Accounts Paper 1 November 2000

ZIMBABAWE SCHOOL EXAMINATIONS
COUNCIL
General Certificate of Education Ordinary Level
PRINCIPLES OF ACCOUNTS 7112/1

NOVEMBER 2000 3 hours
Section A
Answer all questions in this section.
1. On 1 January 1999, P. Moyo bought the business of C. Dube for $140

000. The assets taken over were valued at:
$
Premises 80 000
Motor Vans 50 000
Stock 4 000
All other assets and liabilities were kept by Dube. On the same date,
Moyo opened a business bank account and deposited $10 000.
Given below are additional balances taken from Moyo’s books on 31

December 1999:
$
Furniture and Fittings 10 500
Drawings 8 000
Sales 166 200
Purchases 104 400
General Expenses 5 700
Carriage Outwards 2 800
Carriage Inwards 1 600
Sales Returns 2 200
Discount Allowed 1 500
Discount Received 1 200
Rates and Water 2 120
Electricity 2 000
Wages and Salaries 29 400
Debtors 7 800
Creditors 4 600
Cash at Bank 3 480
Petty Cash 500
The following information is also available:
(i) Stock was valued at $5 900 on 31 December 1999.

(ii) Bad debt amounting to $400 are to be written off.
(iii) A provision for doubtful debts equal to 5% of debtors is to be
created.
(iv) On 31 December 1999, $220 was owing for electricity and
$140 had been paid in advance for rates.
(v) Depreciation is charged at 10% per annum on motor vans.
Furniture and fittings were revalued at $9 900 on 31 December
1999. No depreciation is charged on premises.
(vi) A bank statement received from the bank on 28 December 1999
included an entry of $330 for bank charges. This matter has not
been dealt with in the books.
You are required to prepare:
(a) the Trading and Profit and Loss Account for the year ended 31
December 1999. [13]
(b) the Balance Sheet as at 31 December 1999. [13]
2. (a) The following account appeared in the Purchases Ledger of G.

Standon:
N. Mutasa
$ $
2000 2000
June 6 Bank 720 June 1 Balance b/d 800
Discount Received 80 23 Purchases 1 400
25 Returns Outwards 100
29 Furniture 450
30 Balance c/d 850 _____
2 200 2 200
July 1 Balance b/d 850
You are required to:
(i) state the meaning of the balance on 1 June 2000, [1]
(ii) give the transaction represented by each of the entries from 6

June to 29 June. Name the subsidiary book used in each case.
Set out your answer under the headings shown below:
Date Transaction Subsidiary book [10]

(b) The following information was obtained from the books of S. Tenge:
Data Total Debtors
31 December 1998 $ 8 000

31 December 1999 $10 000
On 1 January 1998, the Provision for Bad Debts Account had a

balance of $550.
Tenge maintains a provision for bad debts equal to 5% of debtors.
You are required to write up the Provision for Bad Debts Account for
the years 1998 and 1999.
Pay special attention to dates and details. [6]
3. Write down the word(s) or figure(s) required to complete each of the

following sentences. Do not copy the whole sentence.
(a) A favorable balance is shown as a ___________ balance on the

bank statement.
(b) The ____________ is calculated by deducting current liabilities
from current assets.
(c) What the proprietor takes from the business for personal use is
called ___________.
(d) The expenses incurred in the day to day running of a business
are ___________ expenditure.
(e) If a fixed asset is depreciated by a percentage of the book value
each year, this method of depreciation is called ____________.
(f) In the books of a partnership, a salary due to a partner is entered
on the ___________ side of his current account.
(g) Closing stock is valued at ___________ or replacement/market
value, whichever is lower.
(h) Preference shares earn a fixed rate of _______________.
(i) Subscriptions owing at the end of the financial year are shown
as a ______________ in the Balance Sheet.
(j) If cash received from a debtor is debited to the debtor’s account
and credited to the cash account, this error is called _________.
(k) A machine bought for $12 000 was sold for $6 600 after 5 years
of use. If the total depreciation charged on the machine
amounted to $4 500, the loss of disposal was ____________.
(l) If a customer has been undercharged, he may be sent a
____________ for the additional amount instead of an amended
invoice.
(m) In a manufacturing business, expenses that cannot be traced
easily to each unit of production are called _____________.
(n) The Purchases Ledger consists of personal accounts of
____________.
(o) Net profit for the year is recorded on the ______________ side
of the capital account. [15]
C. Adamas prepared the following Trial Balance on 31 March 2000:
$ $
Capital, 1 April 1999 50 000
Drawings 18 000
Office Equipment 14 200
Debtors 19 000
Creditors 9 400
Stock, 1 April 1999 15 600
Sales 183 400
Purchases 153 000
Sundry Expenses 16 520
Cash at Bank 7 280 ______
243 600 242 800
As the Trial Balance totals did not agree, a Suspense Account was
opened for the difference.
Subsequently, the following errors were discovered:
(i) The Sales Journal had been undercast by $1 000.

