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ZIMSEC A Level · 9197/3 · N2015

Accounting Paper 3 November 2015

Questions
47
Total marks
100
Syllabus code
9197/3

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Questions
47
Pass mark
29
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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]dissolution of partnerships and conversion to a limited company
A partner had made a 6% loan of $12,000 to his partnership. On the dissolution he is to receive sufficient 8% debentures in the purchasing company to give him the same annual return as the loan gave him. Calculate, in dollars, the nominal value of 8% debentures he must receive.

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Question 102

[2 marks]dissolution of partnerships and conversion to a limited company
A purchase consideration of $122,000 is satisfied by $9,000 of 8% debentures and the balance in ordinary shares of $0.50 each, distributed equally between the two partners. Calculate, in dollars, the value of the ordinary shares each partner receives.

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Question 103

[3 marks]dissolution of partnerships and conversion to a limited company
On a dissolution a partnership's realisation account is debited with premises $40,000, plant and equipment $21,000, motor vehicles $35,000, inventory $6,000, trade receivables $7,200 and dissolution costs paid of $800. It is credited with trade payables of $5,200 taken over by the purchasing company, a purchase consideration of $122,000, and $6,800 collected from the trade receivables. Calculate, in dollars, the profit on realisation.

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Question 104

[3 marks]dissolution of partnerships and conversion to a limited company
On a dissolution a partnership's realisation account is debited with premises $24,000, plant and equipment $26,000, inventory $4,000, trade receivables $5,500 and dissolution costs paid of $600. It is credited with trade payables of $3,000 taken over by the purchasing company, a purchase consideration of $72,800, and $5,300 collected from the trade receivables. Calculate, in dollars, the profit on realisation.

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Question 105

[3 marks]dissolution of partnerships and conversion to a limited company
A partner's capital account stands at $65,000 before a dissolution. He is credited with $16,000, his share of the profit on realisation, and he takes $9,000 of 8% debentures and $56,500 of ordinary shares in the purchasing company. Calculate, in dollars, the cash he must withdraw to close his capital account.

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Question 106

[2 marks]dissolution of partnerships and conversion to a limited company
A partner's capital account stands at $35,000 before a dissolution. He is credited with $8,000, his share of the profit on realisation, and he takes $56,500 of ordinary shares in the purchasing company. Calculate, in dollars, the cash he must pay in to close his capital account.

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Question 107

[2 marks]dissolution of partnerships and conversion to a limited company
A partner's capital account stands at $35,000 before a dissolution. She is credited with $10,500, her share of the profit on realisation, and she takes $36,400 of ordinary shares in the purchasing company. Calculate, in dollars, the cash she must withdraw to close her capital account.

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Question 108

[2 marks]dissolution of partnerships and conversion to a limited company
A purchase consideration of $72,800 is satisfied entirely by the issue of ordinary shares of $0.50 each. Calculate the number of ordinary shares issued.

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Question 109

[3 marks]dissolution of partnerships and conversion to a limited company
On a dissolution a partnership's bank account receives its opening balance of $8,000, $6,800 collected from trade receivables and $13,500 paid in by one partner to close his capital account. It pays dissolution costs of $800, repays a partner's 6% loan of $12,000 and pays the remaining balance to the other partner. Calculate, in dollars, the total of each side of the bank account.

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Question 110

[2 marks]dissolution of partnerships and conversion to a limited company
On a dissolution a partnership's bank account receives its opening balance of $3,500, $5,300 collected from trade receivables and $900 paid in by one partner. It pays dissolution costs of $600 and the remaining balance to the other partner. Calculate, in dollars, the total of each side of the bank account.

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Question 111

[2 marks]dissolution of partnerships and conversion to a limited company
A partnership is taken over by a limited company, but the agreement excludes cash and trade receivables from the assets transferred. How are the trade receivables then dealt with in the partnership's own books?
  1. AThey are still debited to the realisation account, and the cash the partners actually collect is credited to it, so any shortfall falls into the realisation result.
  2. BThey are kept out of the realisation account, and any shortfall on collection is written off against the partners' capital accounts.
  3. CThey are transferred to the purchasing company at book value and settled as part of the purchase consideration.
  4. DThey stay in the partnership's books and are carried forward until the debts are collected in a later period.

