No.

1/1

Marker Code Student Personal

Identification Number (SPIN)

Pacific Senior Secondary Certificate

ACCOUNTING
2011
QUESTION and ANSWER BOOKLET
Time allowed: Three hours

INSTRUCTIONS

1. There are SIX sections to this paper, all of which are compulsory. Answer ALL questions and
allocate your time as follows:
Suggested
Marks Time

Section One: Multiple Choice Questions 20 marks 18 minutes

Section Two: Conceptual Basis of Accounting 22 marks 20 minutes
Section Three: Processing 33 marks 30 minutes
Section Four: Accounting Reports 49 marks 44 minutes
Section Five: Analysis, Interpretation and Decision Making 24 marks 24 minutes
Section Six: Accounting Systems 52 marks 44 minutes
-------------- ---------------
200 marks 180 minutes
======== =========
2. Answer the questions in the spaces provided in this booklet. If you need more space for your
answers, ask the supervisor for extra paper. Write your SPIN on all extra sheets used and number
the questions clearly.
3. Write your Student Personal Identification Number (SPIN) in the space provided above and on
the fold-out flap on the last page.

Check that this booklet contains pages 2-24 in the correct order and that none of these pages is
blank. Pages 25-26 have been left blank deliberately.

YOU MUST HAND THIS BOOKLET TO THE SUPERVISOR AT THE END OF THE
EXAMINATION.

TOTAL MARKS 200

 2

SECTION ONE: MULTIPLE CHOICE (20 marks)

ALL ten questions are compulsory. Each question is worth 2 marks.

Write the letter of the best answer to each question in the space provided on the back flap
of this booklet.

1. Which of the following transactions would not be recorded in the General Journal?

A. Charged R. Misa interest $12.

B. Charged M. Kete for goods $700.
C. Sold old equipment to P. Moli $450.
D. Wrote off P. Tolus account as bad $100.

2. The Statement of Cash Flows shows

A. the net surplus for the period after all the expenses have been paid.
B. all revenue and expenses for the period except for non-cash expenses.
C. expected cash receipts and payments for the following accounting period.
D. the reasons for the changes in the bank balance during an accounting period.

3. Which accounting concept states that all information and explanation necessary for
interpretation reports and statements should be conveyed to users?

A. Going Concern
B. Historical Cost
C. Conservatism
D. Disclosure

4. Business enterprises may look for sources of finance to start their operations or even
expand their existing premises. These businesses may obtain finance from the following
sources except

A. potential owners.
B. clubs and societies.
C. debenture holders.
D. finance companies.

5. Which of the following fixed assets would not be depreciated in the annual accounts of
a solicitor?

A. Office equipment
B. Office furniture
C. Library books
D. Premises
 3

6. The financial statement which cannot be prepared from an adjusted trial balance is the

A. Statement of Financial Position.

B. Statement of Movements in Equity.
C. Statement of Financial Performance.
D. Statement of Changes in Cash Position.

7. The preparation of general journal entries to record balance day adjustments is required
for the following purposes except

A. recognising new assets.

B. omission of transactions.
C. adjusting existing assets.
D. recognising new liabilities.

8. Which of the following is an advantage of keeping a subsidiary ledger for accounts

receivable?

A. The business keeps track of how much each individual debtor owes at all times.
B. The general ledger contains all the details of individual customers accounts.
C. The business can use cycle billing to spread the monthly flow of work.
D. Customers are most likely to pay accounts on time.

9. The process of preparing closing entries is done at the end of the accounting period.
After this process, all accounts are closed or have nil balances except

A. bad debts account as these accounts are written off as bad.

B. inventory account to bring into account the ending stock.
C. cash account as this is a current asset to the business.
D. capital account as this is the proprietors account.

10. The basic accounting equation is as follows

A. A + E + D = L + OE + R
B. A + E = L + OE + (R-E)
C. A = L + OE + P
D. A = + OE
 4

SECTION TWO: CONCEPTUAL BASIS OF ACCOUNTING (22 marks)

(a) Accountability means being held responsible to a higher authority for actions carried
out. In each case, state the authority to which each is accountable to:

(i) Employees

(1 mark)
(ii) Management

(1 mark)
(iii) Organisation

(1 mark)

(b) Define the following accounting concepts.

(i) Historical Cost

(2 marks)
(ii) Going Concern

(2 marks)
(iv) Conservatism

(2 marks)

P4 9
 5

(c) Define the following characteristics of accounting information.

