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ZIMSEC A Level · 6001/2 · N2019

Accounting Paper 2 November 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]absorption costing and job costing
State one use of absorption costing in a manufacturing business.
  1. AValuing closing inventory at full production cost
  2. BDeciding how much cash the business should hold
  3. CWorking out the tax due on a dividend payment
  4. DMeasuring the interest cover on a debenture

Question 102

[2 marks]absorption costing and job costing
What is the difference between overhead allocation and overhead apportionment?
  1. AAllocation shares a common cost; apportionment does not
  2. BAllocation charges a whole cost to one centre; apportionment shares it
  3. CAllocation applies only to fixed costs; apportionment to variable costs
  4. DAllocation is done monthly; apportionment is done yearly

Question 103

[2 marks]absorption costing and job costing
A factory's overheads for a period are: machining $23 850, assembly $17 380, canteen $7 630 and stores $12 140. The canteen and the stores are service departments, and the whole of their cost is eventually apportioned to the two production departments. Calculate the combined total overhead of the machining and assembly departments after apportionment, in dollars.

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Question 104

[2 marks]absorption costing and job costing
Which is the most suitable basis for apportioning the cost of a factory canteen between departments?
  1. ANumber of machine hours worked
  2. BFloor area occupied by each department
  3. CValue of materials issued to each department
  4. DNumber of employees in each department

Question 105

[3 marks]absorption costing and job costing
A factory's canteen serves the stores staff, and the stores issues materials to the canteen. Why can the costs of the two service departments not simply be shared out one after the other in a single pass?
  1. ABecause a service department carries no overhead cost of its own
  2. BBecause the production departments use different bases
  3. CBecause each one's total depends on a share of the other's
  4. DBecause service costs are period costs, not product costs

Question 106

[2 marks]absorption costing and job costing
A production department absorbs overhead at $5.2871 per machine hour. It worked 6 500 machine hours in the period and its actual overhead was $30 000. Calculate the amount by which overhead was over-recovered.
  1. A$1 722.60
  2. B$2 643.55
  3. C$4 366.15
  4. D$34 366.15

Question 107

[2 marks]absorption costing and job costing
A production department's actual overhead for a period turns out to be greater than the overhead it absorbed into its output. How is the difference treated?
  1. ACredited to the income statement for the period
  2. BCharged as an expense in the income statement
  3. CAdded to the value of the closing inventory
  4. DCarried forward and set against next period's overhead

Question 108

[3 marks]absorption costing and job costing
A toy takes 2 machine hours in the machining department, where overhead is absorbed at $5.2871 per machine hour, and 1.25 direct labour hours in the assembly department, where overhead is absorbed at $7.3194 per direct labour hour. Calculate the overhead absorbed by one toy, correct to two decimal places.

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Question 109

[3 marks]absorption costing and job costing
A toy takes $12 of direct material and $2 of direct labour in the machining department and $15 of direct material and $3 of direct labour in the assembly department, and it absorbs $19.72 of overhead. Calculate the total cost of an order for 10 000 of these toys, in dollars.

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Question 110

[2 marks]absorption costing and job costing
A toy costs $51.72 to produce and the company works to a gross profit margin of 33 1/3 %. Calculate the selling price of one toy.
  1. A$34.48
  2. B$68.96
  3. C$77.58
  4. D$86.20

Question 111

[2 marks]absorption costing and job costing
Why should a manufacturing firm have a health and safety department?
  1. ATo meet the law and cut accidents and lost output
  2. BTo value the closing inventory of finished goods
  3. CTo set the overhead absorption rate for the year
  4. DTo raise the selling price of the firm's own products

Question 201

[1 marks]club accounts, receipts and payments
What are the ancillary activities of a club or society?
  1. AThe main purpose the club was formed for
  2. BFees charged to members for life membership
  3. CGifts of money received from outsiders
  4. DSide trading activities run to raise funds

Question 202

[2 marks]club accounts, receipts and payments
How does a receipts and payments account differ from an income and expenditure account?
  1. AIt is prepared on the accruals basis, not the cash basis
  2. BIt is a summary of the cash book, not a profit measure
  3. CIt shows a surplus or deficit, not a cash balance
  4. DIt charges depreciation, which the other never does

Question 203

[2 marks]club accounts, receipts and payments
A club buys equipment for $11 110 and makes an investment of $12 000 during the year. Where do these two payments appear?
  1. AIn the receipts and payments account only
  2. BIn the income and expenditure account only
  3. CIn both accounts, at the same amount
  4. DIn neither, as they are not club transactions

Question 204

[3 marks]club accounts, receipts and payments
A club paid $12 000 for refreshments during the year. Refreshments payables were $1 000 at the start of the year and $6 000 at the end. The inventory of refreshments was $4 000 at the start and $6 500 at the end, and sales of refreshments were $15 000. Calculate the profit on refreshments for the year, in dollars.

