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ZIMSEC A Level · 9197/2 · N2013

Accounting Paper 2 November 2013

Questions
43
Total marks
100
Time allowed
105 min
Syllabus code
9197/2

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Questions
43
Pass mark
26
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Answer every question in the printed order, get marked at the end, then see the answers.

The questions

Question 101

[3 marks]club accounts and incomplete records
A club received $6 000 in subscriptions during the year. Subscriptions in arrear were $1 920 at the start of the year and nil at the end, and subscriptions in advance were $270 at the start and $360 at the end. Calculate the subscriptions income for the year.

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Question 102

[2 marks]club accounts and incomplete records
How are subscriptions received in advance at the end of a club's financial year shown in its accounts?
  1. AAs income of the year in which they are received
  2. BAs a current asset in the balance sheet
  3. CAs part of the accumulated fund at the year end
  4. DAs a current liability in the balance sheet

Question 103

[2 marks]club accounts and incomplete records
A club paid $21 000 to its bar suppliers during the year. Amounts owing to bar suppliers were $2 760 at the start of the year and $2 925 at the end. Calculate the bar purchases for the year.

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Question 104

[2 marks]club accounts and incomplete records
A club's bar sales were $27 300 and its bar purchases $21 165. Bar inventory was $3 015 at the start of the year and $2 805 at the end. Calculate the gross profit on the bar.
  1. A$315
  2. B$5 925
  3. C$6 135
  4. D$6 345

Question 105

[2 marks]club accounts and incomplete records
A club paid rates of $1 200 during the year. Rates prepaid were $300 at the start of the year and $375 at the end. Calculate the rates charged in the income and expenditure account.

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Question 106

[2 marks]club accounts and incomplete records
A club paid sundry clubhouse expenses of $4 800 during the year. Amounts owing for these expenses were $105 at the start of the year and $135 at the end. Calculate the charge for sundry clubhouse expenses in the income and expenditure account.

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Question 107

[3 marks]club accounts and incomplete records
A club's clubhouse cost $21 000 and is depreciated at 10% per annum on cost. An extension costing $12 000 was completed and brought into use on 1 April 2010. Calculate the depreciation charge for the year ended 31 December 2010.
  1. A$900
  2. B$2 100
  3. C$3 000
  4. D$3 300

Question 108

[1 marks]club accounts and incomplete records
A club paid $570 for the hire of extra chairs during the year and still owed $120 for chair hire at the year end. Calculate the charge for the hire of chairs in the income and expenditure account.

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Question 109

[3 marks]club accounts and incomplete records
A club's income for the year was subscriptions $3 990, gross profit on the bar $5 925, entrance fees $1 200, gate takings $1 800 and sale of programmes $15. Its expenditure was rates $1 125, bar man's wages $2 700, hire of chairs $690, other tournament expenses $300, sundry clubhouse expenses $4 830 and depreciation of the clubhouse $3 000. Calculate the surplus of income over expenditure.
  1. A$285
  2. B$2 985
  3. C$3 285
  4. D$5 985

Question 110

[3 marks]club accounts and incomplete records
On 1 January 2010 a club's assets and liabilities were clubhouse at cost $21 000 with accumulated depreciation of $6 300, bar inventory $3 015, prepaid rates 300,cash300, cash 945, subscriptions in arrear $1 920, amounts owing for bar purchases $2 760, clubhouse expenses owing $105 and subscriptions in advance $270. Calculate the accumulated fund at 1 January 2010.
  1. A$15 825
  2. B$17 745
  3. C$18 285
  4. D$24 045

Question 111

[2 marks]club accounts and incomplete records
Which statement correctly distinguishes a receipts and payments account from an income and expenditure account?
  1. AIt records cash movements only, capital as well as revenue
  2. BIt records only the revenue income earned in the year
  3. CIt adjusts every figure for accruals and prepayments
  4. DIt ends with a surplus or a deficit for the year

Question 201

[2 marks]company ratios, gearing and investment appraisal
A company's net profit before debenture interest is $100 000 and it has 5% debentures of $350 000 in issue. Calculate its operating profit after debenture interest.

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Question 202

[2 marks]company ratios, gearing and investment appraisal
A company's net profit before debenture interest is $100 000. It has 5% debentures of $450 000 and 7% preference shares totalling $500 000 in issue. Calculate its operating profit after debenture interest.
  1. A$42 500
  2. B$65 000
  3. C$77 500
  4. D$100 000

Question 203

[2 marks]company ratios, gearing and investment appraisal
A company's net profit before debenture interest is $100 000. It has no debentures in issue but has 7% preference shares totalling $750 000. Calculate its operating profit.
  1. A$47 500
  2. B$52 500
  3. C$100 000
  4. D$152 500

Question 204

[3 marks]company ratios, gearing and investment appraisal
A company's profit after debenture interest is $77 500 and all of it is to be distributed. It has 7% preference shares totalling $500 000 and 600 000 ordinary shares of $1 each in issue. Calculate the ordinary dividend payable.