(i) Reliability

(2 marks)

(ii) Comparability

(2 marks)

(iii) Timeliness

(2 marks)

(d) From the box below, choose the type of business that best matches each of the features
of the business entity given.

Sole trader
Partnership
Company
Clubs and Societies

(i) Enterprises whose primary motive is to provide a meeting place for people
with common interests. (1 mark)

(ii) This business is treated as a person in the eyes of the law. It can be sued
and can sue people. (1 mark)

(iii) The owners are jointly liable for the debts of the business.
(1 mark)

(iv) The growth of the business is limited to the owners personal wealth and
capacity to raise funds. (1 mark)

P5 10
 6

(e) Explain the difference between a Trading Business and a Service Business.

(i) Trading Business

(1 mark)

(ii) Service Business

(1 mark)

(f) Name the ONE common use of funds in a business.

(1 mark)

P4 9 + P5 10 + P6 3 = Section 2
22
 7

SECTION THREE: PROCESSING (33 marks)

(a) Complete the following table on Transactions Analysis.

Analyse each transaction to identify which accounts are affected and state which
account is debit and which is credit. Write No Entry if there is no accounting
recognition.

Debit Account Credit account No entry

(i) Soo deposited cash into his
business cheque account

(ii) Business hired two

management advisors and
an office assistant

(iii) Paid radio commercials

(GST inclusive)

(iv) Signed an agreement for the

business to provide
marketing services

(7 marks)

(b) The financial position of Sportex, a retailer of snow sports equipment, is given on the
first line of the equation below. Each numeral indicates the effect of a different
transaction on the accounting equation. Describe each of the transactions.

Bank Inventory Accounts Fixed assets Liabilities Equity

receivables
3125 1000 1125 6254 2125 9379
i) - 350 +700 +350
ii) +940 +940
iii) + 175 - 280 - 105
iv) -40 - 40
v) - 50 - 50
(5 marks)

(i)

(ii)

(iii)

(iv)

(v)

P7 12
 8

Use the following trial balance to answer questions (c), (d) and (e).

Letava Traders
Trial Balance as at 31st March 2009

Adjustments
Debit Credit Debit Credit
Inventory 1000
Purchases 22000
Purchases returns 1000
Wages-Shop 3000 (i) 100
Rent 15000 (ii) 1000
Equipment 45000 (iii)1500
Bank 4000
Accounts receivable 7000
Office expenses 500
Drawings 9000
Insurance 1000
Sales 49000
Commission 500 (iv) 300 (v) 200
Accounts payable 2000
Capital 17500
Loan 30000
Interest expense 500
$104000 $104000

(c) Write the correct balance day adjustment shown in each case from the trial balance
above.
(i) (1 mark)

(ii) (1 mark)

(iii) (1 mark)

(iv) (1 mark)

(v) (1 mark)

P8 5
 9

(d) Show the closing entries in the general journal for these accounts from the trial balance
above. Narrations are NOT required.
Purchases Returns
Inventory
Purchases
Sales
(i)
Date Particulars Debit Credit

(2 marks)
(ii)
Date Particulars Debit Credit

(2 marks)
(iii)
Date Particulars Debit Credit

(2 marks)
(iv)
Date Particulars Debit Credit

(2 marks)

(e) Prepare the ledger accounts for Purchases and Trading accounts given that the ending
inventory is $2000.

(i) Purchases Account

Date Particulars Debit Credit Balance

(3 marks)

(ii) Trading Account

Date Particulars Debit Credit Balance

(5 marks)

P7 12 + P8 5 + P9 16 = Section 3
33
 10

SECTION FOUR: ACCOUNTING REPORTS (49 marks)

The following trial balance has been extracted from E. Murphys ledger.

Use this to answer questions (a) and (b).

E. Murphy
Trial Balance as at 31st March 2011

$ $
Insurance 880 Commission revenue 3670
Discount expense 3530 Purchases returns 2490
Customs duty 50 Accounts payable 8700
Purchases 25240 Provision for doubtful 80
debts
Cash at bank 800 Sales 68680
Sales salaries 13400 Accumulated 2500
depreciation on buildings
Sales returns 1620 Capital 40000
Cartage outwards 950 Mortgage 20000
Government bonds 10000 Accumulated 3000
depreciation on d/vehicle
Buildings 25000 Rent revenue 5000
Office salaries 25060
Accounts receivables 10000
Cartage inwards 390
Drawings 200
Delivery vehicle 12000
Inventory (1/4/2010) 15000
Land 10000
$154120 $154120

Adjustments:
Inventories on hand at 31st March 2011, $20000
Provision for doubtful debts to be 1% of accounts receivables.
Depreciation on building at 5% on cost.
Depreciation on delivery vehicle at 30% diminishing value.
 11

(a) Prepare a fully classified Statement of Financial Performance for E. Murphy for the year
ended 31st March 2011.

