CARIBBEAN EXAMINATIONS COUNCIL Caribbean Secondary Education Certificate CSEC’ PRINCIPLES OF ACCOUNTS Specimen Papers and Mark Schemes/Keys Specimen Paper: - Paper 01 Paper 02 Paper 032 MarkSchemeandKey: - Paper 01 Paper 02 Paper 032FORM SPEC 2017 CARIBBEA? EXAMINATIONS ‘rest cope 01239010 COUNCIL CARIBBEAN SECONDARY EDUCATION CERTIFICATE* EXAMINATION PRINCIPLES OF ACCOUNTS Paper 01 — General Proficiency T hour 30 minutes IMEN PAPER E FOLLOWING RUCTIONS C) REFULI y. 1 This test consists of 60 items. You will have | hour and 30 minutes to answer them. 2. hadi to this test booklet, you should have an answer sheet 3. Bach tem in his test has four suggested answers lettered (A), (B),(C), (D). Read each item you are about to answer and decide which choice is best 4. On your answer shes, nd the number which conresponds to youritetn and shade the space having the same letter as the answer you have chosen, Look at the sample item below Sample em Prime cots calculated by adding direct factory expenses to the ple Answer (A) cost of goods sold @@®O (B) sale of fixed assets ) SS e (C) _ sale of finished goods (D) cost of materials used ‘The best answer to this item is “cost of materials used”, so (D) has been shaded. 5. you want to change your answer, ese it completely before you fli your new choos 6. When you ae fold to begin, tum the page and work as quickly and as carefully as you can. Ifyou cannot answer anilem, go ont the next one. You may return to that tem later 7. Youray use silent, nom progtammeblecaleulator to answer ts, DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO. Copyright © 2017 Caribbean Examinations Council All rights reserved, 01239010/SPEC 201701239010/S1 Items J-2referto the following information for Dee’s business: Dee commenced business on January 1, 2015. She has decided to create provision fordoubtful debts to 5% oftrade receivables. The following particulars relate to three financial years: Year Trade Receivables s 2015 40000 2016 35,000 2017 45000 ‘What is the total provision for doubtful debts at the end of 2016? (A) $1750 (B) $2,000 (©) $2250 (D) $3750 ‘The effect of provision for doubtful debts on the income statement in 2017 is (A) an increase of $250 (B) a decrease of $250 (C)_aninerease of $500 (D) —adecrease of $500 Which of the following is NOT a capital expenditure? (A) Replacement costs (B) Purchase costs (C)__ Delivery costs wo) 2017 6. ems 4-Srefertothe followinginformation. Office equipment was purchased for $155,000. Its useful life is 5 years and the residual value is $20,000. ‘What is the depreciation expense for the second year? (A) 8 27000 (B) $ 54.000 (C) $81 000 (D) $135 000 The total net book value at the beginning of year (A) 27000 (B) $8100 (C) 8 74000 (D) $101 000 Which of the following is NOT classified asrevenueexpenditure foramotor vehicle? (A) Depreciation (B) —Oilchange (©) Cost of fixing a flat tire (D) Installation of air conditioning, ‘The accounting entry for writing off a bad debt is (A) DrCash Cr Bad debt (B) Dr Provision for bad debt Cr Bad debt (©) DrBad debt Cr Accounts payable (PD) DrBad debt Cr Accounts receivable GO ON TO THE NEXT PAGE10. ‘A business shows accounts receivable as $84 000 and the provision for doubtful debts as $5040, The business is therefore ‘maintaining a provision for doubtful debts of A) 3% (B) 9% 6% (D) 8% 'S House rents apartments. For the year he coll At the end of the financial year D Wate business paid Insurance of $1 000 in advance for the following year, How will this adjustment affect D Waters’ financial statements? (A) Increase expenses Increase current assets (B)__ Increase expenses Decrease current assets (©) Decrease expenses Increase current assets, (D) Decrease expenses Decrease current assets ts $42,000 in rent. In 2016, Mr House collected $40.00, What is the correct journal entry to adjust rent revenue at the end of 2016? Cs) Date Details Dr 2016 Ss 31 December | Accrued rent revenue 2000 Rent revenue 2000 i) Date Detail Dr, cr 2016 $ 3 31 December | Rent revenue 40 000 Prepaid rent revenue 40 000 © Date Details Dr or 2016 s 3 31 December | Rent revenue 2000 “Accrued rent revenue 2000 o Date Details Dr, cr 2016 Ss 3 31 December | Bank 40-000 Income statement 40 000 01239010/SPEC 2017 GO ON TO THE NEXT PAGE12. 01239010/S1 Homes Guest House pays electricity of $500 each month. Attheendofthe financial year, Homes paid $6 500 on this utility, required adjusting entry is known as (A) accrued expense (B) accrued revenue (©) _ prepaid expense (D) prepaid revenue Items 12-13 refer to the following information. ‘A motor vehicle which costs $150 000 is to be depreciated by 10% per annum, It is expected to remain in the business for 4 years. Using the Reducing Balance Method, what is the provision for depreciation after 3 years? (A) $10.930 (B) 812150 (C) $13 500 (D) $15,000 What is the net book value of the motor vehicle at the end of the 4 years? (A) 8 98.415 (B) $ 98 145 (C) $100 145 (D) $109 350 For the first 3 yeats Dyasha Designs calculated the straight line method of deprecation inits fixedassets. Inyear4,the business decided to calculate depreciation using the reducing balance method. The accounting concept that is being violated is (A) Accrual (B) Prudence (©) Matching (D) Consistency 2017 15. 16. Hems 15-16 refer to the following information in which Rhylexi Enterprises discovered the following errors inits ledger. 1. A purchase of a photocopier for $3750 was reatedas the purchase of inventory for sale. I. Actedit sale of $615 to B Maharaj ‘was entered in the books as $651. I. An invoice was received from M Lewis for $350, Purchases was dr. and N Lewis was er, The errors discovered in I, Il and III respectively are (A) enor of principle, compensating (B) error of principle, error of original entry, error of commission (C) error of commission, error of complete reversal, error of principle (D) __errorofcommission, error ofpartial reversal, error of original entry What is the double entry to correct error mm (A) DrPurchases Cr M Lewis (B) DrN Lewis Cr M Lewis (©) DrPurchases Cr N Lewis (D) Dr. MLewis CrN Lewis GO ON TO THE NEXT PAGE17. A purchase of office equipment for $5 700 was debited in the purchases account. correct journal entry to correct this error? What is the cS) Date Details Dr cr s s Purchases 5700 Office equipment 5700 To record the correction of an error of commission @) Date Details Dr cr s s ‘Office equipment 3700) Bank 5700, “To record the correction of an error of commission © Date Details Dr cr $ s Purchases: 5700) Bank 5700 To record the correction of an error of principle © Date Details Dr cr s s Office equipment 5700 Purchases: 5700 To record the correction of an error of principle 01239010/SPE 2017 GO ON TO THE NEXT PAGE18. 19. 01239010/S1 -6- Which of the following situations would require the preparation of a suspense account? 1. Sold inventory for cash. This transaction was completely left out from the books, II, Paideash into bank. Both bank and cash were debited Ill, Purchasedamotor vehicleon credit from Van Sales Ltd for $100 000. $10 000 was debited in motor vehicle account in error: (A) Land ll only B) Land Ifonly (©) Wand ill only ©) 1 Mend tt tem 19 refers to the following information. The purchase of office machinery for $255 cash was entered in the books as follows: Dr Office machinery $255 DrCashS$255 ‘What is the double entry required to correct this error? (A) Dr Office machinery $255 Cr Cash $255, (B) Dr Cash $255 Cr Suspense $255 (©) Dr Suspense $510 Cr Cash $510 (PD) DrCash $510 Dr Suspense $510 2017 20. 21. Which of the following errors would affect the business income statement? 1. The drawings figure of $1781 was entered as $1 871 Il, Discount allowed of $450 was treated as discount received. IIL, The telephone bill was undercast by $275, (A) Tand I only (B) Land If only (©) Mand IT only (D) 1 Mand tt Which of the following groups ofaccounts, are found in the Purchases Ledger control AIC? (A) Total purchases, refunds, return inwards, discount allowed (B) Cash purchases, cash received, returninwards, discountreceived (©) Cheque purchases, cash received, return outwards, discount allowed (D) Credit purchases, cash payments, return outwards, discount received GO ON TO THE NEXT PAGEItems 22-23 refer to the following, On December 31, 2016, Lochan prepared her control Accounts. The following information was provided. s $ (Credit sales 3.000 | Discount allowed GA ‘Credit purchases 3.500 | Discount received 346 Return inwards 350__| Receipts from trade receivables 500 Return outwards 300_[ Payments to wade payables 3.000 Dishonoured cheque 225 22, What isthe original balance on the sales ledger control account? (A) Dr Balance $2300 (B) Cr Balance $2 300 (C) Dr Balance $ 146 (D) Cr Balance $ 146 23. What is the debit side total for the purchases control account? “ $3 500 ® $3 646 © $5525 ) $8521 GO ON TO THE NEXT PAGE 01239010/S1 201724, 28. 26. 