30 000  $1 600  $400 + $1 000 + $2 600) 31 600
Profit on concert ($116 800  $83 500  $27 000) 6 300 62 700
EXPENSES
Printing ($14 000  $2 600 + $2 800) 14 200
Repairs 8 000
Salaries ($45 000  $2 800 + $1 600) 43 800
Sundry expenses 760
Sponsorship 1 000
Loan interest ($30 000 × 12% × 9/12) 2 700
Depreciation [($200 000 – $40 000 + $10 000) x 20%] 34 000
Loss on sale of equipment ($32 000  $30 000) 2 000 106 460
Deficit of expenditure/income 43 760
(e) Statement of Financial Position at 31 March 2013

Cost Depn NBV
Non-Current Assets $ $ $
Equipment[($200 – $40 + $10)000 ; ($40 –$8 + $34) 000 170 000 66 000 104 000
Current Assets
Inventory 13 200
Bank 32 540 48 340
Current Liabilities
Subscriptions prepaid 400
Salaries accrued 1 600
Accrued Interest 2 700
Printing accrued 2 800 7 500 40 840
144 840
Non-Current Liabilities - Bank loan 30 000
Net assets 114 840
Accumulated fund (See Workings) 158 600
Less Deficit 43 760 114 840
WORKINGS Calculation of Accumulated Fund
$
Assets ($160 000 + $15 400 + $1 600) 177 000
Less Liabilities ($2 800 + $1 000 + $2 600 + $12 000) (18 400)
Accumulated Fund 158 600
(a) Ocean Fishing Club Shop
Trading Account for the year ended 31 March 2014
$ $
Sales 7 690
cost of sales
Opening Inventory 975
Purchases ($2 974 + $784  $560) 3 198
4 173
Closing Inventory (859) (3 314)
Gross profit 4 376
Expenses $ $
Wages ($3 670 + $195  $250) 3 615
Depreciation – Shop fittings ( $750  $640) 110 (3 725)
Shop profit for the year 651
(b) Income and Expenditure Account for the year ended 31 March 2014
Incomes $ $
Shop profits (‘a’ part) 651
Subscriptions (350 × $20) 7 000
Receipts from annual family day 2 300
Interest on deposit account ($6 000 × 5%) 300 10 251
Expenses
Administration expenses 2 790
Repairs to equipment ($2 500 + $370  $420) 2 450
Depreciation on equipment [($9 800 + $5 600)  $2 940] × 15% 1 869 (7 109)
Surplus 3 142
(c) Ocean Fishing Club

Statement of Financial Position at 31 March 2014
Non-Current Assets Cost Dep’n NBV
$ $ $
Equipment ($9 800 + $5 600); ($2 940 + $1 869) 15 400 4 809 10 591
Shop fittings 750 110 640
16 150 4 919 11 231
Current Assets
Inventory 859
Subscription in arrears(10 × $20) 200
Bank – current account 876
Bank – deposit account [$13 000 + ($6 000 × 5%)] 13 300 15 235
Current Liabilities
Trade payables 784
Other payables ($370+ $195) 565
Subscriptions in advance (W 1) 720 (2 069) 13 166
24 397
Accumulated Fund at 1 April 2013 19 805
Add Surplus 3 142
22 947
Donations fund 1 450 24 397
WORKINGS
(W 1) Subscription Account
$ $
Balance b/f - arrears (24 × $20) 480 Balance b/f - advances (30 × $20) 600
Income & Expenditures A/c (350 × $20) 7 000 Bank - subscriptions received 7 400
Balance c/d - advances (Balancing fig ) 720 Balance c/d - arrears (10 × $20) 200
8 200 8 200
(W 2) Calculation of Accumulated Fund
Assets at 1 April 2013 $
[$975 + $6 000 + ($9 800  $2 940) + $750 + $6 570 (bank) + $480 (W 1)] 21 635
Liabilities at 1 April 2013 [$560 + $420 + $250 + $600 (W 1)] (1 830)
Accumulated Fund at 1 April 2013 19 805
(d) 1 Use of funds from the deposit account