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Question 205

[2 marks]club accounts, receipts and payments
Subscriptions of $360 were owing to a club at 1 January 2017. Only $240 of that amount was ever received, and the rest is to be written off. Calculate the subscriptions written off, in dollars.

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Question 206

[2 marks]club accounts, receipts and payments
A club's subscriptions for the year amount to $27 000. At 1 January 2017 $360 was owing and $300 had been prepaid. During the year $27 120 was received, and $120 of the arrears was written off. Calculate the subscriptions prepaid at 31 December 2017, in dollars.

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Question 207

[2 marks]club accounts, receipts and payments
A club received donations of $10 000 during the year, of which 90% was given for the construction of a music centre. Calculate the amount of the donations credited to the income and expenditure account, in dollars.

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Question 208

[2 marks]club accounts, receipts and payments
A club's life membership fund stood at $7 000 at the start of the year and a further $5 000 of life membership fees was received during the year. The club spreads the whole of the fund over its estimated life of 10 years. Calculate the amount transferred to the income and expenditure account for the year, in dollars.

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Question 209

[2 marks]club accounts, receipts and payments
A club's equipment cost $60 000 at 1 January 2017, with a provision for depreciation of $22 000. During the year equipment costing $11 110 was bought, and equipment that had cost $9 000, carrying accumulated depreciation of $7 290, was sold. Depreciation is 10% per annum on book value, charged in full in the year of purchase and not at all in the year of sale. Calculate the depreciation charge on equipment for the year, in dollars.

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Question 210

[2 marks]club accounts, receipts and payments
A club sold equipment for $2 000. The equipment had cost $9 000 and its accumulated depreciation at the date of sale was $7 290. Calculate the profit on the sale, in dollars.

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Question 211

[2 marks]club accounts, receipts and payments
A club invested $12 000 in a 10% investment on 1 October 2017, and no interest had been received by the year end of 31 December 2017. Calculate the investment income to be brought into the income and expenditure account for the year, in dollars.

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Question 212

[3 marks]club accounts, receipts and payments
A club's payments for the year were dance expenses $1 200, stationery 550,rent550, rent 1 000, insurance 270,equipment270, equipment 11 110 and an investment of $12 000. Insurance of $20 was outstanding at the start of the year and $50 was prepaid at the end. Subscriptions of $120 were written off, and depreciation for the year is $16 000 on the clubhouse and $4 740 on equipment. Calculate the total expenditure in the income and expenditure account, in dollars.

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Question 301

[1 marks]partnership retirement and appropriation
What is goodwill in accounting?
  1. AThe total value of a business's non-current assets
  2. BThe capital a partner brings into a partnership
  3. CThe excess of a business's price over its net assets
  4. DProfit kept in the business instead of drawn out

Question 302

[2 marks]partnership retirement and appropriation
State one advantage of a partnership over a sole proprietorship.
  1. AProfits do not have to be shared with anyone
  2. BThe owners gain limited liability for debts
  3. CDecisions can be taken without consulting anyone
  4. DMore capital can be raised for the business

Question 303

[2 marks]partnership retirement and appropriation
State one disadvantage of a partnership compared with a sole proprietorship.
  1. ALess capital is available to the business
  2. BProfits must be shared and decisions agreed
  3. CThe business must publish its final accounts
  4. DEach partner is taxed as a separate company

Question 304

[3 marks]partnership retirement and appropriation
Ami, Bibi and Mimi are in partnership sharing profits and losses 2 : 2 : 1. Bibi retired when her capital account stood at $44 000. On the day she retired the non-current assets fell in value by $5 000, and her current account then had a debit balance of $670. Calculate the amount owing to Bibi on her retirement, in dollars.

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Question 305

[2 marks]partnership retirement and appropriation
Inventory that cost $6 000 was damaged. It can now be sold for $7 200, but only after repair costs of $2 000 are incurred. Calculate the amount by which the inventory must be written down, in dollars.

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Question 306

[2 marks]partnership retirement and appropriation
A partnership's gross profit for the year is $72 000 and accrues evenly through the year, as do general expenses of $10 000 for the year. Bad debts of $800 were written off in February. Calculate the net profit for the three months ended 31 March, in dollars.

