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ZIMSEC A Level · 9197/3 · J2008

Accounting Paper 3 June 2008

Questions
50
Total marks
100
Syllabus code
9197/3

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Questions
50
Pass mark
30
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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: accumulated fund and income and expenditure
A tennis club's assets and liabilities at 1 January 2001 were: club premises $80,000, furniture and fittings $45,000, motor vehicles $60,000, sports equipment $42,500, stock of refreshments $8,640, subscriptions owing by members $830, rent and rates paid in advance $1,750, bank balance $29,140, water and electricity outstanding $700, subscriptions paid in advance by members $360 and creditors for refreshments $7,250. Calculate the accumulated fund of the club at 1 January 2001.

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Question 102

[2 marks]club accounts: accumulated fund and income and expenditure
A club received $53,600 in subscriptions during the year ended 31 December 2001. Subscriptions owing by members were $830 at the start of the year and $1,440 at the end. Subscriptions paid in advance by members were $360 at the start of the year and $880 at the end. Calculate the subscriptions income for the year.

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Question 103

[1 marks]club accounts: accumulated fund and income and expenditure
A club paid $33,800 to its suppliers of refreshments during the year. Creditors for refreshments were $7,250 at the start of the year and $6,650 at the end. Calculate the purchases of refreshments for the year.

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Question 104

[3 marks]club accounts: accumulated fund and income and expenditure
A club's refreshments bar had an opening stock of $8,640, purchases of $33,200 and a closing stock of $5,000. Sales of refreshments were $79,960, and $8,450 of the club's general expenses relates to the sale of refreshments. Calculate the profit on refreshments to be shown in the income and expenditure account.

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Question 105

[2 marks]club accounts: accumulated fund and income and expenditure
A club received $37,440 from raffles during the year. It paid raffle expenses of $16,250 and a further $1,400 of raffle expenses was still outstanding at the year end. Calculate the profit from raffles to be shown in the income and expenditure account.

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Question 106

[2 marks]club accounts: accumulated fund and income and expenditure
A club paid rent and rates of $12,750 during the year ended 31 December 2001. Rent and rates of $1,750 had been paid in advance at 1 January 2001, and $450 was outstanding at 31 December 2001. Calculate the rent and rates charge for the year.

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Question 107

[2 marks]club accounts: accumulated fund and income and expenditure
A club paid $12,100 for water and electricity during the year ended 31 December 2001. At 1 January 2001, $700 was outstanding for water and electricity, and at 31 December 2001, $520 had been paid in advance. Calculate the water and electricity charge for the year.

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Question 108

[2 marks]club accounts: accumulated fund and income and expenditure
A club borrowed $50,000 from its bank on 1 January 2001 at 15% per annum. It repaid $20,000 of the loan on 30 June 2001. No interest was paid during the year. Calculate the loan interest to be charged for the year ended 31 December 2001.
  1. A$2,250
  2. B$3,750
  3. C$4,500
  4. D$6,000

Question 109

[2 marks]club accounts: accumulated fund and income and expenditure
A club's sports equipment is depreciated at 15% per annum on the reducing balance. A piece of equipment with a net book value of $6,000 at 1 January 2001 was sold on 30 June 2001 for $4,500. Calculate the loss on the disposal.

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Question 110

[2 marks]club accounts: accumulated fund and income and expenditure
A club's furniture and fittings stood at $45,000 at 1 January 2001. Furniture costing $50,000 was bought during the year, and the furniture and fittings were valued at $92,500 at 31 December 2001. Calculate the depreciation charge on furniture and fittings for the year.

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Question 111

[2 marks]club accounts: accumulated fund and income and expenditure
A sports club receives a single payment from a member which buys that member's membership for life instead of an annual subscription. How should the club treat the amount received?
  1. ACredit it to the accumulated fund at once, since it is a capital receipt that can never become income
  2. BHold it as a creditor in the balance sheet until the member dies, and release the whole of it in that year
  3. CCredit it to a life membership fund and release a share of it to income over the expected life of the membership
  4. DCredit the whole amount to the income and expenditure account in the year in which it is received, as it is a subscription

Question 112

[2 marks]club accounts: accumulated fund and income and expenditure
A club receives a legacy of $500,000 from a deceased member. It is a large receipt that will not recur. How should it be treated in the club's accounts?
  1. ACredited to income and spread in equal amounts over the following ten years
  2. BCredited directly to the accumulated fund and shown in the balance sheet
  3. CCredited in full to the income and expenditure account as income of the year it is received
  4. DShown as a long term liability until the club has decided how it will be spent

