Danho
ZIMSEC A Level · 9197/2 · J2012

Accounting Paper 2 June 2012

Questions
47
Total marks
100
Time allowed
105 min
Syllabus code
9197/2

Sit this paper online

Questions
47
Pass mark
29
Sit this paper

Answer every question in the printed order, get marked at the end, then see the answers.

The questions

Question 101

[3 marks]incomplete records
Henry started a business by paying $26 000 into the bank, and later paid a bank loan of $21 200 into the same account. All other bank receipts were takings banked from the cash till. Payments out of the bank during the year totalled $512 396 and the bank balance at the year end was $32 600. Calculate the amount banked from the cash till during the year.

Answer this when you sit the paper.

Question 102

[3 marks]incomplete records
All of a trader's sales are made for cash and the takings are banked daily after cash payments have been met. During the year the till paid general expenses of $14 460 and motor expenses of $620, the owner took $20 800 from the till for private use, and $497 796 was banked. There was no cash in hand at the start of the year and $500 at the end. Calculate the sales for the year.

Answer this when you sit the paper.

Question 103

[2 marks]incomplete records
Premises are leased at $3 840 per quarter, payable in advance, from 1 August 2010. Five quarterly payments totalling $19 200 were made during the year ended 31 July 2011. What is the lease charge in the income statement for that year?
  1. A$11 520
  2. B$15 360
  3. C$19 200
  4. D$23 040

Question 104

[2 marks]incomplete records
A business borrowed $21 200 on 1 November 2010 at 16% per annum. By 31 July 2011, the end of its financial year, it had paid loan interest of $1 696. What is the loan interest accrued at 31 July 2011?
  1. A$848
  2. B$1 696
  3. C$2 544
  4. D$3 392

Question 105

[2 marks]incomplete records
A trader paid $423 800 to suppliers during his first year of trading and still owed them $43 800 at the year end. He took goods costing $1 340 for his own use. There was no opening stock and the closing stock was valued at $58 000. What is the cost of sales for the year?
  1. A$365 800
  2. B$408 260
  3. C$409 600
  4. D$466 260

Question 106

[2 marks]incomplete records
A trader's general expenses for the year total $53 440. That figure includes $860 paid for the owner's own personal insurance. How is the $860 dealt with in the final accounts?
  1. ALeft in general expenses, since the business bank account paid it
  2. BDeducted from general expenses and carried forward as a prepayment
  3. CDeducted from general expenses and added to drawings
  4. DDeducted from general expenses and added to the year's net profit as other income

Question 107

[2 marks]incomplete records
Motor expenses of $4 820 were paid during the year and one fifth of the mileage was for the owner's private purposes. Calculate the motor expenses charged in the income statement.

Answer this when you sit the paper.

Question 108

[2 marks]incomplete records
A car brought into a business at a valuation of $16 400 is valued at $12 600 at the year end. Fixtures and fittings bought during the year for $19 580 are valued at $16 800 at the year end. There were no disposals, and the business measures depreciation as the fall in valuation over the year. Calculate the total depreciation charge for the year.

Answer this when you sit the paper.

Question 109

[3 marks]incomplete records
At 31 July 2011 a trader's current assets were stock $58 000, prepaid lease payments $3 840, bank $32 600 and cash $500. His current liabilities were creditors for purchases $43 800 and accrued loan interest $848. Calculate the working capital at that date.

Answer this when you sit the paper.

Question 110

[2 marks]incomplete records
A trader began the year with capital of $42 400 and ended it with capital of $58 492. He introduced no further capital during the year, and his drawings in cash and in goods totalled $23 964. Calculate the net profit for the year.

Answer this when you sit the paper.

Question 111

[2 marks]incomplete records
In a two column cash book, the daily takings paid out of the cash till into the bank account are recorded as a contra entry. How is that contra entry made?
  1. ADebit the cash column and credit the bank column
  2. BCredit both the cash column and the bank column
  3. CDebit the cash column and credit the sales account
  4. DCredit the cash column and debit the bank column

Question 201

[2 marks]redemption of preference shares
A company redeems all of its 300 000 preference shares of $2 each at a premium of $0.60 per share. Calculate the total amount paid to the preference shareholders.

