2015 POA N Level Answer

2015 N Level POA Answers

Paper 1 :

a) Assets equals to liabilities less owner’s equity.

b) Arun’s capital at 1 March 2015 = 3,000 + 100 + 600 – 1,000 – 150 = $2,550


 General journal 

DateParticularsDr Cr 
1Apr 1Office equipment 80
Other payables80
Being purchase of office equipment on credit 
2Apr 1Cash 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. 


 Rent income account

Date Particulars Dr Cr Bal 
Jan 1Cash at bank12001200 Cr
Jul 1 Cash at bank12002400 Cr
Dec 31(transfer to*) Income summary2400


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. 


$Current assetsCurrent liabilities
Cash in hand150150
Inventory 4200042000
Trade payables4000040000
Bank overdraft55005500
Trade receivables4450044500
Total 8665045500

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.

Paper 2 :


Statement of financial performance for the year ended 30 June 2015

Fees income (75000 – 3200)72400
Less: Other Expenses
Rental expenses (3680 – 490) 3190
General expenses27140
Loan interest expense400
Insurance expense750
Wages and salaries expense (19500 + 590)20090
Impairment loss on trade receivables275
Depreciation of fixtures and fitting (10% x 30500) 305053895
Profit for the period 17505


Statement of financial position as at 30 June 2015

Non-current asset costAcc. dep.    N.B.V
Fixtures and fittings30500915021350
Current assets
Cash at bank7520
Trade receivables9525
Prepaid rent expense490
Cash in Hand200
Total assets39085
Equity and liabilities
Owner’s Equity
Capital (13030 + 17505 – 7000)  23535
Non-current liabilities
Long term borrowings 8000
Current liabilities
Wages and salaries payable590
Other payables 3760
Fees received in advance 3200
Total equity and liabilities39085

a) Receipt, Bank Statement, Petty Cash Voucher, Payment Voucher (any two)

b) Any two from:

• To pay for small items of expenditure

• to reduce the number of entries in the Cash Book, thus prevent overcrowding

• the job of recording small payments can be assigned to a junior clerk


Petty cash balance 1 Sept100
Total payments in Sept64
Bank reimbursement on 30 Sept64
Petty cash balance 1 Oct36

d) The payment should be classified as Drawings in the general journal.

e) Cash discount = 2% * $2,000 = $40


 General journal 

ParticularsDr Cr 
Trade payable – Anna2000
            Discount received40
            Cash at bank1960

a) Straight line method is suitable for depreciating non-current assets which benefits the

business at a uniform rate. The benefits from using the motor vehicle is higher in its initial years

when it operates more efficiently. Hence it is more appropriate to charge more for depreciation

in the first few years and less in subsequent years.

b) i) profit for the year will be overstated

ii) non-current asset will be overstated


Accumulated depreciation

Date Particulars Dr Cr Bal 
Aug 31Depreciation (20% x 20000) 40004000 Cr
Jul 1Balance b/d 4000 Cr
Dec 31Depreciation (20% x (20000-4000)) 32007200 Cr
Jul 1Balance B/d7200 Cr

d) Matching Concept. A portion of the cost of the non-current asset is matched against the

income earned from using the non-current asset in the same period to find the accurate profits

Prudence concept states profits and assets should not be overstated. Depreciation is charged

to Income Statement to avoid overstating profits, while accumulated depreciation is recorded in

the balance sheet to avoid overstating the value of non-current assets.

e) Materiality

(Explanation: whether an expenditure item is recorded in the balance sheet as capital

expenditure or as an expense in the income statement depends if it is significant and

materially impacts business decision making. Lamps and waste paper bins are



  1. Error of Commission 
  2. Complete reversal of entries / Error of completed reversal
  3. Error of original entry
  4. Error of principle


 General journal 

DateParticularsDr Cr 
131 Jul Utilities / Electricity expenses500
Telephone expenses500
2Cash at bank 6500 
Sales revenue6500
3Cash at bank 360 
Machinery repairs360
4Motor vehicle repairs250 
Motor vehicle250



Date Particulars Dr Cr Bal 
Jun 1 Balance b/d700 Dr
12Cost of sales175525 Dr
15Trade payable – Joe320845 Dr
18Trade payable – Joe (purchases returns) 240605 Dr
19Drawings105500 Dr
22Cost of sales70570 Dr
26Trade payable – Kate 180750 Dr
Jul 1Balance b/d 750 Dr

b) Cost of sales = $175 – 70

                          = $105

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