CSEC Principles of Accounts Paper 2 May/June 2020 - Free CXC Past Paper with Answers

Irius owns a souvenir business which bears his own name. On 1 November 2019 his business' cash in hand was $1 380 and cash at bank was $1 590. During November, the following transactions occurred.

Required Using the form provided on page 9, prepare the business' three-column cash book for November 2019:

• Balance the cash book at month end and bring down the balances into the next period.
• Total the discount columns.
• Enter appropriate folio references in the cash book as if entries had been posted.

Ledger accounts are not required.

What is the significance of the balance on the bank account at the end of the month?

W. Watson, a sole proprietor, presented the following trial balance at 31 December 2019.

Additional Notes (i) Closing inventory at 31 December was $12 000. (ii) Depreciation is to be provided using the straight-line method as follows: a) Shop fittings at 10% per annum b) Van at 20% per annum (iii) Electricity prepaid, $50. (iv) Telephone account outstanding, $22. (v) Accrued salaries, $500. (vi) The provision for doubtful debts must be 15% of receivables.

Required (a) In the space provided below, prepare an Income Statement for W. Watson for the year ended 31 December 2019.

In the space provided below, prepare an extract of W. Watson's Statement of Financial Position (Balance Sheet) to show the Capital section only, as at 31 December 2019.

In the space provided below, draw and label a diagram to show the SIX stages of the accounting cycle for the owner of Ziggy's Shoe Shop.

Identify the type of business organization described in EACH situation below.

A large sized enterprise with many employees and owned by a single person.

Shares in this type of business cannot be sold by shareholders on the stock market.

Three friends operate a business in which the actions of one of them is binding on the other two.

An organization, operated by members, which provides services to members and is often financed by donations, fund-raising and subscriptions.

Identify ONE internal user of accounting information and state how this information is used by that user.

Identify ONE external user of accounting information and state how this information is used by that user.

Each of the transactions below violates an accounting concept or principle. State the concept or principle that is being violated.

Mr Peters paid the water bill for his private home and recorded it as a business expense.

Ian, a receivable, is unable to pay due to bankruptcy and the business is likely to lose $8 000. Management refuses to create a provision for doubtful debts or to write off this amount as a bad debt.

In order to report higher profits for the financial year, management changed its method of calculating depreciation from the straight line to the reducing balance method.

Revenue earned in January 2018 was not recorded until the money was actually received in the following financial period in January 2019.

With reference to the violation in (d) (ii) above, what is the effect on the Income Statement?

Using the information provided on page 16, prepare EACH of the following TWO control accounts for the year ended December 2019. Total and bring down balances for the start of the next year.

(i) Sales Ledger Control Account

(ii) Purchases Ledger Control Account

With reference to the entries made in the control accounts for Janz Place on page 17, what is the accounting department's source of entry for EACH of the following items?

Item No. 1

Item No. 12

Identify TWO examples of accounting software used for preparing and processing payroll.