This paper concentrates on the primary theme of Prepare the income statement (trading and profit and loss account) for the year ended 29 February 2016. [13] b) Prepare the position statement (balance sheet) as at 29 February 2016 in which you have to explain and evaluate its intricate aspects in detail. In addition to this, this paper has been reviewed and purchased by most of the students hence; it has been rated 4.8 points on the scale of 5 points. Besides, the price of this paper starts from £ 40. For more details and full access to the paper, please refer to the site.
BUSINESS
FINANCE & BOOKKEEPING
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 FOUR questions
c) All
questions carry equal marks. Marks for each question are shown in [ ]
d)
Non-programmable calculators are permitted in this examination
1. The
following is the trial balance of Matilde as at 29 February 2016:
£dr £cr
Sales
561,000
Accounts
receivable (debtors) 31,000
Accounts
payable (creditors) 18,000
Purchases
202,000
Communication
expenses 29,000
Insurance
28,000
Interest
on loan 1,000
Returns
inwards 4,000
Energy
costs 37,000
Payroll
costs 165,000
Advertising
expenses 41,000
Business
rates 27,000
Inventory
(stock) at 01 03 15 15,000
Stationery
expenses 7,000
Long-term
loan 30,000
Drawings
25,000
Land
and buildings 420,000
Equipment
140,000
Capital
(01 03 15) 565,000
Balance
at bank 2,000
-----------
-----------
1,174,000
1,174,000
=======
=======
Notes
at 29 February 2016:
The value of inventory was £17,000
Energy costs owing amounted to £6,000
Advertising expenses prepaid amounted to £2,000
Business rates prepaid amounted to £3,000
Ignore depreciation
TASKS
a)
Prepare the income statement (trading and profit and loss account) for the year
ended
29
February 2016. [13]
b)
Prepare the position statement (balance sheet) as at 29 February 2016. [12]
2. a)
Explain the following terms:
i. Insurance
ii. Bookkeeping
iii.
Accounting ratios [6 each]
b)
Outline the benefits of purchasing expensive fixed assets using hire purchase.
[7]
Continued overleaf
3.
Explain the following terms:
a) Life
assurance
b) A
bank current account
c)
Working capital
d)
Debenture finance
e) A
trial balance [5 each]
4. The
following are the summarised final accounts of a trader:
Income
Statement £000
Sales
1,900
Cost of
sales (1,000)
------
Gross
profit 900
Expenses
(500)
------
Net
profit 400
====
Balance
Sheet (position statement)
Fixed
assets (non-current assets) 430
Inventory
160
Accounts
receivable 110
Cash
and bank 20
Accounts
payable (260)
------
Total
capital 460
====
TASKS:
a)
Calculate the following ratios:
i.
Gross profit to sales percentage
ii. Net
profit to sales percentage
iii.
The expenses to sales percentage
iv. The
rate of stock turnover
v. The
current ratio
vi. The
acid test [3 each]
b)
Comment briefly on the financial performance of the business. [7]
For
information the equivalent ratios for the previous year were: gross profit
percentage 39%; net profit percentage 19%; the rate of stock turnover 5.3; expenses
percentage 20%; current ratio 1.8:1; acid test 0.9:1.
5.
Write short notes on FIVE of the following:
a) VAT
b) The
importance of stock control
c) Cash
smoothing
d)
Leasing
e)
Petty cash
f) Cost
accounting
g) A banker’s draft [5 each]