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ZIMSEC A Level · 6001/1 · N2022

Accounting Paper 1 November 2022

Questions
40
Time allowed
80 min
Syllabus code
6001/1

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Questions
40
Pass mark
24
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Answer every question in the printed order, get marked at the end, then see the answers.

The questions

Question 1

Trial balance
Which of the following accounts has a credit balance?
  1. ADiscounts allowed.
  2. BDiscounts received.
  3. CPurchases.
  4. DSales returns.

Question 2

Accounting concepts

A business values inventory at the lower of cost and net realisable value.

Which accounting concept is the business applying?

  1. AHistorical cost concept.
  2. BMateriality concept.
  3. CPrudence concept.
  4. DRealisation concept.

Question 3

Accruals and prepayments

KC (Pvt) Ltd's accounting year ends on 30 September.

Annual rentals are paid in advance on 1 July as follows:

Year$
13 000
23 600

How much is charged in the Income Statement in year 2?

  1. A$3 000
  2. B$3 150
  3. C$3 600
  4. D$3 900

Question 4

Accruals and prepayments

James prepared his financial statements without adjusting for accrued expenses.

What effect will these omissions have on net profit, current assets and current liabilities?

Net profitCurrent assetsCurrent liabilities
Aoverstatedno effectunderstated
Boverstatedunderstatedno effect
Cunderstatedno effectoverstated
Dunderstatedoverstatedno effect
  1. ANet profit overstated, current assets no effect, current liabilities understated
  2. BNet profit overstated, current assets understated, current liabilities no effect
  3. CNet profit understated, current assets no effect, current liabilities overstated
  4. DNet profit understated, current assets overstated, current liabilities no effect

Question 5

Users of accounting information
Users of accounting information can be classified into
  1. Acreditors and external.
  2. Binternal and external.
  3. Cinternal and government.
  4. Dtrade unions and customers.

Question 6

Statement of financial position
In a statement of financial position, a loan payable after one year is classified as
  1. Aa current liability.
  2. Ba non-current liability.
  3. Ca short-term liability.
  4. Dequity.

Question 7

Control accounts

A credit balance of $250 has been omitted from the list of balances extracted from the sales ledger.

What is the effect on the trial balance?

  1. AThe credit side is understated by $250.
  2. BThe credit side is overstated by $250.
  3. CThe debit side is understated by $250.
  4. DThe debit side is overstated by $250.

Question 8

Control accounts
A credit balance on Melody's account in a trade receivables ledger means that
  1. AMelody's cheque has been dishonoured.
  2. Bthe amount owed by Melody is irrecoverable.
  3. Cthe firm owes Melody some money.
  4. Dprovision for doubtful debts should be made for Melody.

Question 9

Correction of errors

Repairs to machinery of $2 500 has been entered in the Machinery account.

Which entries are required to correct the error?

DebitCredit
AMachinery account $2 500Repairs to Machinery account $2 500
BRepairs to Machinery account $2 500Machinery account $2 500
CRepairs to Machinery account $2 500Suspense account $2 500
DSuspense account $2 500Machinery account $2 500
  1. ADebit Machinery account $2 500, credit Repairs to Machinery account $2 500
  2. BDebit Repairs to Machinery account $2 500, credit Machinery account $2 500
  3. CDebit Repairs to Machinery account $2 500, credit Suspense account $2 500
  4. DDebit Suspense account $2 500, credit Machinery account $2 500

Question 10

Inventory valuation
According to IAS 2, inventory should be valued at the lower of
  1. Acost and net realisable value.
  2. Bcost and replacement cost.
  3. Cnet realisable value and selling price.
  4. Dreplacement cost and net realisable value.

Question 11

Capital and revenue expenditure
Cost of an asset includes
  1. Apurchase price plus import duty plus trade discount.
  2. Bpurchase price plus import duty minus carriage inwards.
  3. Cpurchase price plus import duty plus repairs.
  4. Dpurchase price plus import duty plus legal fees.