01239010/S1 <8 Which of the following are items found in the cash book butnot onthe bank statement? (A) Direct debit (B) Standing order (C) Credit transfer (D) _Unpresented cheques A bank statement is a document issued by the (A) bank to its customers, providing information on deposits and payments made by the customer (B) business to the bank, providing information on deposits and payments made by the business (©) bank to its suppliers, receiving information on deposits and payments made by the bank (D) business to the bank, receiving information on deposits and payments made by the business Item 26 refers tothe following information, 3 Balance as per cash book| 4 000 Unpresented cheque 2 500 Tate Todgements 1200 ‘Bank charges 25 What is the balance as per the bank statement? A) 92725 (B) $5275 (C) $5300 (D) $5325 2017 27. 28, 29. Item 27 refers to the followinginformation for D. Valentine’s eash book, ‘The cash book showed a credit balance of $1500. Upon receipt ofher bank statement the following items were discovered standing order $250, direct debit, $375, bank charges $25, credit transfer $975, What is the updated cash book balance? (A) Cr $2150 (B) Cr $1175 (©) Dr $1500 (D) Drs 975 All the following are internal users of accounting except: (A) potential investors (B) board of directors (C) employees (D) owners Which of the following items will be recorded in the Returns Inwards Journal of L Cheng Ltd.? (A) Sale made for cash (B) Sales made on credit (C) Customer returns faulty goods to L Cheng Ltd. (D) faulty good returned to a supplier by L Cheng Lid, ‘When a transaction is credited in the bank column of the cash book what source of payment is used in this transaction? (A) Cash (B) Cheque (C) Debit card (D) Credit eard GO ON TO THE NEXT PAGE31. 32. 34, 01239010/S1 The process of recording, summarizing, analyzing and interpreting of financial data to make informed decisions is known as: (A) accounting adjustments (B) accounting eycle (C) book keeping (D) accounting The source document entered in the Purchases Journal is a (A) purchases invoice (B) purchases receipts, (C) credit note (D) debit note Which of the following is NOT ethical neiple of accounting: (A) due care (B) integrity (C) subjectivity (D) professional behaviour The manager of S Danielle’s Enterprises has instructed the accounts clerk to omit some of the entries totally from the books. ‘This unethical practice is known as: (A) fraudulent financial reporting (B) misappropriation of assets (©) disclosure (D) _ penalities 2017 Items 38-36 refer to a sales invoice received by H Leon with the following information: Te: PGrey From: N Black Items: 15 Rolls book cover @ $2 each 2 dozen Ppens @ $20 per doz 30 folders @ $1.50 each Trade discount: 10% 35. What would be the total on the invoice? (A) $115.00 (B) $110.00 (C) $105.30 (D) $103.50 36, Trade discount is the amount (A) received by wholesalers (B)_— onwhich taxes are charged (C) written off the total invoice (D) written off the purchase price Item 37 refers to the following information shown in books of original entry il Debit Date 2016 | Details | WON, |S November 10 [Q. Quan [322 18 November 23 [E Eck 323 25 37. Which book of original entry would reflect the entry above? (A) Retums Outwards Journal (B) Returns Inwards Journal (C)_ Petty Cash Book (D) Cash Book GO ON TO THE NEXT PAGE38, 39. 40. ai. 01239010/S1 =10- Which of the following is LEAST likely to be a method of payment for employees: (A) cash (B) paypal (©) cheque (D) direct deposit, Which of the following is NOT considered to be an outflow? (A) Rent (B) Sales (C) Utilities (D) Wages and salaries ‘Ms. Forbes sells pens at school, She madea projection of sles fora3-month period. All her pens are sold for $5.00. The estimated sales in units were: April sales 100 units May sales 200 units June sales 50 units What is the (otal expected sales at the end of June? (A) $ 300 (By) $ 500 () $1,500 (D) $1,750 Which of the following is NOT entered in the partnership appropriation account?” (A) Drawings (B) _ Interest on capital (©) Partnership salaries (D) _ Interest on drawings 2017 2. 48. Ifa buyer’s invoice has been overstated, the seller should send him a (A) debit note B) — creditnote (C)_—retums voucher (D) corrected invoice Item 43 refers to the following information ‘obtained from a petty cashier Ss Tmprest amount, 350 Petty cash expenses 325 Received for stationery 20 ‘What amount will be reimbursed to restore the imprest? @ $5 (B) $25 (©) $300 (D) $305 ‘The total in the purchases book signifies total (A) cash and eredit purchases (B) credit purchases (©) cash purchases (D) purchases GO ON TO THE NEXT PAGE45, 47. 01239010/S1 ole Item 45 refers to the following information which was provided by a trader. 5 mae [ee cane Fom omer ee RO re What was his credit sales for the year? (A) 19.600 (B) $19 800 (©) $20000 (D) $3820 The total in the purchases book signifies total (A) cash and credit purchases (B) credit purchases (©) cash purchases (D) purchases Land, machinery, fixtures and fitting and inventory, are all examples of (A) liabilities accounts (B) personal accounts (C) nominal accounts (D) real accounts ‘V Verano sold goods on credit to W Watson. In which ledger would the record of the transaction for W Watson appear? (A) purchases ledger (B) general ledger (C) sales ledger (D) cash ledger 2017 49. Which of the following documents should NOT beusedwhen calculating total wages? (A) Pay sheet (B) Time sheet (©) Employees’ register (D) Income tax return forms Using the permanency method, the descending order in which current assets should be shown in a balance sheet is (A) cash, bank, accounts receivable, inventory (B) inventory, accounts receivable, bank, cash (C) inventory, bank, cash, accounts receivable (D) accounts receivable, inventory, bank, cash tem $1 refers to the following entries. Account | To Record | [Bt 8 1 atts | ane re ui. fassers | Aree [credit tn Jcepts | econ [Credit Which ofthe following are INCORRECT? (A) Land IL only (B) Land If only (C) Mand Itt only () 1 Mand tt GO ON TO THE NEXT PAGE52. 58. 01239010/S1 -12- Which of the following ratios determines the profitability of the business? (A) Capital ratio (B) Current ratio (C)__ Inventory turnover (PD) Retum on investment The term “Limited” after the name of a Company means that (A) amember'sliability is imited tothe amountof shares purchased inthe company (B) _ashareholder can purchase only a limited number of shares in a company (C) the company engages in the sale of a limited range of produets (D) the company is legally registered and can commence operation Which of the following can have its shares traded on the stock exchange? (A) A partnership (B) —Apublic company (©) Aprivate company (PD) Acoroperative society Which of the following types of investment carries a fixed rate of interest whether profit is made or not? (A) Debentures (B) Preference shares (©) Cumulative preference (D) Participating preference 2017 57. Which of the following is NOT an asset? (A) Cash (B) Premises (©) Inventory (D) Creditors Mr X bought a motor van for personal use but has recorded the information in the books of his business, Which accounting ‘concept did Mr X breach? (A) Going concern (B) Business entity © ‘measurement @) Which of the following are ALL components of the Income statement? (A) Netsales, Cost of sales, Net profit (B) —Non-current liabilities, Capital, Expenses (©) Net current assets, Gross profit, Cost of sales (PD) Grossprofit, Currentassets, Current liabilities GO ON TO THE NEXT PAGE59. Item $9 refers to the following information. Office equipment $6500 [Accounts receivable [$1 000 ‘Accounts payable $750 [Bank overdraft $2500 Inventory 34500 [Cash $6 000 ‘What is the value of the net current assets? (a) $3 250 (B) $8 250 (©) $11 500 (D) 814750 Which of the following can be found on both the income statement and on the balance sheet? (A) Drawings (B) Net profit (C) Bank overdraft (D) Accounts receivables 01239010/SPEC 2017CANDIDATE’: RECEIPT INSTRUCTIONS TO CANDIDATE: Fill in all the information requested clearly in capital letters. testcove:Jo]1]2]3]9]°]1]o SUBJECT: __ PRINCIPLES OF ACCOUNTS Paper 01 PROFICIENCY: GENERAL, REGISTRATION NUMBER: FULL NAME: TERS) Signature: Date: Ensure that this slip is detached by the Super band in this booklet. or Invigilator and given to you when you Keep a safe place until you have ree od your results. INSTRUCTION TO SUPERVISOR/INVIGILATOR: n the declaration below, detach this slip and hand it to the candidate as his/her receipt for this booklet collected by you. Thereby acknowledge receipt of the candidate's booklet for the examination stated above. Signature: Supervisor/Invigilator Date:ANSWER KEY Tem No, Key Syllabus] Item No, Key Syllabus Reference Reference T a 66) 3 D 12) 2 c 66) 32, A 3Gb) 3. D 6 (10) 33, C 12) 4 A 6 (8) 34, Cc 12) 3. c (8) 35; D 3a) 6. D 6 (10) 36. D 36) 7. D 6) 31. A 35d) 3 c 6G) 38, B 1d) 9. Cc 612) 39, B 10) 10 A 6G) 40. D 11g) 1 c 6G) a A 80) 12, B (8) a, B 3G) 13 A 68) 4B. D 3186! 