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24.4
(a) Accumulated fund as at 1 June 2007: £
Bar Stocks 88
Equipment 340
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714
 (b)
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Down Town Sports and Social Club
Bar Trading Account
Year Ended 31 May 2008
£ £
Bar Takings 463
Less Cost of goods sold
Opening stock 88
Add Purchases 397
485
LessClosing Stock 101 384
s Gross Prot 79
n
ito
a
is (c)
n
a
rgo Down Town Sports and Social Club
g Income and Expenditure Account
in Year Ended 31 May 2008
k
a £ £
m
Income
itf
or Subscriptions (135 1 14) 149
p Net proceeds of jumble sale 91
-
n Net proceeds of dance 122
o
n Gross prot from bar 79
fro 441
g
itn Less Expenditure
n Wages 198
u
o Hire of rooms 64
c
c
A Loss on sale of equipment (92 2 80) 12
:
4 Depreciation : equipment 30 304
2
r Surplus of income over expenditure 137
e
t
p
a
h
C

74

24.5X
(a)
Sevenoaks College Drama Society
Trading Account
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£ £
 Sale of refreshments 1,200
Less cost of goods sold
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100 IGCSE Accounting Answers
Add Purchases 845
945
Less Closing Stock 165 780
Gross Prot 420

(b)
Income and Expenditure Account
Year Ended 31 December 2010
Income £ £
s
Subscriptions 1,600 n
Prot on sale of refreshments 420 ito
a
Ticket sales 4,000 is
6,020 n
a
Expenditure rg
o
Hire of costumes (1,500 - 650) 850 g
in
Rent of theatre 750 k
a
Administrative expenses 440 m
itf
*Depreciation of scenery 2,000 4,040
o
r
Surplus of income over expenditure 1,980 p
-
n
(c) o
n
Balance Sheet as at 31 December 2010 fo
r
£ £ £ g
n
Fixed Assets ti
n
Scenery (at valuation) 12,500 u
o
Current Assets c
c
Stock of refreshments 165 A
:
Less Current Liabilities 4
2
Subscriptions in advance 90 r
e
t
Bank Overdraft 595 685 (520)
p
a
h
11,980 C
Represented by
Accumulated Fund 10,000
Add Surplus of income over expenditure 1,980
11,980
*
Workings - Scenery - Balance as at 1 January 2010 7,500
Add Purchase of new scenery 7,000
14,500
Less Value as at 31 December 2010 14,000
Depreciation 2,000

75

24.6X (a) Accumulated fund – this is a form of capital account for a non-profit making
organisation and represents the net worth of club. It can be found by
deducting liabilities from the assets.
A surplus is the amount that income exceeds expenditure and is the same as
the profit made by a business.
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Assets and rent of cricket pitch accrued under Current Liabilities.
 (c) (i) Receipts and payments account is a summary of the cash book for a
club or society and details all cash received and payments made.
7/21/2019 (ii) Edexcel
Current Assets.
IGCSE Accounting Answers
(iii) Payment for the purchase of a fixed asset.
(iv) Depreciation of a fixed asset.
(d) Since the donation is a substantial amount it would be added to the
accumulated fund in the balance sheet. The reason for this is that the
donation is not a regular income but a one off receipt and as such should
not be shown on the income expenditure account.

s
n
ito
a
is
n
a
rgo
g
in
k
a
m
ti
f
or
p
-
n
o
n
for
g
itn
n
u
o
c
c
A
:
4
2
r
e
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76

Answers

Chapter 25: Manufacturing accounts

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25.1 76/92
E Smith
Manufacturing and Trading Account
 for the year ended 31 March 2009
£ £
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Stock of raw material 1.4.2008 2,400
Add Purchases 21,340
Carriage inwards 321
24,061
Less Stock of raw materials 31.3.2009 2,620

Cost of raw materials consumed 21,441

Manufacturing wages 13,280
Prime cost 34,721
Add factory overhead expenses
Rent and rates 2,300
Power 6,220
Other expenses 1,430 9,950
44,671
Add Work in progress 1.4.2008 955
45,626
LessWork in progress 31.3.2009 870
Production cost of goods completed c/d 44,756
Sales 69,830
LessCost of goods sold
ts
Stock nished goods 1.4.2008 6,724 n
u
Add Production cost of goods completed b/d 44,756 o
c
51,480 c
a
Less Stock nished goods 31.3.2009 7,230 44,250 ingr
Gross profit 25,580
tu
c
fa
u
n
a
M
:
5
2
r
e
t
p
a
h
C

