Edexcel IGCSE Accounting answers

92 Pages·2010·8.37 MB·English

by  Mr Gaetan Staples

Answers
Chapter 1: Introduction to accounting principles
1.1 Good financial control is important to ensure the continued profitability and
success of the business. Also to control costs and cash flow.
1.2X Profit is obtained by selling goods for more than the purchase price less expenses
incurred in selling the goods.
1.3 (a) Trading and Profit and Loss Account
(b) Balance Sheet
1.4X A sole trader may incur the following drawbacks whilst trading alone:
(cid:116)(cid:1)Liable for all the debts of the business
(cid:116)(cid:1)If a loss is made he/she bears all the losses
(cid:116)(cid:1)May lack expertise in certain areas
(cid:116)(cid:1)Often has to work long hours
Positive outcomes:
(cid:116)(cid:1)Independent and responsible for all decision making
(cid:116)(cid:1)If successful and a profi t is made they keep all the profi ts
(cid:116)(cid:1)Able to offer personal service to customers
(Any one from the above would be acceptable as an answer)
1.5 The rules which lay down the way in which the activities of a business are
recorded and the financial statements, i.e. Trading and Profit and Loss Account s
e
and Balance Sheet prepared. pl
ci
1.6 (a) Going concern concept – when a business is assumed to continue for a n
long time. ri
p
(b) Accrual concept – where profit is the difference between revenues and g
n
expenses in a specific period and not the difference between cash received ti
and cash paid. n
u
(c) Consistency concept – applying the same method of accounting when o
c
dealing with specific items such as depreciation and in stock valuation. c
a
(d) Prudence concept – an accountant is always very careful not to over value o
specific assets such as stock or machinery etc., and to identify any potential n t
liabilities. It is their duty to prepare the accounts as accurately as possible to o
give a fair figure of profit. cti
u
d
1.7X (a) Materiality o
r
(b) Business entity t
n
(c) Money measurement : I
1
(d) Prudence r
e
1.8 Employees would be interested in their employer’s financial results for the pt
following reasons: a
h
(cid:116)(cid:1)The ability to pay wages and salaries C
(cid:116)(cid:1)Secure employment with the opportunity to progress within the business
(cid:116)(cid:1)Continued profi tability
(cid:116)(cid:1)Sound cash fl ow position
(cid:116)(cid:1)Sales maintained and increasing
(cid:116)(cid:1)Business viable for the forthcoming period
(cid:116)(cid:1)Healthy customer base
(Any three of the above would be acceptable as an answer)
1
Answers
Chapter 2: Double entry for cash transactions
2.1 (a) Purchases - asset
(b) Office equipment - asset
(c) Bank loan - liability
(d) Cash in hand - asset
(e) Motor vehicle - asset
(f) Loan from financial company - liability
2.2X Wrong: Assets Liabilities
Money owing to bank Motor van
Stock of goods
2.3
Account to be Debited Account to be Credited
(a) Cash Capital
(b) Bank Cash