14, D 60) 4 B 30) TS. B 7G) 45, A 40) 16 B 7a) 46. B 4a) 17 D TI) a7. D 4b) 18 Cc 75):116) 48. Cc 4b) 19. Cc 78) 9. D iQ) 20. Cc 70 30. B 29) 21 D 78):7) 3 B 210) 22, A 700) 52. c 516) 23, B 700) 3. A 31) 24, D 702) 54. A 912) 25; A 702) 55. c 915) 26. B 712) 36. D 20) 21, B 712) 31, B 20) 28. Cc 12) 58, A SQ) 29) c 3 (le) 39, B 505) 30, B 3Qb) 60, A 6(6):919)r CARIBBEAN EXAMINATIONS COUNCIL CARIBBEAN SECONDARY EDUCATION CERTIFICATE® EXAMINATION 5 Barcode Arew Front Page Bar Code SPECIMEN PAPER FILL IN ALL THE INFORMATION REQUESTED CLEARLY IN CAPITAL LETTERS. TESTCODE | 0 | 1 | 2 SUBJECT _ PRINCIPLES OF ACCOUNTS ~ Paper 02 PROFICIENCY —GENERAL _ REGI [RATION NUMBER, ‘SCHOOL/CENTRE NUMBER NAME OF SCHOOL/CENTRE CANDIDATE’S FULL NAME (FIRST, MIDDLE, LAST) Barcode Area”? Current Bar Code DATE OF BIRTH SIGNATURE “Barcode Area”? L Sequential Bar Coder & rest cope 01239020 SPEC 2017/01239020 MAYAUNE 2017 CARIBBEAN EXAMINATIONS COUNCIL CARIBBEAN SECONDARY EDUCATION CERTIFICATE® EXAMINATION PRINCIPLES OF ACCOUNTS Paper 02 — General Proficiency Specimen Paper 3 hours READ THE FOLLOWING INSTRUCTIONS CAREFULLY. 1. This paper consists of FIVE questions. Answer ALL questions, 2, Write your answers in the spaces provided in this answer booklet. 3. DO NOT write in the margins or above or below questions. 4, Show ALL. working clearly 5. You may use a silent, non-programmable calculator to answer questions 6. Youare advised to take some time to read through the paper and plan your 7. Ifyounced to rewrite any answer and there is not enough space to do so on the original page, you must use the extra lined page(s) provided at the back of this booklet. Remember to draw a line through your original 8. Ifyou use the extra page(s) you MUST write the question number clearly in the box provided at the top of the extra page(s) and, where relevant, include the question part beside the answer. DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO. Copyright © 2017 Caribbean Examinations Couneil All rights reserved. “¥"Barode Area? (01239020/SPEC 2017 Sequential Bar CodeAnswer ALL questions. 4 1. R. Pierre is in the process of preparing her final accounts. The following information was made available on 31 March 2017, 3 Total non-current assets 106 800 Trade payables 17600 Net sales 260 000 Closing inventory 12000 Capital (1 April 2016) 76-200 Cost of sales 86 000 General expenses 90 800 Accounts receivable 9350 35.000 7650 Drawings 6 000) (a) Determine the following for R. Pierre (show working): (Net profit 01239020/SPEC 2017 (2 marks) GO ON TO THE NEXT PAGE L “¥"Barode Area? Sequential Bar Code a) DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT RITE IN THIS ARES: Ga Gross profit percentage (2 marks) GO ON TO THE NEXT PAGE 01239020/SPEC 2017 L “Barcode Area”? Sequential Bar Code _|r (b) Prepare R. Pies working capital 01239020/SPEC 2017 L 4 c's classified balance sheet (vertical format ONLY) and show (9 marks) GO ON TO THE NEXT PAGE “Barcode Area”? Sequential Bar Code a) DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT RITE IN THIS ARES: © (ii) Calculate current ratio, (2 marks) Based on the current ratio in (c) (ii) above, briefly explain to Ms. Pierre’s her current financial position, (S marks) Total 20 marks GO ON TO THE NEXT PAGE 01239020/SPEC 2017 L “Barcode Area”? Sequential Bar Code _|4 Michelle Martin maintains both a three-column cash book and a petty cash book. The petty cash float is $300 every month. All payments for stationery and cleaning expenses are recorded in the petty cash book, ‘The balances at 1 December 2016 were as follows: s Cash 900 Bank 5300 Petty cash 35 During the month of December, the following transactions were recorded in the books: December | Restored imprest by cash to the pety cash book: 8 Paid $500 rent by cheque $500 9. Received $900 cash from S. Smith in full settlement of his account for $1 000, 10 Purchased office stationery for $15, and cleaning supplies for $25.95 12. Bought office stationery for $52.50 13. Purchased printing paper for $9.95 15 Deposited $400 cash into bank 16 P.Kan paid his account of $800 by cheque, less 5% discount 19 Owner withdrew $200 cash for private use 21 Purchased heavy duty staple for $39.75 25. Paid cheque to L. Lamb for amount owing, $800 receiving 2% discount 28 Paid cleaning wages for $75 (@) Draw up a three-column cash book for Michelle Martin for the month of December 2016. (8 marks) GO ON TO THE NEXT 01239020/SPEC 2017 L “Barcode Area”? Sequential Bar Code _| DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,GO ON TO THE NEXT PAGE SS. | ost s S| as gueg {uses [84] 4 9107) sug | yea | %A 9107 08 HPD uneWy 2112491 POUY SOLE NE RTA LON OME WME SHEL NT TEAM LON OF: PSE SELENE AEE EON OG 01239020/SPEC 2017 “¥"Barode Area? Sequential Bar Code=10- 4 (b) Draw up a petty cash book for Michelle Martin for the month of December 2016. Michelle Martin Petty Cash Book Amount ate tails Total | Stationery | Cleaning : Date Detail ; : ‘ (7 marks) 01239020/SPEC 2017 L GO ON TO THE NEXT PAGE “Barcode Area”? Sequential Bar Code a) DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT RITE IN THIS ARES: r © 1 7 What is the significance of the balances in the cash books? (S marks) Total 20 marks GO ON TO THE NEXT PAGE 01239020/SPEC 2017 L “Barcode Area”? Sequential Bar Code _|r -12- 4 Jollibee Limited manufactures antique furniture. The following isa list of accounts for the year ended December 31, 2016, 3 Raw materials inventory 1/1/2016 150 000 Finished goods inventory 1/1/2016 50.000, Work in progress 112016 10 000 Purchase of raw materials during the year 200.000 Factory workers wages 40.000, Office staff wages 10 000 Factory equipment at cost 300.000, Factory repairs 5.000 Carriage inwards on raw materials 3.000 Factory electricity 2.000 The following additional information was also provided at December 31, 2016: Raw materials inventory (31/12/2016) Finished goods inventory (on hand 31/12/2016) Work in progress inventory (31/12/2016) Depreciation of Factory equipment 01239020/SPEC 2017 L 50.000 30.000 20.000 20% GO ON TO THE NEXT PAGE “Barcode Area”? Sequential Bar Code a) DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT BRITE IN THIS ARES r “»- 1 (a) Prepare the manufacturing account for the year ended December 31, 2016, showing clearly (@ Cost of raw materials used (ii) Prime costs Gil) Production costs, (11 marks) GO ON TO THE NEXT PAGE 01239020/SPEC 2017 “Barcode Area”? L Sequential Bar Code _|(b) © @ © “ 7 During the year ended December 31, 2016 Jollibee Limited manufactures a total of 50 000 antique furniture, Calculate the unit cost of production for the year. (2 marks) List the methods of inventory valuation GB marks) Identify TWO types of payment Jollibee Limited may use for goods purchased. 2 marks) Identify TWO skills needed for a career in the field of accounting (2 marks) ‘Total 20 marks GO ON TO THE NEXT PAGE 01239020/SPEC 2017 L “Barcode Area”? Sequential Bar Code _| DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT BRITE IN THIS ARES r “ 1 4. (a) Outline TWO advantages of starting a limited liability company rather than a partnership type ‘company, “@ marks) (b) List FOUR ethical issues encountered in accounting. “(4 marks) GO ON TO THE NEXT 01239020/SPEC 2017 “Barcode Area”? L Sequential Bar Code _|-16- 7 Robert More Company Limited issued the following to shareholders 200 000 ordinary $2 shares are par 100 000 10% preference $5 shares at par 500 $100 debentures (©) Prepare the journal entry, using the form provided below, to show the issue of shares and debentures for the above company (narrative required). Debit Credit Details Ref S 5 (10 marks) GO ON TO THE NEXT PAGE 01239020/SPEC 2017 L “Barcode Area”? Sequential Bar Code _| DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT RITE IN THIS ARES: Jamrock Charity Club lists the following balances for the period ended December 31 -17- Ss Subscriptions received 20.000) Bar takings 15 000 Bar purchases 10 000 Purchased equipment 10 000 Depreciation expense for the year 2.000 (&) Prepare a Receipts and Payments Account for the Jamrock Charity Club for the period ended December 31, 2016. 01239020/SPEC 2017 L Gmarks) Total 20 marks GO ON TO THE NEXT PAGE “Barcode Area”? Sequential Bar Code a)TT -18- 5. (a)_List TWO accounting software programmes used for payroll (2 marks) (b) State TWO differences between statutory deductions and voluntary deductions, Statutory Deductions Voluntary Deduetions 01239020/SPEC 2017 L (4 marks) GO ON TO THE NEXT PAGE “Barcode Area”? Sequential Bar Code a) DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT RITE IN THIS ARES: TT -19- 4 Quick Fix Electronics produces and sells a new model of computers. The computers sell for $3 000 per unit. AAs a result of the intense competition Quick Fix faces, management budget sales quarterly, the projections for the first 4 quarters for 2016 are as follows: UNIT SALES Quarter 1 Quarter? Quarter 3 Quarter 4 3.000 4.000 7.000 8.000 No anticipated changes in the selling price (©) Prepare a sales budget for each quarter showing the following: (the unit selling price Gi) the expected sales Gil) the total Year as a Details Quarter 1 Quarter 2 Quarter 3 Quarter 4 eros (7 marks) @__List FOUR main sections of a business plan. (4 marks) 01239020/SPEC 2017 GO ON TO THE NEXT PAGE L. “Barcode Sequential Bar Code _|=20- 7 (©) Identify THREE essential features of a Co-operative. (G3 marks) Total 20 marks END OF TEST IF YOU FI ORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST. 01239020/SPEC 2017 L ‘Sequential Bar Code | DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT BRITE IN THIS ARES i -21- EXTRA SPACE, 4 Ifyou use this