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ZIMSEC A Level · 6001/2 · J2019

Accounting Paper 2 June 2019

Questions
46
Total marks
100
Time allowed
105 min
Syllabus code
6001/2

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Questions
46
Pass mark
28
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Answer every question in the printed order, get marked at the end, then see the answers.

The questions

Question 101

[2 marks]correction of errors and suspense account
A bookkeeper posts the cost of a new delivery van to the motor expenses account. The trial balance still agrees. What kind of error is this?
  1. AAn error of omission
  2. BAn error of original entry
  3. CA compensating error
  4. DAn error of principle

Question 102

[2 marks]correction of errors and suspense account
A sales invoice for $560 is written in the sales day book as $650 and is then posted as $650 to both the customer's account and the sales account. What kind of error is this?
  1. AA reversal of entries
  2. BAn error of original entry
  3. CAn error of principle
  4. DAn error of commission

Question 103

[2 marks]correction of errors and suspense account
The purchases account has been overcast by $100 and the sales account has also been overcast by $100. What kind of error is this, and what is its effect on the trial balance?
  1. AA reversal of entries, and the trial balance will not agree
  2. BA compensating error, and the trial balance will still agree
  3. CAn error of commission, and the trial balance will not agree
  4. DAn error of original entry, and the trial balance will agree

Question 104

[2 marks]correction of errors and suspense account
A trial balance was extracted and totalled $173 305 on the debit side and $173 265 on the credit side. A suspense account was opened for the difference. What is the balance on that suspense account?
  1. A$40 credit
  2. B$40 debit
  3. C$80 credit
  4. D$20 credit

Question 105

[3 marks]correction of errors and suspense account
Returns outwards of $25 have been posted to the debit side of the returns inwards account, and no other entry was made for them. Which journal entry corrects this?
  1. ADr Returns outwards $25; Cr Returns inwards $25
  2. BDr Suspense $25; Cr Returns outwards $25
  3. CDr Returns inwards $25; Cr Returns outwards $25; Cr Suspense $50
  4. DDr Suspense $50; Cr Returns inwards $25; Cr Returns outwards $25

Question 106

[3 marks]correction of errors and suspense account
Discounts allowed of $20 have been credited to the discounts received account, and no other entry was made for them. Which journal entry corrects this?
  1. ADr Discounts received $20; Cr Discounts allowed $20
  2. BDr Discounts allowed $20; Dr Discounts received $20; Cr Suspense $40
  3. CDr Discounts allowed $20; Cr Discounts received $20
  4. DDr Suspense $40; Cr Discounts allowed $20; Cr Discounts received $20

Question 107

[3 marks]correction of errors and suspense account
Insurance of $30 paid on the owner's private policy was charged to the business insurance account. In trying to correct the error the bookkeeper debited the insurance account with a further $30. Which journal entry now puts the books right?
  1. ADr Drawings $60; Cr Insurance $30; Cr Suspense $30
  2. BDr Drawings $30; Cr Insurance $30
  3. CDr Drawings $30; Dr Suspense $30; Cr Insurance $60
  4. DDr Insurance $60; Cr Drawings $30; Cr Suspense $30

Question 108

[2 marks]correction of errors and suspense account
Fixtures and fittings bought during the year for $3 500 were debited to the purchases account. The business charges no depreciation in the year of purchase. What happens when this error is corrected?
  1. AProfit rises by $3 500 without any entry in suspense
  2. BProfit falls by $3 500 and non-current assets rise
  3. CProfit is unchanged and the non-current assets rise
  4. DProfit rises by $3 500 and the suspense account is cleared

Question 109

[2 marks]correction of errors and suspense account
A cheque for $75 received from a credit customer has been dishonoured by the bank, and no entry at all has been made for the dishonour. Which entry records it?
  1. ADr Suspense $75; Cr Bank $75
  2. BDr Bank $75; Cr Trade receivables $75
  3. CDr Trade receivables $75; Cr Bank $75
  4. DDr Bad debts $75; Cr Trade receivables $75

Question 110

[1 marks]correction of errors and suspense account
Fixtures and fittings bought during the year for $3 500 were debited to the purchases account by mistake. No depreciation is charged in the year of purchase. By how much is the net profit for the year understated?

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Question 111

[3 marks]correction of errors and suspense account
A trader's draft accounts show a net profit of $4 000. These errors are then found: (i) returns outwards of $25 were posted to the debit of returns inwards; (ii) discounts allowed of $20 were credited to discounts received; (iii) the insurance account carries $60 that is the owner's private premium; (iv) fixtures and fittings bought for $3 500 were debited to purchases, and no depreciation is charged in the year of purchase. Calculate the corrected net profit.

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Question 201

[2 marks]manufacturing account and unrealised profit
A manufacturer held raw materials of $700 at the start of the year and $582 at the end of the year, and bought raw materials costing $10 110 during the year. Calculate the cost of raw materials consumed.

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Question 202

[2 marks]manufacturing account and unrealised profit
A manufacturer's cost of raw materials consumed for the year is $10 228 and its direct factory wages are $7 900. Calculate the prime cost for the year.

