Danho
ZIMSEC A Level · 6001/3 · N2022

Accounting Paper 3 November 2022

Questions
49
Total marks
100
Syllabus code
6001/3

Sit this paper online

Questions
49
Pass mark
30
Sit this paper

Answer every question in the printed order, get marked at the end, then see the answers.

The questions

Question 101

[2 marks]Manufacturing account and statement of profit or loss
Green Valley Manufacturing Company Ltd: opening raw materials $72,000, purchases of raw materials $982,000, carriage inwards of raw materials $5,400, closing raw materials $88,000. Calculate the cost of raw materials consumed.

Answer this when you sit the paper.

Question 102

[1 marks]Manufacturing account and statement of profit or loss
Loose tools: opening balance $60,000, purchases during the year $54,600, closing balance $53,600. Calculate the value of loose tools used (charged to the manufacturing account) for the year.

Answer this when you sit the paper.

Question 103

[2 marks]Manufacturing account and statement of profit or loss
Factory rent and rates per the trial balance is $216,000. Factory rent of $20,000 was owing (accrued) at the year end, and factory rates of $4,000 had been paid in advance. Calculate the factory rent and rates charge for the year.

Answer this when you sit the paper.

Question 104

[2 marks]Manufacturing account and statement of profit or loss
A company's manufacturing account for the year includes: indirect wages $91,600, factory rent and rates (after adjustment) $232,000, factory heat and light $148,000, factory insurance $76,000, loose tools used $61,000, depreciation on buildings (factory share) $28,800, depreciation on plant $172,000, depreciation on motor vehicles (factory share) $42,000. Calculate the total factory overheads for the year.

Answer this when you sit the paper.

Question 105

[3 marks]Manufacturing account and statement of profit or loss
Green Valley Manufacturing Company Ltd for the year ended 31 December 2020: raw materials consumed $971,400, total factory overheads $851,400, opening work in progress (semi-finished goods) $111,200, closing work in progress (semi-finished goods) $98,000. Calculate the cost of production.

Answer this when you sit the paper.

Question 106

[2 marks]Manufacturing account and statement of profit or loss
Green Valley Manufacturing Company Ltd's cost of production for the year is $1,836,000. Finished goods are transferred to the warehouse at a market value of $3,600,000. Calculate the manufacturing profit for the year.

Answer this when you sit the paper.

Question 107

[1 marks]Manufacturing account and statement of profit or loss
Administration rent and rates per the trial balance is $112,000. Administration rent of $11,200 was owing at the year end, and administration rates of $3,200 had been paid in advance. Calculate the administration rent and rates charge for the year.

Answer this when you sit the paper.

Question 108

[2 marks]Manufacturing account and statement of profit or loss
Green Valley Manufacturing Company Ltd transfers finished goods to the warehouse at a market value of $3,600,000, which includes a manufacturing profit of $1,764,000. The closing finished goods inventory, valued at this transfer price, is $270,000. Calculate the provision for unrealised profit required on the closing finished goods inventory (to the nearest dollar).

Answer this when you sit the paper.

Question 109

[1 marks]Manufacturing account and statement of profit or loss
The closing provision for unrealised profit required on finished goods is $132,300. The opening provision for unrealised profit (per the trial balance) is $16,000. Calculate the increase in the provision for unrealised profit for the year.

Answer this when you sit the paper.

Question 110

[3 marks]Manufacturing account and statement of profit or loss
Green Valley Manufacturing Company Ltd: turnover $4,800,000, opening finished goods (at transfer price) $170,000, finished goods transferred from the factory (at transfer price) $3,600,000, closing finished goods (at transfer price) $270,000, and the increase in the provision for unrealised profit for the year is $116,300. Calculate the gross profit for the year.

Answer this when you sit the paper.

Question 111

[3 marks]Manufacturing account and statement of profit or loss
Green Valley Manufacturing Company Ltd: gross profit for the year $1,183,700, discount received $7,040, selling and distribution expenses $220,760, administration expenses $316,800, discount allowed $8,560, administration rent and rates (after adjustment) $120,000, administration heat and light $86,800, administration insurance $48,800, depreciation on buildings (administration share) $9,600, depreciation on motor vehicles (administration share) $42,000, and loan notes interest $3,200. Calculate the profit for the year.

Answer this when you sit the paper.