Answer this when you sit the paper.

Question 202

[2 marks]redemption of preference shares
A company redeems preference shares with a nominal value of $600 000. To help finance the redemption it issues new ordinary shares with a nominal value of $200 000, and the rest of the redemption is made out of distributable profit. Calculate the amount that must be transferred to the capital redemption reserve.

Answer this when you sit the paper.

Question 203

[2 marks]redemption of preference shares
A company issues 100 000 ordinary shares of $2 each at a premium of $0.50 per share, all paid in cash. How is the issue recorded?
  1. AShare capital $250 000
  2. BShare capital $200 000 and share premium $50 000
  3. CShare capital $200 000 and revaluation reserve $50 000
  4. DShare capital $100 000 and share premium $150 000

Question 204

[2 marks]redemption of preference shares
A company's non-current assets, carried in the books at $2 600 000, are revalued to $2 850 000. How is the surplus of $250 000 treated?
  1. ACredited to the income statement as a profit of the year, so it may be distributed
  2. BCredited to the capital redemption reserve, which the redemption of shares creates
  3. CCredited to the share premium account, alongside the premium on shares issued
  4. DCredited to a revaluation reserve within shareholders' funds

Question 205

[2 marks]redemption of preference shares
A company's net current assets stood at $1 480 000. It then received $250 000 in cash from a new issue of ordinary shares and paid out $780 000 to redeem its preference shares. Calculate the net current assets immediately after those two transactions.

Answer this when you sit the paper.

Question 206

[2 marks]redemption of preference shares
Why must a company that redeems shares out of distributable profit transfer an equal amount to a capital redemption reserve?
  1. ATo keep the company's capital intact for its creditors, as the reserve is not distributable
  2. BTo make sure the preference shareholders receive the premium promised on redemption
  3. CTo provide the cash needed to redeem the shares when the redemption date arrives
  4. DTo record the profit a company makes when it redeems its own shares below their market value

Question 207

[2 marks]redemption of preference shares
A company redeems 300 000 preference shares of $2 each at a premium of $0.60 per share. Those shares had originally been issued at $2.40 each. The premium on redemption may be written off the share premium account only up to the premium originally received on the same shares. Calculate the maximum amount that may be written off the share premium account.

Answer this when you sit the paper.

Question 208

[1 marks]redemption of preference shares
A company's statement of financial position shows 10% preference shares of $2 each totalling $600 000. Calculate the number of preference shares in issue.

Answer this when you sit the paper.

Question 209

[2 marks]redemption of preference shares
What is the main advantage to a company of raising capital by a rights issue rather than by an offer of shares to the public?
  1. AIt is cheaper and quicker, and control is undisturbed
  2. BThe shares can be issued at a price well above the current market price
  3. CIt removes the need ever to pay a dividend on the new shares
  4. DIt raises new capital without increasing the number of shares in issue

Question 210

[2 marks]redemption of preference shares
Which of these is a disadvantage to a company of raising finance by issuing debentures?
  1. AThe debenture holders can outvote the ordinary shareholders at a general meeting
  2. BThe interest paid is not an allowable charge against the company's profit
  3. CThe interest must be paid whether or not the company makes a profit
  4. DThe debentures dilute the earnings per share of the existing ordinary shareholders

Question 211

[2 marks]redemption of preference shares
Why can a company usually borrow at a lower rate of interest by issuing convertible loan stock than by issuing ordinary loan stock?
  1. ABecause the interest on convertible loan stock is paid only in profitable years
  2. BBecause convertible loan stock is secured on the company's assets in every case
  3. CBecause the holder may later convert the stock into ordinary shares
  4. DBecause convertible loan stock carries no interest until it is converted

Question 212

[2 marks]redemption of preference shares
Which of these is a disadvantage to a company of raising finance by issuing preference shares?
  1. AThe preference dividend rises automatically as the company's profit rises
  2. BThe dividend is an appropriation of profit, so it is not tax deductible
  3. CThe preference shareholders can vote the directors out of office
  4. DThe preference shares must be redeemed within five years of issue

