Caribbean Examinations Council: Caribbean Secondary Education Certificate Examination 07 JANUARY 2021 (A.m.)

CARIBBEAN E XAM I NAT I O N S COUNCIL
CARIBBEAN SECONDARY EDUCATION CERTIFICATE®

EXAMINATION
‘‘*’’Barcode Area”*”
Front Page Bar Code
07 JANUARY 2021 (a.m.)
FILL IN ALL THE INFORMATION REQUESTED CLEARLY IN CAPITAL LETTERS.
TEST CODE
0 1 2 3 9 0 2 0
SUBJECT PRINCIPLES OF ACCOUNTS – Paper 02
PROFICIENCY GENERAL
REGISTRATION NUMBER
SCHOOL/CENTRE NUMBER
NAME OF SCHOOL/CENTRE
CANDIDATE’S FULL NAME (FIRST, MIDDLE, LAST)

D D M M Y Y Y Y
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DATE OF BIRTH
SIGNATURE __________________________________________________
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TEST CODE 01239020
FORM TP 2021028 JANUARY 2021
CARIBBEAN E XAM I NAT I O N S COUNCIL
CARIBBEAN SECONDARY EDUCATION CERTIFICATE®

EXAMINATION
PRINCIPLES OF ACCOUNTS
Paper 02 – General Proficiency
3 hours
READ THE FOLLOWING INSTRUCTIONS CAREFULLY.
1. This examination consists of FIVE questions.
2. Answer ALL questions.
3. Write your answers in the spaces provided in this answer booklet.
4. Do NOT write in the margins.
5. Show ALL working clearly.
6. You may use a silent, non-programmable calculator to answer questions.
7. You are advised to take some time to read through the paper and plan your answers.
8. If you 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.
9. If you 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 © 2020 Caribbean Examinations Council

All rights reserved.
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DO NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA
Answer ALL questions.
Write your answers in the spaces provided in this booklet.
1. John Oinstin is the owner of Oinstin’s Barber Salon. On 31 December 2020, he provided the
following trial balance.
Details Debit Credit

$ $
Capital 10 100
Accounts payable 6 000
Cash at bank 8 000
Drawings 2 400
Rent expenses 4 000
Electricity expenses 1 200
General expenses 1 200
Supplies expense 1 000
Receipts from customers 31 700
Wages expenses 3 000
Furniture at cost 10 000
Provision for depreciation — furniture 1 000
Equipment at cost 20 000
Provision for depreciation — equipment 2 000
$50 800 $50 800
Additional information
• Rent prepaid $800
• General expenses unpaid $500
• Depreciation is to be accounted for as follows:
— Equipment, 20% per year using the reducing balance method

— Furniture, 5% per year using the straight line method
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(a) (i) Using the form provided below, prepare the income statement of Oinstin’s Barber
Salon for the year.
(9 marks)

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(ii) Using the information on pages 4 and 5, prepare an extract of the statement of
financial position for Oinstin’s Barber Salon to show the value of non-current
assets as at 31 December 2020.
(3 marks)

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(iii) Below are descriptions of accounting adjustments in Oinstin’s Barber Salon. In the
space provided, enter the letter code which represents the type of adjustment.

The adjustments are letter coded as follows:
(A) Revenue expenditure

(B) Net book value
(C) Depreciation
(D) Bad debts
(E) Accrued expense
(F) Prepaid expense
An example has been done for you.
Adjustments Letter Code
An account receivable is unable to pay the amount due D
Outstanding invoices to be paid
Non-current assets loss in value
Expenditure incurred every day as daily operating expenses
Cost less depreciation to date

(4 marks)

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(b) Zaheeda received a cheque for the sum of $8 000 for a debt of $12 000 from one of her
customers, Yoshida, on 31 December 2018. One year later Yoshida stopped all payments
to Zaheeda. Two years later Zaheeda discovered that Yoshida is unable to clear the debt
and that she must write off the debt.
(i) Prepare the entry to record the bad debt written off in Zaheeda’s book. No narrative
is required.
General Journal
Date Details Folio Debit Credit

$ $
(2 marks)
(ii) Identify TWO causes of depreciation.
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(2 marks)
Total 20 marks

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2. AK Electronics buys and sells its products on credit only. During the month of December 2020,
the following information was extracted from the business’ accounting records.
Dr Cr
$ $
Opening balances:
Accounts receivable/accounts payable 8 500 8 800
Closing balances:
Accounts receivable/accounts payable 5 300 ?