2 Bank loan
3 Ask members for donations
4 Fund raising events
(e) 1 Use of funds from the deposit account

Advantage: Immediate availability of funds.
Disadvantage: No cash reserves will be left. Interest income on deposit will be lost
2 Bank loan
Advantage: Funds available from bank for full amount.
Disadvantage: Bank loans usually require security. Interest will have to be paid.
3 Ask members for donations
Advantage: No fixed interest charges.
Disadvantage: May not generate required funds so some other source may be required.
4 Fund raising events

(a) In a trading organization, term capital is used to represent the amount invested by owner within the
business. As there are no owner(s) in non-profit organisations so accumulated fund replaces capital in this
case and represents the accumulation of surpluses over a number of years.
(b) Income and expenditure accountfor the year ended 31 March 2016
Incomes $ $
Subscriptions (350 members @ $100) 35 000
Life membership [(25 × $750)/15 years] 1 250
Restaurant profit (W 1) 4 660 40 910
Expenses
Administrative expenses ($4 750 + $350 – $200) 4 900
Depreciation on fixtures [($20 000× 80%×80%)+$34 500]×20% 9 460 (14 360)
Surplus 26 550
(W 1) Restaurant Trading Account (to calculate restaurant profit or loss)

$ $
Restaurant takings 17 450
Restaurant purchases ($6 950 + $955 – $845) 7 060
Restaurant wages ($5 450 + $280) 5 730 12 790
Restaurant profit 4 660
(c) As donations are not received on regular basis and their amounts vary from year to year so clubs capitalise
the donations amounts. In addition, donations may be received for some specific purpose or to complete a
specific future project so should not be treated as income in the year of receipt only.
(d) (i) 1 Fund raising events
2 Bank deposit and bank loan
Advantage: Funds available from bank for full amount.
Disadvantage: Bank loans usually require security. Interest will have to be paid.
3 Sponsorship

(d) (ii) A combination of the above sources may be more beneficial for the club. For instance, Fund raising
events or sponsorships may be arranged. In case these sources do not generate required funds
then bank balance may be used. In case, there is still some deficiency then a loan may be arranged.
QUESTION 8 MAY 2016 P32 Q1 (a to d)
(a) Limited companies prepare income statement whereas a not for profit organization prepares income and
expenditure account.
Non- profit organisations use the term ‘surplus’ or ‘deficit’ for the terms profit or loss as used by companies.
Non- profit organisations use the term Accumulated fund for capital as used by companies.
(b) The Seagulls Boating Club
Trading account for the year ended 31 March 2016
$ $
Revenues 25 750
Less cost of sales
Opening inventory 3 875
Purchases ($8 850 + $2 952  $2 831) 8 971
Closing inventory (3 423) (9 423)
Gross profit 16 327
Wages [($600 × 12) + ($25 750 × 10%)] (9 775)
Profit for the year 6 552
(c) Subscriptions account
$ $
Balance b/f (9 × $80) 720 Balance b/f (4 × $80) 320
Income & expenditure a/c (310 × $80) 24 800 Bank (Balancing figure) 24 480
Balance c/d (3 × $80) 240 Balance c/d (12 × $80) 960
25 760 25 760
(d) The Seagulls Boating Club

Income and expenditure account for the year ended 31 March 2016
Incomes $ $
Subscriptions (‘c’ part) 24 800
Cafe profit (‘b’ part) 6 552 31 352
Expenses
General expenses [$2 500  ($180 × 2/3)] 2 380
Depreciation on fixtures [($16 000 × 75% × 75%) × 25%] 2 250 (4 630)
Surplus of incomes over expenditures 26 722

