7110 principles of accounts - max...
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® IGCSE is the registered trademark of Cambridge International Examinations.
CAMBRIDGE INTERNATIONAL EXAMINATIONS
Cambridge Ordinary Level
MARK SCHEME for the October/November 2015 series
7110 PRINCIPLES OF ACCOUNTS
7110/11 Paper 1 (Multiple Choice), maximum raw mark 30
Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the October/November 2015 series for most Cambridge IGCSE
®, Cambridge International A and AS Level components and some
Cambridge O Level components.
Page 2 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 11
© Cambridge International Examinations 2015
Question Number
Key Question Number
Key
1 B 16 B
2 D 17 C
3 B 18 B
4 A 19 A
5 D 20 D
6 A 21 C
7 C 22 A
8 D 23 D
9 A 24 B
10 C 25 C
11 C 26 C
12 B 27 D
13 A 28 D
14 B 29 B
15 A 30 C
® IGCSE is the registered trademark of Cambridge International Examinations.
CAMBRIDGE INTERNATIONAL EXAMINATIONS
Cambridge Ordinary Level
MARK SCHEME for the October/November 2015 series
7110 PRINCIPLES OF ACCOUNTS
7110/12 Paper 1 (Multiple Choice), maximum raw mark 30
Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the October/November 2015 series for most Cambridge IGCSE
®, Cambridge International A and AS Level components and some
Cambridge O Level components.
Page 2 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 12
© Cambridge International Examinations 2015
Question Number
Key Question Number
Key
1 B 16 A
2 B 17 A
3 D 18 D
4 B 19 D
5 B 20 A
6 B 21 B
7 D 22 B
8 C 23 C
9 C 24 A
10 A 25 D
11 A 26 C
12 C 27 C
13 C 28 D
14 B 29 A
15 D 30 A
® IGCSE is the registered trademark of Cambridge International Examinations.
CAMBRIDGE INTERNATIONAL EXAMINATIONS
Cambridge Ordinary Level
MARK SCHEME for the October/November 2015 series
7110 PRINCIPLES OF ACOUNTING
7110/21 Paper 2 (Structured), maximum raw mark 120
This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners’ meeting before marking began, which would have considered the acceptability of alternative answers. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the October/November 2015 series for most Cambridge IGCSE
®, Cambridge International A and AS Level components and some
Cambridge O Level components.
Page 2 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 21
© Cambridge International Examinations 2015
1 (a)
Carston Garages account
Date Details $ Date Details $
July 12 Bank 194 (1) July 1 Balance b/d 200
Discount received 6 (1) July 15 Motor van
expenses
120 (1)
July 31 Balance c/d 460 July 26 Motor van
expenses
340 (1)
660 660
Aug 1 Balance b/d 460 (1of)
[5]
(b)
Motor van expenses account
Date Details $ Date Details $
July 1 Balance b/d 3200 July 31 Income statement/P & L 3985 (1of)
July 15 Carston Garages 120 (1)
July 23 Bank 200 (1)
July 26 Carston Garages 340 (1)
July 31 Balance b/d 125
3985 3985
Aug 1 Balance b/d 125 (1)
[5]
(c)
Account Subdivision of the ledger
Sales General/Nominal (1)
T Wong (credit
customer)
Sales/Trade receivables (1)
[2]
Page 3 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 21
© Cambridge International Examinations 2015
(d) (i) Expenditure spent running the business on a day to day basis. (1) Expenditure expected to provide a benefit within the current financial year. (1) [2]
(ii) A receipt from the sale of a non-current asset. (1) A loan received. (1) Additional capital. (1) Income/revenue from non-trading activities (1) Basic statement (1) expansion or example (1) Max 2 [2]
(e)
Transaction Revenue
expenditure
Revenue
receipt
Capital
expenditure
Capital
receipt
Sale of motor van � (1)
Purchased new motor
van tyres
� (1)
Cash discount
received
� (1)
Purchase a new
motor van
� (1)
Accept any alternative indication e.g. * or X [4]
[Total: 20]
Page 4 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 21
© Cambridge International Examinations 2015
2 (a)
General Journal
Debit
$
Credit
$
Purchases 950 (1)
Suspense 950 (1)
Suspense 170 (1)
Discount received 170 (1)
Rent 180 (1)
Suspense 180 (1)
Office fixtures/Fixtures & fittings 2 300 (1)
General expenses 2 300 (1)
[8]
(b)
Suspense account
Date Details $ Date Details $
30 Sept Balance/
Difference on TB/
Trial balance
960 (1of) 30 Sept Purchases 950 (1)
Discount received 170 (1) Rent 180 (1)
1 130 1 130
[4]
Page 5 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 21
© Cambridge International Examinations 2015
(c)
Error Increase/Decrease/
No effect Amount
$
1 The total of the purchases
journal had been under cast
by $950.
