ZIMSEC A Level Accounting Paper 3 June 2011

Question 101

[2 marks]capital reduction and reconstruction

A company has 800,000 ordinary shares of $1 each in issue. Under a scheme of capital reduction each ordinary share is to be reduced by $0.25. Calculate, in dollars, the amount released to the capital reduction account by the reduction of the ordinary share capital.

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Question 102

[2 marks]capital reduction and reconstruction

A company has 8% preference share capital of $200,000, made up of shares of $0.50 each. Under a scheme of capital reduction these are to be reduced to shares of $0.30 each. Calculate, in dollars, the amount released to the capital reduction account.

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Question 103

[2 marks]capital reduction and reconstruction

Motor vehicles cost $350,000 and carry accumulated depreciation of $60,000. Under a scheme of capital reconstruction they are sold for $350,000 cash. Calculate, in dollars, the profit on sale credited to the capital reduction account.

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Question 104

[2 marks]capital reduction and reconstruction

Under a scheme of capital reconstruction, trade creditors of $90,000 agree to accept $0.80 in every dollar owed to them in full settlement. Calculate, in dollars, the gain on settlement credited to the capital reduction account.

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Question 105

[2 marks]capital reduction and reconstruction

Plant and equipment cost $210,000 and carries accumulated depreciation of $65,000. Under a scheme of capital reconstruction a debenture holder agrees to take it over at a valuation of $197,000. Calculate, in dollars, the profit on disposal credited to the capital reduction account.

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Question 106

[2 marks]capital reduction and reconstruction

A debenture holder takes over plant and equipment at an agreed valuation of $197,000 in discharge of 7.5% debentures of $85,000, and pays the balance over to the company in cash. Calculate, in dollars, the cash the company receives from the debenture holder.

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Question 107

[2 marks]capital reduction and reconstruction

A capital reduction account is debited with goodwill written off $75,000, a bad debt written off $30,000 and a debit balance of $305,000 on the profit and loss account. Calculate, in dollars, the total that must be credited to the account if it is to close with no balance carried down.

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Question 108

[2 marks]capital reduction and reconstruction

A company with a share premium account of $400,000 has 800,000 ordinary shares of $0.75 each in issue. It makes a one for four bonus issue of ordinary shares out of the share premium account. Calculate, in dollars, the balance remaining on the share premium account.

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Question 109

[3 marks]capital reduction and reconstruction

A company begins a capital reconstruction with a bank overdraft of $50,000. During the reconstruction it receives $350,000 from the sale of motor vehicles and $112,000 from a debenture holder, and it pays $72,000 to trade creditors in full settlement. Calculate, in dollars, the bank balance shown in the balance sheet immediately after the reconstruction.

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Question 110

[2 marks]capital reduction and reconstruction

A company's ordinary share capital of 800,000 shares of $1 each is reduced by $0.25 per share, and a one for four bonus issue of the reduced shares is then made out of the share premium account. Calculate, in dollars, the ordinary share capital shown in the balance sheet after both steps.

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Question 111

[3 marks]capital reduction and reconstruction

Immediately after a capital reconstruction a company holds premises $700,000, new plant and equipment $170,000, stock $30,000, trade debtors $50,000 and a bank balance of $340,000. It owes trade creditors $170,000 and has no long term liabilities. Calculate, in dollars, the total of share capital and reserves shown in the balance sheet.

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Question 112

[3 marks]capital reduction and reconstruction

A company's balance sheet shows both capital reserves and revenue reserves. Which statement correctly distinguishes the two?

AA capital reserve may only be used to buy new non-current assets, while a revenue reserve may only be used to pay the running expenses of the business.
BA capital reserve arises from trading profit that has been earned and retained, while a revenue reserve arises from a transaction outside the ordinary trading of the business.
CBoth are created out of trading profit, and either may be used freely to pay a cash dividend in a year when profits are poor.
DA capital reserve arises outside ordinary trading, such as a share premium, and cannot be paid out as a cash dividend, while a revenue reserve is retained trading profit and can.

Question 113

[1 marks]capital reduction and reconstruction

Which one of the following is a capital reserve?

