CAPE Accounting Unit 1 · 2019 · Paper 2

20 questions and parts from this paper. Open one to see it in full, then practise it on Quelpr and get it marked against the mark scheme.

1. 1(a)10 marksPrepare the journal entries to record the transactions.
2. 1(b)8 marksOutline FOUR basic rights that are associated with the ownership of a share of common stock.
3. 1(c)(i)6 marksIn the books of Crabtree Corporation, prepare the journal entries to account for this investment.
4. 1(c)(ii)2 marksIn the books of Crabtree Corporation, calculate the closing balance of the investment in Passion Ltd on the books of Crabtree Corporation.
5. 1(d)(i)3 marksList THREE reasonable assurances that should be provided by internal accounting controls.
6. 1(d)(ii)6 marksExplain how revenues are reported on the income statements under BOTH the cash basis of accounting and the accrual basis of accounting and give ONE example of EACH.
7. 2(a)16 marksPrepare a multi-step statement of comprehensive income for Cutting Ltd in accordance with IAS 1 and IFRS for SMEs.
8. 2(b)8 marksDistinguish between 'corporations' and 'cooperatives'.
9. 2(c)(i)9 marksPrepare a statement of partners' equity for the current year.
10. 2(c)(ii)2 marksOn 01 January 2019, Davis retired and sold his interest to Rachel and Grant for $80 000, paid from personal funds. Prepare the journal entry to record the sale of partner's interest.
11. 3(a)(i)2 marksCalculate the acid-test ratio for 2017.
12. 3(a)(ii)2 marksCalculate the gross profit margin for 2017.
13. 3(a)(iii)2 marksCalculate the net income margin for 2017.
14. 3(b)(i)6 marksAssess the performance of Rainbow Corp for 2017 in terms of inventory turnover.
15. 3(b)(ii)6 marksAssess the performance of Rainbow Corp for 2017 in terms of average collection period.
16. 3(c)4 marksDistinguish between 'solvency analysis' and 'profitability analysis', giving TWO examples of a ratio used in EACH analysis.
17. 3(d)(i)4 marksOffice equipment which had a cost of 200 000, and on which there was accumulated depreciation of 90 000 on the day of the sale, was sold for $120 000.
18. 3(d)(ii)4 marksLand with an acquisition price of 460 000 was purchased with a cash payment of 210 000 and a long-term mortgage for the remainder.
19. 3(d)(iii)3 marksThe board of directors declared cash dividends totalling 120 000 during the current year. The comparative balance sheet indicates dividends payable of 40 000 at the beginning of the year and…
20. 3(d)(iv)2 marksThe issue of a total of 9000 common stock, 10 par with 7000 for cash and 2000 via a stock dividend at a price of 17 per share.