Question 112

[2 marks]Manufacturing account and statement of profit or loss
A company's manufacturing account shows that the cost of production of goods completed for the year exceeds the market (transfer) value of those goods, producing a loss on manufacturing. What is the correct accounting treatment of that loss?
  1. AIt is written off directly against retained earnings in the statement of financial position, treated as an appropriation of past profit rather than as a cost of the current year.
  2. BIt is transferred out of the manufacturing account and charged as an expense in the statement of profit or loss for the same period, reducing that period's gross profit.
  3. CIt is carried forward in the manufacturing account as an opening balance for the following year, on the grounds that it belongs to production whose goods have not yet been sold on.
  4. DIt is added to the cost of the closing finished goods inventory, so that the loss stays in the statement of financial position until those goods are eventually sold.

Question 113

[1 marks]Manufacturing account and statement of profit or loss
A manufacturing company's trial balance includes a large balance for 'Patent costs', but no amortisation rate or policy for patents is given anywhere in the question. When preparing the manufacturing account and the statement of profit or loss for the year, how should this patent costs balance be treated?
  1. AIt is left out of both statements: with no amortisation instruction given, it is a non-current asset balance for the statement of financial position, not a cost of the current period.
  2. BIt is charged in full to the statement of profit or loss as an administration expense of the year, on the basis that a cost in the trial balance must be written off somewhere.
  3. CIt is split evenly between the manufacturing account and the statement of profit or loss, since it cannot be assigned clearly to either factory work or administration.
  4. DIt is charged in full to the manufacturing account as a factory overhead of the year, since a patent protects a production process and belongs with the other factory costs.

Question 201

[2 marks]Inventory valuation from incomplete records; sources of finance
Shizha Ltd sent invoices to customers totalling $102,240 (at selling price) between 1 and 14 May 2020. The mark up on cost is 25%. Calculate the cost of these goods.

Answer this when you sit the paper.

Question 202

[1 marks]Inventory valuation from incomplete records; sources of finance
Shizha Ltd issued credit notes to customers totalling $3,840 (at selling price) between 1 and 14 May 2020, for goods returned. The mark up on cost is 25%. Calculate the cost of these returned goods.

Answer this when you sit the paper.

Question 203

[2 marks]Inventory valuation from incomplete records; sources of finance
Shizha Ltd received goods valued at $68,200 list price between 1 and 14 May 2020, subject to a 20% trade discount. Calculate the net cost of these goods.

Answer this when you sit the paper.

Question 204

[2 marks]Inventory valuation from incomplete records; sources of finance
Goods with a selling price of $25,600 were taken to an exhibition in Bulawayo on 28 April 2020 and had still not been returned to Shizha Ltd by 14 May 2020. The mark up on cost is 25%. Calculate the cost of these goods.

Answer this when you sit the paper.

Question 205

[1 marks]Inventory valuation from incomplete records; sources of finance
In April 2020, goods costing $4,800 were sent to a customer of Shizha Ltd on a sale or return basis. The customer sold goods costing $3,400 of these on 27 April 2020. Calculate the cost of the goods still held by the customer on a sale or return basis (unsold).

Answer this when you sit the paper.

Question 206

[2 marks]Inventory valuation from incomplete records; sources of finance
Goods were invoiced to a customer of Shizha Ltd in April 2020 for $45,000 (at selling price), but the customer had not yet collected them. The mark up on cost is 25%. Calculate the cost of these goods, which must be excluded from Shizha Ltd's inventory since the sale has already been recorded.

Answer this when you sit the paper.

Question 207

[3 marks]Inventory valuation from incomplete records; sources of finance
Shizha Ltd's physical inventory count on 14 May 2020 was valued at $393,400. Reconciling back to 30 April 2020: add the cost of goods sold 1-14 May ($81,792), deduct the cost of goods returned by customers 1-14 May ($3,072), deduct the cost of goods purchased and received 1-14 May ($54,560), add the cost of goods bought on 26 April but returned to the supplier on 10 May ($9,600), add the cost of unreturned exhibition goods ($20,480), add the cost of unsold sale-or-return goods ($1,400), and deduct the cost of goods already invoiced to a customer but not collected ($36,000). Calculate the value of inventory at 30 April 2020.

Answer this when you sit the paper.

