Cambridge International AS Level · Accounting (9706)
2 multiple-choice questions marked as you go, and 4 written questions with worked solutions. All on Preparation of financial statements - Sole traders.
A sole trader's net assets at the beginning of the year were \(\$85,000\). At the end of the year, the net assets were \(\$92,000\). During the year, the owner introduced a motor vehicle valued at \(\$12,000\) for business use and withdrew \(\$1,500\) per month for private use.
What was the profit or loss for the year?
A sole trader does not maintain full accounting records. During the year ended 31 March 2024, the following data was available:
- Total payments to trade payables: \(\$42,300\)
- Trade payables at 1 April 2023: \(\$5,200\)
- Trade payables at 31 March 2024: \(\$6,800\)
- Cash discount received: \(\$1,100\)
- Returns outwards: \(\$450\)
What was the value of credit purchases for the year?
State the accounting concept that requires a sole trader to record the cost of a new delivery van as a non-current asset rather than an expense in the Statement of Profit or Loss.
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A sole trader has a closing inventory cost of \(\$8,500\). This includes items that cost \(\$500\) but can only be sold for \(\$350\) after incurring repair costs of \(\$50\). Calculate the value of closing inventory to be reported in the financial statements.
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A sole trader provided the following information for the year ended 31 December:
Draft profit for the year: \(\$42,000\)
Closing inventory was undervalued by: \(\$1,500\)
A payment for rent of \(\$2,000\) was correctly recorded in the cash book but completely omitted from the ledger.
Calculate the corrected profit for the year.
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Hassan is a sole trader who prepares his financial statements to 31 December each year. On 1 January 2023, his business had a bank balance of \(\$4,200\) (debit). During the year ended 31 December 2023, the following transactions occurred:
1. Total credit sales were \(\$85,000\). Cash sales were \(\$12,000\).
2. Total credit purchases were \(\$54,000\).
3. Payments to trade payables amounted to \(\$51,500\) after taking a cash discount of \(\$1,500\).
4. Receipts from trade receivables were \(\$78,000\).
5. Rent paid by cheque was \(\$6,000\). This included a prepayment of \(\$500\) for the next year.
6. Hassan withdrew \(\$2,500\) cash from the bank for personal use.
(a) Calculate the total revenue for the year ended 31 December 2023.
(b) Calculate the closing bank balance at 31 December 2023.
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