2015 N Level POA Answers Paper 1
a) Assets equals to liabilities plus owner’s equity.
b) Arun’s capital at 1 March 2015 = 3,000 + 100 + 600 – 1,000 – 150 = $2,550
c) General journal
| Date | Particulars | Dr | Cr | |
| $ | $ | |||
| 1 | Apr 1 | Office equipment | 80 | |
| Other payables | 80 | |||
| Being purchase of office equipment on credit | ||||
| 2 | Apr 1 | Cash in hand | 500 | |
| Capital | 500 | |||
| Being capital contribution of cash from owner |
d) The accounting (business) entity states that the business and its owner(s) are treated as separate and different entities. Only transactions which affect the business are recorded in the business books.
a)
Rent income account
| Date | Particulars | Dr | Cr | Bal |
| 2014 | $ | $ | $ | |
| Jan 1 | Cash at bank | 1200 | 1200 Cr | |
| Jul 1 | Cash at bank | 1200 | 2400 Cr | |
| Dec 31 | (transfer to*) Income summary | 2400 |
b)
| Income | Expenses | |
| Cost of sales | ✔️ | |
| Depreciation | ✔️ | |
| Wages | ✔️ | |
| Discount received | ✔️ |
c) Matching theory states that expenses incurred must be matched against income earned in the same accounting period to find the accurate profit for the year.
di) Purchase journal
dii) Purchase returns/Return outwards journal
diii) Cash book
ai) Current assets: cash and other assets are to be paid to creditors within one year from the date of the balance sheet.
aii) Current liabilities: amounts to be paid to creditors within one year from the date of the balance sheet.
aiii) Working capital: working capital is the amount of capital (or the excess of current assets over current assets over current liabilities) that is available to meet the day-to-day expenses of running the business such as payment for purchase of goods, payment to trade creditors and payment of wages to employees, etc.
bi)
| $ | Current assets | Current liabilities | |
| Cash in hand | 150 | 150 | |
| Inventory | 42000 | 42000 | |
| Trade payables | 40000 | 40000 | |
| Bank overdraft | 5500 | 5500 | |
| Trade receivables | 44500 | 44500 | |
| Total | 86650 | 45500 |
bii) Working Capital = 86,650 – 45,500
= $41,150
c) The purchase of a motor vehicle by cheque will reduce the amount in the Cash at bank account, which is a current asset and therefore result in a drop of working capital.