(a) International Dancing
Income and Expenditure Account for the year ended 31 December 2015
Incomes $
Annual subscriptions 106 500
Profit on sale of CDs (W 1) 3 300 109 800
Expenses
Rent 15 000
Staff costs 61 000
Insurance and administration ($4 200 – $300 + $50) 3 950
CDs for club use 4 000
Depreciation ($17 200 + $11 700 – $21 300) 7 600 (91 550)
Surplus of income over expenditure 18 250
(W 1) CD’s Trading Account

For the year ended 31 December 2015
$ $
Sales 5 800
Cost of Sales
Opening Inventory 180
Purchases 2 600
2 780
Closing Inventory (280) (2 500)
Profit on sale of CD’s 3 300
(b) (i) Bank Account

$ $
Balance b/f 13 500 Rent 15 000
Subscription 105 500 Staff costs 61 000
Sale of Cd’s 5 800 Insurance and administration 4 200
Purchase of music CDs for resale 2 600
Purchase of CDs for club use 4 000
______ Balance c/d (balancing figure) 26 300
124 800 124 800
Balance b/d (balancing figure) 26 300
(ii) Statement to calculate the amount of the loan

$
Purchase price of premises 142 000
Amount arranged from existing bank balance [$26 300 (b(i)) × 1/2] (13 150)
Life membership fees ($5 000 × 10%) (50 000)
Bank loan needed to finance the project 78 850
(c) Statement to show the effects of purchase of the premises on future annual cash flows
$
Rent saved 15 000
Loan interest payable ($78 850 × 10%) (7 885)
Annual membership fees foregone of 10 members joined as life members (5 000)
Annual net cash flow saving 2 115
(d) Advantages
 Certainty of securing a long term business location
 An investment that will potentially increase in value
 Helps to avoid any sudden, large rent increases
 Ability to customise the premises without the landlord’s consent
 Increase the value of the business and the net wealth of the business owner
 The unused area of the building space may be sublet to generate some additional revenue
Disadvantages
 High initial cost -- which might be used for more important business purposes.
 Owning a property also comes with responsibilities like responsibility for maintenance, fixtures and
fittings, decoration and security.
 Any fall in the value of the property will decrease your capital.
 It is usually harder to relocate the business, because selling business premises is a complex and
sometimes lengthy process.
 Payment of loan interest and repayment of loan are also important factors.

(a) Donation Member subscription
Voluntary basis (not of binding on donors) Members’ obligation
May be from both members and non-members From members only
Irregular payment Regular payment, i.e. monthly or annually
May be for a specific purpose or for general purpose For daily running of the organization
(b) Sunshine Social Club

Shop Trading Account for year ended 31 December 2015
$ $
Gift shop takings 124 200
Cost of sales
Inventory at 1 Jan 2015 24 000
Purchases ($74 500 + $64 300 – $54 500) 84 300
Inventory at 31 December 2015 (18 600) (89 700)
Gross profit 34 500
Expenses
Shopkeeper wages ($30 400 – $3 450 – $3 200) 23 750
Depreciation of shop equipment [($55 000 + $4 000) × 20%] 11 800
Insurance [($9 460 + $1 400 – $1 660) × 25%] 2 300
Water and electricity [($14 800 – $2 700 + $2 000) × 40%] 5 640 (43 490)
Shop loss transferred to Income and Expenditure account (8 990)
(c)  start selling goods to non-members as well

 reduce or stop discount offers to members
 better control of overheads
 review the proportion of expenses allocated to gift shop
(d) Statement to calculate the chairman’s contribution to cover the deficit

$ $
Annual ball tickets 68 000
Less Hire of ballroom & band for annual ball 48 000
Food for annual ball 36 000 (84 000)
Loss on annual ball (16 000)
Chairman’s share ($16 000 × 1/2) 8 000

(a) A non-profit organisation is a legal entity which nobody owns. It has trustees or members, who run the
organization but cannot sell their "trusteeship or membership". It is not allowed to distribute profits to
anyone, no matter how much money it makes. In these organisations 100% of the money (surplus) earned
is re-invested in the organisation to finance its main cause.
(b) AB Cricket Club