Decrease 950
2 Discount received, $85, had
been debited to the discount
received account.
Increase (1) 170 (1)
3 A payment of rent, $750, had
been correctly entered in the
cash book, but recorded in
the rent account as $570.
Decrease (1) 180 (1)
4 The purchases of office
fixtures, $2300, had been
recorded in the general
expenses account.
Increase (1) 2 300 (1)
[6]
(d) This error occurs when a transaction is entered using the correct amount and on the correct
side, but in the wrong account (1) of the same class. (1) Right amount (1)/right side (1) Wrong account (1)/same class (1) Wrong name or person (1)/same class (1) Allow any two combinations from the above answers. [2]
[Total: 20]
Page 6 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 21
© Cambridge International Examinations 2015
3 (a)
Aina and Barry
Appropriation Account for the year ended 30 April 2015
$ $
Profit for the year (19 800 – 2000) 17 800 (1)
Add interest on drawings: Aina 450 (1)
Barry 600 (1)
1 050
18 850
Less Interest on capital: Aina 2 000 (1)
Barry 400 (1) + 800 (1) 1 200 (2)
3 200
Salary: Barry 8 000
(11 200)
7 650
Share of profit: Aina 4 590 (1of)
Barry 3 060 (1of)
Accept alternative presentation [8]
Page 7 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 21
© Cambridge International Examinations 2015
(b)
Current accounts
Details
Aina
$
Barry
$
Details Aina
$
Barry
$
Balance b/d 800 Balance b/d 6 500
Drawings 7 500 10 000 (1) Interest on loan 2 000 (1of)
Interest on
drawings
450 600 (1of) Interest on
capital
2 000 1 200 (1of)
Salary 8 000
Balance c/d 10 160 Share of profit 4 590 3 060 (1of)
Balance c/d 2 160
8 750 20 760 8 750 20 760
Balance b/d 2 160 Balance b/d 10 160 (1)of both
[6]
(c) More skills/expertise available
More capital available
Responsibilities shared
Discussions before decisions are made
Share losses
Max 2 × (1) [2]
Page 8 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 21
© Cambridge International Examinations 2015
(d)
Suggestions Accounting principle/concept
1 Remove the provision for doubtful debts
from the income statement.
Prudence or Accrual/Matching (1)
2 Increase the value of the premises from
cost to the current market value.
Historic cost (1)
3 Reduce the depreciation rate on
computers from 30% to 10% per annum.
Consistency (1) or Prudence (1)
4 Record expenses paid without adjustment
for amounts owing.