Question 208

[2 marks]Inventory valuation from incomplete records; sources of finance
Shizha Ltd's bookkeeper recorded $7,300 of carriage on purchases in the carriage outwards account instead of the carriage inwards account during April 2020. When preparing the statement showing the value of inventory at 30 April 2020, how should this $7,300 be treated?
  1. AIt is added to the goods counted on 14 May and then converted back to cost using the 25% mark up, in the same way as every other movement in the two weeks after the year end.
  2. BIt is added to the inventory value, because carriage on purchases is part of the cost of bringing goods to their present location and condition, wherever in the ledger the bookkeeper happened to post it.
  3. CIt is deducted from the inventory value, because posting the amount to carriage outwards overstated the cost of the goods on hand, and the year end figure must now be corrected.
  4. DIt is not used at all in the inventory statement: it is a misclassification between two income statement expense accounts and does not change the quantity or cost of any goods on hand.

Question 209

[2 marks]Inventory valuation from incomplete records; sources of finance
Which of the following is a genuine characteristic of ordinary share capital, as opposed to preference share capital or debentures?
  1. AOrdinary shareholders rank ahead of debenture holders and preference shareholders for repayment out of whatever assets are left if the company is wound up.
  2. BOrdinary shareholders are creditors of the company rather than owners of it, so their return is a contractual charge rather than a share of the profit.
  3. COrdinary shareholders carry voting rights at general meetings, and their dividend is not fixed, varying with the profit made and what the directors recommend.
  4. DOrdinary shareholders receive a fixed rate of dividend which must be paid in every year, whether or not the company has made a profit to pay it out of.

Question 210

[2 marks]Inventory valuation from incomplete records; sources of finance
Which of the following is a genuine characteristic of preference share capital?
  1. APreference shareholders are creditors of the company rather than members of it, so their return is contractual interest that is due whether or not any profit has been made in the year.
  2. BPreference dividends are a legal debt of the company and must be paid in full in every year, including a year in which the company makes a loss, and any amount missed in one year is enforceable by the holder in a court of law.
  3. CPreference shareholders are normally entitled to a fixed rate of dividend, paid before any dividend to ordinary shareholders, but only if the directors declare a dividend from sufficient available profit.
  4. DPreference shareholders normally carry full voting rights at general meetings on the same terms as ordinary shareholders, and they vote on the dividend the directors have recommended.

Question 211

[2 marks]Inventory valuation from incomplete records; sources of finance
Which of the following is a genuine characteristic of debentures (loan notes)?
  1. ADebenture interest is a fixed contractual charge, paid whether or not the company makes a profit, and debentures are often secured against the company's assets.
  2. BDebenture interest is paid only in the years when the directors recommend it out of the profit available, in exactly the same way as a dividend on ordinary shares.
  3. CDebenture holders rank behind both the ordinary and the preference shareholders for repayment if the company is wound up, since a loan is settled only after the owners.
  4. DDebenture holders are part owners of the company and share in its profits through a variable dividend that rises and falls with the profit made for the year.

Question 301

[1 marks]Partnership revaluation and admission of a new partner
Misheck and Rutendo's partnership held patents at $40,000. On 1 February 2021 the patents were revalued to $120,000. Calculate the revaluation gain on patents.

Answer this when you sit the paper.

Question 302

[1 marks]Partnership revaluation and admission of a new partner
Misheck and Rutendo's partnership held machinery at $141,600. On 1 February 2021 the machinery was revalued to $136,400. Calculate the revaluation loss on machinery.

Answer this when you sit the paper.

Question 303

[2 marks]Partnership revaluation and admission of a new partner
On 1 February 2021, Misheck and Rutendo's partnership revalued its assets: patents increased by $80,000, machinery decreased by $5,200, and inventory decreased by $4,000. Calculate the net profit on revaluation.

Answer this when you sit the paper.

Question 304

[2 marks]Partnership revaluation and admission of a new partner
Misheck and Rutendo shared profits and losses 2:1 before Monica's admission. The net profit on revaluation of their partnership's assets on 1 February 2021 was $70,800, shared in the old ratio. Calculate Misheck's share of this revaluation profit.

Answer this when you sit the paper.

Question 305

[1 marks]Partnership revaluation and admission of a new partner
Misheck and Rutendo shared profits and losses 2:1 before Monica's admission. The net profit on revaluation of their partnership's assets on 1 February 2021 was $70,800, shared in the old ratio. Calculate Rutendo's share of this revaluation profit.

Answer this when you sit the paper.

Question 306

[2 marks]Partnership revaluation and admission of a new partner
On Monica's admission to the Misheck/Rutendo partnership on 1 February 2021, goodwill was valued at $60,000 and is not to be shown in the books. It is credited to Misheck and Rutendo in the old ratio 2:1, then debited to Misheck, Rutendo and Monica in the new ratio 2:1:1. Calculate the amount debited to Monica's capital account for this goodwill adjustment.

