This examination is in TWO COMPULSORY Sections.
SECTION A MULTIPLE CHOICE (20 Marks) SECTION B FREE RESPONSE (100 Marks) INSTRUCTIONS
1. Write your Candidates Code Number in the box at the top right of this page and on page 24 2. Answer ALL Questions in the spaces provided in this Booklet.
3. If you need more space for any answer, ask the Supervisor for extra papers
4. Write your Candidate Code Number and Question Number clearly on all extra sheets used and attached them at the appropriate places in this Booklet.
5. Write the number of the extra papers used in the box at the top of page 21. Write NIL if you did not use any.
6. For Multiple Choice Questions, circle the letter of your answer on the Multiple Choice Answer Sheet provided at the end of this Booklet on page 2.
Check that this Booklet contains pages 2 - 24 in the correct order.
YOU MUST HAND THIS BOOKLET TO THE SUPERVISOR AT THE END OF THE EXAMINATION
KIRIBATI NATIONAL CERTIFICATE EXAMINATION
ACCOUNTING
2012
QUESTION AND ANSWER BOOKLET
Time Allowed: 3 Hours plus 10 minutes reading time
(Turn Over)
Candidate Code Number
120
TotalSection A:
Multiple Choice Answer Sheet
(20 marks)
Circle the Letter of your answer.
1. A B C D
2. A B C D
3. A B C D
4. A B C D
5. A B C D
6. A B C D
7. A B C D
8. A B C D
9. A B C D
10. A B C D
11. A B C D
12. A B C D
13. A B C D
14. A B C D
15. A B C D
16. A B C D
17. A B C D
18. A B C D
19. A B C D
20. A B C D
SECTION A: MULTIPLE CHOICE (20 Marks) This section contains 20 Multiple Choice Questions worth one mark each.
Read each question carefully and circle the letter of your answer on the Answer Sheet provided on page 2 of the Exam Booklet.
1. The main purpose of accounting information is
a. to help businesses calculate their profits. b. to help users make financial decisions. c. to calculate the tax a person must pay. d. to provide work for accountants.
2. The accounting equation can be represented as:
a. OE = A – L b. A = L - OE c. A + L = OE d. A + OE = L
3. An accountant who specializes in checking that accounts have been prepared correctly is a/an
a. Auditor.
b. Financial Accountant. c. Management Accountant. d. Tax Accountant.
4. Which of the following is NOT a financial statement for a business?
a. Statement of Financial Position. b. Statement of Financial Performance. c. Statement of Owner’s Investment. d. Statement of Cash Flows.
5. Which of the following is an example ofCapital Expenditure?
a. Repainting an old building.
b. Painting new extensions to the building. c. Insurance on the new extensions. d. Payment of rates on the whole building.
6. Which of the following expenses would be classified as a Financial Expenses?
a. Rates. b. Interest. c. Insurance.
7. The purpose of preparing bank reconciliation statement is to
a. correct any errors made in the bank statement.
b. Update the cheque book and balances it against the bank statement. c. make sure the bank account is not overdrawn.
d. ensure that the bank sends statements regularly.
8. Which of the following is the source document for a cash payment made by a business?
a. An invoice received from a supplier. b. A cheque issued to a supplier. c. A receipt sent to a customer. d. A cheque butt kept by the business.
9. Which of the following must be present for a cheque to be valid?
a. The signature of the bank manager. b. The signature of the drawer.
c. The signature of the payee.
d. The signature of the prime minister.
10.If a firm writes off a bad debt, the effect on the accounting equation will be
a. decrease Bank, decrease Accounts receivable. b. decrease Bank, decrease Capital.
c. decrease Accounts receivable, decrease Capital. d. decrease Accounts receivable, increase Bank
11.Which of the following will decrease net surplus (net profit) reported by a business?
a. An invoice received for advertising. b. An invoice received f tools.
c. Drawings paid to the owner. d. Discount received from a supplier.
12. If a business owner contributed $3,000 cash to his business, the entries in the ledger would be
13.A customer paid us $600 in full settlement of her account after receiving a discount of $50. The amount she owed was:
a. $550 b. $600 c. $650 d. $700
14.The main purpose of a chart of accounts is to
a. classify the accounts in numerical order. b. classify the accounts in alphabetical order. c. provide a numerical index to the ledger. d. make posting to the ledger easier.
15.A petty cash imprest account was established on 1 April 2009 when a cheque for $50.00 was cashed at the bank. On 30 April there was $9.60 left in the petty cash box. The amount of the cheque drawn for petty cash on 30 April would be:
a. $40.40 b. $50.00 c. $9.60 d. $90.40
16.Which of the following is a source document for cash received by a business?
a. A copy of an invoice sent to a customer. b. A cheque sent by a customer.
c. A copy of a receipt sent to a customer. d. A copy of a statement sent to a customer.
17.Which of the following step is necessary to protect the cash of a business?
a. All cash should be banked intact daily. b. All cash should be locked in the drawer. c. All cash should be locked inside the cash box. d. All cash should be locked inside the cabinet.
18.Which of the following transactions would cause a decrease in working capital?