(c) Purchases Cash
(d) Offi ce Machinery Bank
(e) Stationery Cash
2.4X Account to be debited Account to be credited
(a) Bank Capital
(b) Purchases Cash
s
n (c) Motor car Bank
o
ti (d) Cash Uncle Joe loan
c
a (e) Motor expenses Cash
s
n (f) Computer equipment Cash
a
r
t
h 2.5 Max Morgan
s
a
c Bank Account
r
o Jan-01 Capital 30,000 Jan-05 Purchases 2,770
f
y Jan-15 Sales 500 Jan-07 S/H Van 4,800
r
t
n Jan-27 Computer 2,100
e
e Equipment
bl Jan-30 Purchases 1,090
u
o
D Capital Account
2: Jan-01 Bank 30,000
r
e Purchases Account
t
p
Jan-05 Bank 2,770
a
h Jan-30 Bank 1,090
C
Van Account
Jan-07 Bank 4,800
Cash Account
Jan-09 Sales 680 Jan-10 Offi ce Furniture 110
Jan-29 Sales 325 Jan-22 Motor Expenses 92
2
Sales Account
Jan-09 Cash 680
Jan-15 Bank 500
Jan-29 Cash 325
Office Furniture Account
Jan-10 Cash 110
Motor Expenses Account
Jan-22 Cash 92
Computer Equipment Account
Jan-27 Bank 2,100
2.6X
Jane Mellor
Cash Account
May 1 Capital 22,000 May 3 Bank 20,000
May 20 Sales 328 May 22 Stationery 72
Capital Account
May-01 Cash 22,000
Bank Account
May 3 Cash 20,000 May 7 Rent 500
May 25 Sales 560 May 10 Purchases 1,700
May 15 Display units 400
s
n
May 23 Purchases 400 o
ti
May 31 S/H Van 3,000 c
a
s
Rent Account n
a
r
May 7 Bank 500 t
h
Purchases Account as
c
May 10 Bank 1,700 r
o
May 23 Bank 400 y f
r
Display Units Account nt
e
May 15 Bank 400 e
Sales Account bl
u
o
May 20 Cash 328 D
May 25 Bank 560 2:
r
Stationery Account e
t
May 22 Cash 72 p
a
h
Van Account C
May 31 Bank 3,000
3
Answers
Chapter 3: Double entry for credit transactions
3.1 Account to be Debited Account to be Credited
(a) Purchases P. Hart
(b) Cash Sales
(c) Motor Car Morgan Motors
(d) Purchases Cohens Ltd
(e) P. Hart Purchase Returns
(f) H. Perkins Sales
(g) Bank Sales
(h) Cash Offi ce Furniture
3.2X Account to be debited Account to be credited
(a) Computer equipment J. Kershaw
(b) Stationery Cash
(c) Purchases J. Leung
(d) Daswami & Co Sales
(e) Purchases Bank
(f) Sales returns Daswani & Co
(g) Cash Sales
(h) J. Leung Purchase Returns
s
n
o 3.3 Kendrick Products
ti
c
a Cash Account
s
n
a Jan-01 Capital 20,000 Jan-05 Bank 18,000
r
t t Jan-24 Stationery 45
di
e Capital Account
r
c Jan-01 Cash 20,000
r
o
Purchases Account
f
y
r Jan-02 T. Peters 2,543
t
n
e Jan-07 J. Leigh 349
e Jan-09 Bank 592
bl
u T. Peters Account
o
D Jan-18 Purchase Returns 160 Jan-02 Purchases 2,543
:
3 Jan-26 Bank 2,383
r
e Bank Account
t
p Jan-05 Cash 18,000 Jan-09 Purchases 592
a
h Jan-26 T. Peters 2,383
C
J. Leighs Account
Jan-07 Purchases 349
Sales Account
Jan-16 P. Lamond 210
Jan-26 D. Gurkan 1,008
P. Lamond Acccount
Jan-16 Sales 210 Jan-30 Sales Returns 60
Purchase Returns Account
Jan-18 T. Peters 160
4
Stationery Account
Jan-24 Cash 45
D. Gurkan Account
Jan-26 Sales 1,008
Sales Returns Account
Jan-30 P. Lamond 60
Motor Van Account
Jan-31 Harper Motors Ltd 5,250
Harper Motors Ltd Account
Jan-31 Motor Van 5,250
3.4X Mark & Co
Bank Account
Apr 1 Capital 40,000 Apr 14 Purchases 2,300
