2018 N Level POA Answers Paper 1
a)
1. Source documents
2. Journal entries
3. Ledger
4. Trial balance
5. Statement of financial performance
6. Statement of financial position
b) All business transactions must be supported by a verifiable unbiased piece of evidence.
c)
| Source document | ||
| i) | Bank charges | Bank statement |
| ii) | Sale of goods for cash | Receipt |
| iii) | Purchase of goods on credit | Invoice |
| iv) | Return of goods sold on credit | Credit note |
d)
Journal
| Particulars | Dr ($) | Cr ($) |
| Drawings | 320 | |
| Inventory | 320 |
a)
Rental income
| Date | Particulars | Dr ($)+ | Cr ($)- | Balance |
| 2017 | ||||
| Aug 1 | Rental income received in advance | 1 500 | 1 500 Cr | |
| Nov 1 | Cash at bank | 3 500 | 5 000 Dr | |
| 2018 | ||||
| May 1 | Cash at bank | 3 500 | 8 500 Dr | |
| Jul 31 | Rental income received in advance | 1 750 | 6 750 Dr | |
| Jul 31 | Income summary | 6 750 | – |
b)
Advertising expense
| Date | Particulars | Dr ($)+ | Cr ($)- | Balance |
| 2018 | ||||
| Jun 1 | Cash at bank | 2 100 | 2 100 Dr | |
| Jul 31 | Prepaid advertising expense | 1 750 | 350 Dr | |
| 31 | Income summary | 350 | – |
c)
Expenses are recognized when incurred not paid and income are recognised when earned not received.
ai) Assets are resources of value owned by the business.
aii) Liabilities are amounts owed by a business to external parties.
aiii) Owner’s equity is the owner’s interest or claim on the assets of the business.
b) (10 000 + 25 000) – (12 000 + 5 000) = $18 000
c)
| Effect on equity | ||
| 1 | Increase in trade receivables | Increase |
| 2 | Increase in accumulated depreciation | Decrease |
| 3 | Payment of wages which were owing | Decrease |
a) Inventory should be valued at the lower of cost or net realisable value.
b) 75 x (85 + 150 + 95 + 225) = $41 625
c) 165 x 10 = $1650
d)
Journal
| Particulars | Dr ($) | Cr ($) | |
| Impairment loss on inventory(200-165)x10 | 350 | ||
| Inventory | 350 | ||
| Being impairment loss on inventory |
e) Matching concept
