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Surname

Centre
No.

Initial(s)

Paper Reference

7 0 1 1

Candidate
No.

0 1

Signature

Paper Reference(s)

7011/01

Examiners use only

London Examinations
GCE
Accounting
Ordinary Level

Team Leaders use only

Question Leave
Number Blank

Thursday 6 January 2011 Morning


Time: 3 hours

2
3
4
5

Materials required for examination


Nil

Items included with question papers


Source booklet

Instructions to Candidates
In the boxes above, write your centre number, candidate number, your surname, initial(s) and
signature.
Answer BOTH questions in Section A and ALL questions in Section B.
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 6 questions in this question paper. The total mark for this paper is 200.
There are 24 pages in this question paper. Any blank pages are indicated.
Calculators may be used.
The source material for use with questions 1 to 6 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.
2011 Edexcel Limited.
Printers Log. No.

M36651A
W850/7011/57570 1/1/1/

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SECTION A
Answer BOTH questions in this section.
Source material for use with question 1 can be found on pages 2 and 3 of the source booklet.
1.

(a) Prepare the ledger accounts in the books of Freda Payne for the month of October
2010, using the information provided in the books of original entry and in the cash
book. Balance these accounts and bring the balances down on 1 November 2010.
Capital Account

Purchases Account

Purchases Returns Account

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VAT Account

Vileda Supplies Account

Happy Mops Account

Shop Fittings Account

Fitter Shops Ltd Account

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Sales Account

Business Rates Account

Drawings Account

Rent Account

(30)

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(b) Prepare a trial balance at 31 October 2010.


Freda Payne
Trial Balance
As at 31 October 2010
Account

Debit

Credit

(14)

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Freda Payne has been told that as long as her trial balance totals are equal she can assume
that her accounts are correct.
(c) State, with reasons, whether you agree or disagree with this statement.
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(6)
(Total 50 marks)

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Q1

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

(a) Prepare journal entries to correct the errors and omissions listed on page 4 of the
source booklet. Date your entries 31 December 2010 and include suitable narratives.

Date

Narrative

Debit ()

Credit ()

(25)
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(b) Prepare the amended trading and profit and loss account for the year ended
31 December 2010.
Ahmed Khan
Trading and Profit and Loss Account
Year ended 31 December 2010

(11)

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(c) Using the adjustments for accruals and prepayments as an example, evaluate the
importance of the prudence concept in the preparation of the final accounts.
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(10)
(Total 46 marks)
TOTAL FOR SECTION A: 96 MARKS

10

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Q2

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SECTION B
Answer ALL questions in this section.
Source material for use with question 3 can be found on pages 6 and 7 of the source booklet.
3.

(a) Prepare the profit and loss account for the year ended 30 June 2010.
Sandip Ltd
Profit and Loss Account
For year ended 30 June 2010

(18)

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(b) Prepare the appropriation account for the year ended 30 June 2010.
Sandip Ltd
Appropriation Account
For year ended 30 June 2010

(7)
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(c) Prepare the balance sheet (with relevant sub headings) at 30 June 2010.
Your balance sheet must show clearly:
working capital
shareholders funds
Sandip Ltd
Balance Sheet
As at 30 June 2010

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(25)

Q3

(Total 50 marks)

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15

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Source material for use with question 4 can be found on page 8 of the source booklet.
4.

(a) Calculate for both 2009 and 2010:


(i)

gross profit.
2009

2010

(ii) net profit.


2009

2010

(iii) gross profit margin.


2009

2010

(iv) net profit margin.


2009

16

2010

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(v) return on capital employed.


2009

2010

(10)

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(b) Evaluate Williams claim (giving reasons backed up with figures) that the financial
performance of the business in 2010 was superior to that of 2009. In your answer you
are expected to make equal reference to profitability and liquidity.
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(10)
(Total 20 marks)

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Q4

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Source material for use with question 5 can be found on pages 9 and 10 of the source booklet.
5.

(a) For the year ended 31 December 2010, you are required to prepare:
(i) The profit and loss appropriation account
Harsha, Omid and Jasmine
Profit and Loss Account Appropriation Account
Year ended 31 December 2010

(2)

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(ii) The partners capital accounts


Capital Account (Harsha)
Date

Narration

Date

Narration

Capital Account (Omid)


Date

Narration

Date

Narration

Capital Account (Jasmine)


Date

Narration

Date

Narration

(4)

20

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(iii) The partners current accounts


Current Account (Harsha)
Date

Narration

Date

Narration

Current Account (Omid)


Date

Narration

Date

Narration

Current Account (Jasmine)


Date

Narration

Date

Narration

(8)

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At the beginning of their second year in partnership, the partners decided to prepare a
profit sharing agreement which would take account of the following points:

Harsha carries more responsibility for the day to day running of the business than the
other two partners.
Omids drawings tend to be higher than the other two partners.
Jasmines capital contribution is greater than the other two partners.

(b) Outline the changes that could be included in the new agreement to take account of
these points.
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(3)
(c) Describe the accounting double entries required to record these changes.
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(3)
(Total 20 marks)

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Q5

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Source material for use with question 6 can be found on page 11 of the source booklet.
6.

(a) Prepare the subscriptions account for the year ended 31 December 2010 clearly
showing the amount to be transferred to the Clubs income and expenditure account.
Balance the account on 31 December 2010 and bring the balances down.
Subscriptions Account

Date

Narration

Date

Narration

(9)
(b) Explain the treatment of subscriptions in advance and subscriptions in arrears in the
balance sheet of the Keswick Sports Club.
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(5)

Q6

(Total 14 marks)
TOTAL FOR SECTION B: 104 MARKS
TOTAL FOR PAPER: 200 MARKS
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