extra page, you MUST write the question number clearly in the box provided. Question No. “Barcode Area”? L Sequential Bar Code 01239020/SPEC 2017 a)i -22- EXTRA SPACE, 4 Ifyou use this extra page, you MUST write the question number clearly in the box provided. Question No. “Barcode Area”? L Sequential Bar Code 01239020/SPEC 2017 a) DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,CANDIDATE’: RECEIPT INSTRUCTIONS TO CANDIDATE: Fill in all the information requested clearly in capital letters. restcope: | 0| 1] 2] 3] 9} 0 SUBIECT: PRINCIPLES OF ACCOUNTS ~ Paper 02 PROFICIENCY: GENERAL REGISTRATION NUMBER: FULL NAME: TERS) Signature: Date: Ensure that this slip is detached by the Super band in this booklet. or Invigilator and given to you when you Keep a safe place until you have ree od your results. INSTRUCTION TO SUPERVISOR/INVIGILATOR: Sign the declaration below, detach this slip and hand it to the candidate as his/her receipt for this booklet collected by you. Thereby acknowledge receipt of the candidate's booklet for the examination stated above. Signature: Supervisor/invigilator Date:01239020/KMS/sPEC 2017 CARIBBEAN EXAMINATIONS COUNCIL CARIBBEAN SECONDARY EDUCATION CERTIFICATES EXAMINATION PRINCIPLES OF ACCOUNTS PAPER 02 — GENERAL PROFICIENCY SPECIMEN PAPER KEY and MARK SCHEME01239020/xMS/SPEC 2017 General, Specimen Paper Key and Mark Scheme (2 marks) Gross Profit perce Gross Profit/ Sald 174 000/260 000 x (2 marks) ce Sheet March 20 $ s 5 Non ~ Current Assets 10 6800 Current Assots 12 35 000 7650 64 200 Current Liabilities Accounts Payables 17 600) ng Capit 153 400 capital 76 200 83 200 159 400 (6 000) (9 marks)01239020/KMs/sPEC 2017 Principles of Accounts Specimen Paper Paper 02 ~ General Proficiency Key and Mark Scheme Question 1 cont'd (ay (11) Current Ratio = Current assets/current liabilities $64 200/ $17 600 = 3.6:1 (2 marks) A good current ratio indicates that the business has the ability to pay its short-term debts when they become due. Generally, a good current ratio is usually 2:1 In this case Ms. Pierre ratio is 3.6:1, this means that her current ratio is a bit high and she may not be making the best use of her cash and has problens managing her working capital. Ms. Pierre should invest some of her cash to ean interest rather than leave it idle. (5 marks)neiples of A x 02 ~ General 01239020/xMs/spEC 2017 specimen Paper Key and Mark Scheme ion 2 Gash Cash | Bank 2016 F | ise F | Dise $ sis Dee = | Bal B/E 300 aS Des 5 0 [300 EB Dee [Cash c Goo | bec | Bank c 70 Dee i 0 [des 20 6 a Dee |i. banb Te a Dee | Balance 35 ST ai fesa Ta00 [ea60 Te | ae00 | ean Tan = = 355 [5,176 8 marks) elle Martin ty Cash Book mount | Date Details Total | Stationery | Cleaning $ 8 $ $ 35 [bee 7 Bee 10 Dee 10 z Dee 12, Bee 13 Dec 22 bee 28) Dee 32 7 marke)01239020/KMs/sPEC 2017 Principles of Accounts Specimen Paper Paper 02 ~ General Proficiency Key and Mark Scheme Question 2 contd (cr ‘The cash book cash and bank columns both have a debit balance waich indicates that the cash in hand is $955 and cash in bank is $5,176. Cash in hand will always have a debit balance as it is a current asset and a business cannot spend more cash than it has. Bank is also a current asset with a nozmal debit balance as the business is net in overdraft with the bank. The pezty cash book also has 2 debit balance of $81.89. Following the imprest system, the cashier would then need to reimburse $218.15 to start the following month. (5 marks:01239020/xMs/spEC 2017 Principles of Accounts Paper 02 — General Proficiency ‘Specimen Paper Key and Mark Scheme Jollibee Manufacturing a/e for the year ended December 31, 2016 8 s Raw materials inventory a//eoi6) Purchases 200 000 Carriage inwards on raw 3 000 materials 3000 150 000 Net purchases 203 000 Raw materials available for Raw materiale Inventory (31/12/2016) —— Cost of raw materials used 303 000 353 000 (50 000) Factozy wages 40 000 Prine cost 343 000 Overheads Fact y repairs 000 Factory electricity 2 000 Depreciation Factory 6 000 equipment Total factory overheads 67 000 Total manufacturing overheads 420 000 Add work in progress inventory (1/1/2016) +0 900 Less work in progress inventory (21/12/2016) (20 000) (20 900) Production cost 400 000 (21 marks) () Cost per unit of production ~ Cost of production + number of units produced =400 000 + 50 000 = $B per unit 2 rks)01239020/KMs/sPEC 2017 Principles of Accounts Specimen Paper Paper 02 ~ General Proficiency Key and Mark Scheme Question 3 cont'd te (a) te) ‘The methods of { wentozy valuation © First In First out method (FIFO) © ba First out method (LIFO) Average Cost Method (AVCO) Two types of payment for goods parchased * Standing order © Pay pal © cash © cheques * Direct debit * Electronic fund transfer and point of sale (EFTPOS) Two skills needed for a career in the field of accounting © Basic skill in mathematics © Ability to process information in a deep analytical mind interpret facts and figures) * High attention te detail * Organise and work under pressure * Proficient with accounting software (computer literate) © Ability to remain impartial © Strong communication skills Strong interpersonal skills (including teamwork) Any other appropriate answer (3 marks) (2 marks) {analyse and (2 marks)01239020/xMS/SPEC 2017 General, Specimen Paper Key and Mark Scheme company rather than a Separate legal existence © binis d Liability of s shalders © Ability to raise more capital © Any other appr pri - (2 marks) b) tered in accoun dal . oe Fraudulent finan al reporting (4 marks) Prepare journal entries to record shares and debentures Tet Debie 350 000 Ordinary shares 400 000 08 Prefel shares 500 00 Ts Debent: g Ordi Preferenc: 108 shares, (20 marks)Question 4 cont'd 01239020/KMs/sPEC 2017 Principles of Accounts Specimen Paper Paper 02 ~ General Proficiency Key and Mark Scheme ta) Prepare Receipts and Payments account Jamrock Charity Club Receipts and Payments a/e for the peried ended December 31, 2016 5 3 Subscriptions 20 000 Bar Purchases 10 000 Bar takings 15 000 Equipment Balance b/d (4 marks)-10- 01239020/xMS/SPEC 2017 General, Specimen Paper Key and Mark Scheme oftware programmes used for payro2l * Microsoft exce = Acco ng edge Any other appropriate answer (2 marks) b) Two differences between statutory deductior ‘STATOTORY DEDUCTION: VOLUNTARY, Deductions which a a include reque: Trade union dues Group Health and Pension Personal Insurance Payments Contribution to company Social Fand Czedit Union Payme Tay other appropriate answer (4 marks) (e) budget Quarter 1] Quarter Z 7 | vear as a whole Expected 3 000 7 000 7000 3 000 Tare selling | 3 5 e 300 = 3000 T2000 z a (7 marks)ue 01239020/KMs/sPEC 2017 Principles of Accounts Specimen Paper Paper 02 ~ General Proficiency Key and Mark Scheme Question 5 cont'd ta) Four main sections of a business plan Executive summary Company background Operations plan Marketing plan Financial plan Marketing analysis (4 marks) List 2 essentials of a Co-operative Memb are also customers An elected board of management governs activities of the business Are exempted from paying taxes Owned by members Members buy a share in the business Formed for the benefit of their menbers and local communities Provide goods and sei Profit is not their main goal Yearly profits are divided among the members who are also customers (3 marks)rc CARIBBEAN EXAMINATIONS COUNCIL CARIBBEAN SECONDARY EDUCATION CERTIFICATE® EXAMINATION 5 Barcode Arew Front Page Bar Code SPECIMEN PAPER FILL IN ALL THE INFORMATION REQUESTED CLEARLY IN CAPITAL LETTERS. TESTCODE | 0 | 1 | 2 SUBIECT _PRINCIPLES OF ACCOUNTS — Paper 032. PROFICIENCY —GENERAL _ REGI [RATION NUMBER, ‘SCHOOL/CENTRE NUMBER NAME OF SCHOOL/CENTRE CANDIDATE’S FULL NAME (FIRST, MIDDLE, LAST) Barcode Area”? Current Bar Code DATE OF BIRTH SIGNATURE “Barcode Area”? L Sequential Bar CodeT & rest cove 01239032 — | FORM SPEC 2017 CARIBBEAN EXAMINATIONS COUNCIL CARIBBEAN SECONDARY EDUCATION CERTIFICATE* EXAMINATION PRINCIPLES OF ACCOUNTS Paper 032 — General Proficiency T hour 30 minutes READ THE FOLLOWING INSTRUCTIONS CAREFULLY. 1. Answer ALL questions. Write your answers in the spaces provided in this answer booklet. Do NOT write in the margins, 4. Show ALL working clearly. 5. You may use a silent, non-programmable calculator to answer questions. 6. Youare advised to take some time to read through the paper and plan your answers. 7. Ifyou need to rewrite any answer and there is not enough space to do so on the original page, you must use the extra lined page(s) provided at the back of this booklet. Remember to draw a line through your original answer. 8. Ifyou use the extra page(s) you MUST write the question number clearly in the box provided at the top of the extra page(s) and, where relevant, include the question part beside the answer. DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO. Copyright © 2017 Caribbean Examinations Couneil All rights reserved. “¥ "Barcode Area? 01239032/SPEC 2017 Sequential Bar Code _|r Instructions: This paper consists of a case study and TEN ques 4 ions, Read the case study and answer ALL the questions that follow in the spaces provided in this booklet. tase Study ‘Thomas Timberland inherited a small restaurant —“The Junction” —along with a sum of money from his ‘Aunt Joan Smart. On January 1, 2016, he invested some of his savings to expand the operations of the restaurant. ‘The assets of the business as at January 1, 2016 were: Stoves Tables Chairs Pots and pans Reffigerator Fr Cutlery Cash at Bank Cash in Hand s 1500 850 70 475 2.300 1200 600 5500 1400 What type of business entity is Thomas Timberland about to operate? 