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Surname Initial(s)

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Paper Reference
No.

Signature
Candidate
No. 6 0 0 1 0 1
Paper Reference(s)

6001/01 Examiner’s use only

London Examinations GCE Team Leader’s use only

Accounting (Modular Syllabus)


Advanced Subsidiary/Advanced Level Question Leave
Number Blank
Unit 1: The Accounting System and
1
Costing
2
Thursday 10 January 2008 – Morning 3
Time: 3 hours 4
5
6
Materials required for examination Items included with question papers
7
Nil Source booklet

Instructions to Candidates
In the boxes above, write your centre number, candidate number, your surname, initial(s) and signature.
Answer FIVE questions, choosing TWO from Section A and THREE from Section B.
Indicate which questions you are answering by marking the box ( ).
If you change your mind, put a line through the box ( ) and then indicate your new question with
a cross ( ).
All calculations must be shown.
Write your answers in the spaces provided in this question paper.
Do not return the insert with the question paper.

Information for Candidates


The marks for individual questions and the parts of questions are shown in round brackets: e.g. (2).
There are 7 questions in this question paper. The total mark for this paper is 100.
There are 28 pages in this question paper. Any blank pages are indicated.
Calculators may be used.
The source material for use with questions 1 to 7 is in the enclosed source booklet.

Advice to Candidates
Write your answers neatly and in good English.

Total
This publication may be reproduced only in accordance with
Edexcel Limited copyright policy.
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M29056A
W850/6001/57570 4/4/4/4
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SECTION A

Answer TWO questions from this section

If you answer question 1, put a cross in this box ( ).

Source material for use with question 1 can be found on pages 2 and 3 of the
source booklet

1. (a) Prepare for the year ended 31 December 2007:

• capital accounts of the partners recording the entry of Pauline


• profit and loss account
• appropriation account
• current accounts of the partners.

Capital Accounts

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Profit and Loss and Appropriation Account

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Current Accounts

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(15)
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(b) • Calculate the value of the closing balance of stock using the L.I.F.O method.
• Explain the effect on the net profit if the partnership changes to the L.I.F.O
method.

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(7)

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(c) One of the partners, Pauline, said.

“When we provide for depreciation on the equipment, this means that we will have
the cash to replace the equipment at the end of its life.”

Evaluate this statement.

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(4) Q1

(Total 26 marks)

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If you answer question 2, put a cross in this box ( ).

Source material for use with question 2 can be found on pages 4 and 5 of the
source booklet

2. (a) Prepare, for the year ended 31 December 2007, the:

• manufacturing account (in columnar format), showing the prime cost and
production cost of manufacturing sports bags and golf bags
• trading and profit and loss account, showing the gross profit for both the sports
bags and the golf bags and the total net profit for the business.

Manufacturing Account

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Trading and Profit and Loss Account

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(18)

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(b) Calculate the production cost of manufacturing:

• one sports bag


• one golf bag.

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(2)

(c) Calculate what the net profit of Sportex would be if the offer was accepted and
production of the bags ceased.

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(2)

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(d) Evaluate whether Sportex should purchase the sports bag and golf bag from an
overseas supplier, considering both the financial and social accounting aspects.

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(4) Q2

(Total 26 marks)

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If you answer question 3, put a cross in this box ( ).

Source material for use with question 3 can be found on pages 6 and 7 of the
source booklet

3. (a) Distinguish between the terms profitability and liquidity.

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(4)

(b) Calculate, for Wavepower and for Solargain, from the balances given:

• net profit as a percentage of sales


• return on capital employed
• current ratio
• liquid (acid test) ratio.

Net Profit as a Percentage of Sales

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Return on Capital Employed

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Liquid (acid test) Ratio

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(8)
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(c) Comment upon the ratios calculated in (b).

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(5)
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(d) Calculate for Wavepower and Solargain the revised:

• return on capital employed


• liquid (acid test) ratio.

Return on Capital Employed

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Liquid (acid test) Ratio

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(5)

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(e) Evaluate whether the owners of Sonex should purchase Wavepower or Solargain.

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(4) Q3

(Total 26 marks)
TOTAL FOR SECTION A: 52 MARKS

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SECTION B

Answer THREE questions from this section

If you answer question 4, put a cross in this box ( ).

Source material for use with question 4 can be found on pages 8 and 9 of the
source booklet

4. (a) Calculate for the year ended 31 December 2007, the value of:

• sales
• purchases.

Sales

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(6)

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(b) Prepare for the year ended 31 December 2007:

• the trading account


• a calculation of the stock stolen
• the profit and loss account.

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(6)

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(c) Identify and explain which accounting concept has been broken by Rizan’s failure to
maintain a separate bank account for the business.

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(2)

(d) Evaluate Rizan’s decision to not maintain a formal set of accounts.

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(2) Q4

(Total 16 marks)

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If you answer question 5, put a cross in this box ( ).

Source material for use with question 5 can be found on pages 10 and 11 of the
source booklet

5. (a) Calculate the hourly cost of Ahmed’s repair service.

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(6)

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(b) Prepare a quotation for a customer’s vehicle repair, where the vehicle parts cost £70
and the repair will take 7 hours to complete.

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(4)

(c) Calculate the revised hourly cost of Ahmed’s repair service, if the ‘hi tech’ electronic
analysing equipment is purchased.

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(4)

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(d) Evaluate whether Ahmed should purchase the ‘hi tech’ electronic analysing
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(2) Q5

(Total 16 marks)

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If you answer question 6, put a cross in this box ( ).

Source material for use with question 6 can be found on pages 12 and 13 of the
source booklet

6. (a) Explain, for each of (i) to (v), the accepted accounting concept or convention, other
than prudence, which should have been complied with.

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(5)

(b) Prepare a revised trading and profit and loss account for the year ended 31 December
2007 which complies with accepted accounting concepts and conventions.

Revised Trading and Profit and Loss Account

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(5)

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(c) Discuss the role played in accounting by accepted accounting concepts and
conventions.

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(4)

(d) Evaluate a circumstance in which it could be appropriate for a business to account for
the increased skill of staff.

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(2) Q6

(Total 16 marks)

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If you answer question 7, put a cross in this box ( ).

Source material for use with question 7 can be found on pages 14 and 15 of the
source booklet

7. (a) Prepare for Jerome:

• journal entries to correct the errors. (narrations not required)


• the suspense account showing clearly the opening balance.

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(8)

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(b) Prepare the following ledger accounts for the year:

• rent account
• commission receivable account.

Rent Account

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(6)

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(c) Evaluate the role of a trial balance in ensuring the accuracy of ledger accounts.

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(2) Q7

(Total 16 marks)
TOTAL FOR SECTION B: 48 MARKS
TOTAL FOR PAPER: 100 MARKS

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