Question 12

Depreciation
If depreciation of non-current assets was not included in the Income Statement,
  1. Agross profit would be overstated.
  2. Bgross profit would be understated.
  3. Cnet profit would be overstated
  4. Dnet profit would be understated

Question 13

Clubs and societies
Accumulated fund represents
  1. Athe assets of the club less liabilities.
  2. Bthe surplus of income over expenditure for the year.
  3. Cthe surplus of receipts over payments for the year.
  4. Dthe total assets of the club.

Question 14

Clubs and societies
A club's surplus of income over expenditure for a year is represented by
  1. Athe balance on its Accumulated Fund at the beginning of the year.
  2. Bthe decrease in the balance on its Receipts and Payments Account over the year.
  3. Cthe increase in its net assets over the year.
  4. Dthe increase in its liabilities over the year.

Question 15

Inventory valuation

A company has three inventory items with the following details:

ITEMCOST PRICE $NET REALISABLE VALUE $
Shoes5 0003 500
Jackets7 0008 000
Skirts6 0004 000

What is the total value of inventory?

  1. A$14 500
  2. B$15 500
  3. C$18 000
  4. D$19 000

Question 16

Limited companies
A private limited company may not
  1. Aissue bonus shares.
  2. Bissue debentures.
  3. Cmake a rights issue.
  4. Doffer its shares to the public.

Question 17

Manufacturing accounts
Prime cost includes
  1. Acarriage inwards.
  2. Bcost of oil to lubricate machinery.
  3. Cfactory heating and lighting.
  4. Dstorekeepers' wages.

Question 18

Depreciation
In a manufacturing company, loose tools will be depreciated using the
  1. Amachine-hour method.
  2. Breducing-balance method.
  3. Crevaluation method.
  4. Dstraight-line method.

Question 19

Partnerships

Nyasha and Takudzwa are partners sharing profits and losses in the ratio 3:1.

The following information is available:

Nyasha $Takudzwa $
Interest on capitals5 0005 500
Interest on drawings5001 000

Net profit for the year $120 000

How will the profit be shared?

Nyasha $Takudzwa $
A83 25027 750
B83 25036 750
C85 50024 500
D91 12530 375
  1. ANyasha $83 250, Takudzwa $27 750
  2. BNyasha $83 250, Takudzwa $36 750
  3. CNyasha $85 500, Takudzwa $24 500
  4. DNyasha $91 125, Takudzwa $30 375

Question 20

Incomplete records
One of the reasons why businesses may use incomplete records is because
  1. Athey lack skills of double-entry principle.
  2. Bthey have knowledge of double-entry principle.
  3. Cthey want to check the arithmetical accuracy of their records.
  4. Dthey want to reveal embezzlement of funds.

Question 21

Manufacturing accounts

Information about a manufacturing business is given below.

$
Production overheads250 000
Opening inventory of raw materials25 000
Purchases of raw materials345 000
Closing inventory of raw materials19 000
Production wages331 000
Production Supervisor's salary24 000

What is the prime cost?

  1. A$682 000
  2. B$706 000
  3. C$937 000
  4. D$956 000

Question 22

Manufacturing accounts
When a manufacturing company adds factory profit to the cost of goods transferred, it
  1. Ahas no effect on the gross profit.
  2. Bincreases gross profit.
  3. Creduces both the gross profit and the net profit.
  4. Dreduces the gross profit.

Question 23

Limited companies
A company may improve its bank balance by
  1. Aissuing bonus shares.
  2. Bmaking a rights issue.
  3. Cpaying dividends.
  4. Dredeeming its debentures.

Question 24

Sources of finance
A source of capital that gives an investor an option to turn it into shares at a future date is
  1. Aconvertible loan stock.
  2. Bconvertible preference shares.
  3. Cdebentures.
  4. Dordinary shares.

