Accounting

MONTHLY TEST SEPTEMBER 2020
ACCOUNTING
10 ........... (Cambridge)
Duration : 2 periods
Candidate's name : ............................................................... Admission no : ...................

1
Underline the correct answer.
(1) John purchased a noncurrent asset on credit. He made an entry in both the noncurrent asset
account and the creditor’s account.
Which accounting principle did he apply?
(A) consistency (B) dual aspect (C) going concern (D) matching
(2) A trader decided that all items of office equipment costing less than $500 would be treated as
office expenses in the year of purchase.
Which accounting principle is being applied?
(A) going concern (B) historical cost (C) materiality (D) prudence
(3) What is the going concern principle?

(A) Accounting records are prepared assuming that the business will continue to operate in
the foreseeable future.
(B) Income and expense should be accounted for in the same way they were accounted for
in previous periods.
(C) Profit should not be anticipated and losses written off as soon as they are known.
(D) Revenue and costs should be recognized as they are earned or incurred, not when the
money is received or paid.
(4) What is a disadvantage to a sole trader forming a partnership with another trader?
(A) Losses will be shared. (B) More capital will be available.
(C) Profits will be shared. (D) Risks will be shared.
(5) Sara and Fatima are in partnership. Sara is entitled to a partnership salary of $30 000 per
annum and the balance of the profit is shared equally.
The profit for the year was $180 000.
What was Sara’s total income from the business?
(A) $75 000 (B) $90 000 (C) $105 000 (D) $120 000
(6) Which item may appear on the debit side of a partner’s current account?
(A) interest on capital (B) interest on drawings
(C) salary (D) share of profit
(7) Which is not a feature of reliability of information in financial statements ?

(A) The information must be able to be compared with other businesses.
(B) The information must be capable of being independently verified.
(C) The information must not be bias.
(D) The information must be free from significant errors.
contd.....to page 2
2
Grade 10 Accounting contd.....from page 1
(8) Where do interest on capital and interest on partners’ loans appear?
Interest on capital Interest on partners’ loans
(A) appropriation account appropriation account
(B) appropriation account income statement
(C) income statement appropriation account
(D) income statement income statement
(9) Why does a partnership prepare an appropriation account?

(A) to allocate profit for the year to each partner
(B) to calculate interest on partners’ loans
(C) to ensure that drawings are accounted for
(D) to record dividends paid and proposed
(10) A trader always depreciates his motor vehicles using the reducing (diminishing) balance
method.
Which accounting principle is he applying?
(A) consistency (B) duality (C) going concern (D) realization
[Total = 2 × 10 = 20 marks]
contd.....to page 3
3
PART B
Pat and Willy are in partnership sharing profits and losses in the ratio 2:1. Interest is allowed on
capital at the rate of 4% per annum. Willy receives a salary of $12 000 per annum.
The following balances were extracted from the books on 30 September 2020:
$
Capital accounts
Pat 150 000
Willy 100 000
Current accounts
Pat 15 000 Cr
Willy 3 500 Dr
Drawings
Pat 15 000
Willy 15 000
Revenue (sales) 365 000
Inventory at 1 October 2019 53 500
Purchases 173 000
Returns inwards 9 200
Returns outwards 5 500
Carriage 16 500
Administration expenses 25 750
Advertising 23 480
Wages and salaries 66 700
Land and buildings 170 000
Motor vehicles (cost) 75 000
Fixtures and fittings (cost) 50 000
Provisions for depreciation
Motor vehicles 25 000
Fixtures and fittings 24 000
Sundry expenses 10 250
Loan interest paid 2 000
8% Loan repayable 31 December 2025 50 000
Trade receivables 62 500
Provision for doubtful debts 2 000
Trade payables 30 500
Bank 4 380 Cr
contd.....to page 4
4
Additional information:
1 Inventory at 30 September 2020, $ 61 450.
2 Carriage is to be apportioned 30% to the collection of purchases and 70% to the

delivery of goods to customers.
3 At 30 September 2020:
Administration expenses, $ 630, were prepaid.
Wages and salaries, $ 2700, were accrued.
4 Depreciation is to be charged on:

Motor vehicles at the rate of 20% per annum using the diminishing (reducing)
balance method.
Fixtures and fittings at the rate of 15% on cost using the straightline method.
5 Trade receivables include a debt of $2500 which is considered irrecoverable.
6 The provision for doubtful debts is to be maintained at 4% of trade receivables.
REQUIRED
(a) Prepare the income statement and appropriation account of Pat and Willy for the year ended
30 September 2020.
(23 marks)
(b) Prepare the current accounts for the year ended 30 September 2020 on the next page.
Balance the accounts and bring down the balances on 1 October 2020.
(6 marks)
(c) Prepare the Statement of Financial Position of Pat and Willy at 30 September 2020.
(11 marks)
[Total = 40 marks]
contd.....to page 5
5
Pat and Willy
Income statement and appropriation account of for the year ended 30 September 2020
$ $

contd.....to page 6
6

contd.....to page 7
7
(b) Prepare the current account for the year ended 30 September 2020. Balance the accounts and
bring down the balances on 1 October 2020.
Partners current account
Date Details Pat Willy Date Detail Pat Willy

$ $ $ $
contd.....to page 8
8
Pat and Willy
Statement of Financial position at 30 September 2020
$ $ $

contd.....to page 9
9

END Ref : NR

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MONTHLY TEST SEPTEMBER 2020

Candidate's name : ............................................................... Admission no : ...................

(3) What is the going concern principle?

(7) Which is not a feature of reliability of information in financial statements ?

(9) Why does a partnership prepare an appropriation account?

1 Inventory at 30 September 2020, $ 61 450.

2 Carriage is to be apportioned 30% to the collection of purchases and 70% to the

4 Depreciation is to be charged on:

5 Trade receivables include a debt of $2500 which is considered irrecoverable.

6 The provision for doubtful debts is to be maintained at 4% of trade receivables.

Partners current account

Date Details Pat Willy Date Detail Pat Willy

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Accounting

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Accounting

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Accounting

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MONTHLY TEST ­ SEPTEMBER 2020

Candidate's name : ............................................................... Admission no : ...................

(3) What is the going concern principle?

(7) Which is not a feature of reliability of information in financial statements ?

(9) Why does a partnership prepare an appropriation account?

1 Inventory at 30 September 2020, $ 61 450.

2 Carriage is to be apportioned 30% to the collection of purchases and 70% to the

4 Depreciation is to be charged on:

5 Trade receivables include a debt of $2500 which is considered irrecoverable.

6 The provision for doubtful debts is to be maintained at 4% of trade receivables.

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Partners current account

Date Details Pat Willy Date Detail Pat Willy

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MONTHLY TEST SEPTEMBER 2020