Income and expenditure account for the year ended 31 August 2016
Incomes $ $
Subscriptions ($11 200 + $165  $295 + $490 – $270) 11 290
Profit on the sale of equipment ($4 000  $3 640) 360
Match ticket sales 6 400
Profit from refreshments (W 1) – already given in question 720
$1 500 + $800
Life membership ( ) 230 19 000
10
Expenses $ $
Groundsman’s wages 7 500
Repairs to clubhouse 700
Awards to players 1 450
Administration expenses 760
Depreciation on equipment [($7 800 + $2 500 – $3 640) × 10%] 666 11 076
(c) AB Cricket Club
Statement of financial position as at 31 August 2016
Non-current assets $ $
Equipment at net book value [($7 800 + $2 500 – $3 640)  $666] 5 994
Current assets
Inventory 390
Bank 11 880
Savings account 3 500 15 935
Total assets 21 929
Accumulated fund at 1 September 2015 7 825
Add Surplus for the year 7 924 15 749
Life membership fund ($1 500 + $800  $230) 2 070
Clubhouse fund (donation) 3 500
21 319
Current liabilities
Trade payables for refreshments 315 610
Total funds and liabilities 21 929
(d) In case of life membership, the members are generally required to make the payment in a lump sum only
once which enables them to become the members for whole of the life. Life members are not required to
pay the annual membership fees. As 'life membership fees' is a substitute for 'annual membership fees',
therefore, it is desirable that life membership fees should be credited to a separate fund and fair proportion
be credited to income in subsequent years as the organisation is supposed to provide membership facilities
for the rest of their lives.
(a) In a trading organization, term capital is used to represent the amount invested by owner within the
business. As there are no owner(s) in non-profit organisations so accumulated fund replaces capital in this
case and represents the accumulation of surpluses over a number of years. Drawings by a sole trader reduce
his capital but as there is no owner in a non-profit organisation so accumulated fund is not affected by
drawings. Capital increases through profits and reduces by losses & drawings whereas surpluses are added
in accumulated funds and deficits are subtracted.
(b) EF Tennis Club shop trading account
For the year ended 31 December 2016
$ $
Sales 8 960
Cost of Sales
Opening inventory 975
Purchases ($5 720 + $1 450 – $1 210) 5 960
Closing inventory (826) (6 109)
2 851
Shop staff wages (2 200)
Shop profit 651
(c) EF Tennis Club

Income and expenditure account for the year ended 31 December 2016
Incomes $ $
Subscriptions [$3 600 + (20 × $9) + (10 × $9) – (26 × $10)] 3 610
Shop profit 651
Caterer’s rent ($200 × 12) 2 400
Match ticket sales 2 740 9 401
Expenses
Depreciation on equipment [($14 760 + $1 400 – $1 900) × 10%] 1 426
Printing and advertising for matches 3 765
Ground staff wages 4 210
Bad debts (6 × $9) 54
Loss on sale of equipment ($1 900 – $1 760) 140 9 595
Deficit for the year (194)
(d) Statement of Financial Position (Extract) at 31 December 2016

Current assets $ $
Shop inventory 826
Subscriptions in arrears (10 × $9) 90
Bank and cash 8 911 9 827
Current liabilities
Trade payables 1 450
Subscriptions in advance (26 × $10) 260
Rent in advance [$2 600 – ($200 × 12)] 200 1 910
7 917
(e)  As donation is received for a specific long term purpose so should be invested in long term saving
account.
 This investment will create a source of income for the organization.
 It would diversify the incomes of the organization and reduces its dependency on conventional
earning sources.
 The interest on long term saving account may help to “smooth out” the overall income stream.

(a) Statement to calculate the restaurant profit for the year ended 31 December 2016
$ $
Revenue 45 000
Cost of sales
Opening inventory ($1 100 × 75%) 825
Purchases [$28 350 + ($1 750 × 120%) – $1 750] 28 700
29 525
Closing inventory ($825 × 2) (1 650) (27 875)
Gross profit 17 125
Expenses
Insurance [($4 800 + $950 + $1 100) × 50%] 3 425
Electricity ($2 000  $450) × 1/2) 775 (4 200)
Restaurant profit 12 925
$17 125 ×100

(b) (i) Difference in gross margins = 45%  38.06% (
$45 000
)
= 6.94%
(ii) Bulk buying with higher trade discounts.