(ii) The purchase of additional office equipment for $600 had been
posted to the Purchases Account.
(iii) A cash payment of $254 had been debited twice to the Sundry
Expenses Account.
(iv) A sale of goods to B. Murphy had been correctly entered in the
Sales Journal as $273 but was wrongly posted to Murphy’s
account as $237.
(v) No entry had been made in the books in respect of a cheque
payment of $1 269 to a creditor. M. Simba.
(vi) A sales ledger balance of $418 had been omitted from the Trial
Balance figure.
(vii) Adams withdrew $500 cash from the bank and settled his
private telephone bill. No entry had been made in the books.
(a) prepare the Suspense Account, [6]
(b) rewrite the Trial Balance as it would appear after the correction
of all the errors, [10]
(c) state one error that affects the agreement of a trial balance. [1]
Section B
Answer any two questions from this section.
5. The following information relates to the business of S. Kuda:

$
Stock, 1 January 1999 8 500
Sales 195 000
Sales Returns 15 000
Stock, 31 December 1999 15 500
Gross profit is 33 1/3% of turnover.
Net profit is 20% of turnover.
Calculate for the year ended 31 December 1999, showing all your
workings:
(a) Turnover [2]
(b) Gross profit [2]
(c) Cost of goods sold [2]
(d) Net profit [2]
(e) Expenses of running the business charged to the Profit and Loss
Account. [2]
(f) Rate of stock turnover. [3]
6. The following information was taken from the books of L. Nleya:

$
2000
October 1 Sales Ledger balances 15 200
31 Credit Sales 20 450
Cash and cheques received from customers 12 300
Returns Inwards 4 050
Customer’s cheques returned unpaid 500
Discount Allowed 330
Bad debts written off 760
Interest charged on customers’ overdue accounts280
Cash refunds to customers in respect of over
payments 240
Credit balances in Purchases Ledger transferred
to Sales Ledger 490
credit balances in Sales Ledger 160
(a) prepare the Sales Ledger Control Account for the month of
October, [12]
(b) state one reason for keeping control accounts. [1]
7. The share capital of ABC Limited on 31 December 1999 was as

follows:
Authorized Capital
500 000 $1 Ordinary Shares

200 000 20% $2 Preference Shares, fully paid
The following information is available for the year ended 31

December 1999:
$
General Reserve Account, 1 January 1999 450 000
Profit and Loss Account, 1 January 1999 135 000
Net profit for the year 218 000
Interim dividend paid: Ordinary 32 500
Preference 30 000
On 31 December 1999, the directors recommended:
(i) the transfer of $100 000 to General Reserve Account,

(ii) the payment of the final Preference dividend for the year,
(iii) the payment of a final dividend of 15% on Ordinary Shares.
You are required to prepare:
(a) the Profit and Loss Appropriation Account for the year ended
31 December 1999. [5]
(b) the Balance Sheet extract as at 31 December 1999, showing the

capital structure and the total of shareholders funds. [8]

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ZIMBABAWE SCHOOL EXAMINATIONS

PRINCIPLES OF ACCOUNTS 7112/1

Answer all questions in this section.

1. On 1 January 1999, P. Moyo bought the business of C. Dube for $140

Given below are additional balances taken from Moyo’s books on 31

The following information is also available:

(i) Stock was valued at $5 900 on 31 December 1999.

You are required to prepare:

(b) the Balance Sheet as at 31 December 1999. [13]

2. (a) The following account appeared in the Purchases Ledger of G.

You are required to:

(i) state the meaning of the balance on 1 June 2000, [1]

(ii) give the transaction represented by each of the entries from 6

Date Transaction Subsidiary book [10]

Data Total Debtors

31 December 1998 $ 8 000

On 1 January 1998, the Provision for Bad Debts Account had a

Tenge maintains a provision for bad debts equal to 5% of debtors.

Pay special attention to dates and details. [6]

3. Write down the word(s) or figure(s) required to complete each of the

(a) A favorable balance is shown as a ___________ balance on the

C. Adamas prepared the following Trial Balance on 31 March 2000:

Subsequently, the following errors were discovered:

(i) The Sales Journal had been undercast by $1 000.

You are required to:

(a) prepare the Suspense Account, [6]

Answer any two questions from this section.

5. The following information relates to the business of S. Kuda:

6. The following information was taken from the books of L. Nleya:

(b) state one reason for keeping control accounts. [1]

7. The share capital of ABC Limited on 31 December 1999 was as

500 000 $1 Ordinary Shares

The following information is available for the year ended 31

On 31 December 1999, the directors recommended:

(i) the transfer of $100 000 to General Reserve Account,

You are required to prepare:

(b) the Balance Sheet extract as at 31 December 1999, showing the

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