Question 201

[2 marks]inventory valuation from a later physical count
Invoices totalling $15,000 at list price were sent to customers, and a trade discount of 5% is offered to all customers. The company marks up all goods at 20%. Calculate, in dollars, the cost of the goods invoiced.

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Question 202

[2 marks]inventory valuation from a later physical count
Credit notes totalling $1,200 at list price were issued to customers, and a trade discount of 5% is offered to all customers. The company marks up all goods at 20%. Calculate, in dollars, the cost of the goods returned by those customers.

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Question 203

[2 marks]inventory valuation from a later physical count
Inventory with a net selling price of $450 has been damaged and is now worthless. The company marks up all goods at 20%. Calculate, in dollars, the amount by which the inventory valuation at cost must be reduced.

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Question 204

[2 marks]inventory valuation from a later physical count
Inventory which cost $1,400 is slightly spoilt. It can be sold for $1,600 only after repairs costing $500. Calculate, in dollars, the amount by which this inventory must be written down.

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Question 205

[2 marks]inventory valuation from a later physical count
Goods sold during April for $2,100 had still not been collected by the customer when inventory was counted, so they were included in the count. The company marks up all goods at 20%. Calculate, in dollars, the cost at which these goods must be taken out of the inventory valuation.

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Question 206

[2 marks]inventory valuation from a later physical count
Carriage inwards of $130, relating to goods still unsold at the year end, was debited to the carriage outwards account in error. How does this affect the closing inventory valuation?
  1. AInventory is reduced by $130, since the carriage has already been charged as an expense in the carriage outwards account.
  2. BInventory is increased by $260, to reverse the entry wrongly made and then record the right one.
  3. CInventory is increased by $130, since carriage inwards is part of the cost of bringing goods to their present location and condition.
  4. DInventory is unchanged, since the error lies between two expense accounts and no goods have moved in or out of the business.

Question 207

[2 marks]inventory valuation from a later physical count
Goods costing $2,500, which a company holds on a sale or return basis and has not yet decided whether to keep, were included in its inventory count. How should they be treated in the inventory valuation?
  1. ALeft in at $2,500, since the goods are physically held on the company's own premises at the date of the count.
  2. BDeducted in full, since title has not passed and the goods are not yet the company's inventory.
  3. CLeft in, but written down to net realisable value because the decision to keep them is still open.
  4. DDeducted at their expected selling price rather than at the $2,500 they cost.

Question 208

[3 marks]inventory valuation from a later physical count
An inventory count on 10 May 2012 valued inventory at $32,000. Between 1 and 10 May, goods costing $11,875 were sold and despatched, goods costing $21,000 were bought and received, goods costing $400 were returned to suppliers, goods costing $950 were returned by customers, and inventory costing $500 was taken out of the warehouse for use in the business. The count also included goods costing $375 that were worthless, spoilt goods needing a write down of $300, goods costing $2,500 held on a sale or return basis, and goods costing $1,750 sold in April but not yet collected, while carriage inwards of $130 on unsold goods had been left out of the valuation. Calculate, in dollars, the value of inventory at cost at 30 April 2012.

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Question 209

[1 marks]inventory valuation from a later physical count
What is a perpetual inventory system?
  1. AA system in which inventory is valued at what it would cost to replace today rather than at what was paid for it.
  2. BA system in which every receipt and issue is recorded as it happens, so the quantity and value held are known at any time.
  3. CA system in which inventory is written down to net realisable value every time the market price falls.
  4. DA system in which the inventory held is established only at the end of each accounting period, by carrying out a full physical count.

Question 210

[1 marks]inventory valuation from a later physical count
What is a periodic inventory system?
  1. AInventory is counted continuously, a few lines at a time, so that every line held is counted several times during the year.
  2. BInventory is recorded on a stores card as each receipt and issue happens, and is never counted physically.
  3. CInventory is valued at the lower of cost and net realisable value on every individual line held at the year end.
  4. DNo continuous record is kept, and the inventory held is established at the period end by a physical count.