2. List TWO features of this type of business entity, 01239032JANUARY/F 2017 L “(i mark) (2 marks) GO ON TO THE NEXT PAGE “¥"Barode Area? Sequential Bar Code a) DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT BRITE IN THIS ARES r 01239032JANUARY/F 2017 L (1 mark) (6 marks) GO ON TO THE NEXT PAGE “Barcode Area”? Sequential Bar Code a)r 5. What is the value of his current assets? (mark) ‘The following transactions took place during the first two weeks of January: 2016 s January 6 Bought chicken and lamb 3.750 Bought rice 1900 7 Withdrew § 2.000 from the bank for business use 8 Bought pasta products 780 9 Sold 20 lunches to Harry Smith at $18 each for cash 11 Purchased peas 150 Purchased seasonings 175 Purchased drinks 1200 Purchased vegetables 600 12 Returned unsuitable vegetables 60 14 Obtained a loan from Overland Credit Union and received a cheque for $5 000 Al payments which were less than $200 were paid in cash. 6. Using the table on page 7, prepare and balance the two-column cash book for the first two weeks of January. GO ON TO THE NEXT PAGE 01239032JANUARY/F 2017 L “Barcode Area”? Sequential Bar Code _| DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT RITE IN THIS ARES: a (10 marks) 01239032JANUARY/F 2017 L GO ON TO THE NEXT PAGE “¥"Barode Area? Sequential Bar Code a)r At the end of the month it was observed that the business had incurred the following expenses: 4 s Electricity 1240 Cooking gas 1180 Wages 2720 Transportation 175 Telephone 45 The business also bought a new food processor on credit from Courts Ltd. for $1 200. Revenue eared from sales for the period was $20 000, The value of closing stock was $650, 7. Name TWO other items of expense which Timberland may have incurred. @ marks) GO ON TO THE NEXT PAGE 01239032JANUARY/F 2017 L ‘Sequential Bar Code | DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT BRITE IN THIS ARES 4 8. Prepare the Trading and Profit and Loss Account for the period ended January 31, 2016, 01239032JANUARY/F 2017 L (13 marks) GO ON TO THE NEXT PAGE “Barcode Area”? Sequential Bar Code a)r “ 7 9. ‘Thomas experienced a high level of spoilage of vegetables during the first month of operation. State TWO ways this problem can be avoided in the future. (2 marks) 10. _List TWO ways by which Thomas could have increased sales. @ marks) Total 40 marks END OF TEST IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST. 01239032/SPEC 2017 L ‘Sequential Bar Code | DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT BRITE IN THIS ARES r “ie EXTRA SPACE, 5 Ifyou use this extra page, you MUST write the question number clearly in the box provided. Question No. "Barcode Area” Sequential Bar Code 01239032/SPEC 2017 |TC -2- EXTRA SPACE, 5 Ifyou use this extra page, you MUST write the question number clearly in the box provided. Question No. "Barcode Area” L Sequential Bar Code 01239032/SPEC 2017 | DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,DONGT WREEINTHIS AREA DO NOT WRITE IN PHIS AREA DONGT BRITE IN THIS ARES TT -13- EXTRA SPACE, 4 Ifyou use this extra page, you MUST write the question number clearly in the box provided. Question No. “Barcode Area”? L Sequential Bar Code 01239032/SPEC 2017 a)TT -14- EXTRA SPACE, 4 Ifyou use this extra page, you MUST write the question number clearly in the box provided. Question No. “Barcode Area”? L Sequential Bar Code 01239032/SPEC 2017 a) DONOT WRITE IN THIS AREA DO MOT IRITE IN TITS AREA DO NOT WRITE IN THIS AREA,CANDIDATE’: RECEIPT INSTRUCTIONS TO CANDIDATE: Fill in all the information requested clearly in capital letters. restcope: | 0| 1] 2] 3] 9} 0 SUBIECT: PRINCIPLES OF ACCOUNTS - Paper 032 PROFICIENCY: GENERAL REGISTRATION NUMBER: FULL NAME: TERS) Signature: Date: Ensure that this slip is detached by the Super band in this booklet. or Invigilator and given to you when you Keep a safe place until you have ree od your results. INSTRUCTION TO SUPERVISOR/INVIGILATOR: Sign the declaration below, detach this slip and hand it to the candidate as his/her receipt for this booklet collected by you. Thereby acknowledge receipt of the candidate's booklet for the examination stated above. Signature: Supervisor/invigilator Date:(01239032/K/sPEC 2017 CARIBBEAN EXAMINATIONS COUNCIL CARIBBEAN SECONDARY EDUCATION CERTIFICATES EXAMINATION PRINCIPLES OF ACCOUNTS PAEER 032 — GENERAL PROFICIENCY SPECIMEN PAPER KEYPrinciples of A General > Paper Sole tradex/sole props: Owned and operated by the same person Capital investea by one individua of the prefits go to the owne ks borne by one individ stoves Tables ota and Pang Refrigerator Freezer cutie Capital Current Assets! Cash at Bank Cash in Hand 01239032/K/SPEC 201701239020/KMs/sPEC 2017 inciples of Accounts Specimen Paper Paper 02 — General Bro: Key and Mal ficiency ASH BOOK Gash _(C Bal C/D) Water, advertising, taxes or any other suitable expense Thomas Timber Trading and Profit and Loss Accoun For the month of January 31, 2016 $ s sales 20 000 Purchases 8 555 st Returns 60 3 495 61 Closing 650 Cost of Goods 1 Gross Profit Expenses Electricity Owing 1 240 Cooking gas 1 igo Wages 120 ‘elephone10 fa) tb) te) (ay fal tb) te) (a) Principles of Accounts Paper 032 — General Proficiency Specimen Paper Key Buy small quantities Better storage Change the supplier Change the variety of vegetables Promotions Advertising Reduction in price change of menu 01239032/K/sPEC 201701239032/Ms/SPEC 2017 CARIBBEAN EXAMINATIONS COUNCIL CARIBBEAN SECONDARY EDUCATION CERTIFICATES EXAMINATION PRINCIPLES OF ACCOUNTS PAEER 032 — GENERAL PROFICIENCY SPECIMEN PAPER Mark Scheme01239032/MS/SPEC 2017 Principles of Accounts per 032 — General Proficiency Specimen Paper Mark Soh Profiles Question x a I T Correctly stated the type of business T 2. | Listed any Two features correctly 2 3 Correctly calewlated opening capital 1 4. | Recorded debit entries correctly (0 mark for 2, max. 4) 4 Showed capital 1 Suitable narration 1 8. | core culation of current assets 1 6 correct heading 1 Included opening cash and bank balances 2 (1 mark each) correctly entered all other transactions 4 (mark for 2, max. 4) Correctly recorded contra entries 2 Balanced Cash Book correctly 1 1. | corzectly identified any other TWO expenses 2 8 Correct heading for Trading and Profit and 1 Loss Account, Correct treatment of Returns outwards 1 Correct amount for purchases 1 Included Returns Outwards 1 Included sales amount 1 Correctly included closing stock 1 Indicated Grose Profit 1 Included 5 expenses 5 (2 mark each) 1 Indicated Net Profit 8. Listed T#0 appropriate ways of dealing with 2 the problem Listed two suitable ways of increasing 2 sales total Marke | 10 20 | 10CARIBBEAN EXAMINATIONS COU REPORT ON CANDIDATES’ WORK IN THE CARIBBEAN SECONDARY EDUCATION CERTIFICATE JANUARY 2004 PRINCIPLES OF ACCOUNTS Copyright © 2004 Caribbean Examinations Council StMichael, Barbados llrightsreserved-2- PRINCIPLES OF ACCOUNTS GENERAL PROFICIENCY JANUARY 2004 GE RAL COMMENTS ‘The Principles of Accounts examination administered in January 2004 consists of three papers. Paper 01 is a 60-item Multiple Choice paper. Paper 02 is an extended paper divided into two sections. Section I consists of three questions which are compulsory and Section II consists of four questions of which candidates are re- quired to attempt any two. Paper 03/2 is the alternative to the School Based Assess- ment. This report gives details of candidates’ performance on each Paper. Paper 01 - Multiple Chi Paper 01 consists of 60 multiple choice items of which 15 are Knowledge items, 30 Application items and 15 Interpretation items. The performance on this paper was good. ‘The mean score was 38.40 and the standard deviation was 8.58. On this paper 93 per cent of the candidates achieved Grade III or higher. Paper 02 - Problem Solving Although the overall performance of candidates on this paper has not improved sig- nificantly over the years, it should be noted that there is some improvement in certain aspects of their responses. For example, candidates are taking greater care in head ing statements correctly and there is improvement in recording transactions in the general journal Section | (Compulsory) uestion 1 The question had two parts. Part (a) required the candidates to rewrite a given ‘rial Balance correctly, thereby testing their understanding of how to classify items and determine whether the item should be debited or credited,“3. Part (b) tested candidates’ understanding of how to use the general journal by requir- ing them to record transactions with appropriate narrations. ‘Most candidates demonstrated from their workings, that they were very comfortable with the preparation of a Trial Balance. Items on the Trial Balance with which some candidates had difficulty were: (i) Provisions (ii) Discounts (iii) Carriage. Some candidates