Question 113

[1 marks]club accounts: accumulated fund and income and expenditure
A club runs a refreshments bar, raffles and dances alongside its main sporting purpose. What does the income and expenditure account show for each of these ancillary activities?
  1. AIts profit or loss for the year
  2. BNothing, since they are not the club's main purpose
  3. CIts gross takings for the year
  4. DIts takings less the cost of the goods sold only

Question 114

[1 marks]club accounts: accumulated fund and income and expenditure
A club deposits $60,000 into a new club house fund. How is this shown in the club's final accounts?
  1. AAs a club house fund in the balance sheet, matched by the asset holding the money
  2. BAs expenditure in the income and expenditure account, since the money is set aside
  3. CAs income in the income and expenditure account for the year
  4. DNot at all, since no money has left the club

Question 201

[2 marks]partnership dissolution: realisation, capital and bank accounts
On the dissolution of a partnership the debtors totalled $24,400. Debtors owing $16,000 paid $15,040 in full settlement. One of the partners agreed to take over the remaining debts, subject to a provision of 10% for possible bad debts. Calculate the amount at which the remaining debts are taken over.

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Question 202

[1 marks]partnership dissolution: realisation, capital and bank accounts
The creditors of a partnership being dissolved totalled $27,400. Creditors owed $18,000 were paid $17,100 in full settlement, and the balance is to be paid in due course. Calculate the discount received on the dissolution.

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Question 203

[2 marks]partnership dissolution: realisation, capital and bank accounts
A partner has made a 4% loan of $6,000 to his partnership. On dissolution he is paid the loan together with one year's interest due on it. How much is paid to him for the loan?
  1. A$6,000
  2. B$6,120
  3. C$6,240
  4. D$6,480

Question 204

[3 marks]partnership dissolution: realisation, capital and bank accounts
A partnership is dissolved. The assets are transferred to the realisation account at their book values: premises $40,000, furniture $10,800, motor vehicles $11,600, stock $17,400 and debtors $24,400. Dissolution expenses of $660 and loan interest of $240 are also charged in the account. Premises are sold for $41,600, furniture for $4,700, motor vehicles for $3,400 and stock for $16,200. Partners take over further assets at agreed values: furniture $4,000, motor vehicles $4,700, furniture $1,000 and stock $400. Debtors realise $15,040 in cash and the remaining debts are taken over by a partner at $7,560. A discount of $900 is received from creditors. Calculate the loss on realisation.

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Question 205

[1 marks]partnership dissolution: realisation, capital and bank accounts
A loss on realisation of $5,600 is shared between three partners in the ratio 3:2:1. Calculate the share of that loss borne by the first named partner.
  1. A$1,867
  2. B$2,800
  3. C$3,360
  4. D$933

Question 206

[3 marks]partnership dissolution: realisation, capital and bank accounts
On the dissolution of a partnership, a partner's capital account has a credit balance brought down of $30,000, and his current account, which is transferred to it, has a credit balance of $2,950. He takes over assets valued at $11,560 and bears $2,800 of the loss on realisation. Calculate the amount that must be paid to him in cash to close his account.

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Question 207

[2 marks]partnership dissolution: realisation, capital and bank accounts
On the dissolution of a partnership, a partner's capital account has a credit balance brought down of $20,000 and his current account, which is transferred to it, has a credit balance of $2,420. He takes over a motor vehicle valued at $4,700 and bears $1,867 of the loss on realisation. Calculate the amount that must be paid to him in cash to close his account.

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Question 208

[2 marks]partnership dissolution: realisation, capital and bank accounts
On the dissolution of a partnership, a partner's capital account has a credit balance brought down of $10,000, while his current account, which is transferred to it, has a debit balance of $1,170. He takes over assets valued at $1,400 and bears $933 of the loss on realisation. Calculate the amount that must be paid to him in cash to close his account.

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Question 209

[3 marks]partnership dissolution: realisation, capital and bank accounts
A dissolution bank account is opened with cash in hand of $700 and a bank overdraft of $7,300. The receipts are premises $41,600, furniture $4,700, motor vehicles $3,400, stock $16,200 and debtors $15,040. The payments are creditors $17,100, a partner's loan and interest $6,240, dissolution expenses $660 and the partners' capital accounts $40,940. Calculate the balance remaining at bank after these entries.