Apr 28 C. Chang 950
Apr 30 Ash Car Sales 5,400
Capital Account
Apr 01 Bank 40,000
Purchases Account
Apr 3 E. Shah 845
Apr 5 C. Chang 950
Apr 14 Bank 2,300
Apr 20 E. Shah 920 s
n
E. Shah Account o
ti
Apr 16 Purchase returns 72 Apr 03 Purchases 845 ac
s
Apr 20 Purchases 920 n
a
r
C. Chang Account t
t
Apr 28 Bank 950 Apr 05 Purchases 950 di
e
Motor Van Account cr
Apr 09 Ash Car Sales 10,400 or
f
Ash Car Sales Account y
r
t
Apr 30 Bank 5,400 Apr 09 Motor Van 10,400 n
e
Sales Account e
bl
Apr 12 Naik Bros 147 u
o
Apr 23 Cash 369 D
Apr 29 Curtis & Co 420 :
3
Naik Bros Account r
e
t
Apr 12 Sales 147 p
a
Purchase Returns Accounts h
C
Apr 16 E. Shah 72
Cash Account
Apr 23 Sales 369 Apr 26 Motor Expenses 40
Curtis & Co Account
Apr 29 Sales 420
Motor Expenses Account
Apr 26 Cash 40
5
Answers
Chapter 4: B alancing of accounts and
preparation of a Trial Balance
4.1
Capital
May-01 Bank 2,500
Bank
May-01 Capital 2,500 May-12 K Gibson 76
May-09 C Bailey 250 May-12 D Ellis 370
May-10 H Spencer 150 May-31 C Mendez 87
May-31 Balance c/d 2,367
2,900 2,900
e
c Jun-01 Balance b/d 2,367
n
ala Cash
B
al May-06 Sales 500 May-08 Rent 120
Tri May-15 Stationery 60
a May-19 Rent 120
f May-31 Balance c/d 200
o
n 500 500
o
ti Jun-01 Balance b/d 200
a
ar Rent
p
e May-08 Cash 120 May-31 Balance c/d 240
r
p
d May-19 Cash 120
n 240 240
a
s Jun-01 Balance b/d 240
t
n
u Stationery
o
cc May-15 Cash 60
a
f Purchases
o
g May-02 D Ellis 540 May-31 Balance c/d 1,082
n
ci May-02 C Mendez 87
n May-02 K Gibson 76
a
al May-18 D Ellis 145
B
: May-18 C Mendez 234
4
r 1,082 1,082
e
t Jun-01 Balance b/d 1,082
p
a
h Sales
C
May-31 Balance c/d 1,496 May-04 C Bailey 430
May-04 B Hughes 62
May-04 H Spencer 176
May-06 Cash 500
May-25 C Bailey 90
May-25 B Hughes 110
May-25 H Spencer 128
1,496 1,496
Jun-01 Balance b/d 1,496
6
H Spencer
May-04 Sales 176 May-10 Bank 150
May-25 Sales 128 May-31 Balance c/d 154
304 304
Jun-01 Balance b/d 154
D Ellis
May-12 Bank 370 May-02 Purchases 540
May-31 Balance c/d 315 May-18 Purchases 145
685 685
Jun-01 Balance b/d 315
C Mendez
May-31 Bank 87 May-02 Purchases 87
May-31 Balance c/d 234 May-18 C Mendez 234
234 234
Jun-01 Balance b/d 234
K Gibson e
c
May-12 Bank 76 May-02 Purchases 76 n
a
C Bailey Bal
May-04 Sales 430 May-09 Bank 250 al
May-25 Sales 90 May-31 Balance c/d 270 Tri
a
520 520 f
o
Jun-01 Balance b/d 270 n
o
B Hughes ti
a
May-04 Sales 62 May-31 Balance c/d 172 ar
p
May-25 Sales 110 e
r
172 172 p
d
Jun-01 Balance b/d 172 n
a
s
t
n
u
Trial Balance as at 31 May 2010 o
c
Dr Cr ac
£ £ f
o
Capital 2,500 g
n
Bank 2,367 ci
Cash 200 n
a
Rent 240 al
B
Stationery 60 :
4
Purchases 1,082 r
e
Sales 1,496 t
p
H Spencer 154 a
h
D Ellis 315 C
C Mendez 234
C Bailey 270
B Hughes 172
4,545 4,545
7
4.2X (a)
Bank Account
August 1 Capital 22,000 August 1 Rent 1,800
August 14 Sales 980 August 7 Shop fittings 3,230
August 20 Sales 1,300 August 7 Purchases 5,000
August 28 Sales 2,000 August 9 Cash 1,000
August 30 Salaries 2,100
