GRADE 10PRINCIPLES OF ACCOUNTS 7110/01&02CANDIDATE NAME: _________________________________________ 1 Hour ; 65Marks

Answer all the questions:

1. N. Mann is a sole trader who does not keep the books of the business on the double entry system. However, the following information is available from the records:

$1 January 2012

Trade receivables 8 480Trade payables 7 560Inventory 4 360

31 December 2002Trade receivables 10 160Trade payables 6 200Inventory 5 640

All sales and purchases are made on a credit basis.Receipts from Trade receivables during the year ended 31 December 2012 amounted to $54 800.Payments to Trade payables during the year ended 31 December 2012 amounted to $32 640.REQUIRED:(a) Calculate the sales and purchases totals for the year ended 31 December 2012.

[8](b) Calculate the rate of inventory turnover.

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(c) State two merits of Single Entry System.

[2](d).State two demerits of Single Entry System.

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(e) State two differences between Statement of Affairs andBalance Sheet.

[2](f) State any two differences between single entry system anddouble entry system.

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2. The following information was obtained from the books of Vale: $

1 January 2012 Trade receivables 9 506Trade payables 2 580

31 December 2012 Credit sales 20 345* Credit purchases at list price 7 200* Purchases returns at list price 200Sales returns 120Cash and cheques received from Trade receivables 19 580Cash and cheques paid to suppliers 5 170Discount received 190Discount allowed 210Bad debts written off 155

* All purchases and purchases returns were subject to a trade discount of 10% off the list price.

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(a) Select the appropriate balances and prepare the trade receivables account for the year.

Dr Trade receivables account Cr

[7](b) Select the appropriate balances and prepare the trade payables account for the year.

Dr Trade receivables account Cr

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3. Which of the following items will appear in the Assets side of the Statement of financial position and which will appear in the Liability side?Choose the one you consider correct and place a tick () in the box to indicate the correct answer.(i) has done as an example

Items Assets LiabilitiesEg ., (i) Capital $ 50,000 (ii) Outstanding Rent $ 6,000(iii) Cash $ 30,000(iv) Goodwill $ 15,000(v) Provision for taxation $ 10,000(vi) Closing Inventory $ 20,000(vii) Trade receivables $ 5,000(viii) Interest received in advance $ 4,000

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4. J. Kirkwood is a dealer who has not kept proper books of account. At 31st August 2011 his state of affairs was as follows: $Cash 115Bank balance 2209Fixtures 4000Inventory 16740Trade receivables11890Trade payables 9052Van (at valuation) 3000

Required:(a) Draw up a statement of affairs as at 31st August 2011

Statement of affairs as at 31st August 2011

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During the year to 31st August 2012 his drawings amounted to $7560. Winnings from a football pool $2800 were put into the business. Extra fixtures were bought for $2000.

At 31st August 2012 his assets and liabilities were: cash $84, bank overdraft $165, inventory $2149, trade payables for goods $ 6002, trade payables for expenses $ 236, fixtures to be depreciated $ 600 van to be valued at $ 2500, trade receivables $ 15821, prepaid expenses $ 72.

(b) Draw up a statement of affairs as at 31st August 2011

Statement of affairs as at 31st August 2012

[4](c) Calculate the profit and loss made by Kirkwood for the year ended 31st August 2012.

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MCQ’SFor each of the parts 1to 15below there are four possible answers A, B, C and D. Choose the one you consider correct and place it in the box to indicate the correct answer.e.g

1. In which book of account is cash discount received first recorded?

A cash book B purchases ledger C sales journal D sales ledger

2. Which should be recorded in the general journal?

A debt written off as bad B goods returned to supplierC goods sold for cash D trade discount allowed to customer

3Which account could have a credit balance?

A bank B carriage inwards C carriage outwards D cash

4. Which is a current asset?

A purchase ledger balances B rent received in advanceC sales ledger balances D wages accrued

5 How are fixed assets normally shown in a Statement of financial position?

A at net book value B at net realizable valueC at replacement cost D at scrap value

6. Goods for re-sale are bought for cash.What are the entries in the books of the purchaser?

7. X keeps a full set of books of account.Where will the Sales account appear?

A general journal B general ledger C sales journal D sales ledger

8. A business purchases goods on credit for $800, less 25 % trade discount, with a cash discount of5 % if payment is received in full within 28 days.How much will the business pay if it settles within 28 days?

