Student Personal Identification Number (SPIN)
South Pacific Form Seven Certificate
QUESTION and ANSWER BOOKLET
Time allowed: Three hours
Write your Student Personal Identification Number (SPIN) on the top right hand corner of this booklet and on the fold-out flap on the last page. Answer ALL QUESTIONS. Write your answers in the spaces provided in this booklet. If you need more spaces for answers, ask the Supervisor for extra paper. Write your SPIN on all extra sheets used and clearly number the questions. Attach the extra sheets at the appropriate places in this booklet. Time 27 mins. 45 mins. 18 mins. 50 mins. 40 mins.
Question One Question Two Question Three Question Four Question Five
Conceptual Basis Processing Accounting Systems Accounting Reports Decision making Total
15 25 10 28 22
marks marks marks marks marks
Check that this booklet contains pages 2-29 in the correct order and that none of these pages is blank. YOU MUST HAND THIS BOOKLET TO THE SUPERVISOR AT THE END OF THE EXAMINATION.
QUESTION ONE: CONCEPTUAL BASIS
Uptown Limited is a Reporting Entity. The Financial Statements for the year ended 31 December 2003 are included in the company’s Annual Report and presented to the shareholders at the Annual General Meeting. Financial Statements contribute to the objectives of General Purpose Financial Reporting. Answer the following questions related to the Financial Statements of the company: (1) Name ONE objective of General Purpose Financial Reporting as stated in the Statement of Concepts.
(1 mark) (2) Give the purpose of the Statement of Accounting Policies as it contributes to the objectives of General Purpose Financial Reporting.
(1 mark) (3) Give the purpose of the Statement of Financial Performance as it contributes to the objectives of General Purpose Financial Reporting.
(1 mark) (4) Explain why the financial statements are audited before being presented to the shareholders. Your explanation needs to include a qualitative characteristic of good accounting information.
(1 mark) 4
(5) Explain why the financial statements are published as soon after balance date as possible. Your explanation needs to include a qualitative characteristic of good accounting information.
In the preparation of the financial statements for Uptown Limited a number of policy decisions about disclosure of information were made. (1) Identify the accounting concept on which each of the following d ecisions was based. Policy Decision Made (i) (ii) To exclude from the financial statements details of the owner’s personal assets Land and Building have been valued at current cost, while other Fixed Assets are shown at Historical Cost Low value items of capital expenditure were written off against revenue in the year of purchase Revenue is recognised in the period it relates to rather than when the cash changes hands (4 marks) (2) The Mortgage over Land and Buildings is recorded as a Liability in the Financial Statements. (i) Give TWO reasons why Mortgage over Land and Buildings is regarded as a Liability according to the Statement of Concepts. Accounting Concept
(ii) The Mortgage is recorded in the Financial Statements as both a Current Liability and a Long Term Liability. Explain why this would be the case.
Peter Smiff is an engineer and owns a well established business Smiff and Associates Engineers. The business currently employs a young engineer, Ruci Sims, who has expressed an interest in becoming a partner in the business. She has talked to Peter about how he should charge his work out to customers. As his accountant Peter has asked you the following questions: (1) State TWO advantages for Peter of entering into a business partnership with...