Question 213

[2 marks]redemption of preference shares
What is the main disadvantage to a company of raising capital by an offer of ordinary shares to the public?
  1. AInterest has to be paid on the shares whether or not a profit is made
  2. BThe new shares must be redeemed out of distributable profit within ten years
  3. CThe company's gearing rises sharply because the new shares count as borrowing
  4. DIt dilutes existing control and earnings, and issue costs are heavy

Question 301

[2 marks]cash budget
A business prepares a budget for the coming year. Which of these is a benefit of doing so?
  1. AIt guarantees that the business will earn the profit shown in the budget, whatever happens
  2. BIt removes the need to keep double entry records during the year
  3. CIt sets a standard against which actual results are compared, so action can be taken
  4. DIt fixes selling prices for the whole year so they need not be reviewed

Question 302

[1 marks]cash budget
What does a cash budget show that a budgeted income statement does not?
  1. AThe profit the business expects to earn in each month
  2. BThe months in which the bank balance is expected to run short
  3. CThe gross profit percentage the business expects to achieve
  4. DThe value of the stock the business expects to hold at the year end

Question 303

[2 marks]cash budget
A trader's sales are $72 000 in September and $87 000 in October. Nine tenths of each month's sales are for cash and are received in the month of sale, and the remaining tenth is on credit and is received in the month after the sale. Calculate the total cash received in October.

Answer this when you sit the paper.

Question 304

[2 marks]cash budget
A trader's purchases are $45 000 in October, $72 000 in November and $105 000 in December. One tenth of each month's purchases is paid for in cash at the time of purchase and the remaining nine tenths two months after purchase. Calculate the total paid for purchases in December.

Answer this when you sit the paper.

Question 305

[3 marks]cash budget
A trader's cash balance on 1 October is $2 010. Sales are $72 000 in September and $87 000 in October, nine tenths being received in the month of sale and one tenth in the month after. Purchases are $36 000 in August and $45 000 in October, one tenth being paid at the time of purchase and nine tenths two months later. Rent of $1 200, wages of $13 500 and sundry expenses of $10 200 are paid in October as they are incurred. Calculate the budgeted cash balance at 31 October.

Answer this when you sit the paper.

Question 306

[2 marks]cash budget
Which pair of items in a list of budgeted expenses is left out of a cash budget altogether?
  1. ARent payable and the wages of the month
  2. BSundry expenses and rent payable
  3. COffice equipment bought and wages
  4. DDepreciation and bad debts provision

Question 307

[2 marks]cash budget
A business buys office equipment for $50 000 in November, paying for it at once. How does that purchase appear in the cash budget for November?
  1. AAs a payment of $50 000 in November
  2. BAs a payment spread evenly over the months that follow
  3. CIt does not appear, because it is capital expenditure
  4. DOnly the depreciation on the equipment appears

Question 308

[3 marks]cash budget
A trader's purchases are $39 000 in September and $72 000 in November, one tenth of each month's purchases being paid at the time of purchase and nine tenths two months later. In November he also pays wages of $18 000 and sundry expenses of $4 800, and buys office equipment for $50 000, paying at once. No rent is payable in November. Calculate the total budgeted cash payments for November.

Answer this when you sit the paper.

Question 309

[3 marks]cash budget
Budgeted sales for October, November and December are $87 000, $102 000 and $129 000. Budgeted purchases for the same three months are $45 000, $72 000 and $105 000. Stock is $21 000 on 1 October and $24 000 on 31 December. Calculate the budgeted gross profit for the three months ending 31 December.

Answer this when you sit the paper.

Question 310

[2 marks]cash budget
Office equipment costing $50 000 is bought during a three month budget period. How does it affect the budgeted income statement for those three months?
  1. AThe full $50 000 is charged as an expense
  2. BHalf the cost is charged and half is carried forward
  3. COnly the depreciation for the period appears
  4. DNothing appears at all, since the equipment was paid for in cash

Question 311

[2 marks]cash budget
Why does the closing cash balance in a cash budget differ from the profit in a budgeted income statement for the same period?
  1. AThe cash budget uses selling prices and the income statement uses cost prices
  2. BThe cash budget covers a shorter period than the budgeted income statement
  3. CThe income statement leaves out the cost of the goods that were sold
  4. DThe cash budget records money as it moves, not as it is earned or incurred

Question 312

[1 marks]cash budget
Office furniture is depreciated at $1 350 per month. Calculate the depreciation charged in a budgeted income statement covering three months.