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Question 205

[2 marks]company ratios, gearing and investment appraisal
A company pays a total ordinary dividend of $42 500 on 600 000 ordinary shares of $1 each whose market value is $1.12 each. Its profit after debenture interest is $77 500 and its preference dividend is $35 000. Calculate the dividend yield on the ordinary shares.
  1. A5.21%
  2. B6.32%
  3. C7.08%
  4. D11.53%

Question 206

[3 marks]company ratios, gearing and investment appraisal
A company's earnings attributable to its ordinary shareholders are $54 500. It has 300 000 ordinary shares of $1 each in issue and their market value is $1.50 each. Calculate the price/earnings ratio, to two decimal places.

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Question 207

[3 marks]company ratios, gearing and investment appraisal
A company has 7% preference shares of $400 000, 5% debentures of $350 000, ordinary shares of $300 000 and retained earnings of $20 000. Calculate its gearing, measured as fixed return capital as a percentage of total capital employed.
  1. A29.91%
  2. B32.71%
  3. C70.09%
  4. D234.38%

Question 208

[3 marks]company ratios, gearing and investment appraisal
A company has 7% preference shares of $750 000, no debentures, ordinary shares of $900 000 and retained earnings of $36 000. Calculate its gearing, measured as fixed return capital as a percentage of total capital employed, to two decimal places.

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Question 209

[3 marks]company ratios, gearing and investment appraisal
Three companies each earn $100 000 before debenture interest. Yellow Ltd has earnings per ordinary share of 18.17 cents and a price/earnings ratio of 8.26, Brown Ltd 7.08 cents and 15.81, and Coffee Ltd 5.28 cents and 30.32. On these figures, where would you advise an investor to buy ordinary shares, and why?
  1. ACoffee Ltd, because its price/earnings ratio is highest
  2. BBrown Ltd, its figures lie between the other two
  3. CCoffee Ltd, its earnings per share is the lowest
  4. DYellow Ltd, its shares cost least per dollar earned

Question 210

[2 marks]company ratios, gearing and investment appraisal
In a year of unusually high profits, is it better to hold ordinary shares or debentures in a geared company?
  1. ADebentures, because interest is paid before dividends
  2. BOrdinary shares, as the surplus profit is all theirs
  3. CDebentures, because their rate rises with the profit
  4. DOrdinary shares, because their dividend is fixed by law

Question 301

[1 marks]standard costing and variance analysis
What is a standard hour?
  1. AThe output that should be produced in one hour
  2. BThe time one unit of output should take to make
  3. CAn hour of work paid at the standard wage rate
  4. DThe number of hours a factory works each week

Question 302

[3 marks]standard costing and variance analysis
The standard price of a material is $1.80 per kg and the standard usage is 8.5 kg per unit. During June, 160 000 kg were bought for $304 000 and 19 000 units were produced. Calculate the material price variance.
  1. A$16 000 adverse
  2. B$16 000 favourable
  3. C$16 150 adverse
  4. D$16 150 favourable

Question 303

[3 marks]standard costing and variance analysis
The standard usage of a material is 8.5 kg per unit at a standard price of $1.80 per kg. During June, 19 000 units were produced using 160 000 kg, which had been bought at $1.90 per kg. Calculate the material usage variance.
  1. A$1 500 favourable
  2. B$2 700 adverse
  3. C$2 700 favourable
  4. D$2 850 favourable

Question 304

[2 marks]standard costing and variance analysis
A month's material price variance is $16 000 adverse and its material usage variance is $2 700 favourable. Calculate the material total cost variance.
  1. A$13 300 adverse
  2. B$13 300 favourable
  3. C$18 700 adverse
  4. D$18 700 favourable

Question 305

[3 marks]standard costing and variance analysis
The standard labour rate is $8.00 per hour and the standard time is 0.25 hour per unit. During June, 19 000 units were produced in 5 000 direct labour hours and total wages were $46 000. Calculate the labour rate variance.
  1. A$5 700 adverse
  2. B$6 000 adverse
  3. C$6 000 favourable
  4. D$8 000 adverse

Question 306

[3 marks]standard costing and variance analysis
The standard time for a unit is 0.25 hour at a standard rate of $8.00 per hour. During June, 19 000 units were produced in 5 000 direct labour hours at an actual rate of $9.20 per hour. Calculate the labour efficiency variance.
  1. A$250 adverse
  2. B$2 000 adverse
  3. C$2 000 favourable
  4. D$2 300 adverse

Question 307

[2 marks]standard costing and variance analysis
A month's labour rate variance is $6 000 adverse and its labour efficiency variance is $2 000 adverse. Calculate the labour total cost variance.
  1. A$4 000 adverse
  2. B$4 000 favourable
  3. C$8 000 adverse
  4. D$8 000 favourable

Question 308

[2 marks]standard costing and variance analysis
A factory reports a favourable material price variance together with an adverse material usage variance. What is the most likely link between them?
  1. AThe material was bought in smaller quantities than usual
  2. BThe standard price had been set too high for the year
  3. CMore units were produced than the budget allowed for
  4. DCheaper material of poorer quality was wasted in use

