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Note:
The terminology in use for 2016 exams will be in line with the FRS 102. In some cases this differs
slightly from the terminology previously used (IFRS). For the 2016 exams, students who use
IFRS terminology will not be penalised, however it is preferred that students use FRS 102
terminology throughout.
Page 1 of 10
SECTION A
Answer ALL THREE QUESTIONS (Compulsory) in this Section
QUESTION 1 (Compulsory)
The following trial balance was extracted from the books of P. Thomas, a sole trader, on 31 December
2015:
/
/
Land
125,600
Equipment
101,110
Accumulated depreciation on equipment
31,415
Inventory as at 1/1/2015
24,810
Receivables and payables
62,100
52,175
VAT (refund due)
5,160
Deposit on rented premises, held by landlord
8,950
Bank and cash
7,820
Allowance for irrecoverable debts
5,625
PRSI liability
3,710
Business rent
15,000
Sales
402,250
Purchases
195,100
Returns
4,150
3,750
Discounts
2,150
3,120
Distribution and advertising
4,450
Power
2,100
Internet
770
Business insurance
11,250
Wages and salaries
82,190
Employers PRSI/NIC
8,280
4% long term bank loan
91,250
Long term loan interest
1,760
Irrecoverable debts
1,120
Drawings
5,290
Accumulated profits/losses
22,410
Capital
51,855
Suspense
1,600
669,160
669,160
The following information, which has not been accounted for above, is also available:
1.
The inventory count as at 31 December 2015 showed closing inventory valued at /21,195.
2.
P. Thomas has agreed an annual rent of /20,000 with his landlord. Rent for the fourth
quarter 2015 remains unpaid at the year end.
3.
Included in business insurance above is /9,000 which relates to the year ended 29 February
2016
4.
P. Thomas has specific concerns over /2,560 of receivables and wishes to set up a specific
allowance with respect to these balances. The general allowance on remaining receivable
balances should be maintained at 5%.
5.
Not depreciated
Equipment
Page 2 of 10
QUESTION 1 (Continued)
6.
The suspense account balance above relates to sales of /800 which was recorded as
purchases in error. The receivables and payables balances are correct. Ignore VAT.
b)
11 Marks
9 Marks
Total 20 Marks
Page 3 of 10
QUESTION 2 (Compulsory)
The trial balance of C. Cindy failed to agree. The debits exceeded the credits by /8,452. The balance
was placed in a suspense account. After an inspection the following items were discovered:
i.
ii.
Cash sales of /1,235 were recorded by debiting sales with /2,135 and crediting cash with
/3,215.
iii.
Mr Smith whose debt was the subject of a specific allowance for receivables, paid his debt in
full /540. The only entry made for this transaction was to credit receivables with /540.
iv.
An invoice for rates for /1,125 was found behind the bookkeepers desk. The invoice had
not been accounted for.
v.
The total of the sales returns day book was overcast by /640.
vi.
Discounts received of /420 was recorded by crediting receivables and debited discounts
received.
vii.
A new piece of machinery valued at /12,150 was written off to repairs in error. The
depreciation policy of C. Cindy is to depreciate machinery by 10% straight line method. The
sole trader charges a full years depreciation in the year of purchase and non in the year of
sale.
Prepare the journal entries, with the appropriate narratives, necessary to correct the above errors.
13 Marks
Prepare a suspense account and hence calculate the remaining difference.
3 Marks
Prepare a working showing the effect on proprietors profit (if any) of correcting each of the
above errors.
4 Marks
Total 20 Marks
Page 4 of 10
QUESTION 3 (Compulsory)
Answer ANY FOUR of the SIX parts below
Part A
Outline your understanding of the imprest system as it relates to petty cash.
2 Marks
Given the following information calculate the cash replenishment required for the month of May 2016.
/
175
35.75
9.50
44.20
50
625
15
3 Marks
Part B
The following information relates to the payroll costs for D. Hicks, a sole trader for the month of June
2016.