August 30 Balance c/d 13,150
26,280 26,280
Sept 1 Balance b/d 13,150
Cash Account
August 9 Bank 1,000 August 9 Stationery 163
August 16 Sundry expenses 28
e August 30 Balance c/d 809
c
n 1,000 1,000
a
al Sept 1 Balance b/d 809
B
al Sales Account
Tri August 30 Balance c/d 4,280 August 1 Bank 980
a August 20 Bank 1,300
of August 28 Bank 2,000
n 4,280 4,280
o
ti Sept 1 Balance b/d 4,280
a
r
a Purchases Account
p
e
r August 7 Bank 5,000 August 30 Balance c/d 10,700
p
d August 10 Book Supplies 4,200
n August 25 Delta Books 1,500
a
s 10,700 10,700
t
n
u September 1 balance b/d 10,700
o
c Shop Fittings Account
c
a
f August 7 Bank 3,230
o
g Capital Account
n
ci August 1 Bank 22,000
n
a Rent Account
al
: B August 1 Bank 1,800
4 Stationery Account
r
e
t August 9 Cash 163
p
a Sundry Expenses Account
h
C August 16 Cash 28
Salaries Account
April 30 Bank 2,100
Book Supplies Accounts
August 10 Purchases 4,200
Delta Books Account
August 25 Purchases 1,500
8
4.2X (b)
Jenny Moore
Trial Balance as at 31 August 2010
Dr Cr
£ £
Bank 13,150
Cash 809
Sales 4,280
Purchases 10,700
Shop Fittings 3,230
Capital 22,000
Rent 1,800
Stationery 163
Sundry expenses 28
Salaries 2,100
Book Supplies 4,200
Delta Books 1,500
e
31,980 31,980 nc
a
al
B
4.3 al
Bank Tri
a
(1) Capital 15,000 (9) Rent 500 f
o
(30) L Clark 440 (11) Rates 190 n
o
(30) K Allen 76 (27) Bowman Furnishers 532 ti
a
(27) Howe Homes 460 r
a
(27) W Hunt 2,070 p
e
(28) Motor Vehicles 3,000 pr
(30) Bates Motors 5,000 d
n
(30) Balance c/d 3,764 a
s
15,516 15,516 nt
u
(1) Balance b/d 3,764 o
c
c
Capital a
f
(30) Balance c/d 15,000 (1) Bank 15,000 o
g
(1) Balance b/d 15,000 n
ci
Howe Homes n
a
(27) Bank 460 (3) Purchases 460 al
B
J Bond 4:
r
(17) Purchases returns 60 (3) Purchases 620 e
t
(30) Balance c/d 780 (20) Purchases 220 p
a
840 840 h
C
(1) Balance b/d 780
Rent
(9) Bank 500 (30) Balance c/d 500
(1) Balance b/d 500
L Clark
(12) Sales 480 (23) Sales returns 40
(30) Bank 440
480 480
9
R Gee
(12) Sales 1,170 (30) Balance c/d 1,170
(1) Balance b/d 1,170
Purchses Returns
(30) Balance c/d 88 (17) Bowman Furnishers 28
(17) J Bond 60
88 88
(1) Balance b/d 88
Motor Vehicles
(25) Bates Motors 5,000 (30) Balance c/d 8,000
(28) Bank 3,000
8,000 8,000
(30) Balance b/d 8,000
Stationery
(29) Cash 56 (30) Balance c/d 56
e
c
n (30) Balance b/d 56
a
al Purchases
B
al (3) Bowman Furnishers 320 (30) Balance c/d 3,930
Tri (3) Howe Homes 460
a (3) W Hunt 1,800
f
o (3) J Bond 620
n
o (20) J Bond 220
ti (20) W Hunt 270
a
r
a (20) Bowman 240
p
e 3,930 3,930
r
p
d (1) Balance b/d 3,930
n
a Bowman Furnishers
ts (17) Purchases returns 28 (3) Purchases 320
n
u (27) Bank 532 (20) Purchases 240
o
c 560 560
c
a
f W Hunt
o
g (27) Bank 2,070 (3) Purchases 1,800
n
ci (20) Purchases 270
n 2,070 2,070
a
al Sales
B
4: (30) Balance c/d 2,401 (7) Cash 480
r (12) L Clark 480
e
pt (12) K Allen 96
a (12) R Gee 1,170
h
C (26) Cash 175
2,401 2,401
(1) Balance b/d 2,401
Rates
(11) Bank 190 (30) Balance c/d 190
(1) Balance b/d 190
10