Principles of Accounts for CSEC®

2nd edition

Chapter 9: Accounting for limited liability companies,

co-operatives and non-profit organizations
The following test paper contains four multiple-choice questions, to help you prepare for
Paper 1, and one problem question, to help you prepare for Paper 2. If you decide to complete
the paper under exam conditions, you should give yourself no longer than 40 minutes to
complete all questions.

1. The primary source of raising capital in a co-operative is:

(A) issue and sale of shares to members
(B) interest on loans and other investments by the co-operative
(C) members purchasing goods and services from the society
(D) member donations to the society.
(1 mark)

2. The club treasurer discovered, at the end of the year, that subscriptions of $100 were still
outstanding. Where would he record this?
(A) Under current assets in the statement of financial position (balance sheet)
(B) Under current liabilities in the statement of financial position (balance sheet)
(C) In the receipts and payments account under receipts
(D) In the receipts and payments account under expenditure.
(1 mark)

3. A company has 100 000 ordinary shares at $1.00 each and 200 000 8% preference shares
at $1.00 each. The company has proposed dividends of $20 000. What amount would the
ordinary shareholders receive?
(A) $16 000
(B) $ 4 000
(C) $ 5 000
(D) $ 1 000
(1 mark)

4. Tip & Co. realised a net profit of $297 300. Their total capital invested to date is $991 000, total
non-current assets are $743 250. What is the rate of return on investment for this company?
(A) 40%
(B) 30%
(C) 17%
(D) 29%
(1 mark)

1 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
Chapter 9: Accounting for limited liability companies, co-operatives and non-profit organizations

5. Toy Smart Trading Co. Ltd has authorised share capital of 500 000 ordinary shares at $1.00
each, and 200 000 10% preference shares at $2 each. They have decided to issue 300 000
ordinary shares at $1 each and 100 000 10% preference shares at $2 each. The company has
also decided to issue $200 000 6% debentures. These shares have been fully subscribed and
paid up.
Toy Smart Trading Co. Ltd also has retained earnings of $500 000 and a general reserve of
$300 000.
(a) (i) Prepare for Toy Smart Trading Co. Ltd the journal entries needed to record this issue
of shares and debentures.

(5 marks)

(ii) Prepare the statement of financial position (extract) for Toy Smart Trading Co. Ltd
to show non-current liabilities and equity.

2 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
Chapter 9: Accounting for limited liability companies, co-operatives and non-profit organizations

(6 marks)
The treasurer of Harmony Youth Football Club has provided the following information for the
year ended 30 June 2018.
Details: $
Subscriptions received 10 000
Bar takings 15 000
Ground maintenance 3 000
Bar purchases 5 000
Football nets 3 750
Bar staff wages 4 000
Refreshments 1 500
Transport to and from matches 1 250
Balance at 1 July 2017 7 500

(b) Prepare for Harmony Youth Football Club the receipts and payments account for the
year ending June 30 2018.

(4 marks)

3 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
Chapter 9: Accounting for limited liability companies, co-operatives and non-profit organizations

The Town Agricultural Co-operative Society Ltd has 180 members who each own 5 000 shares
at $1 each. The management committee has released the following information:
Surplus (31 Dec 2018) $69 000
Honoria $10 000
Surplus (31 Dec 2017) $14 000
The decision has been made to:
• transfer 12% of surplus to reserves
• pay dividends at 3 cents per share.
(c) Prepare for Town Agricultural Co-operative Society Ltd the appropriation account for the
year ended 31 December 2018.

(5 marks)
(Total 24 marks)

4 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019