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Question 210

[2 marks]partnership dissolution: realisation, capital and bank accounts
During the dissolution of a partnership, a partner takes over a motor vehicle at an agreed value of $4,700. How is this recorded in the books?
  1. ACredit the realisation account, debit the partner's capital account
  2. BDebit the bank account, credit the realisation account
  3. CCredit the partner's capital account, debit the bank account
  4. DDebit the realisation account, credit the partner's capital account

Question 211

[2 marks]partnership dissolution: realisation, capital and bank accounts
On the dissolution of a partnership, when is a loan made to the firm by one of the partners repaid?
  1. AOnly if a surplus remains once the capitals have been repaid
  2. BAfter the outside creditors, but before any capital is repaid
  3. CBefore the outside creditors, because he is one of the owners
  4. DAfter every partner's capital has been repaid in full

Question 301

[2 marks]conversion of a sole trader into a limited company
A limited company takes over the business of a sole trader. The assets taken over are revalued at premises $164,000, motor vehicles $36,000, debtors $42,000 and stock $33,000. Creditors of $83,630 are also taken over. The sole trader's bank balance is not taken over. Calculate the value of the net assets acquired.

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Question 302

[2 marks]conversion of a sole trader into a limited company
A limited company agrees a purchase consideration of $240,000 for a business whose net assets it takes over at an agreed value of $191,370. Calculate the goodwill arising on the acquisition.

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Question 303

[2 marks]conversion of a sole trader into a limited company
A purchase consideration of $240,000 is settled by issuing 12,000 ordinary shares of $10 each at $13 each, by issuing $60,000 of 14% debentures at par, and by paying the balance in cash. Calculate the amount paid in cash.

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Question 304

[1 marks]conversion of a sole trader into a limited company
A company makes a rights issue of 4,000 ordinary shares of $10 each at $12 each, and the issue is fully subscribed. How much is credited to the share premium account?
  1. A$8,000
  2. B$12,000
  3. C$40,000
  4. D$48,000

Question 305

[2 marks]conversion of a sole trader into a limited company
A company's share premium account stood at $30,000. It then issued 12,000 ordinary shares of $10 each at $13 each to the vendor of a business, and made a rights issue of 4,000 ordinary shares of $10 each at $12 each, which was fully subscribed. Calculate the balance on the share premium account after these issues.

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Question 306

[2 marks]conversion of a sole trader into a limited company
A company's issued share capital was 25,000 ordinary shares of $10 each. It then issued 12,000 ordinary shares of $10 each to the vendor of a business and a further 4,000 ordinary shares of $10 each under a rights issue. Calculate the issued ordinary share capital after these issues.

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Question 307

[2 marks]conversion of a sole trader into a limited company
A company's bank balance was $28,000. It then paid $24,000 in cash to the vendor of a business, received $48,000 from a fully subscribed rights issue and paid $4,000 for the expenses of these matters. Calculate the bank balance after these transactions.

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Question 308

[1 marks]conversion of a sole trader into a limited company
A company's premises stand in its books at $200,000 and are revalued at $275,000. What amount is credited to the revaluation reserve?
  1. A$37,500
  2. B$75,000
  3. C$200,000
  4. D$275,000

Question 309

[3 marks]conversion of a sole trader into a limited company
After taking over a business and making a rights issue, a company's balances are: ordinary share capital $410,000, share premium account $74,000, revaluation reserve $75,000, and a profit and loss account of $84,000, against which $4,000 of acquisition expenses has still to be written off. Calculate the total of the shareholders' funds.

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Question 310

[2 marks]conversion of a sole trader into a limited company
What does goodwill represent when one business buys another?
  1. AThe profit the buyer expects to make from the business in its first year
  2. BThe excess of the price paid over the fair value of the identifiable net assets acquired
  3. CThe total value of the fixed and current assets the buyer takes over from the seller
  4. DThe excess of the assets taken over above the liabilities taken over

Question 311

[2 marks]conversion of a sole trader into a limited company
What is a rights issue of shares?
  1. AAn issue of shares to the directors as a reward for the year's results
  2. BAn issue of free shares to the existing shareholders out of the company's reserves
  3. CAn offer of new shares to the existing shareholders in proportion to their holdings
  4. DAn offer of shares to the general public through a prospectus and a bank