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Question 203

[2 marks]manufacturing account and unrealised profit
Freehold buildings that cost $9 000 are depreciated at 2 1/2% per annum on cost. The charge is apportioned 2/5 to the factory and 3/5 to administration. What amount is charged in the manufacturing account?
  1. A$90
  2. B$135
  3. C$225
  4. D$450

Question 204

[1 marks]manufacturing account and unrealised profit
Plant and machinery costing $33 000 is depreciated at 10% per annum on cost, and all of it is used in the factory. Calculate the depreciation charged as a factory overhead for the year.

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Question 205

[3 marks]manufacturing account and unrealised profit
A manufacturer's costs for the year were indirect factory wages $2 940, factory maintenance $1 948, indirect factory materials $780, factory power $2 826, depreciation of freehold buildings charged to the factory $90 and depreciation of plant and machinery $3 300. Calculate the total factory overheads.

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Question 206

[3 marks]manufacturing account and unrealised profit
A manufacturer's prime cost for the year is $18 128 and its factory overheads are $11 884. Work in progress was $2 788 at the start of the year and $3 300 at the end of the year. Calculate the cost of production for the year.

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Question 207

[2 marks]manufacturing account and unrealised profit
A company's cost of production for the year is $29 500. All goods manufactured are transferred from the manufacturing account to the income statement at cost plus 10%. At what value are they transferred?
  1. A$26 550
  2. B$29 500
  3. C$32 450
  4. D$32 800

Question 208

[2 marks]manufacturing account and unrealised profit
A manufacturer transfers its finished goods to the income statement at cost plus 10%. Its closing inventory of finished goods, valued at that transfer price, is $3 696. Calculate the provision for unrealised profit needed at the year end.

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Question 209

[1 marks]manufacturing account and unrealised profit
A manufacturer's provision for unrealised profit was $264 at the start of the year, and the provision required at the end of the year is $336. Calculate the increase in the provision to be charged against profit.

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Question 210

[2 marks]manufacturing account and unrealised profit
A manufacturer held finished goods of $2 904 at the start of the year and $3 696 at the end of the year, both at transfer price. Goods with a transfer price of $32 450 were completed and transferred from the factory during the year. Calculate the cost of sales.

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Question 211

[3 marks]manufacturing account and unrealised profit
A manufacturing company had sales of $45 184 and a cost of sales of $31 658 for the year. Its factory profit for the year was $2 950 and the provision for unrealised profit rose by $72. Its expenses were selling and distribution $3 578, administrative $4 658 and depreciation of buildings charged to administration $135. Calculate the profit for the year.

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Question 212

[2 marks]manufacturing account and unrealised profit
Why does a business that makes the goods it sells prepare a manufacturing account as well as an income statement?
  1. ATo find the cost of producing the goods it has completed
  2. BTo value its closing inventory at the current selling price
  3. CTo keep the factory wages out of the income statement
  4. DTo show the tax authorities how many units it produced

Question 301

[2 marks]ratio analysis and interpretation
A bank is asked to lend money to a limited company and studies the company's financial statements before deciding. What is the bank mainly looking for?
  1. AWhether the company can pay the interest and the loan
  2. BHow much the directors of the company are paid each year
  3. CWhether the company's share price is likely to rise soon
  4. DThe value of the dividends paid to ordinary shareholders

Question 302

[2 marks]ratio analysis and interpretation
A company's issued ordinary share capital is $4 960 and its ordinary shares have a nominal value of $0.25 each. Calculate the number of ordinary shares in issue.

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Question 303

[3 marks]ratio analysis and interpretation
A company has 19 840 ordinary shares in issue in both years. Its profit for the year was $4 760 in 2015 and $5 830 in 2016. What is the earnings per share for the two years?
  1. A0.24and0.24 and 0.29
  2. B0.96and0.96 and 1.18
  3. C0.18and0.18 and 0.23
  4. D0.38and0.38 and 0.47

Question 304

[2 marks]ratio analysis and interpretation
At 31 December 2016 a company had current assets of $49 808 and current liabilities of $21 238. Calculate its current ratio, to two decimal places.

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Question 305

[2 marks]ratio analysis and interpretation
At 31 December 2015 a company had current assets of $46 224, of which inventory was $20 073, and current liabilities of $18 432. Calculate its acid-test ratio, to two decimal places.

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Question 306

[2 marks]ratio analysis and interpretation
At 31 December 2016 a company had current assets of $49 808, of which inventory was $25 228, and current liabilities of $21 238. Calculate its acid-test ratio, to two decimal places.

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Question 307

[3 marks]ratio analysis and interpretation
A company's revenue for the year ended 31 December 2015 was $243 150 and its trade receivables at that date were $20 105. All sales are on credit. Using a 365 day year, calculate the trade receivables collection period in days, to two decimal places.

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Question 308

[2 marks]ratio analysis and interpretation
A company's revenue for the year ended 31 December 2016 was $291 950 and its trade receivables at that date were $21 685. All sales are on credit. Using a 365 day year, calculate the trade receivables collection period in days, to two decimal places.