Name
D. Box
C. Funne
A. Shine
Gross Monthly
Salary
1,950
2,210
3,120
7,280
PAYE
Deducted
390
553
967
1,910
Employee
PRSI/NIC
137
155
219
511
Employer
PRSI/NIC
10% of Gross
10% of Gross
10% of Gross
Part C
Write a note on any two of the following terms as they relate to inventory valuation in the financial
statements:
Cost
Net realisable value (NRV)
First in - first out (FIFO)
5 Marks
Page 5 of 10
QUESTION 3 (Continued)
Part D
P. Phonix does not keep proper books and records. He is available to provide you with the following
information for the year ended 31 December 2015.
/
10,150
160
12,200
450
2,130
78,500
1,020
650
780
Part E
The following information is available for P. Calc for the year ended 31 March 2016:
During the year a new building premises was constructed. Costs in relation to the construction are as
follows:
/
Material costs
142,150
Architect and legal fees
31,000
Cost of new plants & flowers for the building
320
Repairs
5,750
Site preparation costs
15,120
Loan interest incurred directly in relation to the construction of the asset
11,100
You are required to:
i.
ii.
The value of buildings to be recorded as an addition in the books and records of P. Calc for
the year ended 31 March 2016.
3 Marks
State the impact on profits and non-current assets if revenue expenditure is incorrectly
capitalised and shown as a non-current asset.
2 Marks
Part F
i.
ii.
Outline your understanding of the role played by the books of prime entry in the financial
accounting system.
2 Marks
Provide an example of three books of prime entry and outline the information contained in
each book of prime entry.
3 Marks
Total 20 Marks
Page 6 of 10
SECTION B
Answer any TWO of the three questions in this Section
QUESTION 4
a) The following information is available for A. Marche a sole trader who does not maintain proper
books and records.
/
9,785
11,248
25,120
125 per month
50 per month
66,450
101,360
56,741
542
45,270
202
101
97,140
11,103
A. Marche suspects that an employee may be stealing funds from the business. With the aid of the
information above prepare the Bank T Account for the year ended 30 June 2016 and hence derive any
cash discrepancy which may indicate that an employee is stealing from A. Marche.
7 Marks
b) J. Stanford does not maintain proper books and records. She is however able to provide you with
the following information as at 31 December 2015.
/
119,750
21,140
43,640
11,320
23,710
87,140
15,000
Calculate the profit/loss figure for J. Stanford for the year ended 31 December 2015.
5 Marks
Outline your understanding of why the technique used in part (i) can be used to derive the
profit/loss figure.
2 Marks
Page 7 of 10
QUESTION 4 (Continued)
Part C
Outline your understanding of the concepts of mark-up and margin.
2 Marks
The following information for the year ended 31 December 2015 is available for a sole trader who does
not maintain proper books and records.
/32,110
/29,320
/184,750
/7,980
45%
Using the information above derive the sales figure (to the nearest whole number) for the year ended 31
December 2015.
4 Marks
Total 20 Marks
Page 8 of 10
QUESTION 5
Part A
i.
Outline your understanding of how the VAT system operates. Note: knowledge of VAT rates
is not required.
4 Marks
ii.
The following transaction information is available for D. Dars for the month of April 2016.
ii.
iii.
/
950
1,020
945
887
1,130
1,215
During the year ended 30th April 2016 /4,922 was paid in electricity costs.
Page 9 of 10
QUESTION 6
a) A business can be run through one of three possible mediums: sole trader, partnership and limited
company. Provide a description of each of these business types.
6 Marks
Outline two advantages and one disadvantage of conducting business as a sole trader and a limited
company.
6 Marks
b) An accountant within an organisation has many roles. State any four of these.
4 Marks
c) At the centre of accounting is the concept of accountability. For both a public limited company and
a charity provide an example of the following:
i.
ii.
An organisational objective.
Whom the organisation is accountable to and why.
4 Marks
Total 20 Marks
Page 10 of 10