HRN INSTITUTE OF EDUCATION

Advanced/Subsidiary Level COMMON TEST

General Certificate of Education Advanced
Level

ACCOUNTING
9706/12 & 42
Multiple Choice Questions and Structured questions
March 2017
2 hours
Additional Materials: NIL

NAME OF CANDIDATE:

__________________________________________________________

CLASS OF CANDIDATE:

___________________________________________________________

READ THESE INSTRUCTIONS FIRST

Write your candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use a soft pencil for any diagrams, graphs or rough working.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
You should answer all the questions set.
Write only ONE correct answer.
Section B
Answer all the questions on the question paper itself. Ensure that all
workings are presented to prevent loss of marks.
At the end of the examination, fasten all your work securely together.
This document consists of 26 printed pages.

HRNIOE 2017
[Turn over
The number of marks is given in brackets [ ] at the end of each question or
part question.
NO additional papers will be collected for correction. Hence, the candidate is
to ensure that he/she writes all answers ON THE QUESTION PAPER.

THIS PAPER CONTAINS 115 MARKS.

SECTION A [8 MARKS]

1 A company changes from the straight-line method of depreciation to

the reducing balance method.

Which accounting principle has not been applied?

A consistency
B going concern
C historic cost
D materiality

2 A company purchased a lorry for $50 000 on 1 January 2015. It has an

estimated residual value of $10 000 and a four-year life. The company
charges depreciation monthly on a straight-line basis.

What will the charge for depreciation be for the year to 30 June 2015?

A $5000 B $6250 C $10 000

D $12 500

3 The opening net book value of motor vehicles was $150 000.

During the year a motor vehicle was sold for $26 000. There was a
profit on disposal of $2000.

Depreciation is calculated at 10% on the opening net book value.

The closing net book value was $145 000.

What was the cost of motor vehicles purchased during the year?

A $33 500 B $34 000 C $35 500

D $36 000

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 4 A suspense account was opened to record the difference on a trial
balance.

The following errors were then discovered.

1 Discount allowed of $2000 had only been entered in the sales ledger
control account.

2 A cheque for $1500 paid for repairs had been entered as $5100 in
the repairs account.

What was the opening balance on the suspense account?

A $1600 credit
B $1600 debit
C $5600 credit
D $5600 debit

5 Inventory costing $1200 has been damaged. It would normally be sold

for $1800.

It can be sold for $1700 if repairs are undertaken at a cost of $600. To

replace the inventory would cost $1000.

At which value should the damaged inventory be shown in the financial

statements?

A $1000 B $1100 C $1200

D $1800

6 A statement of financial position at 31 December 2015 showed the

following:

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 What were the owners drawings?

A $8250 B $8750 C $8950

D $9450

7 At the end of the year, the balance on a firms sales ledger control
account was $12 900. The total of the customers accounts in sales
ledger was $11 900.

The following errors were then discovered.

1 A customers account had been undercast by $700.

2 A contra with a supplier in the purchases ledger of $200 had only

been entered in the sales ledger control account.

3 The discount allowed column in the cash book totalled $500. This
had not been posted to the nominal ledger.

What was the correct balance on the sales ledger control account?

A $11 200 B $11 400 C $12 000 D

$12 400

8 A manufacturing business has two production departments: assembly

and painting.

The following information is available.

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 The total machinery insurance cost for the year was $5000.

How much insurance should be apportioned to the assembly

department?

A $3000 B $3500 C $3750

D $4000

SECTION B [107 MARKS]

9 Raheem is a trader who makes all his sales on credit. He prepared the
following sales ledger control account for the month of December
2015:

Raheem extracted a list of customer account balances from the sales

ledger at

31 December 2015 totaling $18 740. This did not agree with the
balance on the control account.

The following errors were found:

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 1 A sales invoice for $960 had been correctly recorded in the sales
journal, but had not been

posted to the customers ledger account.

2 A customers irrecoverable debt of $250 had not been written off in

any of Raheems books

of account.

3 A cheque received, $670, from a customer had been correctly

recorded in the cash book. It had been entered on the debit side of the
customers ledger account as $760.

4 A cheque received, $200, from a customer had been returned unpaid

by the customers bank. No entry in respect of the returned cheque
had been made in any of Raheems books

of account.

5 Discounts allowed of $830 had not been entered in the control

account. They had been entered in the customers ledger accounts.

6 A contra to the purchases ledger of $1370 had been entered in the

customers sales ledger account, but had not been included in the
control account.

REQUIRED

(a) Prepare the updated sales ledger control account for the month of
December 2015. Start your answer with the balance brought down of
$20 470.

Sales ledger control account

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...

[5]

(b) Prepare a statement to reconcile the original total of sales ledger

balances of $18 740 with the closing balance on the amended sales
ledger control account.

...

[5]

(c) State three advantages to a business of maintaining a sales ledger

control account.

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1.

