Cambridge Ordinary Level: Cambridge Assessment International Education
Cambridge Ordinary Level: Cambridge Assessment International Education
Cambridge Ordinary Level: Cambridge Assessment International Education
Write your centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
You may use an HB pencil for any diagrams or graphs.
Do not use staples, paper clips, glue or correction fluid.
DO NOT WRITE IN ANY BARCODES.
Where layouts are to be completed, you may not need all the lines for your answer.
The businesses mentioned in this Question Paper are fictitious.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
DC (LK) 168661/5
© UCLES 2019 [Turn over
2
1 Filton is a retailer of electrical goods. His financial year ends on 30 September. The following
information was available from his books.
$
23 December 2018 1200
14 June 2019 600
Information from the bank account for the year ended 30 September 2019
Receipts
$
3 October 2018 Four months’ rent receivable 800
5 February 2019 Four months’ rent receivable 800
6 July 2019 Three months’ rent receivable 600
Additional information
On 30 September 2019 Filton’s stationery was valued at $450. Two months’ rent was owed to him.
REQUIRED
(a) Prepare the following ledger accounts for the year ended 30 September 2019.
Make the appropriate transfers to the income statement.
Balance the accounts and bring down the balances on 1 October 2019.
(i)
Stationery account
[4]
(ii)
Rent receivable account
[4]
(b) Name the subdivision of the ledger that would contain the rent receivable account.
............................................................................................................................................. [1]
(c) State the section of the statement of financial position on 30 September 2019 in which the
balance of the rent receivable account will appear.
............................................................................................................................................. [1]
REQUIRED
(d) Complete the following table by naming the business document and the book of prime
(original) entry used by Filton for each transaction.
The first item has been completed as an example.
[Total: 20]
© UCLES 2019 7110/21/O/N/19 [Turn over
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2 Rod’s financial year ends on 31 December. On 1 January 2020 Rod will purchase a new delivery
vehicle for his business. The details are as follows:
Rod is undecided whether to charge depreciation on the new delivery vehicle by using the
straight‑line method or diminishing (reducing) balance method. If he decided to use the diminishing
(reducing) balance method this would be at a rate of 50% per annum.
REQUIRED
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
............................................................................................................................................. [2]
(b) Calculate the depreciation which would be charged on the new delivery vehicle for each of
the years 2020, 2021 and 2022 using the straight‑line method and diminishing (reducing)
balance method.
Insert your answers in the table provided.
Use the space provided on the next page to show your workings.
2021
2022
Workings
[4]
Rod has estimated the following to help him decide which method of depreciation he should use
for the delivery vehicle.
REQUIRED
(c) Explain one advantage of using the straight‑line method to depreciate the delivery vehicle.
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
............................................................................................................................................. [2]
(d) Explain one advantage of using the diminishing (reducing) balance method to depreciate the
delivery vehicle.
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
............................................................................................................................................. [2]
Rod has been advised by a friend that he could use the revaluation method to depreciate the
delivery vehicle.
REQUIRED
(e) Explain how the annual depreciation would be calculated using the revaluation method.
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
............................................................................................................................................. [2]
© UCLES 2019 7110/21/O/N/19
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On 30 June 2019 Rod sold his old office computer. The following information is available.
Rod has the following depreciation policy for the office computer:
depreciation is charged at the rate of 25% using the diminishing (reducing) balance method
depreciation is charged for each month of ownership in the year of sale.
Rod sold the old office computer for $900, receiving payment by cheque.
REQUIRED
(f) Calculate the profit or loss on the sale of the old office computer.
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
............................................................................................................................................. [2]
(g) State the entries Rod would make in his accounting records on 30 June 2019 to record the
disposal of the old office computer.
[6]
[Total: 20]
© UCLES 2019 7110/21/O/N/19 [Turn over
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3 The Primrose Garden Store has two departments: plants and tools. The following information is
available for the year ended 30 September 2019.
$
Revenue plants 252 000
tools 130 000
Wages plants 38 000
tools 17 000
Direct expenses 5 730
Additional information
REQUIRED
(i) plants
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
..................................................................................................................................... [2]
(ii) tools
...........................................................................................................................................
