Jun 08

JUNE 2008
NUMERACY & ACCOUNTING
Instructions to candidates:
a) Time allowed: Three hours (plus an extra ten minutes’ reading time at the start – do not write anything during this
time)
b) Answer any FIVE questions with at least TWO questions from each part
c) All questions carry equal marks. Marks for each question are shown in [ ]
d) Non-programmable calculators are permitted in this examination
PART A
1. a) Assume an exchange rate of £1 =1.90 dollars.
i How many pounds would you get for:
 480 dollars
 750 dollars
 1340 dollars [3]
ii How many dollars would you get for:
 £480
 £770
 £1120 [3]
b) A company sells three products:
Product X at £2 each
Product Y at £4 each
Product Z at £5 each
The company gives a trade discount of 25% BEFORE adding 17.5% VAT (sales tax).
Calculate (and show workings) the total invoice value to a customer who buys 100 of Product X, 120 of
Product Y and 160 of Product Z. [6]
c) A firm’s cost data for a product is as follows:
Variable cost per unit £35
Selling price per unit £55
Total fixed costs £240,000
i How many units have to be made and sold to break even? [3]
ii What is the profit (or loss) if 18,500 units are made and sold? [5]
2. The following are the values of orders (in £) received on an average day in a sales department:
520 640 540 610 580
570 570 580 660 640
560 560 510 630 690
780 820 560 670 720
540 640 540 710 580
790 740 640 610 640
720 620 620 520 630
640 630 560 620 570
630 520 730 630 640
640 720 810 590 620
TASKS
Starting with £500, group the above figures into intervals of 50 and then:
a) construct a frequency distribution [8]
b) find the arithmetic mean daily sales orders [4]
c) obtain the median [2]
d) draw a histogram to represent your frequency distribution [6]
continued overleaf
3. You are in the process of preparing statistical analysis for inclusion in a company report.
The following financial data needs presenting:
A Earnings per share over the last 8 years:
2000 15p per share
2001 20p per share
2002 20p per share
2003 30p per share
2004 35p per share
2005 45p per share
2006 50p per share
2007 60p per share
B Total company profit before tax for the last 8 years:
2000 £180,000
2001 £190,000
2002 £210,000
2003 £230,000
2004 £260,000
2005 £300,000
2006 £320,000
2007 £360,000
TASKS
a) Prepare the information regarding earnings per share in bar chart form. [8]
b) Prepare the information regarding company profit (before tax) in bar chart form. [8]
c) Explain where you might use pie charts to display information. [4]
4. Write notes on FOUR of the following:

a) trend analysis
b) the use of algebra to solve problems
c) compound interest
d) Z charts
e) scatter diagrams
f) moving averages [5 each]
PART B
5. The following trial balance was extracted from the books of Justin as at 31 May 2008:
£ £
Capital (01 06 07) 226,000
Drawings 22,000
Premises at cost 200,000
Equipment at cost 80,000
Vehicles at cost 40,000
Sales 880,000
Purchases 580,000
Wages 64,000
Business rates 33,000
Communication costs 18,000
Distribution costs 12,000
Insurances 28,000
Stock (01 06 07) 48,000
Bank 5,000
Cash 1,000
Debtors 56,000
Creditors 36,000
Depreciation accounts (01 06 07):
Equipment 25,000
Vehicles 20,000
------------- -------------
1,187,000 1,187,000
======= =======
NOTES at 31 May 2008:
 Stock in hand was valued at £46,000.
 Wages owing amounted to £4,000.
 Insurance prepaid amounted to £2,000.
 Equipment is to be depreciated by 20% on cost.
 Vehicles are to be depreciated at 25% on cost.
Question 5 continues overleaf

TASKS
a) Prepare the trading and profit and loss account for year ended 31 May 2008. [12]
b) Prepare the balance sheet as at 31 May 2008. [8]
6. The following are the first 12 transactions of a new business:

01 May £30,000 deposited in a business bank account.
01 May Equipment purchased for £18,000 – by cheque.
01 May Rent paid £1,300 – by cheque.
02 May Goods for resale purchased £7,000 – by cheque.
03 May Rates paid £1,800 – by cheque.
06 May Insurance premium paid £1,200 – by cheque.
08 May Goods for resale purchased £2,500 on credit from Bannerman Ltd.
09 May Wages paid £860 – by cheque.
11 May Goods sold for £4,800, and payment received in full (by cheque).
12 May Goods for resale purchased £3,200 – by cheque.
13 May Cheque for £1,900 sent to Bannerman Ltd.
14 May Wages paid £900 – by cheque.
TASKS
a) Write up the above transactions in the ledger accounts. [12]
b) Draw up a trial balance as at the end of 14 May 2008. [4]
c) Explain the use of a trial balance. [4]
7. The following information relates to a company which has a 31 May year end:
£ £
2007 2008
Sales 2,400 3,900
Cost of sales 1,200 1,700
Total expenses 600 850
Total current assets 460 530
Total current liabilities 310 430
Closing stock 90 100
Average stock 85 100
TASKS
a) Calculate the following for BOTH years:
i the gross profit percentage
ii the net profit percentage
iii the stock turnover
iv the current ratio
v the acid test ratio [3 each]
b) Comment on the financial performance over the current year. [5]
8. Write short notes on FOUR of the following:

a) accounting concepts
b) share capital
c) debentures
d) depreciation
e) day books
f) control accounts
g) a partnership agreement [5 each]
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JUNE 2008

NUMERACY & ACCOUNTING

4. Write notes on FOUR of the following:

Question 5 continues overleaf

6. The following are the first 12 transactions of a new business:

8. Write short notes on FOUR of the following:

© INSTITUTE OF COMMERCIAL MANAGEMENT

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