093 5 CANDIDATE - PLEASE NOTE! PRINT your name on thetine below and retara ero tees eee | TESTCODE 01239010 FORM TP 2021107 MAY/JUNE 2021 CARIBBEAN EXAMINATIONS COUNCIL CARIBBEAN SECONDARY EDUCATION CERTIFICATE" EXAMINATION PRINCIPLES OF ACCOUNTS Paper 01 — General Proficiency I hour 30 minutes 10 MAY 2021 READ THE FOLLOWING INSTRUCTIONS CAREFULLY. This test consists of 60 items. You will have 1 hour and 30 minutes to answer them. Inad ion to this test booklet, you should have an answer sheet. Each item in this test has four suggested answers lettered (A), (B), (C), (D). Read each item you are about to answer and decide which choice is best. ‘On your answer sheet, find the number which corresponds to your item and shade the space having the same letter as the answer you have chosen. Look at the sample item below. ‘Sample Item Prime cost is calculated by adding direct factory expenses to the Sample Answer (A) cost of goods sold A®2O® {B) sale of fixed assets (©) sale of finished goods (D) cost of materials used The best answer to this item is “cost of materials used”, so (D) has been shaded. If you want to change your answer, erase it completely before you fill in your new choice. When you are told to begin, turn the page and work as quickly and as carefully as you can. If you cannot answer an item, go on to the next one. You may return to that item later. The use of silent, electronic calculators is allowed. DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO. Copyright © 2021 Caribbean Examinations Council All rights reserved.-2- 1. A trader had an opening capital of $3 900. During the year, acompany boughtstationery If his drawings were $900 and his closing for $220 and used $120 worth of it. What ‘capital was $4 860, what was his net profit? figure would be posted to the profit and loss account to represent the expenditure for (A) $ 900 stationery? ®) $960 (©) $1860 (A) $100 (D) $3000 @®) $120 (©) $220 (D) $340 Item 2 refers to the following balances at the end of a financial period. 5. The acid test ratio indicates Motor vehicle 200 (A) net current assets less inventory Payables 3.000 available to pay current liabilities Reeeivables 2000 (B) current assets to pay current Capital 11.000 liabilities Building 10000 (©) non-current assets to be sold to pay current liabilities (D) an overdraft that the trader could 2. What is the TOTAL amount for the assets? secure to pay hiscurrent liabilities (A) $12.00 (B) $13,000 6. Which of the following items are examples (©) $14000 of current liabilities? (Dd) $15 000 1. Mortgages I. Accounts payable 3. MsHoyte, a grocer, bought a computer on III, Accrued wages credit from Tan Company. In Ms Hoyte's books, which of the following journal (A) Land Ionly entries would be made for this transaction? (B) Land Ill only | (©) Mand It only (A) Debit purchases account (D) 1, Mand tit Credit Tan Company (B) Debit computer account Credit cash (©) Debit Tan Company Credit purchases account (D) Debit computer account ‘Credit Tan Company GO ON TO THE NEXT PAGE 0123901 0/MJ/CSEC 2021-3- Item 7refersto the following balances from the books of J. Sammy, a sole trader, at the end of a financial period. s Land 7.000 Building 5.000 Inventory 1100 Receivables 500 Bank overdraft 400 Payables 700 Cash 200 Capital (at start) 10 000 Drawings 300 Net profit 3.000 ‘The current ratio of the business (rounded to 2 decimal places) is (A) 14521 (B) © (Dy Merill Industries operatesona40-hourwork shift per week. Overtimeis paid attimeand ahalf. Employees are paid $50 an hour. What is the gross pay of an employee who worked for 49 hours for the week? (A) $2,000 (B) $2225 (©) $2450 (D) $2675 0123901 0/MJ/CSEC 2021 9. 10. Which of the followingaccountsare usually transferred to the income statement? (A) Rent, premises, drawings (B) Drawings, rent, purchases (©) Commission received, rent, purchases. (D) Purchases, furniture, commission received Which ofthe followingiitemsis/are acapital expenditure? (A) Wages (B) Repairs (©) Purchase of goods (D) Purchase of machinery GO ON TO THE NEXT PAGEaha tem 11 refers to the following information about the operation of a firm. Provision for doubtful debts on 1 January 2020 — $ 700 Receivables on 31 December 2020 — $25 000 The provision for doubtful debts is calculated at a rate of 2% of receivables. 