did not know which stock should be in and which should be out of the Trial Balance. Part (b) of the question presented difficulty for some candidates. ‘The transaction which proved to be most challenging was item (v) which required the candidates to correct an error where receipt from a revenue had been debited to an Expense Ac- count and credited to cash. Although candidates recognized the need to remove the item from the expense account by crediting the account, very few candidates recog- nized the corresponding need to double the amount when adjusting the Cash Ac- count. Candidates would benefit from additional practice in recording transactions in the general journal, especially those which require them to correet errors. Question 2 This question tested the candidates” ability to prepare a set of Final Accounts from incomplete records. In order to prepare the Trading and Profit and Loss Account, candidates would have had to use the information given to determine the amounts for items such as Purchases, Sales and certain expense items. Similarly, calculations were required to arrive at opening capital, cash and some other items of assets in order to prepare the Balance Sheet. Ninety-six per cent of the candidates attempted this question. Most candidates had difficulty calculating the correct sales amount, failing to include the $800 000 deposit from cash sales. Similar difficulty was encountered in calculating purchases, cash balance and capital. Candidates demonstrated a clear understanding of how to set up and do a Trading and Profit and Loss Account and Balance Sheet, but because the calculations were, for the most part, incorrect. ‘The overall performance on the question was disap- pointing.Candidates would benefit from additional practice in using the Control Accounts to calculate missing figures of Purchases and Sales. In determining amounts to go to the Profit and Loss Account for expense items, it would be helpful if students actu- ally wrote up the Expense Account, uestion 3 This question tested the candidates’ ability to prepare the Final Accounts and the Current Accounts of a partnership. Candidates were required to demonstrate understanding of how to calculate and treat items such as interest on capital, interest on loans (when the loan is made by a partner), salaries paid to partners and profits when the agreement is silent about how they are to be shared. Eighty-one per cent of the candidates attempted this question, but only a small per centage did very well on it. For the most part, the preparation of the Current Account was well done. The majority of candidates calculated the interest on capital correctly. ‘This item, as well as salaries, was dealt with correctly in the Appropriation Account. Although most candidates calculated the interest on the loan correetly, very few ree- ognized that as a business expense, it should have been dealt with before the prepara- tion of the Appropriation Account, Most treated it as a part of the appropriation of profits. Additionally, as an outstanding expense item, it should have been carried to the Balance Sheet as a current liability. Many candidates missed this. In preparing the Balance Sheet, many candidates carried the detailed workings from the partners’ Current Accounts instead of simply transferring the closing balances. Candidates attempted to share the residual profits by various means other than shar~ ing equally as stated in the Partnership Act. Candidates would benefit from additional practice in those areas where weakness was evident, for example how to treat interest on loans, transferring balances from the Current Account to the Balance Sheet and the Partnership Act with respect to sharing of profits. Section II (Optional Ques Question 4 This question tested candidates’ ability to use information from the Bank Statement to update the Cash Book and prepare a Bank Reconciliation Statement. Candidates were also required to give brief responses to questions which tested their understandos. ing of how to treat with the bank balance on the Balance Sheet and outstanding cheques. Forty-four per cent of the candidates attempted this question. Most candidates dem- onstrated a clear understanding of how to prepare a Bank Reconciliation Statement and selected the correct items from the question in preparing it, Candidates, however, had difficulty in updating the Cash Book, Items which pre- sented the most challenge were item (1), which involved the recording of an incorrect amount in the Cash Book, and item (3), where the amount was debited instead of credited in the Cash Book. In the case of item (3), very few candidates recognized the necessity to double the figure when making the correction, In attempting the theory questions in part (c), candidates had difficulty in determining which bank balance would appear in the Balance Sheet. However, most candidates knew how cash at bank would be classified on the Balance Sheet and that cheques which were not cancelled and returned by the bank represented cheques not yet credited by the bank. “Correction of Erroi practice. a section of the syllabus which warrants a great deal of Question 5 This question required candidates to journalize the entries of a newly formed com- pany and to prepare the opening Balance Sheet, Further, given an assumed profit made by the company at the end of the year, candidates were required to prepare a Profit and Loss Appropriation Account and show extracts from the end-of-year Bal- ance Sheet. Only nine per cent of the candidates attempted this question and the responses were In recording the journal entries, a large number of candidates demonstrated a lack of understanding of the difference between share capital and loan capital. ‘The question required that they show the entries for share capital but almost all candidates included the I1 per cent debentures. In preparing the opening Balance Sheet, very few candi- dates attempted to show the distinction between shares and debentures by using the label “Long Term Liability” for the debentures. However, the calculation for the ordinary and preference shares was, for the most part, correct.<6. Part (b) of the question required candidates to prepare a Profit and Loss Appropria- tion Account on the assumption that the company made a $70 000 profit at the end of the year. Candidates were also required to show the liability side of the end-of-year Balance Sheet. ‘The section of the question dealing with the Appropriation Account was well done. ‘The majority of candidates correctly prepared the Appropriation Account of a com pany. However, they experienced difficulties with the preparation of the Balance Sheet extract. In preparing the extract, some common errors which occurred were: - not including the retained profit among the reserves. Some candidates did not include it in the balance sheet. ~ not using the term “retained profit” for the balance in the Appropriation Account. - not treating the dividends payable as current liabilities, = not grouping items correctly. Some candidates did not attempt to group the items under sub-sections with appropriate headings. Items were simply listed anywhere in the balance sheet. Question 6 Part (a) of this question tested the candidates” ability to differentiate between capital expenditure and revenue expenditure, given five separate transactions. Part (b) tested candidates’ knowledge of depreciation by requiring them to calculate annual depre- ciation and net book values over a three-year period using the Straight-line and Re- ducing Balance methods. A form was provided for candidates’ responses. A few candidates did not use the form in their response. Seventy-six per cent of candidates attempted this question. Most candidates were strong on the calculation of annual depreciation using both the Straight-line and Re- ducing Balance methods. Calculating the net book value of the fixed assets was also an area of strength. Identifying whether a transaction represented revenue or capital expenditure proved challenging for candidates. Candidates need to understand that remodeling a building and the cost of installing a fixed asset represent a capital expenditure in contrast to repairs which come under building maintenance.Another area of difficulty was determining the difference in the net fixed asset totals if one method of depreciation were used instead of another. This simply required that candidates totalled the assets in both methods and find the difference. However, very few candidates attempted this section or came up with the correct answer. Question 7 This question tested candidates’ ability to prepare a set of Final Accounts for non- profit organizations. Candidates were required to prepare a Bar Trading Account, Income and Expenditure Account and a Balance Sheet from data given. Forty-four per cent of the candidates attempted this question. Candidates seemed to be reasonably capablertable in identifying the revenue and expense items to be used in the Income and Expenditure Account. In many instances though, the calculation of the amount was incorrect —an indication that they were not sufficiently able to deal with prepayments and accruals. The