ACredit balance on the profit and loss account
BFixed asset replacement reserve
CShare premium account
DGeneral reserve

Question 301

[2 marks]correction of errors, suspense account

Receipts from cash sales of $3,200 were correctly debited to the cash account but were credited in the sales ledger control account. What is the effect of this error on the draft final accounts?

AGross profit and net profit are understated by $3,200 and trade debtors are understated by the same amount.
BGross profit is overstated by $3,200 and trade debtors are overstated by the same amount.
CProfit is not affected, but trade debtors are overstated by $3,200 and the trial balance no longer agrees.
DProfit is understated by $3,200, and the difference is held in the suspense account until it is corrected.

Question 302

[2 marks]correction of errors, suspense account

Returns inwards of $4,500 and returns outwards of $3,500 were posted to the trading account as returns inwards $3,500 and returns outwards $4,500. Calculate, in dollars, the amount by which gross profit has been overstated by these two postings.

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Question 303

[2 marks]correction of errors, suspense account

Office furniture costing $32,000, bought for resale and charged to purchases, was transferred to the finance manager's office on 1 January 2007 and capitalised. Depreciation on furniture is 15% per annum on cost. Calculate, in dollars, the depreciation charge on this furniture for the year ended 31 March 2007.

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Question 304

[2 marks]correction of errors, suspense account

Trading stock with a selling price of $50,000 was stolen from a warehouse. Mark up on all goods is 25% and the insurance company agreed to pay $26,000 in full settlement. Calculate, in dollars, the net loss on the theft charged to the profit and loss account.

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Question 305

[3 marks]correction of errors, suspense account

A company's draft gross profit for the year is $571,000. Corrections are then made for cash sales of $3,200 left out of the sales account, returns inwards understated by $1,000, returns outwards overstated by $1,000, the $40,000 cost of stolen stock wrongly left in cost of sales, and furniture costing $32,000 wrongly included in purchases. Calculate, in dollars, the corrected gross profit.

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Question 306

[3 marks]correction of errors, suspense account

A company's draft net profit for the year is $162,500. Corrections are then made for cash sales of $3,200 left out of sales, returns inwards understated by $1,000, returns outwards overstated by $1,000, stolen stock whose $40,000 cost is removed from cost of sales and then charged as a loss, an insurance claim of $26,000 receivable on that theft, furniture costing $32,000 removed from purchases and capitalised, and depreciation of $1,200 on that furniture. Calculate, in dollars, the corrected net profit.

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Question 307

[2 marks]correction of errors, suspense account

Returns inwards of $4,500 and returns outwards of $3,500 were posted as returns inwards $3,500 and returns outwards $4,500. Which journal entry corrects the error?

ADebit Returns inwards $1,000, Debit Returns outwards $1,000, Credit Suspense account $2,000
BDebit Suspense account $2,000, Credit Returns inwards $1,000, Credit Returns outwards $1,000
CDebit Returns inwards $1,000, Credit Returns outwards $1,000, with nothing in the suspense account
DDebit Returns outwards $1,000, Credit Returns inwards $1,000, with nothing in the suspense account

Question 308

[2 marks]correction of errors, suspense account

A suspense account opens with a debit balance of $1,100. Correcting entries then add a debit of $900, for payments to creditors debited in the purchases ledger control account as $15,400 instead of $14,500, and credits of $1,000 for returns inwards and $1,000 for returns outwards. Calculate, in dollars, the total of each side of the completed suspense account.

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Question 309

[2 marks]correction of errors, suspense account

Draft creditors are $37,350. Payments to creditors of $14,500 were debited in the purchases ledger control account as $15,400. Calculate, in dollars, the corrected figure for creditors.

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Question 310

[1 marks]correction of errors, suspense account

Which one of the following errors leaves a trial balance in agreement, so that nothing passes through the suspense account?

ADiscount allowed of $900 entered in the discount received account only.
BReturns inwards posted at $3,500 when they should have been posted at $4,500.
CA cash sale credited to the sales ledger control account instead of to the sales account.
DA payment to a creditor debited in the purchases ledger control account as $15,400 instead of $14,500.

Question 311

[3 marks]correction of errors, suspense account

Why are fixed (non-current) assets depreciated in a set of final accounts?