11, What amount would be recorded in the provision for doubtful debts account at year end? (A) Credit $200 (B) Debit $200 (©) Credit $500 (D) Debit $500 12, K.Khan, a debtor ofA and B Enterprises, 13. Partnerships are formed for the purpose of settles his debt of $120 less 2% discount, by cheque. How should the double entry I. combining capital from different be recorded in the books of A and B persons Enterprises? Il. benefiting from different skills and specializations A) [DF K Khan 317 MI. sharing ideas, experience and Drdiscountreceived] $3 responsibilities Cr bank $120 (A) Lanid Ilonly (B) [DrK. Khan $117 G) “Zand Honky Drdiscount allowed $3 Oe aaa Cr bank $120 ee © |Drbank $117 , 14, Control accounts are kept in Drdiscountallowed] $3 Neletdaeieataah tae CrK. Khan $120 2 (A) locating errors () | Dr bank S17 (B) _ increasing profits Crdiscountreceived] $3 (© limiting drawings rK. Khan $120 (©) limiting expenditure GO ON TO THE NEXT PAGE, 0123901 0/MI/CSEC 202115. 16. 17. Items 18-16 referto the following statement of financial position provided for a firm as at | January 2019, $s 3.000 |Payables 500 0 5500 Bank Receivables I Inventory 1.000 What sum of money is represented by 1? (A) $1,000 (B) $2000 (©) $3,000 (D) $6000 Which of the following accounts is represented by II? (A) Loan (B) Cash (©) Capital (D) _Liabitity A trader received an invoice for $4 000 less 25% trade discount. Subsequently, he returned one-eighth of the goods. What amount would be entered in his returns outwards account? (A) $375 (B) $400 (© $450 (D) $500 0123901 0/MJ/CSEC 2021 18. 19. 20. a. Mr Abel and Mrs Blue purchased goods on credit valued at $50 and $75 respec- tively from Mr Kane, Another customer paid cash for goods amounting to $550. Mr Kane took goods at cost for himself amounting to $500. Which of the following figures represents the total in Mr Kane’s sales account? () $125 @) $ 425 (© $ 675 (D) $1175 Which of the following accounts are nominal? (A) Wages and rent (B) Stock and debtors (C) Machinery and plant (D) Creditors and fixtures Which of the following features is associated with private limited companies? (A) They are family owned. (B) Shares are not sold publicly. (C)__ Financial statementsare published. (D) Government agencies purchase shares. In calculating the gross profit percentage, ‘gross profit should be divided by (A) cost of goods sold (B) net purchases (©) net profit (D) net sales GO ON TO THE NEXT PAGE,22, 23. 24, 25, -6- A standing order of $25 for insurance appears in the debit column of the bank statement. ‘This amount does not appear the cash book. How is this item treated in order to update the cash book? (A) Credit the bank account with $25. (B) Debit the bank account with $25. (© Add $25 to the bank statement balance. (D) Subtract $25 from the bank statement balance. Which of the following entries would ‘NOT appear in a cash book? (A) Payment for goods (B) Goods sold on credit (©) Goods sold for cheque (D) Goods bought for cash Mrs Smith does not keep proper records. She began her business with $10 000 in its bank account. She uses her vehicle and building worth $6 000 and $15 000 respectively as part of her business. Customers owe her $4000. She withdrew $1 500 for personal use and owed creditors $2,000. ‘What is the closing capital of the business? (A) $2500 (B) $28 500 (C) $3150 (D) $3300 Which of the following will result when opening inventories of raw materials are added to net purchases of raw materials? (A) Prime cost (B) Production cost (©) Raw materials used (D) Raw materials available for use 0123901 0/MI/CSEC 2021 26. 27. Item 26 refers to the following data which pertain to Tarisha Ali, an employee of a bank. $3 500 S$ 800 ‘Monthly salary Overtime Income tax rate: 25% on every dollar above $2 000 of monthly salary 30% on overtime earned The TOTAL income tax to be deducted from Tarisha Ali’s salary is (A) $ 615 (B) $740 (©) $ 875 (D) $1075 Mr. Jones paid $250 in cash for repairs to machinery. This transaction was entered in the cash book and posted to the ledger. The double entry involved would be (A) debit cash account credit repairs account (B) debit repairs account credit cash account (©) debit cash account credit machinery account () How does an increase in bad debts affect a sole trader’s financial statements? (A) Decreases the gross profit (B) Increases the gross profit (C) Decreases the net profit (D) Increases the net profit GO ON TO THE NEXT PAGE.