$
Payments to creditors 56 000
Receipts from debtors 10 100
Credit sales 8 000
Discount received 1 400
Credit purchases 68 000
Returns outwards 1 500
Bad debts written off 500
Sales returns 200
Total discounts allowed 400
(a) (i) State THREE purposes of control accounts in the accounting process.
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(3 marks)

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Using the information on page 9, prepare the accounts payable control account
(ii)
for AK Electronics for the month ended 31 December 2020.

Accounts Payable Control Account

Date Details Debit Date Details Credit
$ $
(6 marks)

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(iii) Using the information on page 9, prepare the accounts receivable control account
for AK Electronics for the month ended 31 December 2020.
Accounts Receivable Control Account

Date Details Debit Date Details Credit
$ $
(8 marks)
(b) State THREE reasons why the company’s bank statement balance did NOT agree with the
business’ cash book balance.
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(3 marks)
Total 20 marks

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3. (a) Match the statements below with the correct terms by entering the appropriate letter code
in the spaces provided.

The terms are letter coded as follows.
A. Business entity
B. Accrual
C. Prudence
D. Duality
E. Consistency
Statements Letter code
Expenses and revenue are recorded when incurred or earned

respectively.
A company’s financial statements should follow the same accounting

principles, methods, practices and procedures from one accounting
period to the next.
The personal transactions of the owner are kept separate from the
business’ transactions.
Assets should not be overstated and liabilities should not be understated.
Every transaction affects at least two accounts.

(5 marks)

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(b) (i) Natural Stuff manufactures a single product. The following forecast are for the
three months ending 31 December 2020.
2020 Units
October 4 000
November 10 000
December 12 000

The selling price of the product during the budget period will be as follows:
October $8
November $9
December $9
Prepare a sales budget for each of the three months ending 31 December 2020.
(3 marks)

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(ii) The accounting staff of Natural Stuff prepares quarterly cash flow projections.
Using the form on page 15, complete the cash flow statement.
Natural Stuff
Cash Flow Statement
for the three months ending 31 December 2020
October November December

$ $ $
Cash sales 32 000 90 000 108 000
Receipts from credit customers 12 000 15 600 20 000
Purchase of non-current assets 7 000 86 000
Payments for credit purchases 3 000 5 000 10 000
Utilities 3 600 4 000 4 000
Salary expense 25 000 25 000 30 000
Advertising expense 1 000 1 000 1 000

The company forecasts that the bank balance will be $10 000 on 1 October
2020.

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October November December

$ $ $
(8 marks)

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(c) (i) If the owner of Natural Stuff incurs a cost of $150 for each product and sets his
mark-up at 25%, calculate the selling price.
(2 marks)
(ii) Using the information in (c) (i), calculate the gross profit margin for the product.
(2 marks)
Total 20 marks

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NOTHING HAS BEEN OMITTED.

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4. On 1 December 2020, Sheba’s bank balance was $3 700 credit. The transactions for the month
of December 2020 were as follows:
December 5 Received and banked a cheque, $10 950, from M. Merick, a credit customer. He
had deducted a trade discount of $270.
7 Paid a cheque to Fray Ltd, a supplier, in full settlement of his account of $4 800
less 2% cash discount.
9 Harry, a credit customer, paid his debt of $5 000 by cheque after deducting a
cash discount of 5%.
20 Received $4 000 by cheque from D. Armstrong.
21 Paid utilities by cheque, $1 200.
26 The bank returned the cheque received from D. Armstrong as he did not have
sufficient funds.

(a) Use the form provided on page 19 to prepare the cash book for the month ending
31 December 2020. Bring down the balance on 1 January 2021.
(11 marks)

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Cash Book
Discount Bank Discount Bank

Date Details Date Details
$ $ $ $
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(b) Sheba’s books show a total discount received of $500 for the 11 months from
1 January 2020 to 30 November 2020.
Prepare the discount received account for the year ended 31 December 2020. Show the
year end transfer to the appropriate financial statement.
Discount Received Account
Date Details $ Date Details $

(3 marks)
(c) Identify the ledger in which the following accounts would be posted.
Account Ledger
Discount received
Fray Ltd
Harry
(3 marks)

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(d) Sheba provided the following summary of his utility expenses for the year ended
31 December 2020.
1 January 2020 Accrued expenses $1 670

At year ended 31 December 2020 Total utilities expenses paid $8 950
31 December 2020 Prepaid utilities expenses $ 560
State the amount of the utilities expenses which would be recorded in the income statement
and statement of financial position.
(2 marks)
(e) Identify the document that is sent to a debtor to indicate the amount owed to a business.
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(1 mark)
Total 20 marks