Accrual/Matching (1)
[4]
[Total: 20]
Page 9 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 21
© Cambridge International Examinations 2015
4 (a) (i) 000 126100
140000 90 =× (2)
90 000 + 36 000 (1) = 126 000 (1) [2]
(ii) 90 000 – (11 000 + 37 000) (1) = 116 000 (2) [2] (iii) 36 000 (1) – 18 900 = 17 100 (2) [2]
(b)
Workings 30 September
2015
30 September
2014
Profit margin
(profit for the year
to revenue)
=×100000126
900 18 (1of)
15.00% (1of) 12.13%
Rate of inventory
turnover ( )=
+ /2000 37 000 11
000 90
(1)
3.75 times(1of) 2.00 times
Working capital
ratio (current ratio) =
++
000 27
800 2 200 14 000 37
(1)
2.00:1 (1of) 2.60:1
Quick ratio
(acid test ratio) =+
000 27
800 2 200 14
(1)
0.63:1 (1of) 1.10:1
[8]
(c) (i) Inventory turnover has increased (1) Inventory is being sold at a faster rate (1) Inventory level has increased substantially over the year (1) Inventory control is needed (1)
MAX 3 × (1) [3]
(ii) Both liquidity ratios have fallen in the year (1) Working capital ratio is at the benchmark level of 2:1 (1) Quick ratio is lower than the yardstick of 1:1 but is still at an acceptable level (1) There is very little cash available to pay trade payables (1)
MAX 3 × (1) [3]
Based upon own figures.
[Total: 20]
Page 10 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 21
© Cambridge International Examinations 2015
5 (a) Cheng
Income Statement for the year ended 30 September 2015
$ $
Revenue 315 000 (1) Inventory 1 October 2014 36 800
Purchases (165 000 (1) + 3000) 168 000 (1)
Purchase returns (2 600) (1)
202 200
Less Inventory 30 September 2015 (29 980)
Cost of sales (172 220) (1) Gross profit 142 780 (1of)
Plus other receivables:
Commission receivable (12 500 (1) + 2500) 15 000 (1) 157 780
Less expenses:
Wages and salaries 34 800 (1)
Motor vehicle expenses 17 200 (1)
Rent (15 000 (1) – 3000) 12 000 (1)
Bank loan interest (1200 (1) + 600) 1 800 (1)
Heat and light 6 500 (1)
Operating expenses (7100 (1) + 1100) 8 200 (1)
Depreciation: Motor vehicles 8 000 (1)
Fixtures and fittings (1)
Bad debts 2 000 (1)
Increase in Provision for doubtful debts 600 (2)
(94 700)
Profit for the year 63 080
[22]
Page 11 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 21
© Cambridge International Examinations 2015
(b) Cheng
Statement of Financial Position at 30 September 2015
Assets
Non-current assets Cost Accumulated
depreciation
Book
value
$ $ $
Motor vehicles 50 000 18 000 32 000 (2) (1of) Fixtures and fittings 24 000 21 600 2 400 (2) (1of) 74 000 39 600 34 400
Current assets
Inventory 29 980 (1) Trade receivables 32 000 (1)
Less Provision for doubtful debts (1 600) 30 400 (1) Other receivables (3000 (1) + 2500 (1)) 5 500
Cash and bank (19 500 (1) – 3000 (1)) 16 500
82 380
Total assets 116 780
Capital and liabilities
Capital 15 000
Profit for the year 63 080 (1) of 78 080
Less Drawings (18 000) (1) 60 080
Non-current liabilities/Long-term liabilities (1)
6% Bank loan 30 000 (1) Current liabilities
Trade payables 25 000 (1) Other payables (600 (1) + 1100 (1)) 1 700
26 700
Total liabilities 116 780
[18]
[Total: 40]
® IGCSE is the registered trademark of Cambridge International Examinations.
CAMBRIDGE INTERNATIONAL EXAMINATIONS
Cambridge Ordinary Level
MARK SCHEME for the October/November 2015 series
7110 PRINCIPLE OF ACCOUNTS
7110/22 Paper 2 (Structured), maximum raw mark 120
This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the details of the discussions that took place at an Examiners’ meeting before marking began, which would have considered the acceptability of alternative answers. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge will not enter into discussions about these mark schemes. Cambridge is publishing the mark schemes for the October/November 2015 series for most Cambridge IGCSE
®, Cambridge International A and AS Level components and some
Cambridge O Level components.