“Te 29. Which of the following items are NOT recorded in the appropriation account? 1. Interest on loans from partners Il. Interest on capital II, Withdrawals by partners (A) Land Il only (B) Land Ill only (©) Mand Il only (D) 1 Wand 11 30. Which of the following entries ina three» 32+ column cash book are contra entries? (A) Debit cash, eredit bank (B) Debit eash, eredit cash (©) Credit cash, eredit bank (D) Debit bank, credit bank 33. Item 31 refers to the following information provided by a business. s Totalunpresentedcheques| 120 Lodgement not entered on bank statement 150 Balance per cash book | _560 31. What is the balance per bank statement?” (A) 8120 (@) $150 (© $340 (D) $530 0123901 0/MJ/CSEC 2021 Item 32 refers to the following table which shows balances on the asset accounts ofthe Bayroe Club as at 30 June 2020. Assets $s Premises 5400 Equipment 1825 Furniture 960 Bank and cash 1640 Inventory and refreshments nR ‘The amount of the club’s accumulated fund was (A) $1640 (B) $4497 (© $8185 (D). $9897 Which of the following are a long-term liability? (A) Creditors (B) Debentures (© Accrued wages (D) Bank overdrafts GO ON TO THE NEXT PAGE-8- Item 34 refers to the following information. Debit Insurance A/e Credit 2020 8 2020 s 2January Balance b/d 700 31 December Profit & loss a/e 8 100 15 January Bank 8000 31 December Balance e/d 600, 8700 $700 34, What is the amount of insurance prepaid at the end of the year? (A) $ 600 B) $ 700 (©) $8000 () $8100 tem 35 refers to the following information. _37.__-_A photocopying machine valued at $5 000 is depreciated at 10% using the straightline 3 method. Whats its book value after TWO Inventory at 1 January2020 | 1 500 years? Purchasesduringthemonth | 1200 Cost of goods sold 1400 (A) $4000 (B) $4050 (© $4500 35. Whatistheinventory atthe end of January? @) $4980 (A) $ 300 . (B) $500 38. Andina Williams is a petty cashier. If she © $ 700 has a float of $200 and she spends $180, (D) $1300 how much should she be reimbursed at the end of the period? 36. Which ofthe following items onastatement @ $s Fd of financial position would differ MOST in ) $I ‘ presentation, when comparing the books of io an ‘a company and the books of a sole trader? (A) Non-current assets (B) Current liabilities, (C) Current assets (D) Capital 0123901 0/MJ/CSEC 2021 GO ON TO THE NEXT PAGE,39. 41. 42, (A) Invoice (B) Sales ledger (C) Sales journal (D) Statement of financial position Which ofthe following financial documents shows the net earnings of a business? (A) Income statement (B) Appropriation account (C)__ Statement of financial position (D) Receipts and payments account A sole trader uses his trading account to determine (A) surplus (B) net profit (©) gross profit (D) super profit Inorder to avoid writing numerous cheques for small amounts, a firm may set up a (A) bank draft (B) petty cash fund (C) general journal (D) bank standing order Which of the following states the correct order of the stages in the accounting cycle, before final accounts? (A) Postingto ledger, journalizing, trial balance (B) Posting to ledger, trial balance, journalizing (©) Soumalizing, trial balance, posting to ledger (D) _Journalizing, posting to ledger, trial balance 0123901 0/MJ/CSEC 2021 44, 45. According to the Partnership Act, if there is no Deed of Partnership, the amount of profitto be received by EACH partner would be (A) divided equally {B) calculated at 5% of net profit (©) calculated at5%oncapital invested (D) divided in proportion to capital invested In the books of a partnership, the salaries of the partners should be (A) debited in the drawings account (B) credited in the approp account (©) debited in the partners’ capit account (D) credited in the partners’current account Item 46 refers to the following table which shows the summarized position of Foster and Scott Limited at 6 March 2020. $ Current liabilities 60 000 Current assets 100 000 Non-current assets, 200 000 Non-current liabilities | 150 000 What was the capital of Foster and Scott Limited at 6 Mareh 2020? (A) $ 