Question 211

[2 marks]inventory valuation from a later physical count
Which of the following is a use of replacement cost?
  1. ATo calculate the profit or loss made on disposal when a non-current asset is finally sold or scrapped.
  2. BTo decide how a partnership's profit for the year should be divided between the partners.
  3. CTo spread the cost of a non-current asset, less its residual value, over the years that get the use of it.
  4. DTo support an insurance claim, so that what was lost is compensated at what it would cost to replace now.

Question 301

[3 marks]income statement from ratios and investor ratios
A company's inventory at the start of the year is $10,000 and at the end of the year $6,400. Its rate of inventory turnover is 10 days, based on a 365 day year. Calculate, in dollars, the cost of sales for the year.

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Question 302

[2 marks]income statement from ratios and investor ratios
A company's cost of sales for the year is $299,300 and it earns a margin of 20%. Calculate, in dollars, the revenue for the year.

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Question 303

[2 marks]income statement from ratios and investor ratios
A company has 8% debentures of $90,000 in issue and its interest cover for the year is 2.5 times. Calculate, in dollars, the profit before interest and tax for the year.

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Question 304

[2 marks]income statement from ratios and investor ratios
A company's gross profit for the year is $74,825 and its profit before interest and tax is $18,000. Administrative costs for the year are $52,325 and the only other expense is distribution costs. Calculate, in dollars, the distribution costs for the year.

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Question 305

[2 marks]income statement from ratios and investor ratios
A company's profit before interest and tax is $18,000. Debenture interest for the year is $7,200, the taxation charge is $1,500 and the preference dividend is $3,000. Calculate, in dollars, the profit attributable to the ordinary shareholders.

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Question 306

[2 marks]income statement from ratios and investor ratios
A company is financed by 8% debentures of $90,000, 10% preference shares of $30,000, ordinary shares of $120,000 and retained profit of $5,000. Gearing is measured as prior charge capital divided by total capital employed. Calculate the gearing as a percentage, correct to two decimal places.

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Question 307

[2 marks]income statement from ratios and investor ratios
A company's profit attributable to the ordinary shareholders is $6,300 and its ordinary share capital is $120,000, made up of shares of $0.50 each. Calculate the earnings per share in cents, correct to two decimal places, rounding a half cent up.

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Question 308

[2 marks]income statement from ratios and investor ratios
A company's earnings per share is $0.02625 and the market price of one ordinary share is $1.20. Calculate the price earnings ratio, correct to two decimal places.

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Question 309

[2 marks]income statement from ratios and investor ratios
A company's profit attributable to the ordinary shareholders is $6,300. It has 240,000 ordinary shares in issue and paid an ordinary dividend of $0.02 per share. Calculate the dividend cover, correct to two decimal places.

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Question 310

[2 marks]income statement from ratios and investor ratios
A company paid an ordinary dividend of $0.02 per share and the market price of one ordinary share is $1.20. Calculate the dividend yield as a percentage, correct to two decimal places.

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Question 311

[2 marks]income statement from ratios and investor ratios
What does a company's gearing ratio indicate?
  1. AHow quickly the company turns the inventory it holds into sales during the course of the year.
  2. BHow much of the profit earned in the year is being paid out to the ordinary shareholders as dividend.
  3. CHow much of the long term capital carries a fixed return that must be met before ordinary shareholders receive anything.
  4. DHow many times over the company could pay its debenture interest out of its operating profit.

Question 312

[2 marks]income statement from ratios and investor ratios
What does a company's dividend cover indicate?
  1. AHow many times the ordinary dividend could have been paid out of the profit available to ordinary shareholders.
  2. BThe cash income a shareholder receives each year, expressed as a percentage of what one share costs in the market today.
  3. CThe number of years of the current earnings per share that the market is willing to pay for one ordinary share.
  4. DThe proportion of the company's long term capital that carries a fixed rate of return.