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Question 307

[3 marks]partnership retirement and appropriation
A partnership's gross profit for the year is $72 000 and accrues evenly through the year, as do general expenses of $10 000 for the year. Damaged inventory was written down by $800 at the year end. Calculate the net profit for the nine months ended 31 December, in dollars.

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Question 308

[2 marks]partnership retirement and appropriation
A partner's capital account stood at $118 000 throughout the nine months ended 31 December, and interest on capital is allowed at 10% per annum. Calculate his interest on capital for those nine months, in dollars.

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Question 309

[3 marks]partnership retirement and appropriation
A partnership's net profit for the three months ended 31 March is $14 700. Ami is entitled to a salary of $2 100 a year, and interest on capital of 10% a year is allowed on capitals of Ami $120 000, Bibi $44 000 and Mimi $80 000. Calculate the residual profit available for sharing between the partners for the three months, in dollars.

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Question 310

[2 marks]partnership retirement and appropriation
A retiring partner's current account had a debit balance of $5 000 brought forward. Before she retired she was credited with $1 100 of interest on capital and $3 230 as her share of profit, and she made no drawings. Calculate the debit balance transferred from her current account to her capital account, in dollars.

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Question 311

[3 marks]partnership retirement and appropriation
Ami's current account had a credit balance of $15 000 brought forward. During the year he was credited with a salary of $525, interest on capital of $11 850 and profit shares totalling $21 785, and he made no drawings. Calculate the balance carried down on his current account, in dollars.

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Question 401

[2 marks]company share capital and reserves
Why might a company issue redeemable preference shares?
  1. AThe capital can be repaid when no longer needed
  2. BThey carry a vote at every general meeting
  3. CThe dividend on them is an allowable expense
  4. DThey can never be repaid, so capital is permanent

Question 402

[2 marks]company share capital and reserves
A company has 4% redeemable preference shares of $0.50 each with a nominal value of $50 000. They are redeemed at $0.60 each. Calculate the cash paid to redeem them, in dollars.

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Question 403

[2 marks]company share capital and reserves
A company redeemed preference shares with a nominal value of $50 000 out of profits, paying $60 000 in total. Calculate the amount that must be transferred to the capital redemption reserve, in dollars.

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Question 404

[2 marks]company share capital and reserves
Preference shares of $50 000 nominal value are redeemed for $60 000, and the company has a share premium account of $45 000. Which account is debited with the $10 000 premium on redemption?
  1. ACapital redemption reserve
  2. BShare premium account
  3. CRevaluation reserve
  4. DGeneral reserve

Question 405

[2 marks]company share capital and reserves
A company with 230 000 ordinary shares of $1 each makes a rights issue of one share for every four held, at $1.20 each. Calculate the share premium arising on the issue, in dollars.

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Question 406

[2 marks]company share capital and reserves
Buildings that cost $300 000, carrying accumulated depreciation of $50 000, are revalued at $264 000. Calculate the surplus credited to the revaluation reserve, in dollars.

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Question 407

[2 marks]company share capital and reserves
A company began the year with 230 000 ordinary shares of $1 each. It made a rights issue of one share for every four held, and later a bonus issue of one share for every five then in issue. Calculate the ordinary share capital at the end of the year, in dollars.

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Question 408

[2 marks]company share capital and reserves
A company had 287 500 ordinary shares of $1 each in issue when it proposed a dividend of 20 cents per share. Calculate the proposed dividend, in dollars.

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Question 409

[2 marks]company share capital and reserves
A company's general reserve stood at $38 000. A bonus issue of $57 500 was then made, taking equal amounts from the general reserve and from retained earnings. Calculate the balance on the general reserve at the year end, in dollars.

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Question 410

[3 marks]company share capital and reserves
A company's retained earnings stood at $111 000 at the start of the year. During the year it transferred $50 000 to the capital redemption reserve, earned a profit after tax of $88 000, paid an interim dividend of $16 000, provided for a proposed dividend of $57 500 and used $28 750 of retained earnings for a bonus issue. Calculate the retained earnings at the year end, in dollars.

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Question 411

[2 marks]company share capital and reserves
A company's share premium account stood at $45 000. During the year $10 000 was written off it as the premium on the redemption of preference shares, and a rights issue added $11 500 to it. Calculate the balance on the share premium account at the year end, in dollars.

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Question 412

[2 marks]company share capital and reserves
How can a company economically empower the community around it?
  1. ABy sending all its profit to overseas shareholders
  2. BBy importing every input it uses from abroad
  3. CBy keeping wage rates as low as the law allows
  4. DBy hiring local people and buying from local suppliers

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