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Question 309

[2 marks]ratio analysis and interpretation
A company's profit for the year ended 31 December 2016 was $5 830 and its total equity at that date was $25 000. Calculate the return on equity as a percentage, to two decimal places.

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Question 310

[3 marks]ratio analysis and interpretation
Over two years a company's current ratio fell from 2.51:1 to 2.35:1 and its acid-test ratio fell from 1.42:1 to 1.16:1. Over the same period its inventory rose from $20 073 to $25 228 and its cash at bank fell from $6 046 to $2 895. What do these figures show?
  1. ALiquidity has improved because the inventory held has risen
  2. BLiquidity has weakened, with more of the cash tied up in inventory
  3. CLiquidity is unchanged since both ratios are still above 1:1
  4. DThe company can no longer pay its current liabilities on time

Question 311

[2 marks]ratio analysis and interpretation
Which current asset is left out of the acid-test ratio, and why is it left out?
  1. ATrade receivables, because some of them may never pay
  2. BPrepayments, because no cash will ever be received for them
  3. CInventory, because it is the slowest to turn into cash
  4. DCash at bank, because it is not owed by any customer

Question 401

[1 marks]overhead apportionment and job costing
In costing, what is a cost centre?
  1. AA unit of product for which a cost is found
  2. BThe amount charged to a customer for one job
  3. CA place or function to which costs are charged
  4. DThe department that controls the factory budget

Question 402

[2 marks]overhead apportionment and job costing
What is meant by an under-absorption of overheads?
  1. AThe overhead incurred is less than the amount budgeted
  2. BThe absorption rate was set higher than it should be
  3. CThe department worked more hours than the budget allowed
  4. DThe overhead absorbed is less than the overhead incurred

Question 403

[2 marks]overhead apportionment and job costing
What is meant by the margin of safety?
  1. AThe profit left after all the fixed costs have been paid
  2. BThe excess of the selling price over the variable cost
  3. CThe sales needed before the business makes any profit
  4. DThe amount by which sales exceed the break-even sales level

Question 404

[2 marks]overhead apportionment and job costing
A factory has two production departments and two service departments, a powerhouse and a maintenance department. The powerhouse supplies power to the maintenance department, but the maintenance department does no work for the powerhouse. How should the two service department costs be reapportioned?
  1. AThe maintenance department first, since its cost is larger
  2. BThe powerhouse first, since maintenance does no work for it
  3. CBoth together, split between the production departments
  4. DIn either order, since the totals reapportioned are the same

Question 405

[2 marks]overhead apportionment and job costing
Powerhouse overheads of $51 000 are reapportioned on units of power used. The machine shop used 21 000 units, the assembly shop 6 000 units and the maintenance department 3 000 units. Calculate the powerhouse cost reapportioned to the machine shop.

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Question 406

[3 marks]overhead apportionment and job costing
A machine shop has overheads of its own of $131 050. Powerhouse overheads of $51 000 are reapportioned on units of power used, of which the machine shop used 21 000 out of 30 000 units in total. The maintenance department's overheads of $141 900, plus the $5 100 share it receives from the powerhouse, are reapportioned on maintenance hours, of which the machine shop used 9 000 out of 12 000 hours in total. Calculate the total overheads of the machine shop.

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Question 407

[2 marks]overhead apportionment and job costing
A machine shop's total budgeted overheads for the coming year are $277 000 and it expects to work 55 400 machine hours. Overheads are absorbed on machine hours. Calculate the overhead absorption rate per machine hour, in dollars.

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Question 408

[2 marks]overhead apportionment and job costing
An assembly shop's total budgeted overheads for the coming year are $192 000 and it expects to work 24 000 direct labour hours. Overheads are absorbed on direct labour hours. Calculate the overhead absorption rate per direct labour hour, in dollars.

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Question 409

[3 marks]overhead apportionment and job costing
A job passes through two departments. The machine shop absorbs overheads at $5.00 per machine hour and the assembly shop at $8.00 per direct labour hour. In the machine shop the job took 200 machine hours and 100 direct labour hours; in the assembly shop it took 50 machine hours and 300 direct labour hours. Calculate the total overhead absorbed by the job.

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Question 410

[2 marks]overhead apportionment and job costing
Job A101 used direct materials of $2 000 in the machine shop and $8 000 in the assembly shop, and direct labour of $10 000 in the machine shop and $5 000 in the assembly shop. Overheads absorbed by the job came to $3 400. Calculate the total cost of job A101.

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Question 411

[2 marks]overhead apportionment and job costing
The total cost of job A101 is $28 400 and the company adds a mark-up of 20% on cost to every job. Calculate the selling price of job A101.

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Question 412

[2 marks]Marginal and absorption costing
How does marginal costing differ from absorption costing?
  1. AIt charges each fixed factory overhead to the units made
  2. BIt values the closing inventory at variable production cost
  3. CIt reports a higher profit than absorption costing every year
  4. DIt is the only method that may be used for costing a job

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