Question 312

[2 marks]conversion of a sole trader into a limited company
Which of these describes a capital reserve?
  1. AA reserve of cash set aside in a separate bank account to meet a future capital cost of the business
  2. BA reserve built up out of trading profits and available for distribution to the members
  3. CA reserve that arises outside ordinary trading and cannot be paid out as a cash dividend
  4. DThe balance of the profit and loss account carried forward at the end of the year

Question 313

[2 marks]conversion of a sole trader into a limited company
What is the position of a debenture holder in a limited company?
  1. AA member whose dividend is fixed and is paid before the ordinary shareholders
  2. BA creditor who is repaid only in a year in which the company makes a profit for the year
  3. CA member who votes at general meetings and shares in the profits after tax
  4. DA creditor whose interest is a fixed charge payable whether or not a profit is made

Question 401

[3 marks]cash budget and master budget
A company sells half of its output for cash and half on credit, and its credit customers pay two months after the sale. In October it sold 10,000 units at $8 each and in December it sold 6,000 units at $8 each. Calculate the cash received from sales in December.

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Question 402

[2 marks]cash budget and master budget
A company pays its wages and salaries 75% in the month in which they are incurred and 25% in the following month. Wages and salaries were $20,000 for October and $24,000 for November. Calculate the payment for wages and salaries in November.

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Question 403

[1 marks]cash budget and master budget
A company pays for its purchases two months after the month of purchase. Its purchases were August $36,000, September $32,000 and October $28,000. How much does it pay for purchases in October?
  1. A$28,000
  2. B$32,000
  3. C$36,000
  4. D$96,000

Question 404

[2 marks]cash budget and master budget
Fixed assets costing $60,000 are bought at the end of November and are to be paid for in three equal monthly instalments, beginning in the month after the purchase. How much is paid for them in December?
  1. A$15,000
  2. B$20,000
  3. C$30,000
  4. D$60,000

Question 405

[3 marks]cash budget and master budget
A company's cash budget shows a bank balance of $16,400 in hand at 30 November. December receipts are budgeted at $64,000 and December payments at $88,000. What is the budgeted bank balance at 31 December?
  1. A$7,600 in hand
  2. B$24,000 overdrawn
  3. C$80,400 in hand
  4. D$7,600 overdrawn

Question 406

[3 marks]cash budget and master budget
A company's budgeted unit sales for the six months to 31 December are July 9,000, August 9,200, September 9,600, October 10,000, November 7,600 and December 6,000. The selling price is $6 per unit up to September and $8 per unit from October. Calculate the budgeted sales revenue for the six months.

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Question 407

[1 marks]cash budget and master budget
A company values its closing stock at 31 December at an amount equal to the purchases of the last three months of the period. Its purchases were October $28,000, November $24,000 and December $24,000. What is the closing stock at 31 December?
  1. A$48,000
  2. B$52,000
  3. C$76,000
  4. D$172,000

Question 408

[2 marks]cash budget and master budget
A company's opening stock for a six month period is $50,000, its purchases for the period are $172,000 and its closing stock is $76,000. Calculate the cost of sales for the six months.

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Question 409

[2 marks]cash budget and master budget
A company's fixed assets had a net book value of $240,000 at 30 June, and it bought further fixed assets costing $60,000 at the end of November. Depreciation is 10% per annum on the reducing balance of the assets owned at 31 December. Calculate the charge for the six months ending 31 December.
  1. A$12,000
  2. B$15,000
  3. C$24,000
  4. D$30,000

Question 410

[2 marks]cash budget and master budget
A company sells half of its output for cash and half on credit, and its credit customers pay two months after the sale. Its sales were $60,800 in November and $48,000 in December. Calculate the trade debtors outstanding at 31 December.

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Question 411

[2 marks]cash budget and master budget
Why does a depreciation charge never appear in a cash budget?
  1. AIt is not a payment of cash, only the writing down of an asset already bought
  2. BIt is a payment of cash, but it is made only once, at the very end of the year
  3. CIt is charged against the reserves rather than against the year's profit
  4. DIt is treated as a payment in the budgeted profit and loss account instead

Question 412

[2 marks]cash budget and master budget
A company budgets a healthy gross profit for a six month period, yet its budgeted bank balance falls over the same period. Which of these best explains the difference?
  1. AGross profit is always calculated only after the cash has actually been received from customers
  2. BA bank balance is affected only by cash sales, so credit sales never reach it at all
  3. CGross profit includes the depreciation charge, which is the same thing as a cash payment
  4. DCash goes out on stock, fixed assets and dividends, which are not charges against gross profit

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