Page 2 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 22
© Cambridge International Examinations 2015
1 (a) Cash Book (Bank Columns)
Date Details $ Date Details $
Oct 1 Balance b/d 705 Oct 1 Bank charges 35 (1)
Ng 150 (1)
YJ Electric 250 (1)
___ Balance c/d 270
705 705
Oct 1 Balance b/d 270 (1of)
[4]
(b) Bank Reconciliation Statement at 1 October 2015
$ $
Balance as per bank statement 1358
Plus
Amounts not yet credited:
Sampson 625 (1) 1983
Less
Cheques not yet presented:
Yang Stores 849 (1) Lam 364 (1)
Xevera 500 (1) 1713
Balance as per cash book 270 (1)of [5]
(c) (i) Sales ledger (1) (ii) Sales invoice (1) [2]
(d)
Izzat account
Date Details $ Date Details $
Oct 1 Balance b/d 750 (1) Oct 6 Sales returns 280 (1)
5 Sales 1440 (1) 21 Bank 800 (1)
____ 22 Bad debt 1110 (1of)
2190 2190
[5]
Page 3 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 22
© Cambridge International Examinations 2015
(e) General Journal
Date Dr
$
Cr
$
Oct 22 Bad debt 1110 (1)of
Izzat 1110 (1)of
Balance owing written off as
irrecoverable (1)
[3]
(f) Large storage capacity
Accuracy/reduction in errors
Speed of processing/timely info/less time consuming
Security of data
To prepare the trial balance
To prepare financial statements/income statement/balance sheet
To prepare exception reports
3 points × (1) [3]
[Total: 22]
Page 4 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 22
© Cambridge International Examinations 2015
2 (a)
Sales ledger control account
Date Details $ Date Details $
Aug 1 Balance b/d 27 520 Aug 31 Sales returns 1 700 (1)
31 Sales 32 400 (1) Bank 40 150 (1)
Interest charged 600 (1) Discount allowed 780 (1)
Bad debts 2 900 (1)
_____ Balance c/d 14 990 (1)
60 520 60 520
Sept 1 Balance b/d 14 990 (1of)
[8]
(b)
Error Type of error
1 Omission
2 Principle (1)
3 Reversal (1)
4 Commission (1)
[3]
Page 5 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 22
© Cambridge International Examinations 2015
(c) General journal
Details Dr
$
Cr
$
Tong 560 (1)
Sales 560 (1)
Sales 800 (1)
Disposal of fixtures and
fittings
800 (1)
Discount allowed 112 (1)
R Biggs 112 (1)
Mia 75 (1)
Mason 75 (1)
[8]
(d) Used as a balancing figure when the trial balance does not balance (1) Enables draft financial statement to be prepared (1) Assist/help in correction of errors (1) Max 1 [1]
[Total: 20]
Page 6 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 22
© Cambridge International Examinations 2015
3 (a) Fairview Manufacturing
Manufacturing Account for the year ended 31 October 2015
$ $
Inventory 1 November 2014 108 000
Purchases of raw materials 486 000
Carriage in on raw materials 18 000 (1) 612 000
Inventory 31 October 2015 (94 000)
Cost of raw materials consumed 518 000 (1of)+w no aliens
Factory wages (295 000 + 9000) 304 000 (1) Direct packaging 33 000 (1)
Prime cost 855 000 (1)w +of if no aliens
Factory overheads:
Indirect packaging 22 000 (1) Rent 24 000 (1) Management salaries 75 600 (1) Indirect expenses 8 500 (1) Depreciation – Factory equipment 35 000 (1)
165 100
1 020 100 (1)of Work in progress at:
1 November 2014 84 300
31 October 2015 (81 400)
2 900 (1) Cost of production/Factory cost 1 023 000 (1of) +w [13]
(b)
$ $
Time worked: 140 @ $6 840 (1) 28 @ $7.50 210 (1)
1050
