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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS General Certificate of Education Advanced Subsidiary Level and Advanced Level

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May/June 2008 1 hour

ACCOUNTING Paper 1 Multiple Choice Additional Materials: Multiple Choice Answer Sheet Soft clean eraser Soft pencil (type B or HB is recommended)


READ THESE INSTRUCTIONS FIRST Write in soft pencil. Do not use staples, paper clips, highlighters, glue or correction fluid. Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided unless this has been done for you. There are thirty questions on this paper. Answer all questions. For each question there are four possible answers A, B, C and D. Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet. Read the instructions on the Answer Sheet very carefully. Each correct answer will score one mark. A mark will not be deducted for a wrong answer. Any rough working should be done in this booklet. Calculators may be used.

This document consists of 11 printed pages and 1 blank page. IB08 06_9706_01/2RP © UCLES 2008

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2 1 When is it necessary to distinguish between revenue and capital expenditure? A B C D 2 when preparing cash budgets when preparing investment appraisal calculations when preparing profit and loss accounts when preparing purchase ledger control accounts

Rent is paid by a business monthly in advance on the first day of each month. The payments during this financial year have been as follows: – up to and including 1 June – from 1 July thereafter $500 per month $600 per month

Which amount(s) will appear in the accounts for the year ended 31 October? profit and loss expense A B C D 3 $6400 $6400 $6400 $7000 balance sheet $600 prepayment $600 accrual -

The table gives information relating to the fixed assets of a business. $ net book value at the end of the year net book value at the beginning of the year depreciation charge for the year additions at cost during the year What is the net book value of disposals during the year? A $8000 B $11 000 C $18 000 D $22 000 25 000 16 000 5 000 22 000

© UCLES 2008


3 4 A trial balance at 30 June, before making end of year adjustments, showed: debit $ trade debtors provision for doubtful debts 35 600 credit $ 1 160

At 30 June, it was decided to write off a bad debt of $1600 and to make a provision for doubtful debts equal to 2 % of trade debtors. What was the total expense in the profit and loss account for bad and doubtful debts for the year ended 30 June? A 5 $680 B $1120 C $2080 D $2280

A company has two fixed assets. Details are given in the table. asset X Y date bought 1 Jan, Year 1 1 Jan, Year 1 cost $ 10 000 20 000 depreciation method straight line reducing balance life 5 years rate 20 % residual value $2000 nil

What is the depreciation charge for the year ended 31 December, Year 2? A 6 $4800 B $5200 C $5600 D $6000

Which transaction applies the matching concept? A B C D a machine acquired on long-term rental is included in fixed assets computer equipment is depreciated over two years a building is revalued following a fall in property prices a waste-paper basket is treated as revenue expenditure


The following debit balance appears on a trial balance after preparing the manufacturing account for the year. loose tools What is this item? A B C D a creditor for loose tools the annual charge for loose tools a prepayment for loose tools stock of loose tools $18 000

© UCLES 2008


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4 8 At the year-end a cash book shows a credit balance of $4800. The bank statement included bank charges of $25 which had not been included in the cash book. Cheque payments entered in the cash book before the year end to the value of $250 had not yet cleared the bank. How would the bank balance be shown in the balance sheet? $ A B C D 9 current asset...
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