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5. The following balances were extracted from the ledgers of Black Cake Enterprise Ltd on
31 December 2020.
Black Cake Enterprise Ltd

Trial Balance
as at 31 December 2020
$
Revenue 110 000
Bank overdraft 4 500
Fixtures and fittings 35 000
Provision for depreciation — fixtures and fittings 2 300
Land 59 000
Capital 60 000
Inventory 25 000
Trade receivables 13 000
Trade payables 27 000
Purchases 56 000
Discount received 8 700
Wages and salaries 12 000
Discount allowed 5 200
Sundry expenses 6 900
(a) Use the form provided on page 23 to prepare the trial balance for Black Cake Enterprise
Ltd as at 31 December 2020. (Include the account and the amount to make both sides of
the trial balance equal.)


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(9 marks)
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(b) For each scenario, identify the following errors which were later discovered
(i) A sale of goods on account for $1 800 to M. Mullins had been posted to the account
of M. Millar.
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(1 mark)
(ii) Office equipment sold for $2 000 had been posted to the sales account.
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(1 mark)
(iii) Wages of $4 500 for the office workers had been debited to the bank and credited
to the wages account.
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(1 mark)

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(c) Prepare journal entries to correct the errors identified in (b) on page 24. Narratives are
not required.
Date Details Folio Debit Credit
(8 marks)
Total 20 marks
END OF TEST
IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.
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EXTRA SPACE
If you use this extra page, you MUST write the question number clearly in the box provided.
Question No.
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CANDIDATE’S RECEIPT
INSTRUCTIONS TO CANDIDATE:
1. Fill in all the information requested clearly in capital letters.
TEST CODE:
0 1 2 3 9 0 2 0
SUBJECT: PRINCIPLES OF ACCOUNTS – Paper 02
PROFICIENCY: GENERAL
REGISTRATION NUMBER:
FULL NAME: ________________________________________________________________

(BLOCK LETTERS)
Signature: ____________________________________________________________________
Date: ________________________________________________________________________
2. Ensure that this slip is detached by the Supervisor or Invigilator and given to you when you
hand in this booklet.
3. Keep it in a safe place until you have received 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.
I hereby acknowledge receipt of the candidate’s booklet for the examination stated above.
Signature: _____________________________
Supervisor/Invigilator
Date: _________________________________

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CARIBBEAN E XAM I NAT I O N S COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE®

FILL IN ALL THE INFORMATION REQUESTED CLEARLY IN CAPITAL LETTERS.

SUBJECT PRINCIPLES OF ACCOUNTS – Paper 02

CANDIDATE’S FULL NAME (FIRST, MIDDLE, LAST)

CARIBBEAN E XAM I NAT I O N S COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE®

Paper 02 – General Proficiency

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This examination consists of FIVE questions.

2. Answer ALL questions.

3. Write your answers in the spaces provided in this answer booklet.

4. Do NOT write in the margins.

5. Show ALL working clearly.

6. You may use a silent, non-programmable calculator to answer questions.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright © 2020 Caribbean Examinations Council

Write your answers in the spaces provided in this booklet.

Details Debit Credit

• Rent prepaid $800

• General expenses unpaid $500

• Depreciation is to be accounted for as follows:

— Equipment, 20% per year using the reducing balance method

GO ON TO THE NEXT PAGE

GO ON TO THE NEXT PAGE

GO ON TO THE NEXT PAGE

(A) Revenue expenditure

An example has been done for you.

Adjustments Letter Code

An account receivable is unable to pay the amount due D

Outstanding invoices to be paid

Non-current assets loss in value

Expenditure incurred every day as daily operating expenses

Cost less depreciation to date

GO ON TO THE NEXT PAGE

Date Details Folio Debit Credit

(ii) Identify TWO causes of depreciation.

GO ON TO THE NEXT PAGE

GO ON TO THE NEXT PAGE

GO ON TO THE NEXT PAGE

Accounts Receivable Control Account

GO ON TO THE NEXT PAGE

Statements Letter code

Expenses and revenue are recorded when incurred or earned

A company’s financial statements should follow the same accounting

Assets should not be overstated and liabilities should not be understated.

Every transaction affects at least two accounts.

GO ON TO THE NEXT PAGE

GO ON TO THE NEXT PAGE

October November December

GO ON TO THE NEXT PAGE

October November December

GO ON TO THE NEXT PAGE

GO ON TO THE NEXT PAGE

NOTHING HAS BEEN OMITTED.

GO ON TO THE NEXT PAGE

20 Received $4 000 by cheque from D. Armstrong.

21 Paid utilities by cheque, $1 200.

GO ON TO THE NEXT PAGE