A $560 B $570 C $600 D $760

9 A retailer bought 20 items from a manufacturer at list price of $20 each, subject to 20 % trade discount.The retailer later returned ten of the items.How much is entered in the Sales Returns Journal of the manufacturer?

A $160 B $200 C $240 D $320

10. The totals of the discount columns in a trader’s Cash Book were as follows.$200 debit

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$150 creditWhat entry will the trader make in the Discount Allowed account?

A $150 credit B $200 credit C $150 debit D $200 debit

11. A business provides the following information.sales for year $189 000purchases for year $125 000gross profit as a percentage of cost of sales 25%

What is the gross profit for the year?

A $31 250 B $37 800 C $47 250 D $64 000

12. A trader provides the following information.1 January 2012, Opening inventory $. 40,000Goods bought during the year 2012 $. 60,000Goods sold during the year 2012, Sale price $. 40,000, Cost $. 30,000

What is the value of Closing inventory on 31 December 2012

A. $ 60000 B. $70000 C. $100000 D. $130000

13. Single entry accounting is

A. The opposite of double entry B. Transactions are entered in the first entry onlyC. A system where the owners can participate D. Double entry without credit entries

14. Reconstruction of credit sales is completed in which ledger account?

A. Trade payable B. Trade receivable C. Inventories D. Sales

15. At the start of the year Owner’s equity was valued at $120000. During the year extra capital of $13300 was invested and drawings were $7000. The closing Owner’s equity was $180000. How much was the profit for the year?

A. $ 41700 B. $ 53700 C. $ 66300 D. $ 80300

16 Which best describes the assets of a business?

A cash and items that should turn into cash in the near future B cash invested by the owner of the business C items bought for long term use by the business D items owing to or owned by the business

17. The balance on a trader’s capital account was $150 000.

He then had the following transactions.

Took $2000 in cash from the shop for personal use.Paid $4000 for a private motor car from the business bank account.Introduced $10 000 new capital into the business.

What was the balance on his capital account after these transactions? A $138 000 B $154 000 C $158 000 D $160 000

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Which businessman is operating a trading business? A accountant B computer software developer C hairdresser D second hand car dealer

A trader provided the following information.

$ capital at the end of the year 21 000 capital at the beginning of the year 10 000 drawings during the year 3 000 capital introduced during the year 8 000

What was the trader’s net profit for the year? A nil B $6000 C $11 000 D $16 000

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1.What is Single Entry System of Book keeping?• Accounting records which are not maintained accordingto double entry principles is known as Single EntrySystem.• In other words any system of book keeping which is not acomplete double system of book keeping.

2.State two features of single entry system.• It is incomplete and unscientific method.• Generally both aspects of debit and credit are notrecorded .• Less costly.

3.State two merits of Single Entry System.• It is very easy and simple method.• It is less costly• It is suitable for small business concerns.

4.State two demerits of Single Entry System.• It is incomplete and unscientific method.• It is not possible to prepare Trail Balance, Profit and lossaccount and Balance sheet.

5.What is Statement of Affairs ?• Statement of Affairs is like a Balance sheet, which showsthe estimated values of Assets and Liabilities.

7.State two types of Single Entry System.• Pure single entry system.• Simple single entry system.• Quasi Single entry system.

8.What is pure single entry system ?• Under Pure single entry system no subsidiary books aremaintained only ledger containing the personal accountsof trade receivalbes and trade payabless are kept.

9.State two differences between Statement of Affairs andBalance Sheet.• Statement of Affairs Balance Sheet• 1.It is prepared under 1. It is prepared under• single entry system double entry system

• 2.Values of assets and 2. Values of assets &• liabilities are estimates. liabilities are true.

10.State any two differences between single entry system anddouble entry system.Single entry Double entrysystem system

1. Both one aspect 1. Both the aspectsRecorded. are recorded

2.Less costly 2. Costly3.It is unsatisfactory 3. It is satisfactory system.

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