Question 309

[2 marks]standard costing and variance analysis
A factory reports a favourable labour rate variance together with an adverse material usage variance. What is the most likely link between them?
  1. ALower graded workers were used and spoiled more material
  2. BA bonus was paid to workers for saving material
  3. CMaterial prices fell during the period
  4. DThe standard usage had been set too generously

Question 310

[2 marks]standard costing and variance analysis
A factory reports an adverse labour rate variance together with a favourable labour efficiency variance. What is the most likely link between them?
  1. AThe workers were idle for part of the month
  2. BOvertime was worked at the standard hourly rate
  3. CHigher paid skilled workers worked faster
  4. DThe standard rate had been set above the market rate

Question 311

[2 marks]standard costing and variance analysis
A factory reports an adverse material usage variance together with an adverse labour efficiency variance. What is the most likely link between them?
  1. AThe material price rose sharply during the month
  2. BWages were increased in the middle of the month
  3. CFewer units were produced than were budgeted
  4. DPoor quality material caused scrap and rework

Question 401

[2 marks]correction of errors and suspense account
A credit sale of $600 was correctly entered in the sales journal but was never posted to the customer's account. Which journal entry corrects this?
  1. ADebit Suspense $600, credit Trade receivables $600
  2. BDebit Trade receivables $600, credit Suspense $600
  3. CDebit Trade receivables $600, credit Sales $600
  4. DDebit Sales $600, credit Trade receivables $600

Question 402

[2 marks]correction of errors and suspense account
Sales returns of $190 were omitted from the books altogether. Which journal entry corrects this?
  1. ADebit Sales returns $190, credit Trade receivables $190
  2. BDebit Trade receivables $190, credit Sales returns $190
  3. CDebit Sales returns $190, credit Suspense $190
  4. DDebit Suspense $190, credit Sales returns $190

Question 403

[2 marks]correction of errors and suspense account
A contra of $145 between a debtor and a creditor was entered in the debtors ledger but not in the creditors ledger. Which journal entry corrects this?
  1. ADebit Trade receivables $145, credit Trade payables $145
  2. BDebit Suspense $145, credit Trade payables $145
  3. CDebit Trade payables $145, credit Trade receivables $145
  4. DDebit Trade payables $145, credit Suspense $145

Question 404

[3 marks]correction of errors and suspense account
Sales include $320 received on the sale of plant and machinery whose book value was $240. Which journal entry corrects this?
  1. ADebit Sales $320, credit Plant and machinery $320
  2. BDebit Plant and machinery $240, credit Sales $240
  3. CDebit Suspense $320, credit Plant and machinery $240 and profit on disposal $80
  4. DDebit Sales $320, credit Plant and machinery $240 and profit on disposal $80

Question 405

[2 marks]correction of errors and suspense account
The debit side of the cash book was overcast by $220, and the bank balance is an overdraft. Which journal entry corrects this?
  1. ADebit Suspense $220, credit Bank $220
  2. BDebit Bank $220, credit Suspense $220
  3. CDebit Bank $220, credit Cash $220
  4. DDebit Suspense $220, credit Sales $220

Question 406

[3 marks]correction of errors and suspense account
Investments costing $1 720 were sold for $2 100. The receipt was entered in the cash book but was never posted to any other account. Which journal entry corrects this?
  1. ADebit Suspense $1 720, credit Investments $1 720
  2. BDebit Investments $1 720, credit Suspense $1 720
  3. CDebit Suspense $2 100, credit Investments $2 100
  4. DDebit Suspense $2 100, credit Investments $1 720 and profit on sale $380

Question 407

[2 marks]correction of errors and suspense account
Which kind of error requires an entry in the suspense account?
  1. AA complete omission of both sides of a transaction
  2. BAn error of principle in an otherwise balanced entry
  3. CA one sided error, where only one entry was made
  4. DA compensating error of two equal opposite amounts

Question 408

[2 marks]correction of errors and suspense account
A company's trade receivables of $8 490 must be increased by a credit sale of $600 that was never posted and reduced by sales returns of $190 that were omitted. A provision for bad debts of 2% of the corrected trade receivables is required. Calculate the provision needed.

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Question 409

[2 marks]correction of errors and suspense account
A suspense account opened the year with a credit balance of $1 575. The correcting entries credited it with 600and600 and 145 and debited it with 220and220 and 2 100. Calculate the balance remaining on the suspense account.

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Question 410

[3 marks]correction of errors and suspense account
A company's draft profit for the year is $5 047. These corrections are needed: closing inventory was understated by $100, sales returns of $190 were omitted, $320 of plant sale proceeds were wrongly included in sales when the plant had a book value of $240, a profit of $380 on the sale of investments was never recorded, and the provision for bad debts is to be reduced by $20. Calculate the revised profit for the year.
  1. A$4 917
  2. B$5 037
  3. C$5 077
  4. D$5 117

Question 411

[2 marks]correction of errors and suspense account
One inventory sheet was undercast by $100 at the year end. What effect does this have before it is corrected?
  1. AProfit is overstated and inventory understated by $100
  2. BProfit and closing inventory are both understated by $100
  3. CProfit is understated by $100 but inventory is correct
  4. DNeither profit nor closing inventory is affected by it

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