ATo show each fixed asset in the balance sheet at the amount it would fetch if it were sold on the open market at the year end.
BTo charge each year with the part of the asset's cost used up in earning that year's revenue, matching cost against revenue.
CTo reduce the profit on which corporation tax is charged, which is the main reason a business writes an asset down each year.
DTo build up a cash fund set aside each year out of profit, so that the money to replace the asset is there when it finally wears out.

Question 401

[2 marks]process costing with equivalent units

In process 1 each unit uses 7.5 metres of direct material at $2.00 a metre. The materials used in process 1 for the period cost $30,000. Calculate the number of units started and completed in process 1.

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Question 402

[2 marks]process costing with equivalent units

Process 1 completes 2,000 units in the period. Each unit needs 2.5 direct labour hours and direct labour is paid $12.00 an hour. Calculate, in dollars, the direct labour cost charged to the process 1 account.

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Question 403

[2 marks]process costing with equivalent units

A process worked 5,000 direct labour hours in the period. Variable overheads are absorbed at $6.50 per direct labour hour and fixed overheads at $3.00 per direct labour hour. Calculate, in dollars, the total overheads charged to the process account.

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Question 404

[2 marks]process costing with equivalent units

The process 1 account for a period is charged with direct materials $30,000, direct labour $60,000, variable overheads $32,500 and fixed overheads $15,000. All units started are completed and transferred to process 2. Calculate, in dollars, the total value transferred to process 2.

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Question 405

[2 marks]process costing with equivalent units

A process transfers 2,000 completed units to the next process at a total cost of $137,500. Calculate, in dollars, the cost of one unit transferred.

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Question 406

[3 marks]process costing with equivalent units

Process 2 receives 2,000 units from process 1 and has no opening work in progress. At the end of the period 1,000 units remain as closing work in progress, complete for materials but only 80% complete for labour. Calculate the equivalent units of production for labour in process 2.

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Question 407

[2 marks]process costing with equivalent units

Process 2 has 2,000 equivalent units of production for materials. Each unit uses 12 metres of direct material at $1.50 a metre. Calculate, in dollars, the direct material cost charged to the process 2 account.

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Question 408

[2 marks]process costing with equivalent units

Process 2 has 1,800 equivalent units of production for labour. Each unit needs 1.5 direct labour hours and direct labour is paid $8.00 an hour. Calculate, in dollars, the direct labour cost charged to the process 2 account.

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Question 409

[2 marks]process costing with equivalent units

Process 2 worked the equivalent of 2,700 direct labour hours in the period and absorbs variable overheads at $7.00 per direct labour hour. Calculate, in dollars, the variable overheads charged to the process 2 account.

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Question 410

[2 marks]process costing with equivalent units

Process 2 receives 2,000 units from process 1 during the period and has no opening work in progress. Closing work in progress is 1,000 units. Calculate the number of completed units transferred out of process 2 to finished goods.

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Question 411

[3 marks]process costing with equivalent units

Which of the following is a feature of process costing?

ACosts are collected for each separate customer order, so that the cost of every individual job can be reported to the customer who placed it.
BEvery unit of output is costed on its own, because the units leaving a process differ from one another and can be identified separately.
CWork in progress is ignored at each period end, because production is continuous and the process never stops long enough for it to be measured.
DThe cost of a unit is an average, found by dividing the total cost of the process for the period by its equivalent units of output.

Question 412

[1 marks]process costing with equivalent units

In process costing, what is meant by equivalent units?

AThe number of units that were started in the process during the period, whether finished or not.
BThe number of complete units that the work actually done in the period is equal to.
CThe number of units lost in a process that is expected to be lost under normal working.
DThe number of units still in the process at the period end, whatever stage they have reached.

Accounting Paper 3 June 2011

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The questions

Question 101

Question 102

Question 103

Question 104

Question 105

Question 106

Question 107

Question 108

Question 109

Question 110

Question 111

Question 112

Question 113

Question 301

Question 302

Question 303

Question 304

Question 305

Question 306

Question 307

Question 308

Question 309

Question 310

Question 311

Question 401

Question 402

Question 403

Question 404

Question 405

Question 406

Question 407

Question 408

Question 409

Question 410

Question 411

Question 412

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