Answer this when you sit the paper.

Question 307

[2 marks]Partnership revaluation and admission of a new partner
Misheck's capital account: balance brought down $320,000, plus his share of the revaluation profit $47,200, plus his net goodwill adjustment of $10,000 (credited $40,000 in the old ratio, debited $30,000 in the new ratio). Calculate Misheck's capital account balance carried down at 1 February 2021.

Answer this when you sit the paper.

Question 308

[2 marks]Partnership revaluation and admission of a new partner
Rutendo's capital account: balance brought down $480,000, plus his share of the revaluation profit $23,600, plus his net goodwill adjustment of $5,000 (credited $20,000 in the old ratio, debited $15,000 in the new ratio). Calculate Rutendo's capital account balance carried down at 1 February 2021.

Answer this when you sit the paper.

Question 309

[2 marks]Partnership revaluation and admission of a new partner
Monica joined the Misheck/Rutendo partnership on 1 February 2021, introducing a building valued at $784,000 as her capital, and is debited $15,000 as her share of the goodwill adjustment. Calculate Monica's capital account balance carried down.

Answer this when you sit the paper.

Question 310

[3 marks]Partnership revaluation and admission of a new partner
The new Misheck/Rutendo/Monica partnership's statement of financial position at 1 February 2021 includes: motor vehicles $232,800, machinery (revalued) $136,400, furniture and fittings $156,000, the building Monica introduced $784,000, patents (revalued) $120,000, inventory (revalued) $252,000, trade receivables $182,400 and bank $76,800. Calculate the total assets of the new partnership.

Answer this when you sit the paper.

Question 311

[2 marks]Partnership revaluation and admission of a new partner
A partnership's financial statements distinguish a 'provision' from a 'reserve'. Which statement correctly explains the difference between the two?
  1. AA provision always appears in the statement of financial position as a non-current liability, while a reserve always appears among the current liabilities, so the two are told apart by where they are shown rather than by what they are set aside for; the amounts are arrived at in the same way.
  2. BA provision and a reserve are two names for exactly the same accounting treatment, so either term may be used in a set of final accounts; both are deducted in arriving at the profit for the year, and the choice between the two words is a matter of house style rather than of accounting substance.
  3. CA reserve is set aside for a known liability or fall in asset value whose exact amount or timing is uncertain (e.g. a reserve for doubtful debts); a provision is set aside out of profit to strengthen the business or fund a future purpose, not to cover a known loss in value (e.g. a general provision).
  4. DA provision is set aside for a known liability or fall in asset value whose exact amount or timing is uncertain (e.g. a provision for doubtful debts); a reserve is set aside from profit to strengthen the business or fund a future purpose, not to cover a known loss in value (e.g. a general reserve).

Question 312

[1 marks]Partnership revaluation and admission of a new partner
A club receives a general donation, given with no restriction on its use. How is a general donation correctly treated in the club's financial statements for the year it is received?
  1. AIt is credited in full to the income and expenditure account as income for that year.
  2. BIt is credited straight to the club's accumulated fund in the statement of financial position.
  3. CIt is used only to reduce the cost of a specific non-current asset the club later buys.
  4. DIt is spread as income over several future years instead of the year it is received.

Question 313

[2 marks]Partnership revaluation and admission of a new partner
A club receives a specific donation, given for a stated purpose (for example, to buy a named asset). How does its accounting treatment differ from a general donation?
  1. AIt is recorded as a liability owed back to the donor until the stated purpose has been carried out, and released to income only in the year the club finally buys the named asset.
  2. BIt is not treated as income at all: it is credited to a specific fund (or used to reduce the cost of the asset it was given to buy) and shown in the statement of financial position, not the income and expenditure account.
  3. CIt is treated in exactly the same way as a general donation, credited in full to the income and expenditure account as income of the year in which it is received, since the club is under no obligation to hand any part of it back to the person who gave it.
  4. DIt is credited to the income and expenditure account, but only in the year in which the named asset is finally bought, however many years after the gift that eventually turns out to be.

Question 401

[1 marks]Investment appraisal (net present value)
The Supreme Spikers tennis club's revenue is currently $4,000,000 and is expected to remain constant if Ben is not hired. If Ben is hired, revenue is expected to increase by 10% annually (compounding). Calculate the incremental revenue for Year 1 of Ben's contract.