E. Murphy
Statement of Financial Performance for year ended 31st March 2011
$ $ $
Revenue:

Less Cost of Goods Sold:

Gross Profit:
+ other Revenue

Less Selling & Distribution Expenses:

General & Administrative Expenses:

Financial Expenses:

Total expenses:
Net profit (Loss)

(20 marks)

P 11 20
 12

(b) Prepare a fully classified Statement of Financial Position for E. Murphy as at 31st March
2011.
E. Murphy
Statement of Financial Position as at 31st March 2011
$ $ $
Owners Equity:

Represented by:
Current Assets:

Less Current liabilities:

Working Capital:

+ Fixed Assets:

+ Investments:

Less Long Term Liabilities:

(16 marks)

P 12 16
 13

(c) Prepare the Statement of Changes in Cash Position for Mitchs Carpenters for the year
ended 31/12/2010 from the following information.

Cash Sales 62000

Cash from accounts receivable 40000
Cash purchases 20000
Payment to accounts payable 35000
Wages and salaries 34000
Commission received 14000
Expenses paid 25000
Furniture sold for cash 12000

Plant purchased for $155000 of which $31000 was paid in cash, the rest to be paid off later.
Cash drawings for the year $15000 and the proprietor transferred another $40000 cash into
the business during the year.

Bank balance 1/1/2010 13500

Mitchs Carpenters
Statement of Changes in Cash Position for year ended 31st December 2010

Cash was received from: $ $

Cash was applied to:

Net increase/decrease in cash

(13 marks)

P 11 20 + P 12 16 + P 13 13 = Section 4
49
 14

SECTION FIVE: ANALYSIS, INTERPRETATION, (24 marks)

AND DECISION MAKING

Use the extract below to answer the questions that follow.

Statement of Financial Performance of Polis Fish & Chips

for year ended 30th June 2010

2009 2008

Net Sales 99570 96350

Less Cost of Sales
Opening Inventory 800 800
Purchases 58109 56096
Packaging 617 961
Closing Inventory (888) (800)
40932 39293

Less Expenses
Operating Expenses 16208 18117
Administration expenses 8218 7935
Depreciation 4222 4452
Total expenses 28648 30504
$12284 $8789

(a) What are Net Sales as used in the extract?

(1 mark)

(b) Why has the packaging been included with Cost of Sales?

(2 marks)

(c) What is the Cost of Sales figure in 2009? Show your calculations.

(2 marks)

P 14 5
 15

(d) This business uses Operating Expenses. State THREE examples that would be included
in the operating expenses category.

(i) (1 mark)

(ii) (1 mark)

(iii) (1 mark)

(e) The words Gross Profit and Net Profit have been omitted from the extract. Identify
these figures for both 2008 and 2009. (Show calculations)

(i)

Gross Profit 2008 2009

(2 marks)

(ii)

Net Profit 2008 2009

(2 marks)

P 15 7
 16

(f) Use this table to answer questions that follow.

Assets $ Liabilities $ Owners equity $

Accounts receivable 60000 Accounts payable 80000 Capital 150000
Inventory 40000 Bank Overdraft 15000 Net profit 5000
Prepayments 5000 Loan (plant) 20000
Furniture 15000 Mortgage 190000
Office equipment 10000
Plant 200000
Buildings 130000

You are required to calculate the following ratios.

(i) Working Capital amount

(2 marks)

(ii) Current ratio

(2 marks)
(iii) Liquid ratio

(2 marks)
 17

(iv) Equity ratio

(2 marks)

(v) Debt ratio

(2 marks)

(vi) Explain the relationship between the equity ratio and the debt ratio.

(2 marks)

P 14 5 + P 15 7 + P 16-17 12 = Section 5
24
 18

SECTION SIX: ACCOUNTING SYSTEMS (52 marks)

Cash Subsystem

(a) The purpose of the petty cash fund is to facilitate the payment and recording of those
items that are individually too small to require the drawing of a cheque. The normal
method used for controlling and recording petty cash is called the imprest system.
State the THREE distinct steps involved in this system.