Increase in selling prices
Change of suppliers with cheaper rates
More sales of higher margin items
(c) In case of life membership, the members are generally required to make only one payment in a lump sum
which enables them to become the members for whole of their lives. As 'life membership fees' is a
substitute for 'annual membership fees', therefore, it is debited to bank account and credited to a separate
fund and fair proportion be credited to income in subsequent years as the organisation is supposed to
provide membership facilities for the rest of their lives.
(d) If Gurmukh has $1 000 to pay life fee he would not be required to pay membership fee again in his life
irrespective of changes in annual membership rates. As Gurmukh is a retired personnel so it can only benefit
him on financial grounds if he lives for a period more than one year. Clubs usually offers special benefits for
life members which could also be there. However, life fee, once paid is not recoverable or refundable.
On the basis of above discussion, Gurmukh may become life member if he has ample funds like $1 000and
his health conditions are good.

(a)
Not-for-profit organisations Profit-making organisations
Accumulated fund Capital / Equity
Income and Expenditure account Income Statement
Receipts and payments account Bank account/Cash book
Surplus of income over expenditure Profit
Excess of expenditure over income (deficit) Loss
(b) RS Rowing Club

Income and Expenditure Account for the year ended 31 March 2017
Incomes $ $
Members’ subscriptions ($10 300 + $650 – $700 – $450 + $350) 10 150
Profit on sale of equipment [$1850 (sales)  {($364+$1624$429) cost of sales}] 291
Profit from annual boat race [$4 200  $325  $2 456) 1 419 11 860
Expenses
Rent of boathouse 2 800
Wages of boatman 3 500
Depreciation of boats and equipment [($24 000  $11 200) × 10%] 1 280 (8 959)
(c) RS Rowing Club

Extract from statement of financial position at 31 March 2017
$
Accumulated fund at 1 April 2016 40 614
Accumulated fund at 31 March 2017 43 515
(d) In case of life membership, the members are generally required to make only one payment in a lump sum
which enables them to become the members for whole of their lives.
As 'life membership fees' is a substitute for 'annual membership fees', therefore, it is debited to bank
account and credited to a separate life fee fund and fair proportion be credited to income in subsequent
years as the organisation is supposed to provide membership facilities for the rest of their lives.
This treatment is also in compliance with the matching concept. The life fee should be spread over a suitable
time period for which club is expecting to provide services to the life members. The suitable time period
may be determined through dividing the life fee by the annual membership fee. This time period is 8 years
($400/$50) in this case.
(e) If amount is invested at interest rate of 7.5% then it will generate annual income $2 625 ($35 000 × 7.5%).
On the other hand if club builds its own boat house, then club would save annual rent of boathouse
amounting to $2 800 and in addition it will also generate an annual rental income of $1 250. Total extra
income would be $4 050.
As investment is for three years only so the funds would be available to the club afterwards for other
investment opportunities, this flexibility would not be available in case of building a boathouse. Boathouse
may involve higher maintenance with passing years but as rents usually increase on yearly basis so increase
in rental income and saving also justifies the building of a new boat house.
On purely financial grounds, the club should use the funds to build the new boat-house.
QUESTION 15 MAY 2018 P31 & P33 Q4
(a)
Public limited company Not-for-profit organisation
(i) Prepares income statement Prepares income and expenditure account
(ii) Excess of total incomes over total expenses is Excess of total incomes over total expenses is called
called profit surplus
Excess of total expenses over total incomes is Excess of total expenses over total incomes is called
called loss deficit
(iii) Shows share capital and reserves Shows accumulated fund
(iv) Financial statements are published and available Financial statements are not published
for general view
(v) Prepares statement of cash flows Prepares receipts and payments account
(b) Income and Expenditure Account for the year ended 31 December 2017
Incomes $ $
Profit on sale of meals 2 600 28 900
Less expenditure
Loss on trips [($1000 × 2 × 12)  (620 × $25)} 8 500
Irrecoverable debts (subscriptions written off) 250
Depreciation on fixtures and fittings 1 530
Other running costs ($18 100 + $200) 18 300 (28 580)
Surplus 320
(c) Statement of Financial Position at 31 December 2017