19.A firm has a mark-up percentage of 60%. For the trading period in questions opening stock was $65,000, closing stock $50,000, and purchases amounted to $180,000. The sales for the period were:
a. $117,000 b. $312,000 c. $195,000 d. $166,000
20.A machine was bought for $11,000. The estimated life is five years and the residual value is $1,000. The depreciation for the second year under the straight line method will be
SECTION B:
FREE RESPONSE
(100 Marks)
Question One
:
This question deals with Classification of Accounts
.
(8 marks)
a) The table below shows a number of different expenses. Classify each expense by placing a tick in the correct box. (The first one has been done for you.)
Expenses Selling
Expenses
Administrative Expenses
Financial Expenses
a Rates √
b Interest
c Telephone rental d Advertising
(3 Marks)
b) Classify each of the items below under one of the following headings: Current Asset, Fixed Asset, Intangible Asset, Current Liability or Non-current Liability. (The first one has been done for you.)
Assets Current
Asset Non-Current Asset Intangible Asset Current Liability Non-current Liability
a Cash at bank √
b Accounts Receivable c Furniture
d Mortgage e Goodwill f Bank overdraft
(5 Marks)
Question Two:
This question deals with Accounting processing (7 Marks)
Using the accounting equation grid given below, show the effects of the transactions. You are NOT required to calculate the new balances. The business uses perpetual inventory system for recording inventories. You are to use the (+) and (-) signs with your answers.
June 1 Owner contributed further $4,000 cash into the business.
2 Bought Equipment costing $1,000 from Value City and deposit $650. 6 Bought a furniture from KSS $400
9 Paid electricity $120
12 An old furniture which cost $1,500 was sold for $300 cash 15 Loan repayment of $150
23 Received Commission $200
Transaction Bank
Equipment & Furniture
Building Expenses = Creditors Loan Capital Revenue
June 1
2
6
9
12
15
23
24
27
30
31
Question Three:
Transactions Processing
(46 Marks)
Part I: Journalizing and Ledger Posting: (28 marks)
On November 2011 Palina Café had the following balances in the ledger:
The following transactions occurred during the month:
Nov 2 Paid advertising $135, wages $1,000 (cheque no. 125)
Paid Arobati $190 as full settlement of account in November 1 (cheque no 126) 4 Bought goods from Banririe $100
9 Cash sales $150 (receipt no 30)
Receive Commission $100 (receipt no 31) 10 Paid Rent $250 (cheque no 127)
Issued invoice to Tiritaake $50
12 Received $400 from Teaka (Receipt no 32)
15 Palina withdrew cash $200 for personal use (cheque no 128) Paid Banririe $500 (cheque no 129)
17 Paid wages $500 (cheque no 130) 19 Sold an old furniture for $200 to Lita. 22 Cash sales $200 (receipt no 33)
Marinoa paid $490 in full settlement of her account (receipt no 34) 24 Purchases goods from Ataruru $300
25 Wrote off Nick S account $250
27 Received credit note from Ataruru $20
29 Sold goods to KSS Ltd. for $800 (invoice no 20) 30 Purchased furniture from Valoeli Ltd $4,000
In the spaces provided in the table on pages 10 to 12, you are required to:
a. Enter the transactions in the appropriate journals on pages 10 and 11, calculate the Capital and total the journals for the month
b. Post entries from the journalsprepared in (a) only to the Sales Account and Cash at Bank Account on page 12 using the threecolumn ledger.
Cash at bank $10,000 Furniture $6,000 Land $20,000 Building $10,000
a. Journalisation
(1) General Journal – narration are not required (8 Marks)
(2) Cash Payments Journal (8 Marks)
Date Particulars Chq # Discount
Received Details Bank
Accounts
Payable Wages Purchases
Other payments
(3) Cash Receipts Journal (8 Marks)
Date Particulars Receipt
#
Discount
Allowed Receipts Bank
Accounts
Receivable Sales
b. Ledger Posting
(4) Sales Account (1 Marks)
Date Particulars Debit Credit Balance
(5) Cash at Bank (3 Marks)
Date Particulars Debit Credit Balance
Part II: Financial Statements (18 Marks) Kiribati Security Services’ accountant has moved to Tonga and they haven’t had any luck finding a new accountant. They asked you to help them prepare their end of year statements for the year ending, 31 June 2012.
Kiribati Security Services
Trial Balance for the year ended 30 June 2012
Debit Credit
Land and Building 27,000
Car 2,000
Furniture and Fittings 5,300
Bank 4,250
Cash on hand 250
Inventory (1/5/2011) 8,000
Accounts Receivable 3,100
Mortgage 20,000
Interest received 1,000
Accounts Payable 9,000
Opening Capital 7,000
Sales 71,300
Purchases Returns 1,000
Rates 500
Car expenses 2,500
Purchases 34,000
Sales Returns 2,250
Heating and lighting 600
Advertising 590
Wages (office) 16,500
Insurance 360
Office expenses 2,100
Closing inventory is 4,200
You are required to:
Kiribati Security Services
Statement of Financial Performance for the year ended 30 June 2012
Revenue $ $ $
Sales
Sales Returns Net Sales
Less: Cost of Goods Sold Opening Inventory Purchases
Less Purchases Returns Goods Available for Sale Less Closing Inventory Cost of Goods Sold Gross Profit
Add Other Income Interest Received
Less: Expenses
Selling and Distribution Expenses
Administration Expenses
Total Expenses
Profit for the year
Kiribati Security Services
Statement of Financial Position as at 30 June 2012
(8 Marks)
$ $
Assets
Current Assets
Non-Current Assets
Total Assets Less: Liabilities Current Liabilities
Non-Current Liabilities
Total Liabilities Net Assets
Equity
Question Four:
Analysis, Interpretation and Making Decisions.