Question 401

[2 marks]budgeting, flexed budgets and cost variances
The standard cost of one computer desk is direct materials 2 kg at $6.00 per kg, direct labour 45 minutes at $32.00 per hour, variable production overheads $10.00 per direct labour hour and fixed production overheads $9.00 per unit. Calculate, in dollars, the standard production cost of one desk.

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Question 402

[2 marks]budgeting, flexed budgets and cost variances
A company budgets a direct labour cost of $48,000 for a quarter. Each unit of its product needs 45 minutes of direct labour and direct labour is paid $32.00 an hour. Calculate the budgeted output in units for the quarter.

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Question 403

[2 marks]budgeting, flexed budgets and cost variances
A budgeted output of 2,000 desks carries a standard production cost of $52.50 a desk. Calculate, in dollars, the budgeted cost of production for the quarter.

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Question 404

[2 marks]budgeting, flexed budgets and cost variances
A company's budgeted cost of production for a quarter is $105,000 for 2,000 desks, and it expects a mark-up of 20% on the cost of production. Calculate, in dollars, the budgeted revenue for the quarter, assuming all production is sold.

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Question 405

[2 marks]budgeting, flexed budgets and cost variances
A company budgets revenue of $126,000 and a cost of production of $105,000 for a quarter, with all production sold. Budgeted fixed selling overheads for the quarter are $8,000. Calculate, in dollars, the budgeted profit for the quarter.

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Question 406

[3 marks]budgeting, flexed budgets and cost variances
A budget of 2,000 desks is flexed to the actual output of 2,200 desks. The standard variable costs of a desk are direct materials $12.00, direct labour $24.00 and variable production overheads $7.50, and fixed production overheads of $18,000 do not change with output. Calculate, in dollars, the flexed budget cost of sales for 2,200 desks.

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Question 407

[2 marks]budgeting, flexed budgets and cost variances
A budgeted selling price of $63.00 a desk is flexed to the actual output of 2,200 desks, all of which are sold. Calculate, in dollars, the flexed budget revenue.

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Question 408

[2 marks]budgeting, flexed budgets and cost variances
A flexed budget shows revenue of $138,600 and cost of sales of $113,700 for 2,200 desks. Fixed selling overheads for the quarter are $8,000 and do not change with output. Calculate, in dollars, the flexed budget profit.

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Question 409

[1 marks]budgeting, flexed budgets and cost variances
Budgeted sales revenue for a quarter is $126,000 and actual sales revenue is $143,000. Calculate, in dollars, the total sales variance.

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Question 410

[1 marks]budgeting, flexed budgets and cost variances
The standard direct labour cost of the actual output of 2,200 desks is $52,800 and the actual direct labour cost is $49,600. Calculate, in dollars, the total direct labour cost variance.

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Question 411

[1 marks]budgeting, flexed budgets and cost variances
The standard direct material cost of the actual output of 2,200 desks is $26,400 and the actual direct material cost is $23,100. Calculate, in dollars, the total direct material cost variance.

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Question 412

[2 marks]budgeting, flexed budgets and cost variances
Which of the following is a duty of the costing department of a manufacturing organisation?
  1. AComparing actual results with the budget, calculating the variances and reporting them to the managers responsible.
  2. BPreparing the company's statutory financial statements for filing with the registrar of companies each year.
  3. CAuditing the annual financial statements and reporting to the shareholders on whether they give a true and fair view.
  4. DCollecting the debts owed by credit customers and deciding which of those debts should be written off.

Question 413

[2 marks]budgeting, flexed budgets and cost variances
What is a flexed budget?
  1. AA budget prepared before the period begins, using the level of output that the company expects to achieve during it.
  2. BA budget in which every cost is treated as fixed, so that none of the totals change when the level of output changes.
  3. CA budget restated at the actual output, with variable costs and revenue at standard rates and fixed costs unchanged.
  4. DA budget revised at the end of each month so that the budget and the actual figures always agree exactly.

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