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General Certificate of Education

January 2006
Advanced Subsidiary Examination

ACCOUNTING ACC1
Unit 1 Financial Accounting:
The Accounting Information System

Wednesday 11 January 2006 9.00 am to 10.00 am

For Examiner’s Use

You will need no other materials.
You may use a calculator. Number Mark Number Mark

Time allowed: 1 hour 1 5

2 6
Instructions
! Use blue or black ink or ball-point pen.
3
! Fill in the boxes at the top of this page.

! Answer all questions. 4

! Answer the questions in the spaces provided.

! All workings must be shown and clearly labelled; otherwise marks for Total (Column 1)

method may be lost.

! Make and state any necessary assumptions. Total (Column 2)

! Do all rough work in this book. Cross through any work you do not
Quality of Written
want marked. Communication

TOTAL
Information
! The maximum mark for this paper is 80.
Examiner’s Initials
4 of these marks are for the Quality of Written Communication.
! The marks for questions are shown in brackets.

! You are reminded of the need for good English and clear presentation

in your answers. Some questions involve only numerical work; all

other questions should be answered in continuous prose. Quality of
Written Communication will be assessed in all prose answers.

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Answer all questions in the spaces provided.

Total for this question: 18 marks

1
The following is the trial balance of Sandeep Singh at 31 December 2005.

Dr Cr
£ £

Fixed assets 100 000

Stock at 1 January 2005 12 000
Wages and salaries 24 000
Rent and rates 8 000
Drawings 15 000
Capital at 1 January 2005 101 000
Purchases and sales 75 000 120 000
Discount 1 000
Carriage outwards 2 000
Returns 10 000 5 000
Rent received 25 000
General expenses 6 000
Debtors and creditors 30 000 20 000
Bank overdraft _______ 10 000
_______
282 000
_______ 282 000
_______
_______ _______

Additional information

Stock at 31 December 2005 was £15 000.

REQUIRED

Prepare trading and profit and loss accounts for the year ended 31 December 2005. Clearly
identify the cost of goods sold, gross profit and net profit.

A balance sheet is not required.

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(18 marks)
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Total for this question: 12 marks

2
The table below shows transactions which relate to Ferndale Fish and Chip Shop.

REQUIRED

Complete the table by entering the appropriate information in the spaces provided.

An example has been given.

Source Subsidiary Account to Account to

Transaction
document book be debited be credited

Example Payment of Petty cash Petty cash Travel Petty cash

travel costs to an voucher book expenses
employee

(a) Rent paid by

cheque

(b) Damaged
potatoes returned
to Veggie
Supplies Ltd
(c) Fish fryer
purchased on
credit from
Chippit Ltd
(12 marks)
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Total for this question: 9 marks

3
Since Janice Booth introduced a mail-order facility, her business has expanded significantly.
She is concerned, however, about the possibility of non-payment by debtors. She is
considering investing in computer software to help manage her sales ledger.

REQUIRED

Identify and explain three ways in which the management of her sales ledger would benefit
from computerisation.

Benefit 1 .......................................................................................................................................

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(3 marks)

Benefit 2 .......................................................................................................................................

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(3 marks)

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(3 marks)
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Total for this question: 12 marks

4
The following extracts are taken from the subsidiary books of Karen Miles for the three
months ended 31 December 2005.

Sales Day Book

Date Details Goods VAT Total

£ £ £
Oct to Dec Total for period 42 000 7350 49 350

Purchases Day Book

Date Details Goods VAT Total

£ £ £
Oct to Dec Total for period 36 000 6300 42 300

Sales Returns Day Book

Date Details Goods VAT Total

£ £ £
Oct to Dec Total for period 1600 280 1880

Purchases Returns Day Book

Date Details Goods VAT Total

£ £ £
Oct to Dec Total for period 1200 210 1410

Additional information

(1) At 1 October 2005, there was a credit balance in the VAT account of £7650.

(2) A payment of £6950 was made in respect of VAT on 9 October 2005.

(3) The cash book showed that for the period 1 October to 31 December 2005, there
were cash sales of £16 450 which included VAT at 17.5%.

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REQUIRED

(a) Prepare the VAT account for the three months ended 31 December 2005.

Bring down the balance on the account at 1 January 2006.

VAT Account
Dr Cr
Date Details £ Date Details £

(10 marks)

(b) Explain the significance of the balance brought down on 1 January 2006.

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(2 marks)
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Total for this question: 12 marks

5
Brian Jarvis prepared the following balance sheet at the end of the accounting year.

It contains errors.

Balance Sheet for the year ended 31 December 2005

£ £

Fixed assets 90 000

Current assets
Stock 8 000
Debtors 13 000
Cash at bank 7 000
______
28 000
Current liabilities
Creditors 8 000
______
36 000
______
54 000
______
______
Capital
Opening balance 82 000
Net profit for the year 50 000
______
32 000
Drawings 22 000
______
54 000
______
______

Additional information

(1) Fixtures and fittings costing £3000 had been recorded as purchases and charged to
the trading account for the year.

(2) Brian had taken £1000 cash from the bank account for his own use. This had not
been recorded in the accounts.

(3) Brian found a cheque for £2500 received from a customer during December,
which had been mislaid and had not been recorded.

REQUIRED

Redraft the balance sheet, correcting any errors.

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(12 marks)
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Total for this question: 13 marks

6
Kingdom Carpet Fitters received a bank statement showing the following transactions in
their account during December 2005.

Bank Statement

Date Details Dr Cr Balance

£ £ £
Dec 1 Balance 430 cr
6 Cheque to F Banks 250 180 cr
7 Cash and cheques paid in 380 560 cr
12 Standing order: British Gas 200 360 cr
18 Credit transfer from J Ball 240 600 cr
22 Cash and cheques paid in 300 900 cr
23 Cheque to H Wilton 470 430 cr
30 Bank charges 20 410 cr
30 Dishonoured cheque: B Brown 150 260 cr

REQUIRED

(a) Update the cash book below with the relevant items from the bank statement, and bring
down the balance at the end of the month.

Cash Book (Bank columns only)

Dr Cr
Date Details £ Date Details £
Dec 1 Balance b/d 430 Dec 2 F Banks 250
7 Sales banked 380 18 H Wilton 470
22 Sales banked 300 29 M Wall 140
31 Sales banked 560 30 Wages 100

(5 marks)

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(b) Prepare a bank reconciliation statement at 31 December 2005.

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(5 marks)

(c) Explain the term ‘dishonoured cheque’ shown in the bank statement.

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(3 marks)
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END OF QUESTIONS

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G/J142485/Jan06/ACC1