$ $ $
Non-current assets Cost Acc dep NBV
Premises 100 000 100 000
Fixtures and fittings 15 300 3 930 11 370
115 300 3 930 111 370
Current assets
Inventory of meals 250
Bank (W1) 3 200 4 050
Total assets 115 420
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Muhammad Nauman Malik

Title A2-Level Accounting (Topical & Yearly)

Author Muhammad Nauman Malik

Published by Read & Write Publications

Composed by Rashid Mehmood

Title designed by Rashid Mehmood, Raja Naveed

Legal Advisor Mian Tariq Ahmad (Advocate Supreme Court)

Tel: 051-5551226, +92-315-5618976

Muhammad Nauman Malik,

Table of Contents (Topical)

QUESTION 10 MAY 2015 P41 & P42 Q3(E & F) ...................................................................................................... 87

QUESTION 10 NOVEMBER 2017 P32 Q2............................................................................................................. 118

QUESTION 6 NOVEMBER 2017 P32 Q3............................................................................................................. 135

QUESTION 9 NOVEMBER 2014 P41 Q2 ............................................................................................................. 165

SOLUTION CHAPTER 13 211

QUESTION 10 NOVEMBER 2014 P43 Q2............................................................................................................. 254

QUESTION 10 NOVEMBER 2016 P33 Q5............................................................................................................. 301

NOVEMBER 2017 - PAPER 33 383

CHAPTER 1 ACCOUNTS OF NON PROFIT ORGANISATIONS

QUESTION 2 MAY 2011 P42 Q2 (a to c)

QUESTION 3 NOVEMBER 2011 P23 Q2 (B)

QUESTION 4 NOVEMBER 2012 P21 Q2

QUESTION 5 MAY 2013 P21 Q1

QUESTION 6 MAY 2014 P23 Q1

1 April 2013 31 March 2014

QUESTION 7 MAY 2016 P31 Q1

1 April 2015 31 March 2016

The following information was available for members’ subscriptions.

QUESTION 10 NOVEMBER 2016 P32 Q1

QUESTION 11 NOVEMBER 2016 P33 Q2

Other balances are:

QUESTION 13 NOVEMBER 2017 P32 Q1

QUESTION 14 NOVEMBER 2017 P33 Q1

QUESTION 15 MAY 2018 P31 & P33 Q4

Fixtures and fittings account

Provision for depreciation of fixtures and fittings account

The following information was also available.

(c) Balance Sheet at 30 April 2011

QUESTION 2 MAY 2011 P42 Q2 (a to c)

(c) Public limited company Not-for-profit organisation

QUESTION 3 NOVEMBER 2011 P23 Q2 (B)

QUESTION 4 NOVEMBER 2012 P21 Q2

(b) PPE Rowing Club

(c) Statement of Financial Position

(d) Income and Expenditure account

(e) Statement of Financial Position at 31 March 2013

(c) Ocean Fishing Club

(d) 1 Use of funds from the deposit account

(e) 1 Use of funds from the deposit account

QUESTION 7 MAY 2016 P31 Q1

(W 1) Restaurant Trading Account (to calculate restaurant profit or loss)

Advantage: No fixed interest charges.

(d) The Seagulls Boating Club

QUESTION 9 NOVEMBER 2016 P31 Q1

(W 1) CD’s Trading Account

(b) (i) Bank Account

(ii) Statement to calculate the amount of the loan

QUESTION 10 NOVEMBER 2016 P32 Q1