purchase of library books presented a challenge for many of the candidates. Since library books are to remain in the library for some time, the purchase should be treated as a capital expenditure and the item should appear among the current as on the Balance Sheet. Many candidates treated the purchase as a revenue expen ture and reported it on the Income and Expenditure Account, Finding the correct purchases to include in the Bar Trading Account was a challe1 for many candidates, as they did not factor in the closing creditors’ balance. Can dates should be encouraged to prepare total creditors’/debtors’ accounts when they are required to determine purchases or sales in a problem. Other areas of difficulty identified were:- - not recognizing loan as a long-term liability - inability to either calculate or recognize depreciation on equipment = not showing sub-sections in the Balance Sheet-8- PAPER 03/2 (For Private Candidates only) Paper 03/2, as the alternative paper to the School based Assessment, attempts to simulate what students do for the SBA. In order to do this, the paper pres two business cases or situations and requires the candidates to perform accounting functions in answering questions asked s one or This year the paper presented one business The case required candidates to answer questions about the operations of the business, carry out certain accounting functions and make simple business decisions ‘The case presented a community centre engaging in fund-raising activities to improve facilities within the community. Candidates were asked to determine profit or loss made on the activities, draw up and record an expense account, answer simple ques tions about the business and make simple recommendations. Candidates’ performance on this paper continues to improve. The mean on this paper was 13.59 and the Standard Deviation was 6.27; and 26 per cent of the candi- dates achieved Grade III or higher. The Examining Committee is of the view that the difficulties candidates experience with this paper may be due to their unfamiliarity with answering questions on case studies and therefore continues to recommend that candidates work through past papers when preparing for this examination.CARIBBEAN EXAMINATIONS COUNCIL REPORT ON CANDIDATES’ WORK IN THE SECONDARY EDUCATION CERTIFICATE EXAMINATION JUNE 2004 PRINCIPLES OF ACCOUN Copyright © 2004 Caribbean Examinations Council St. Michael, Barbados All rights reservedPRINCIPLES OF ACCOUNTS GENERAL PROFICIENCY JUNE 2004 GENERAL COMMENTS ‘This paper has two sections. Section I consists of three compulsory questions and Section Il consists of four questions of which candidates are required to answer any two, All questions carry 20 marks cach, School Based Assessment is part of the requirement for the examination, In addition, there is an alternative paper to be done by private candidates in liew of School Based Assessment, This report gives details of the eandidates’ performance on each question. In addition it provides feedback on the Sehool Based Assessment as well as the alternative paper 3/2, DETAILED COMMENTS - PAPER 02 Section I - Compulsory Question 1 Candidates were required to! + Arrange items in order of permanence Classify items into Real, Personal and Nominal accounts Caleulate fixed and current assets Prepare journal entries to correct errors Prepare @ Suspense account to reveal the ori nal balance Approximately forty per cent of the candidates who attempted this question scored marks or more, ‘The mean mark on this question was 7.87, Strengths Candidates showed the ability to: + List assets in order of permanence + Classify items into Real, Personal and Nominal eecounts + Calculate total fixed assets + Post entries to the Suspense accounts Weaknesses were shown in the following areas! Calculation of current assets + The use of dates and the business name in the headings + Correcting errors + Proper format of the General Journal + Determining the original difference as per Trial Balance on the Suspense account Recommendations Teachers should ensure that candidates: 1. Prepare the Suspense accounts to determine the original difference on the Trial Balance. 2. Correct errors with the Suspense account. Write proper headings including the name of the business and date. Read questions carefully and follow instructions given. Know the correct format of the JournalQuestion 2 Candidates were required to! + Prepare a Sales Ledger Control account + Prepare a Purchases Ledger Control account + Indicate why a Sales Ledger Control account can have both @ debit and credit balance + State benefits of Control accounts About sixty per cent of the candidates who attempted this question scored between 9 and 11 marks out of a possible 20, About thirty per cent scored below 9, and about ten per cent had marks above 11, The mean mark on this question was 8.42, Most of the marks were obtained in the part of the question which dealt with the Sales Ledger Control account ‘The following general areas of weaknesses were noticeable in the candidates’ work: + ‘Thorough heading of accounts was not maintained, i.e. name of the firm, name of the account and period of time under consideration, + Dishonoured cheque was credited instead of debited in the Sales Ledger Control account. + Many candidates did not know which entries go to the Sales Ledger Control account and which go to the Purchases Ledger Control account. + The closing debit and credit balances were entered on the wrong sides of the Sales Ledger Control account, + Purchases were entered on the debit side instead of the credit side of the Purchases Ledger Control account, + ‘There was uncertainty in treating with and differentiating between (a) returns inwards and returns outwards and (b) discounts allowed and discounts received, in the Sales and Purchases Ledger Control accounts. + Failure to balance off the accounts properly, i.e. balance e/d and balance b/d. + A few candidates treated the Sales Ledger Control account and Purchases Ledger Control account as one account. + Most candidates did nat know why a Sales Ledger Control account could have a credit balance. Recommendation: 1, Ensure that every unit of the syllabus is taught, Judging from the number of “No Responses”, it js evident that in many instances *Control accounts” was either not taught or not thoroughly revised. 2. Insist that candidates practise the use of Control accounts in the SBA projects. Encourage candidates to read on the topics from different books. They can get a better understand- ing and appreciation of the topies when this is done. 4. Ensure that candidates work on past papers in preparation for their examinationQues This question tested the topic ‘LEDGER’ and required candidates to: + Post transactions separately to divisions of the Ledger including Purchases, Sales and the General Ledger. + Post all cash transactions to the business’ bank account, + Prepare a list of creditors at July 28, 2002. + Prepare a list of debtors at July 28, 2002 Correctly balance any three (5) accounts, Approximately cighty-one per cent of the candidates attempted this question, The mean mark on this question was 6.83. Those candidates who did not do well showed weaknesses in the following areas: + Identifying the divisions of the Ledger + Correctly naming the accounts in their appropriate divisions + Posting correctly to accounts in the Purchases and Sales Ledgers + Distinguishing between discounts allowed and discounts received + Distinguishing between returns inwards and returns outwards + Correctly treating cash transactions in respect to correct identification of particulars + Correctly posting transactions; some candidates reversed the entries to the respective ledger accounts + Correctly treating credit sales in the Sales Ledger + Correctly treating credit purchases in the Purchases Ledger + Correctly closing / balancing off accounts, Some candidates balanced the accounts by placing bid to close the account and o/d as the closing balance Identifying discount allowed and treating it as a bad debt Recognising the significance of full settlement ‘Treating the three Ledgers as accounts and posted to these Preparation of Journals for Ledgers Part (b) (i) required candidates to prepare a list of creditors and (b) (li) a list of debtors. Candidates who performed poorly in this section were unable to + differentiate between debtors and creditors + correctly list the creditors + correctly ist the debtors. Part (¢) required candidates to balance any three accounts. This part was generally well done, although some candidates showed the following weaknesses: () Used the brought down (b/d) to close the account and the carried down (c/d) to bring down the balance Gi) Inserted the e/d without completing the bid ‘The candidates’ overall performance was satisfactory. Fifly per cent (50%) scored in the range of 9 = 20. The remaining fifty per cent had scores in the range of 0 - 8 marks. ‘Twentycfour per cent of those in the 0 + 8 range scored between 0 = 2 marks. ‘This seems to suggest that there is a basic weakness among candidates in understanding the Ledger and its divisions. ‘The level of mastery in this area was expected to be higher