TEST CODE 01239032

FORM TP 2013026 JANUARY 2013

CARIBBEAN E XAM I NAT I O N S COUNCIL

CARIBBEAN SECONDARY EDUCATION CERTIFICATE®

EXAMINATION

PRINCIPLES OF ACCOUNTS

Paper 032 – General Proficiency

1 hour 30 minutes

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. Answer ALL questions.

2. ALL answers MUST be written in this booklet.

3. You are advised to take some time to read through the paper and plan
your answers.

4. Show ALL working clearly.

5. You may use a silent, non-programmable calculator to answer questions.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright © 2012 Caribbean Examinations Council

All rights reserved.

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INSTRUCTIONS: This paper consists of a case study and TWELVE questions. Read the case
study and answer ALL the questions that follow in the spaces provided in this
booklet.

CASE STUDY

PART A

Sita’s Hairdressing Salon specializes in providing hairdressing services and selling beauty supplies.

1. State the name of ONE type of journal that Sita is LIKELY to use in her business.

_____________________________________________________________________________
(1 mark)

On 1 January 2012, Sita provided the following valuations.

Premises 180 000

Wigs and Weaves 15 000

Beauty Supplies 9 500

Unpaid Mortgage Interest 5 950

Furniture and Fixtures 7 700

Receivables (Debtors) 8 400

Equipment 24 600

Mortgage 92 000

Vehicles 60 000

Payables (Creditors) 9 800

Cash and Bank 5 000

Stationery Supplies 800

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2. Complete the table below to show the current assets, non-current assets, current liabilities and
their totals. One has been done for you as an example.

Current Assets Amount Non-current Assets Amount Current Liabilities Amount

$ $ $

Wigs and weaves 15 000

Total

(10 marks)

3. State the balance sheet equation.

_____________________________________________________________________________
(1 mark)

4. Calculate the value of Sita’s capital at 1 January 2012.

(4 marks)

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5. Identify a suitable ratio for measuring Sita’s liquidity position.

_____________________________________________________________________________
(1 mark)

6. Using the ratio identified in Question 5, calculate Sita’s liquidity position at 1 January 2013. Show
working clearly.

(3 marks)

7. State whether Sita’s liquidity position is acceptable. State ONE reason to support your answer.

_____________________________________________________________________________

_____________________________________________________________________________

_____________________________________________________________________________

_____________________________________________________________________________
(2 marks)

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PART B

Sita makes the following transactions during the month of June.

• On 1 June, sold $900 worth of goods for cash.

• On 2 June, bought $1 500 worth of goods from Mac & Co. on credit terms of 5/10, n/30.
• On 3 June, returned $300 worth of goods to Mac & Co.
• On 4 June, bought $10 000 worth of equipment by cheque.

8. Complete the form below by indicating for EACH transaction:

• which account to debit and which account to credit

• the type (classification) of account
• the affect of the transaction on the net income

One has been done for you as an example.

Effect of Transaction on calculation of

Net Income (Net Profit)
Name of Account Type of Account (Tick the appropriate column)

INCREASE DECREASE NONE

1 June DEBIT: Real √

Cash

CREDIT: Nominal √
Sales

2 June DEBIT:

CREDIT:

3 June DEBIT:

CREDIT:

4 June DEBIT:

CREDIT:

(9 marks)

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9. State ONE reason for the effect of the transaction on 3 June on the calculation of Net Income.

_____________________________________________________________________________
(1 mark)

10. Sita paid off her account with Mac & Co. on 5 June. Prepare the account of Mac & Co. in the
ledger of Sita to show all transactions up to payment on 5 June.

(4 marks)

Sita has decided to apply 25% depreciation, on a reducing balance basis, on the equipment which she
bought on 4 June. At the end of Year 1, the depreciation expense was $2 500.

11. Calculate, for Sita, the depreciation expense at the end of Year 2. Show working clearly.

(2 marks)

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12. Calculate the net book value of the equipment bought on 4 June, at the end of Year 2.

(2 marks)

Total 40 marks

END OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

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