Less Tax and social security 250
Pension contribution 60
(310) (1) Net pay 740(1of) [4]
(c) Pay slip (1) [1]
[Total: 18]
Page 7 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 22
© Cambridge International Examinations 2015
4 (a)
Workings Answer
Inventory at 1 August
2014
Cost of goods sold 285 000 (1)
+ 65 000 – 295 000 $55 000 (1)
Rate of inventory
turnover }
}
000)/265000(55
000285
+
(1) 4.75 times (1of)
Expenses paid for the
year ended 31 July
2015
Gross profit 95 000 (1) – Profit (35 000)
Expenses 60 000 (1) Less accrued (8000) (1)
$52 000 (1of)
Working capital ratio
(current ratio) }
}
8000 000 52
000 13000 42000 65
+
++ (1) 2:1 (1)
Quick ratio
(acid test ratio) }
}
8000 000 52
000 13 000 42
+
+ (1) 0.92:1 (1)
[12]
(b)
Proposal Working capital
(Increase,
decrease, no
effect)
Amount
$
1 Sell excess non-current assets
for $4000 Increase 4000
2 Sell old inventory costing
$15 000, for $9000 cash
Decrease (1) 6000 (1)
3 Allow a trade receivable 5% cash
discount for early payment of a
debt of $10 000
Decrease (1) 500 (1)
4 Pay expenses accrued of $8000 No effect (1) Nil (1)
5 Bring additional capital into the
business, motor vehicle $5000
and cash $1000
Increase (1) 1000 (1)
[8]
[Total: 20]
Page 8 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 22
© Cambridge International Examinations 2015
5 (a) Ning
Income Statement for the year ended 30 September 2015
$ $
Revenue 248 200
Less Sales returns (7 850)
240 350 (1)
Inventory 1 October 2014 20 450
Purchases 104 750
Carriage inwards 3 400 (1) 128 600 (1)
Less Inventory 30 September 2015 (17 300)
Cost of sales (111 300) (1) Gross profit 129 050 (1) of no aliens
Discount received 8 250 (1) Commission received 5 900 (1) 14 150
143 200
Less expenses:
Advertising (10 800 (1)–900 (1))* 9 900
Distribution (17 200 (1) + 2600 (1))* 19 800
Electricity 4 230 (1) Wages and salaries 35 000 (1) Insurance 5 000 (1) Loss on disposal 2 270 (1) Depreciation: Leasehold 4 000 (1) Computer equipment 13 000 (1) Fixtures and fittings 3 000 (1) Bank loan interest
(3000 (1) + 1000 (1)* 4 000 (2) Bad debts 6 400 (1) Increase in Provision
for doubtful debts 400 (2) (107 000)
Profit for the year 36 200
[23]
* must be netted for 2
nd mark
Page 9 Mark Scheme Syllabus Paper
Cambridge O Level – October/November 2015 7110 22
© Cambridge International Examinations 2015
(b) Ning
Statement of Financial Position at 30 September 2015
Assets
Non-current assets Cost Accumulated Book
Depreciation Value
$ $ $
Leasehold premises 80 000 24 000 56 000 (1 of) Computer equipment 75 000 36 000 39 000 (1 of) Fixtures and fittings 30 000 20 500 9 500 (1 of) 185 000 80 500 104 500
Current assets
Inventory 17 300 (1) Trade receivables 38 000 (1) Less Provision for doubtful debts 1 900 36 100 (1 of) Other receivables 900 (1)
54 300
Total assets 158 800
Capital and liabilities
Capital 50 000 (1) Plus Profit for the year 36 200 (1) of 86 200
Less Drawings (25 000) (1) 61 200
Non-current liability (1) 8% Bank loan 40 000 (1) Current liabilities
Trade payables 38 700 (1)
Other payables (1000 (1) + 2600 (1)) 3 600
8% Bank loan 10 000 (1) Bank 5 300 (1) 57 600
Total liabilities 158 800
[17]
[Total: 40]
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