as it is required for the SBA. The general overall performance highlighted a basic weakness in an introductory topic in which each candidate should emonstrate proficiency. Teachers should take note since this area forms the basis for other areasSection I~ Optional Question 4 ‘This question tested candidates’ ability to + Prepare a payroll cegiste. + Caleulate the amoust payable to National Health Insurance Scheme and to give reasons why employees’ hourly rates differ. Fortyetwo per cent scored less than § marks. The mean mark on the question was 9.19. Candidates did not fobiain full marks for the caleulation of the various deductions given, However, most candidates who were prepared scored above the average mark, with some obtaining perfect rengihs (2) The majority of candidates obtained high scores in the knowledge profile with many obtaining the maximum mark. In addition, results indicated that most candidates knew how to calculate gross wages and net wages. (b) Responses to this part indicated that candidates were able to give at least one correct reason for differences in rates (©) Candidates scored marks for this part if the correct multiplier was used. Responses were fair Weaknesse: (a) Some candidates calculated the overtime rate incorrectly and hence failed to arrive at the correct figure for gross pay. The majority of candidates had difficulties in calculating the correct figure for ‘income tax. Candidates lost marks for not including union dues, and in addition, incorrect figures for other elements of deductions resulted in the wrong figure for income tax. (b) Candidates stated the total National Health Insurance figure obtained from the payroll register. This treatment clearly showed lack of correct interpretation of total National Health Insurance Scheme. In addition, candidates lost marks for using the incorrect multiplier (©) A few candidates were not aware that PA.Y.E. and tax were the same and hence did not include the figures in the given column, Some inserted an additional column for tax. Conclusion ‘The overall performance was unsatisfactory since this question was based on one of the easiest topics in the syllabus. Results clearly indicated that there was a lack of knowledge of basic principles, namely calculating gross wages, income taxes and other deductions. A small number of candidates, who were prepared, performed well. Recommendations Candidates should be given more practice in calculating income taxes using various approaches. In addition, more emphasis should be placed on explaining concepts clearly, such as National Health Insurance and other deductions to be determined from gross wages. This should be extended to practical cases used in a typical business. Furthermore, most candidates lost marks due to rounded off figures to the nearest dollar. This practice must be discouraged and should be clearly communicated to candidates in the classroom.Ques The question tested most of the objectives required for this area of the syllabus, namely Trading Account, Profit and Loss Account and the Balance Sheet. This question had a mean of 7.81, It provided the necessary stimulus for the candidates to respond appropriately to the question which was very straightforward and in the format to which candidates are usually accustomed. Candidates were given f choice in that they could have chosen any format to present their answer and the mark scheme awarded them appropriately. The question was very popular among candidates. Weaknesses + Attention should be paid to the use of the correct format, e.g. Carriage Inwards added to Purchases and Retums Outwards subtracted to determine correct Net Purchases. Most candidates missed the mark awarded for Carriage Inwards added to Purchases + Candidates did not Know how to correctly treat Bad Debts, Provision for Bad Debts and Depreciae tion, ‘This was @ popular question. Approximately 50 per cent of the candidates obtained @ passing grade. Question 6 ‘This question was divided into two parts. In the first part, candidates were asked to + Prepare, from a summarized Receipts and Paymenis account and notes, a Subscription account + Identity" the amount of subscription to be transferred to the Club's Income and Expenditure account, + Caleulate the amounts for telephone expenses and furniture repairs to be transferred to the Income and Expenditure account + State the amounts for Bank and Subscription as @ current liability on the Club’s Balance Sheet + Identify three other income items with their totals. In the second part, the candidates were asked to: + Post transactions to a Motor Vehicle account. + Show the Provision for Depreciation account for two years using the Reducing Balance method and the enlry for Motor Vehicles in the Balance Sheet for the second year. ‘This question was not popular. About ten per cent of the candidates attempted it and of these about eighty per cent received less than nine marks out of 20. The mean mark on this question was 4.34, In the first part, candidates were unable to prepare properly the Subscription account. More emphasis and exposure should be given to candidates to show them how to prepare this account. Some of the candidates Were unable to start the account with the correct figure for balance bid and to close off the account with the correct figure for balance cid. However, candidates were able to gain marks in calculating the correct amounts for telephone expenses, furniture repairs and stating the other income items. Another weakness demonstrated by candidates was the inability (© state correctly the amounts for subscription as a current liability and for bank on the Balance Sheet. In the second part, of those who attempted to post entries in the Motor Vehicle account, some were able to record the correct word for the particulars / details columa, yet too many used incorrect words such as ‘purchases’ and “motor vehicle’. Again this is another area where more emphasis should be placed in writing Up a fixed asset account. Another problem area in this section was the balancing off of both the Motor Vehicle and Provision for Depreciation accounts. In the Provision far Depreciation account the candidates again fell down, failing to record the correct words, “Profit and Loss account, in the details column, In the last part of this question many candidates failed to include the depreciation for the period in the accumulated depreciation figure and in writing up the Balance Sheet extract, Candidates also prepared Balance Sheets for yeers one and two although only the extract for year two was required, The Motor Vehicle at cost in some cases was not statedQuestion 7 This was an optional question and fewer than twenty-five per cent of the candidates attempted it. The response to the question was fair, with a mean score of 9.8 Candidates were presented with data in a jumbled form pertaining to a partnership and a company and were required to separate the data so that they could: (Prepare an Appropriation account for a partnership. Gi) Prepare an Appropriation account (Statement of Retained Earnings) for a company. Gif) Prepare the Current account of individual pariner.s Gv) List two advantages that s limited company has over a partnership type of business. Unfortunately, in response to the request for identification of the information relating to a partnership as against a company, 2 number of candidates detailed the information using at least one page, No marks were allocated for this exercise as they were awarded only for the actual preparation of the secounts. It is recommended that candidates spend their time productively on activities for which marks are allocated. Most candidates were able to deal competently with the Appropriation account of the partnership. However, some candidates appeared to be unfamiliar with the computation of the share of profit for the partners. A significant aumber of candidates also deducted interest on drawings from the net profit rather than adding to it, The partners” salaries and their interest on capital were, for the most part, treated correctly, A large number of the candidates prepared the current accounts of the partners correctly. However, quite a few candidates failed to recognize that the pariner, Cough, had an opening debit balance in his current account. This hindered them from obtaining maximum marks in this section, Im part (©), the candidates were required to prepare a Statement of Retained Eamings. Apparently, this requirement presented the greatest difficulty, Those candidates who revised and practised preparing the Appropriation account of a company seored heavily in this section, but some of the weaker candidates were lunsure of what information should be included in the Statement of Retained Earnings. Some of those candidates had incorrectly included partners’ salaries and interest on capital in the Statement. It seems aguite evident that they experienced difficulty in handling the accounts relating to a company. Another area of weakness was demonstrated in the last part of the question, Very few candidates scored any mark here. They were unable (© give two advantages that a limited company has over # partnership type of business