Answer this when you sit the paper.

Question 401

[2 marks]manufacturing account
A manufacturer's opening inventory of raw materials was $10 000, purchases of raw materials for the year were $70 000 and the closing inventory of raw materials was $8 000. Calculate the cost of raw materials consumed.

Answer this when you sit the paper.

Question 402

[3 marks]manufacturing account
A manufacturer's cost of raw materials consumed for the year is $72 000. Direct wages of $108 000 were paid and a further $2 000 of direct wages was unpaid at the year end. Direct factory expenses of $5 500 were paid, of which $500 related to the following year. Calculate the prime cost.

Answer this when you sit the paper.

Question 403

[2 marks]manufacturing account
A manufacturer's prime cost for the year is $187 000 and its factory overheads are $64 000. Work in progress was $15 000 at the start of the year and $16 000 at the end. Calculate the production cost of goods completed.

Answer this when you sit the paper.

Question 404

[2 marks]manufacturing account
At the year end a manufacturer owes $2 000 of direct wages and has paid $500 of direct factory expenses in advance. How do the two adjustments affect the manufacturing account?
  1. AThe unpaid wages are added and the prepayment is deducted
  2. BThe unpaid wages are deducted and the prepayment is added
  3. CBoth are added to the costs charged for the year
  4. DBoth are deducted from the costs charged for the year

Question 405

[2 marks]manufacturing account
A manufacturer's production cost of goods completed for the year is $250 000, and finished goods are transferred to the trading account at cost plus 10%. Calculate the transfer price of the goods completed.

Answer this when you sit the paper.

Question 406

[2 marks]manufacturing account
Prime cost is made up of which costs?
  1. ARaw materials consumed, direct wages and factory overheads
  2. BAll the costs of the factory, including its overheads and its rent
  3. CRaw materials consumed, direct wages and direct expenses
  4. DRaw materials consumed and factory overheads only

Question 407

[2 marks]manufacturing account
Finished goods are transferred from the factory to the warehouse at cost plus 10%, and the closing inventory of finished goods is held at its transfer price of $13 200. Calculate the provision for unrealised profit needed on that inventory.

Answer this when you sit the paper.

Question 408

[2 marks]manufacturing account
The provision for unrealised profit on a manufacturer's finished goods falls from $1 700 to $1 200 over the year. How is the fall treated?
  1. A$500 is credited to the profit and loss account
  2. B$500 is charged to the profit and loss account
  3. C$1 200 is charged to the profit and loss account
  4. D$500 is added to the closing inventory of finished goods

Question 409

[3 marks]manufacturing account
Sales for the year were $500 000. The opening inventory of finished goods was $18 700, goods transferred from the factory during the year were $275 000 and the closing inventory of finished goods was $13 200, all at transfer price. Calculate the gross profit for the year.

Answer this when you sit the paper.

Question 410

[3 marks]manufacturing account
A manufacturing company's gross profit for the year is $219 500. To this are added a manufacturing profit of $25 000 and a decrease of $500 in the provision for unrealised profit, and from it are deducted operating expenses of $65 000. Calculate the net profit for the year.

Answer this when you sit the paper.

Question 411

[2 marks]manufacturing account
Why does a manufacturing company transfer its finished goods to the trading account at cost plus a mark up rather than at cost?
  1. ATo increase the profit shown for the year as a whole, which pleases the shareholders
  2. BTo show what the goods would have cost if bought in, so factory profit is separate
  3. CBecause the transfer price must equal the selling price of the goods
  4. DTo provide for the unrealised profit held in the closing inventory

More sittings of this paper

The answers, and why they are the answers

Sit the paper here to see which ones you got right. Danho explains every question, keeps your score, and works without a connection.

Get it on Google PlayDownload on the App Store