(i)

(ii)

(iii)

(3 marks)
(b) L. Lote balanced her bank account at 1st August 2011 and it showed a credit balance of
$9620.50. After a comparison with the bank records (which showed a debit balance of
$7190.18 at 31st August), the following differences were noted.
T. Toos dishonoured cheque had been debited in the bank statement $116
Outstanding lodgements: $94 and $26
Interest on overdraft $64
Unpresented cheques: #572 $764, #579 $125
Bank fee $10
Interest on government bonds $216

Other information:
Cash Receipts Journal:
Aug 31 Entries to date $22062.47

Cash Payments Journal

Aug 31 Entries to date $20427.15

(i) Prepare L. Lotes Bank Account in the ledger.

Bank Account
Date Particulars Debit Credit Balance

(3 marks)
 19

(ii) Prepare L. Lotes Bank Reconciliation Statement as at 31st August 2011.

(5 marks)

Fixed Assets

(a) On 1st January 2008, Risas Printers purchased a new printing machine for $50000
cash. Freight charges on the machine were $400 and installation costs $1000. An annual
insurance of $110 was paid.

The companys depreciation policy is to depreciate machinery at 25% diminishing

value. The machine has an estimated residual value of $17000. As a result of new
technology, the machine was replaced on 31st March 2011 and $15000 was received as
a trade-in allowance from EGT Commercial World.

(i) Show the general journal entries for the three years. Narrations are not required.

Date Particulars Debit Credit

2008
Dec 31

(2 marks)

P 18-19 13
 20

(ii)
Date Particulars Debit Credit
2009
Dec 31

(2 marks)

(iii)
Date Particulars Debit Credit
2010
Dec 31

(2 marks)

(b) Show the Accumulated Depreciation and the Disposal Account in the ledger.

(i) Accumulated Depreciation

Date Particulars Debit Credit Balance

(3 marks)

(ii) Disposal Account

Date Particulars Debit Credit Balance

(3 marks)

(c) Explain whether a gain or a loss on sale was made. How much was the gain or loss?

(2 marks)
 21

Accounts Receivable and Accounts Payable

(a) Use the following information from the books of Polus Motors to prepare the Debtors
Control and the Creditors Control Account in the general ledger.

General Journal
Sales Journal total 25272 Freight charged to debtors 1745
Purchases Journal total 18474 Freight charged to creditors 1364
Sales Returns Journal total 205 Interest charged to debtors 362
Purchases Returns Journal total 376 Purchase of new printer 1364
Bad debts written off 2125

Cash Receipts Journal Cash Payments Journal

Bank column total 198247 Bank column total 172246
Debtors column total 19828 Creditors column total 16824
Cash sales column total 32416 Cash purchases column total 9112

(i) Debtors Control Account

Date Particulars Debit Credit Balance

(6 marks)

(ii) Creditors Control Account

Date Particulars Debit Credit Balance

(5 marks)

P 20-21 23
 22

Inventories

(a) Explain clearly why inventories should be controlled so that neither too many nor too
few are held by the business.

(2 marks)

(b) State ONE characteristic to distinguish between Periodic Inventory and Perpetual
Inventory.
(i) Periodic Inventory

(1 mark)

(ii) Perpetual Inventory

(1 mark)

(c) Purchased 100 items @ $22.50 each.

Prepare general journal entries for this transaction under periodic and perpetual to
record the comparison.
(i) Periodic Inventory

(2 marks)
(ii) Perpetual Inventory

(2 marks)
 23

Payroll

(a) The following information is about the payroll of Luasis Boutique.

Calculate the gross pay for each employee. Show your calculations correctly.

Name Hours Worked Hourly rate

Ordinary 1 1/2
V. Maka 36 $8.25
T. Fonua 40 7 $10.00
K. Masi 40 8 $10.50

(i) V. Maka

(1 mark)

(ii) T. Fonua

(2 marks)

(iii) K. Masi

(2 marks)

(b) Explain clearly what PAYE represents.

(1 mark)

P 22-23 14
 24

(c) Explain the difference between gross pay and net pay.

(i) Gross pay

(1 mark)

(ii) Net pay

(1 mark)

P 18-19 13 + P 20-21 23 + P 22-24 16 = Section 6

52
 25

This page has been left blank deliberately.

 26

This page has been left blank deliberately.

 27

Student Personal
ANSWER SHEET Identification Number

MULTIPLE CHOICE SECTION ACCOUNTING

2011
SECTION TOTALS
Write the LETTER of the correct
(MARKER ONLY)
answer only.

Section Exam Check

Number Mark Marker
1. 6.

1 20
2. 7.

2 22
3. 8.

3 33

4. 9.
4 49

5. 10.
5 24

Number
2 = 6 52
Correct 20

TOTAL
200