Question 25

Purchase of a business

A business purchased for $150 000 had the following balances.

$$
Non-current assets40 000
Net current assets22 000
Revaluation reserve20 000

How much was paid for goodwill?

  1. A$62 000
  2. B$68 000
  3. C$88 000
  4. D$108 000

Question 26

Partnerships

Information for a partnership is shown below:

$
Net profit before interest25 000
Interest on partner's loan to the firm3 000
Interest on capital accounts4 000
Drawings10 000

Which figure is to be apportioned between the partners?

  1. A$18 000
  2. B$21 000
  3. C$22 000
  4. D$25 000

Question 27

Ratio analysis
Which transaction would decrease short-term liquidity?
  1. ABuying non-current assets for cash.
  2. BPaying creditors in cash.
  3. CPaying creditors using a bank overdraft.
  4. DSelling goods on credit.

Question 28

Ratio analysis
Which item accounts for the difference between the current ratio and acid-test ratio?
  1. ACash and cash equivalents
  2. BInventory
  3. CTrade payables
  4. DTrade receivables

Question 29

Purchase of a business
When the purchase price exceeds the value of net assets taken over, the difference is known as
  1. Agoodwill.
  2. Binherent goodwill.
  3. Cnegative goodwill.
  4. Dpremium.

Question 30

Control accounts
Which one appears in a trade receivables control account?
  1. ADiscounts allowed.
  2. BDiscounts received.
  3. CProvisions for doubtful debts.
  4. DReturns outwards.

Question 31

Costing
Which one is a variable cost?
  1. ABought in raw materials.
  2. BDepreciation of machinery.
  3. CFactory rent.
  4. DFactory supervisor's wages.

Question 32

Budgeting
The expected volume of sales will determine
  1. Amaterial purchases budget.
  2. Bsales budget.
  3. Ctrade receivables budget.
  4. Dtrade payables budget

Question 33

Marginal costing

The following information relates to product X.

$
Revenue at break-even point12 000
Unit selling price20
Fixed costs4 800

What is the marginal cost of each unit of product X?

  1. A$2,50
  2. B$8
  3. C$10,50
  4. D$12

Question 34

Marginal costing

The following information about a product is given:

Per unit $
Selling price132
Direct materials60
Direct labour48

Fixed costs total $60 000.

How many units must be produced to break-even?

  1. A250 units
  2. B715 units
  3. C834 units
  4. D2 500 units

Question 35

Standard costing

The following information is available about a product.

Standard selling price per unit$18
Budgeted sales (units)35 000
Actual sales (units)38 000
Actual sales revenue$644 100

What is the sales price variance?

  1. A$14 100 Adverse.
  2. B$14 100 Favourable.
  3. C$39 900 Adverse.
  4. D$39 900 Favourable.

Question 36

Investment appraisal

The net present values of a project have been calculated as follows:

NPV ($)
at 10%40 000
at 20%(18 000)

What is the internal rate of return on the project?

  1. A10.69%
  2. B13.10%
  3. C16.90%
  4. D20%

Question 37

Standard costing

Details of direct materials are as follows:

Budgeted31 500kgs @ $12 per kg
Actual34 000kgs @ $13,20 per kg

What is the direct material price variance?

  1. A$37 800 Adverse.
  2. B$37 800 Favourable.
  3. C$40 800 Adverse.
  4. D$40 800 Favourable.

Question 38

Investment appraisal
Which of the following methods of investment appraisal is based on profits?
  1. AAccounting rate of return.
  2. BInternal rate of return.
  3. CNet present value.
  4. DPayback.

Question 39

Investment appraisal
Sensitivity analysis indicates
  1. Acapital rationing.
  2. Bmaximum acceptable margin of error.
  3. Cpayback period of the project.
  4. Dprofitability of the project.

Question 40

Budgeting
What is a master budget?
  1. AA budget based on a limited factor.
  2. BA forecast Income Statement.
  3. CA forecast Statement of Financial position.
  4. DA set of budgeted financial statements.

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