2.

3.

[3]
(d) State two types of errors that will not be identified by producing a

sales ledger control account.

1.

2.

[Total: 15]

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10 Maneesh has not maintained a full set of accounting records for the
year ended 31 December 2015. The following information has been
provided:

Additional information

1 Maneesh makes both cash and credit sales. All sales were made at 40%
gross margin.

2 Credit sales for the year totalled $184 190.

3 Credit purchases for the year totalled $136 422. There were no cash
purchases.

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4 The business maintains a cash float of $180.

5 Maneesh withdrew $20 per week from cash sales for drawings, before
banking the rest.

6 Maneesh depreciates his non-current assets at 20% per annum using

the reducing balance method.

7 The rent charge for the year was $24 600.

8 The general expenses charge for the year was $14 160.

9 Irrecoverable debts of $900 should be written off at 31 December 2015.

REQUIRED

(a) Prepare the income statement for the year ended 31 December 2015.

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[6]

(b) Prepare the statement of financial position at 31 December 2015.

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..

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[9]

[Total: 15]

11 M Limited manufactures a single product. The following balances have

been extracted from the ledgers for the year ended 31 December

2015:

Dr Cr
$ $
Inventories at cost at 1 January 2015
Raw materials 10 400
Work-in-progress 12 600
Finished goods at transfer price 14 904
Purchases of raw materials 146 200
Carriage inwards 3 160
Carriage outwards 2 790
Direct wages 249 400
Indirect wages 54 650
Rent 49 000
Heat, light and power 28 600
General expenses 12 600
Office salaries 24 780
Revenue 742 490
Provision for unrealised profit at 1 January 2 484

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2015
Plant and machinery at cost 200 000
Office equipment at cost 15 000
Motor vehicles used by salesmen 25 000
Provision for depreciation:
plant and machinery 60 000
office equipment 4 600
motor vehicles 5 740

Additional information

1 Inventories at 31 December 2015

Raw materials at cost $ 11 750

Work-in-progress at cost $ 14 670

Finished goods at transfer price $ 15 750

2 Expenses are to be apportioned to the production department as

follows:

Rent 4/5

Heat, light and power 4 / 5

General expenses 3/4

3 Rent has been prepaid by $4000 at 31 December 2015.

4 Heat, light and power is in arrears by $3500 at 31 December 2015.

5 Completed goods are transferred at a mark-up on factory cost of 20%.

6 Depreciation is to be provided as follows:

Plant and machinery 10% per annum on cost

Motor vehicles 25% per annum on cost

Office equipment 15% on the net book value

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REQUIRED

(a) Prepare the manufacturing account for the year ended 31 December
2015.

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[9]

(b) Prepare the income statement for the year ended 31 December 2015.

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..

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..

. [10]

(c) Explain what is meant by the term transfer price.

..

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. [2]

[Total: 21]

12 AB Cricket Club is a not-for-profit organisation.

REQUIRED

(a) State two reasons why the members of a not-for-profit

organisation do not receive a dividend.

Reason 1:

.[1]
Reason 2:

.[1]

Additional information

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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

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 3 At 31 August 2016, the balances were:

Subscriptions in advance $295

Subscriptions in arrears $165

Trade payables for refreshments $315

Inventory of refreshments $390

4 The donation of $3500 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 years 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 $3640.

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.

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..

..

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. [11]

(c) Prepare the statement of financial position at 31 August 2016.

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..

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. [11]

(d) Explain why the club transfers life membership fund to the

income and expenditure accounts over 10 years.

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..

[4]

[Total: 25]

13 Helen Ossetia provides the following information for the year ended 31

May 2013.

A full years depreciation is charged in the year of purchase and no

depreciation is charged in the year of disposal.

Buildings and machinery are depreciated using the straight line

method.
Motor vehicles are depreciated using the reducing (diminishing)

balance method.
REQUIRED
(a) Explain why Helen needs to depreciate her non-current assets.

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......

[4]

(b) State three causes of depreciation of motor vehicles.

1.

2.

3.

[3]
(c) Calculate the rate of depreciation used by Helen at 31 May 2013

to depreciate each class of non-current asset.

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.[4]

(d) Explain why machinery is usually depreciated using the straight

line method while motor vehicles are usually depreciated using the

reducing balance method.

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.[4]
Additional information
During the year ended 31 May 2014:
1 Helen bought new machinery costing $720 000 and sold old
machinery which had cost $160 000. The old machinery had been
bought on 1 December 2011.
2 Helen bought a new motor vehicle. She traded in an old vehicle
valued at $40 000 and paid the balance of $160 000, by cheque.
The trade in vehicle had cost $100 000 and had a net book value of
$60 000 at the date of disposal.
3 A new building costing $1 000 000 was completed during the year.

REQUIRED
(e) Complete the non-current asset schedule below for the year

ended 31 May 2014.

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 [16]

[Total: 31]

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