...........................................................................................................................................
...........................................................................................................................................
..................................................................................................................................... [2]
(b) Prepare the departmental trading account showing the profit or loss of each department.
Plants Tools
$ $ $ $
[8]
The following were the summarised wage details for September 2019.
$
Total gross wages 5400
Total deductions
income tax 950
voluntary contributions 510
On 9 October 2019 the $950 income tax deducted from wages was paid to the tax authorities by
cheque.
REQUIRED
1 ................................................................................................................................................
2 ................................................................................................................................................
3 ................................................................................................................................................
[3]
(d) Prepare the following ledger accounts showing the entries for September 2019. It is not
necessary to total or balance the accounts.
(i)
Wages account
[3]
(ii)
Income tax account
[2]
[Total: 20]
At 30 September 2019
Inventory 68 000
Owner’s capital 150 000
5% bank loan – repayable 2025 50 000
REQUIRED
(a) Calculate the following for the year ended 30 September 2019.
Comparative figures for the year ended 30 September 2018 are shown in the last column.
Purchases
$260 000
Percentage of gross
profit to revenue 25%
(gross profit margin)
Percentage of
profit for the year 10%
to revenue (profit
margin)
Return on capital
employed (ROCE) 18%
[10]
(b) Suggest four possible reasons for the change in the profitability ratios of the business over
the two years.
1 ................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
2 ................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
3 ................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
4 ................................................................................................................................................
...................................................................................................................................................
...................................................................................................................................................
[4]
Indu wishes to increase her profit for the year and has made some proposals. A friend has advised
that each proposal may not comply with an accounting principle or concept.
REQUIRED
(c) Complete the table by placing a tick (3) to indicate the effect on the profit for the year of each
proposal. Name the accounting principle or concept not being applied.
The first one has been completed as an example.
[6]
[Total: 20]
© UCLES 2019 7110/21/O/N/19
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5 Feng is a sole trader. The following balances were extracted from the books on 30 September 2019.
$
Non‑current assets (at cost)
Land and buildings 170 000
Motor vehicles 30 000
Fixtures and fittings 7 000
Provisions for depreciation at 1 October 2018
Land and buildings 18 600
Motor vehicles 10 000
Fixtures and fittings 1 400
Disposal account 8 500 Credit
Revenue 326 000
Purchases 135 000
Returns inwards 4 300
Carriage of goods 9 000
Wages and salaries 90 000
Motor vehicle expenses 11 250
Insurance 2 700
Rent receivable 14 500
6% Bank loan (repayable 30 May 2022) 40 000
Bank interest paid 2 400
Capital 160 000
Drawings 25 000
Inventory at 1 October 2018 30 000
Electricity and water 6 050
Marketing expenses 17 300
General expenses 14 000
Bank 27 450 Debit
Trade payables 36 550
Trade receivables 35 000
Provision for doubtful debts 900
1 On 15 August 2019 goods had been purchased on credit for $1950. The transaction had not
been recorded in the books.
7 A new motor vehicle costing $16 000 was purchased on 19 September 2019. Payment was
made by cheque. No entries had been made in the books.
8 Depreciation is to be charged on all non‑current assets owned at the end of the year as
follows.
(i) Land costing $60 000 is not depreciated. The buildings are depreciated at 2% per annum
on cost.
(ii) Motor vehicles are depreciated at the rate of 25% per annum using the diminishing
(reducing) balance method.
(iii) Fixtures and fittings are depreciated at the rate of 10% per annum on cost, using the
straight‑line method.
9 Trade receivables of $7000 are irrecoverable. The provision for doubtful debts is to be
maintained at 5% on the remaining trade receivables.
REQUIRED
(a) Prepare the income statement for the year ended 30 September 2019.
Feng
Income Statement for the year ended 30 September 2019
$ $
$ $
Feng
Statement of Financial Position at 30 September 2019
$ $ $
$ $ $
[Total: 40]
© UCLES 2019 7110/21/O/N/19
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