40000 (B) $9000 (©) $150 000 (D) $190 000 GO ON TO THE NEXT PAGE,47, 49, 0" A mechanic starts his business with $10 000 worth of tools. What entries should he make to record this transaction? (A) Debit bank account Credit capital account (B) Debit capital account Credit bank account (© Debit tools account Credit capital account (D) Debit capital account Credit tools account The net profit of a firm was shown as $1 600. It was later discovered that discounts received were undercast by $10 and purchases were understated by $36, What is the correct net profit? (A) sis7a (B) $1610 © $1636 ©) $1646 An asset purchased for $1 000 depreciates at the rate of 10% per annum using the reducing balance method. What is the book value of the asset at the beginning of the third year? (A) $ 800 (B) $ 810 © $ 900 @) $1190 0123901 0/MJ/CSEC 2021 50, 51. R.A. David operates a small grocery. You have been asked to assist in the preparation ofthe final accounts for 2020 and have been provided with the following information. Balance at 31 December 2020 Debtors, 40 000 ‘Accounts payable 25 000 Bank overdraft 35.000 Inventory of goods for resale | 80.000 ‘Non-current assets 180 000 Long-term loans 130.000 What was the capital at I January 2021? (A) $110.00 (B) —$130000 (©) $160.00 (D) $180 000 MrGreenand Mrs Black agreed toestablish @ partnership, Green and Black Co., and each of them deposited $5 000 into a bank account. How should this be recorded in the books of the partnership? (A) Credit cash $10 000 Debit capital $10 000 (B) _DebitGreenand BlackCo.$10000 Credit bank $10 000 each (C) Debit partnership bank account $10 000 Credit partners’ current aecounts $5 000 each (D) Debit partnership bank account $10 000 Credit partners’ capital accounts 55.000 each GO ON TO THE NEXT PAGE<1 Items 52-53 refer to the following information for Jaco Ltd. Jaco Ltd sells canned tomato sauce. The following inventory information was available for the month ended 31 May 2020. { Date ‘Transaction ‘Amount May 1 | Beginning inventory | 40 cans @ $500 per can 4 _| Purchased 80 cans @ $515 per can 15__| Sold 100 cans @ $650 per can 20 | Sold 10 cans @ $650 per can 52. Using the FIFO method, what is the value of ending inventory? (A) $5000 ®) $5150 (©) $6500 (D) $2000 53. Using the AVCO method, what is the value of ending inventory? (A) $ 5100 (B) $5788 (C) $6000 (D) $2450 54, To which account should depreciation of 5S. Which of the following accounting entries office machines be transferred? should be made if goods are sold on credit? (A) Trading (A) Debit cash account (B) Manufacturing Credit sales account (C) Profit and loss ()— Appro (B) Debit sales account Credit cash account (©) Debit sales account Credit account receivable account (D) Debit account receivable account Credit sales account GO ON TO THE NEXT PAGE, 01239010/MJ/CSEC 202156. 57. -12- Which of the following may be used to calculate the cost of production? (A) Prime cost + factory overheads — “Amaris One Stop Shop opening workinprogress+closing 5 rk aes Net sales 30000 (B) Prime cost ~ factory overheads — Rent expense 3.000 opening work in progress +closing, Discount received 2.000 work in progress Gross profit 12.000 Discount allowed 4.000 (©) __ Prime cost + factory overheads ~ ‘opening work in progress~closing Item 58 refers to the following information supplied by a sole trader. work in progress 58. What is the net profit percentage (to the nearest whole number)? (D) Prime cost + factory overheads + opening workin progress~closing (A) 10% work in progress (B) 17% (©) 23% (D) 37% P. Amos is employed by a constru company at a rate of $7 per hour. During a week, he worked his basic week of 59. When a company declares a dividend of 40 hours. The income tax due on his pay 159% the dividend warrant ofa shareholder is $20 and he is also liable to pay national ‘owning 1 500 one-dollar ordinary shares is insurance contributions of 5% of his gross pay, What is his net pay? (A) $ 100 B) $225 (A) $246 (© $1500 (B) $260 (Dy SISis (© 8266 (D) $280 ; 60. Prime cost is $79 110, office expenses $3 000 and factory overheads $4 720. How much is the cost of production? ($4720 (B) $71 390 (© $83830 (D) — $86.830 END OF TEST IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST. 01239010/MJ/CSEC 2021