Answer this when you sit the paper.

Question 402

[1 marks]Investment appraisal (net present value)
The Supreme Spikers tennis club's revenue is currently $4,000,000 and is expected to remain constant if Ben is not hired. If Ben is hired, revenue is expected to increase by 10% annually (compounding). Calculate the incremental revenue for Year 3 of Ben's contract.

Answer this when you sit the paper.

Question 403

[2 marks]Investment appraisal (net present value)
The Supreme Spikers tennis club's revenue is currently $4,000,000 and is expected to remain constant if Ben is not hired. If Ben is hired, revenue is expected to increase by 10% annually (compounding). Calculate the incremental revenue for Year 5 of Ben's contract.

Answer this when you sit the paper.

Question 404

[1 marks]Investment appraisal (net present value)
If Ben is hired: Year 1 salary $120,000, Year 1 accommodation rental $14,400, and the annual end of year holiday trip is $4,000. Calculate the incremental cost for Year 1 (the $814,400 signing on fee is a one-off, not an annual cost).

Answer this when you sit the paper.

Question 405

[2 marks]Investment appraisal (net present value)
If Ben is hired: Year 5 salary $248,832, Year 5 accommodation rental $0 (nil), and the annual end of year holiday trip is $4,000. Calculate the incremental cost for Year 5.

Answer this when you sit the paper.

Question 406

[2 marks]Investment appraisal (net present value)
If Ben is hired, his Year 2 incremental revenue is $840,000 and his Year 2 incremental cost (salary $144,000 + rental $18,000 + holiday trip $4,000) is $166,000. Calculate the Year 2 net cash flow.

Answer this when you sit the paper.

Question 407

[2 marks]Investment appraisal (net present value)
If Ben is hired, his Year 4 incremental revenue is $1,856,400 and his Year 4 incremental cost (salary $207,360 + rental $18,000 + holiday trip $4,000) is $229,360. Calculate the Year 4 net cash flow.

Answer this when you sit the paper.

Question 408

[2 marks]Investment appraisal (net present value)
Ben's Year 5 net cash flow is $2,189,208. The present value of $1 at the club's 12% cost of capital in Year 5 is 0.507. Calculate the present value of Ben's Year 5 net cash flow.

Answer this when you sit the paper.

Question 409

[2 marks]Investment appraisal (net present value)
The present values of Ben's five years of net cash flows, discounted at the club's 12% cost of capital, are: Year 1 $233,608.80, Year 2 $537,178.00, Year 3 $804,560.00, Year 4 $1,034,797.44, Year 5 $1,109,928.46. Calculate the total present value of these net cash inflows.

Answer this when you sit the paper.

Question 410

[3 marks]Investment appraisal (net present value)
The total present value of Ben's five years of net cash inflows, discounted at the club's 12% cost of capital, is $3,720,072.70. Ben requires a once off signing on fee of $814,400, payable immediately. Calculate the net present value of hiring Ben.

Answer this when you sit the paper.

Question 411

[2 marks]Investment appraisal (net present value)
The Supreme Spikers tennis club calculates a net present value of $2,905,672.70 for hiring Ben, and the club's accountant has already calculated a net present value of $726,424 for hiring Tenson instead. Which player should the club advise employing, and why?
  1. ATenson, because the lower net present value is the safer and more conservative figure, and a club should always prefer the contract that puts less of its money at risk.
  2. BBen, because his net present value is substantially higher than Tenson's, meaning his contract is expected to add more value to the club, in today's money, over its life.
  3. CEither player, because once the net present value of a contract is positive the investment is already worthwhile, and the size of the figure makes no difference to the choice between them.
  4. DNeither player, because a net present value says only what a contract is worth today and nothing about whether the club can afford the wages out of its own cash.

Question 412

[1 marks]Investment appraisal (net present value)
Which of the following correctly defines an opportunity cost?
  1. AThe total amount of cash actually paid out for a resource, as recorded in the books of the business.
  2. BThe difference between the cost budgeted for a resource and the cost actually incurred for it later on.
  3. CThe value of the best alternative given up (foregone) when a choice is made between competing uses of a scarce resource.
  4. DA cost that has already been incurred in the past and cannot now be changed by any decision taken.

More sittings of this paper

The answers, and why they are the answers

Sit the paper here to see which ones you got right. Danho explains every question, keeps your score, and works without a connection.

Get it on Google PlayDownload on the App Store