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PAGE 73

MAMOON TAYYAB
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PAGE 74

MAMOON TAYYAB
PAGE 75

MAMOON TAYYAB
Q2 W2004

2 The following financial statements, which contain errors, were prepared by an inexperienced
book-keeper.

Trading and Profit and Loss Account for the year ended 31 July 2004

$ $
Sales 100 000
Income from sale of fixed assets 20 000
120 000
Cost of goods sold 60 000
Gross profit 60 000
Sundry expenses 20 000
Purchase of fixed assets 30 000 50 000
Net profit 10 000

Balance Sheet as at 31 July 2004

$ $
Rent and rates paid 5 000
Stock 8 000
Debtors 2 000
Cash 1 000
16 000
Creditors 1 100
Discounts received 900 2 000
14 000

Capital 10 000
Net profit 10 000
20 000
Less: drawings 6 000
14 000

REQUIRED

(a) Identify the items of capital and revenue income and expenditure which have been
incorrectly treated in the financial statements. Explain how each item should have been
included in the financial statements.

Category Item Correct Treatment

(i) Capital income

(ii) Capital expenditure

[8]

© UCLES 2004 7110/02 O/N/04 [Turn over


PAGE 76

MAMOON TAYYAB
Q2 W2004

Category Item Correct Treatment

(iii) Revenue income

(iv) Revenue expenditure

(b) Calculate the corrected net profit for the year ended 31 July 2004.

..........................................................................................................................................

..........................................................................................................................................

..........................................................................................................................................

..........................................................................................................................................

..........................................................................................................................................

..........................................................................................................................................

..........................................................................................................................................

..........................................................................................................................................

......................................................................................................................................[5]

[Total: 13]

© UCLES 2004 7110/02 O/N/04


PAGE 77

MAMOON TAYYAB
Q4 S2006

Q 4 The following balances are included in Sam Chung’s books of account:

$
Purchases 84 000
Wages 18 600
Fixtures and fittings 24 500
Investment income 900

REQUIRED

(a) Identify the revenue income, revenue expenditure and capital expenditure in the table
below. Purchases has been completed as an example.

$ Revenue Revenue Capital


income expenditure expenditure
Purchases 84 000 ‫ݱ‬
Wages 18 600
Fixtures and fittings 24 500
Investment income 900

[3]

(b) Sam Chung included half of the purchases as capital expenditure in the accounts.
State the effect and the amount this error had on his net profit.

[2]

[Total: 5]

© UCLES 2006 7110/02/M/J/06 [Turn over


PAGE 78

MAMOON TAYYAB
Q4 S 2006

Q 4 The following balances are included in Sam Chung’s books of account:

$
Purchases 84 000
Wages 18 600
Fixtures and fittings 24 500
Investment income 900

REQUIRED

(a) Identify the revenue income, revenue expenditure and capital expenditure in the table
below. Purchases has been completed as an example.

$ Revenue Revenue Capital


income expenditure expenditure
Purchases 84 000 ‫ݱ‬
Wages 18 600
Fixtures and fittings 24 500
Investment income 900

[3]

(b) Sam Chung included half of the purchases as capital expenditure in the accounts.
State the effect and the amount this error had on his net profit.

[2]

[Total: 5]

© UCLES 2006 7110/02/M/J/06 [Turn over

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