Question Answer Mark

number
1(a)(i) Award marks as indicated.
Dina
Manufacturing account for the year ended 31 March 2022
$ $

Opening inventory - raw materials 9 640

Purchases 98 400 (1)

Closing inventory - raw materials (10 400) (1fb)

Cost of raw materials consumed 97 640 (1of)

Direct wages 38 400 (1)

Royalties 1 780 (1)

Prime cost 137 820 (1of)

Factory overheads

Depreciation charge - plant and machinery 17 200 (1)

Indirect wages 27 000 (1)

Insurance 3 200 (1)

Electricity 7 800 (1)

Factory rent 12 000 (1)

67 200

205 020

Opening inventory - work in progress 4 200

Closing inventory - work in progress (4 430)

(230) (1)

Production cost 204 790 (1of)

(13)
Question Answer Mark
number
1(a)(ii) Award marks as indicated.
Dina
Income statement for the year ended 31 March 2022

$ $

Revenue 385 000

(1)
Cost of sales
Opening inventory — finished goods 6 750
Production cost 204 790
(1of)
211 540
Closing inventory — finished goods (5 850)
(1fb)
Cost of goods sold 205 690

Gross profit 179 310

(1of)
(4)

Question Answer Mark

number
1(b)(i) Award marks as indicated.

Ratio Formula
Gross profit percentage Gross profit X 100
Revenue
(1)

Profit for the year as a Profit for the year X 100

percentage of revenue Revenue
(1)

Return on capital Profit for the year X 100

employed. Capital employed
(1)
(3)
Question Answer Mark
number

1(b)(ii) Award 1 mark for analysis of each ratio, 2 marks for development of the
ratios and 1 mark for overall conclusion.

Sample answer

The decrease in gross profit percentage may be due to a lower selling price
and/or a higher cost of sales (1).

Despite the fall in the gross profit percentage, the profit for the year as a
percentage of revenue and the return on capital employed both improved (1)
indicating better control over expenses (1) and more efficient use of resources
(1).

So, Dina’s statement is incorrect (1). (5)

Accept any other appropriate responses.

(Total for Question 1 = 25 marks)

Question Answer Mark
number
2(a) Award marks as indicated.
Ali
Income statement for the year ended 30 April 2022

$ $
Income 72 160
(1)
Wages 15 710
(1)
Fuel W1 8 310
(2)
Insurance 550
(1)
Depreciation 6 000
(1)
Office rent and rates W2 7 200
(2)
Irrecoverable debts 70
(1)
Provision for irrecoverable debts 20
(1)
Bank interest 40 37 900
(1)
Profit for the year 34 260
(1of)

W1 $8 310 (2)

$8 140 + ($480 - $310) (1) = $8 310 (1of)

W2 $7 200 (2)
(12)
$7 800 + ($600 - $1 200) (1) = $7 200 (1of)
Question Answer Mark
number
2(b) Award marks as indicated.
Ali
Statement of financial position at 30 April 2022

Assets $ $ $
Non-current assets Cost Accumulated Carrying
depreciation value
Motor vehicle 34 000 18 000 16 000
(1of)
Current assets
Trade receivables 3 200
Provision for irrecoverable (160) 3 040
debts (1of)

Other receivables 1 310 4 350

(1of)
Total assets 20 350
Equity and liabilities
Equity
Opening equity 17 100
(1)
Profit for the year 34 260
Drawings (35 350)
Total equity 16 010
(1of)
Non-current liabilities
Bank loan 1 800
(1)
Current liabilities
Other payables 480
Bank overdraft 2 060
2 540
(1)
Total liabilities 4 340
Total equity and liabilities 20 350
(1of fb)

(8)
Question Answer Mark
number
2(c)(i) Award 1 mark for explaining the concept plus marks as indicated for
development.

Sample answer

Prudence concept states that profits and assets should not be overstated
and losses and liabilities should not be understated(1).

Writing off an irrecoverable debt ensures that the net profit/profit for the
year is not overstated (1) and trade receivables are not overstated (1).

Accept any other appropriate responses. (3)

Question Answer Mark

number

2(c)(ii) Award 1 mark for explaining the concept plus 1 mark as indicated for
development.

Sample answer

Accruals concept states that revenue of the accounting period should be matched
against the costs of the same period whether paid or not (1).

Providing for depreciation ensures that the costs of the motor vehicle are
matched with the income/benefits earned during the same period (1).
(2)
Accept any other appropriate responses.

(Total for Question 2 = 25 marks)

TOTAL FOR PAPER = 50 MARKS