(15 Marks)
The following results refer to the accounts of New Way My Way during the past three years, ending December of each year.
Year 1 Year 2 Year 3
Revenue Sales
Cash 5,000 6,000 8,000
Credit 25,000 30,000 37,000
Cost of sales 20,000 24,000 31,950
Distribution Expenses 3,000 3,200 4,100
Administration Expenses 3,150 3,750 4,275
Inventory:
1 January 1,950 2,050 2,950
31 December 2,050 2,950 5,050
Balance sheet (extract)
Accounts Receivable 5,000 6,000 9,000
Opening Capital (1 January) 26,500
You are required to:
a) Calculate accounting ratios for each of the three years, using the table provided on page 17 to show
i) Gross Profit Percentage ii) Net Profit Percentage
Formula Year 1 Year 2 Year 3
Gross Profit Percentage
Net Profit Percentage
Distribution Expenses Percentage
Administration Expenses Percentage
Return on Equity Percentage
b) Calculate the Current Ratio and Working Capital for Valoeli from the information given below and then explain what does each mean:
Current Assets are $14,000, and her Current Liabilities are $7,000.
Calculate Current Ratio Calculate Working Capital Show your work out/Formula: Show your work out/Formula:
Answser: __________________ Answer: __________________ Explain Valoeli’s Current Ratio shown in your
answer:
Explain Valoeli’s Working Capital shown in your answer:
C) Vena-Liz Flowers had the following Assets and Liabilities:
Cash $1,450 Accounts Payable $750
Mortgage $4,000 Accounts Receivable $900
Inventory $2,800 Bank Overdraft (Secured) $1,000
Fixtures and Fittings $14,000 Vans $27,500
Study the table above and then answer the questions in the boxes below for Vena-Liz Flowers: Equity Ratio:
Formula:
Liquid Ratio: Formula:
Answer: _________________________ Answer: _________________________ Explain what is the meaning of the Current Ratio:
(3 Marks)
Question Five:
Petty Cash Imprest.
(10 Marks)
Aborgi Carol Bokai is the owner of AP Restaurant. On 1 September, 2011, she opened a Petty Cash Imprest account.
Information relating to the petty cash fund during the month of September are as follows:
2011
September 1 Received Petty Cash Imprest cheque no. 579 $200 3 Paid stationery $12.25; travelling $13 (Voucher 001/002) 4 Paid courier $15; cleaning $22.50 (Voucher 003/004) 5 Paid travelling $12 (Voucher 005)
10 Paid postage $19; stationery $13.50 Voucher 006/007) 17 Paid cleaning $16.50 (Voucher 008)
21 Paid stationery $14.50; travelling $18 (Voucher 009/Voucher 010) 23 Paid for biscuits and milk $15 (Voucher 011)
28 Paid owner’s lunch $9 (Voucher 012) 30 Paid cleaning $13.50 (Voucher 013)
Drew reimbursement cheque no. 580
Petty Cash Book Date Particulars Voucher
No.
Receipts Payments Stationery Travelling Cleaning Other Expenses
Question Six:
Cheques and Bank Reconciliation.
(14 marks)
a. Cheques: (8 Marks)
Prepare this cheque from the following information below:
On the 24th June 2012 Keoki Benny settled his account by paying $1,500.00 to Lehua F. Liliuhokalani. Use the Not Negotiable Stamp.
I.
(6 Marks)
(6 marks)
i) Who is the payee? ________________________ ii) Who is the Draweer? ______________________
(2 Marks)
Bank of Kiribati
Bairiki, Tarawa
Date: _____________
Pay _____________________________________________________ or bearer
The sum of _____________________________________________$ __________
Keoki Benny ___________________
b. Bank Reconciliation: (6 Marks) Prepare a Bank Reconciliation Statement for Ato Earvin Traders as at September 2011. Debit Balance as per bank statement $2,856.25.
Deposit not yet credited $1,235.70 Unpresented Cheques were:
Chq no. 154 $654.20, Chq no. 155 $125.00, Chq no. 159 $224.55.
Ato Earvin Traders
Bank Reconciliation Statement as at 30 September 2011
14
KNC
ACCOUNTING
2012
Candidate Code Number
FOR MARKER USE ONLY
Section B
Marks
Q1 8
Q2 7
Q3.
46
Q4.
15
Q5 10
Q6.
14
Section B
100
Section A
20
TOTAL
120
For candidate Use