77

25.2X P Lucas
Manufacturing, Trading and Prot and Loss Account
for the year ended 30 September 2009
£ £ £
Stock of raw materials 1.10.2008 8,460
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Carriage inwards 2,720 41,440
 49,900
LessStock of raw materials 30.9.2009 10,970
7/21/2019 Cost of rawEdexcel IGCSE
materials Accounting
consumed Answers 38,930
Manufacturing wages 20,970
Prime cost 59,900
Factory Overhead Expenses
Power 6,120
Factory expenses 12,650
Depreciation: Plant and machinery 7,560 26,330
86,230
Add Work-in-progress 1.10.2008 3,070
89,300
Less Work-in-progress 30.9.2009 2,460
Production cost of goods completed c/d 86,840
Sales 174,610
LessCost of goods sold:
Stock of nished goods 1.10.2008 12,380
Add Production cost of goods completed b/d 86,840
99,220
LessStock of nished goods 30.9.2009 14,570 84,650
Gross profit c/d 89,960
ts Less Expenses:
n
u Salesmen's salaries and expenses 26,420
o
c Ofce and administration expenses 25,910
c
a
ingr Delivery van expenses 5,890
Advertising 5,080
tu Depreciation:
c
fa Delivery van expenses 3,040
u
n Ofce equipment 807 3,847 67,147
a
M Net Profit 22,813
:
5
2
r
e
t
p
a
h
C

78

25.3X
(a)
Joey Peterson
Manufacturing Account for the year ended 30 June 2010
£ £
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Add Purchases 314,000
 395,600
LessStock of raw material 30.6.2010 94,500
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301,100 Answers
Direct Wages (450,000 1 8,900) 458,900
Direct factory power 40,000
Prime cost 800,000
Add Indirect manufacturing cost
Factory rent and rates 96,000
Indirect factory wages 98,600
General expenses 14,400
Insurance (66,900 2 6,900) 3 __
1
3
20,000
Depreciation : Plant and Machinery 50,000 279,000
1,079,000
Add Work in progress 1.7.2009 125,300
1,204,300
LessWork in progress 30.6.2010 154,300
Production Cost 1,050,000

(b)

Trading Account for the year ended 30 June 2010

Sales 2,000,000 ts
n
Less Cost of goods sold u
o
Stock of nished goods 1.7.2009 115,440 c
c
Add Production Cost 1,050,000 a
1,165,440 ingr
Less Stock of furnished goods 30.6.2010 85,440 1,080,000 tu
c
Gross Profit 920,000 fa
u
n
25.4X a
M
(a) (i) Cost of raw materials consumed £560,000 :
5
(ii) Prime cost £1,280,000 2
(iii) Total factory overheads £740,000 r
e
t
(iv) Value of closing stock of work in progress £80,000 £3,000,000 p
(b) (i) Selling price of one engine1 £2,000,000 1 50% 5 _____________
a
1,000 engines h
5 £3,000 C

(ii) Total gross profit5 750 engines 3 £1,000 5 £750,000

(iii) Value of closing stock of finished goods based on factory cost of
production : 250 engines 3 £2,000 5 £500,000

79

Answers

Chapter 26: Partnership accounts

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Stead and Jackson
 Appropriation Account
for the year ended 31 December 2010
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Net prot 45,000
LessSalary: Jackson 5,000
40,000
Balance of prots shared:
__
1
Stead 2 20,000
__
1
Jackson 2
20,000 40,000

(b)
Capital Account
Stead Jackson Stead Jackson
2010
Dec 31 Balance b/d 24,000 16,000

(c)
Current Accounts
Stead Jackson Stead Jackson
2010 2010
t
s Dec 31 Drawings 15,000 19,000 Dec 31 Balance b/d 2,300 3,500
n
u Dec 31 Balances c/d 7,300 9,500 Dec 31 Salary 5,000
o
Dec 31 Share of prots 20,000 20,000
c
a 22,300 28,500 22,300 28,500
ip 2011
h
s
r Jan 1 Balance b/d 7,300 9,500
e
n
t
r
P
a
26.2X (a)
:
6 Wain, Brown and Cairns
2
r Appropriation Account for the year ended 31 March 2010
e
t
p £ £
a Net prot 60,000
h
C Less: Salaries
Wain 10,000
Brown 8,000 18,000
42,000
Balance of prots shared:
Wain 50% 21,000
Brown 30% 12,600
Cairns 20% 8,400 42,000

80

(b)
Capital Accounts
Wain Brown Cairns Wain Brown Cairns
2010
Mar 31
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Balance b/d 30,000 50,000 70,000
 Current Accounts
Wain Brown Cairns Wain Brown Cairns
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2010 2010
Mar 31 12,000 15,050 14,980 Mar 31 2,400 3,100 5,700
Drawings Balance b/d
Mar 31 21,400 8,650 — Mar 31 Salaries 10,000 8,000 —
Balances c/d
Mar 31 Share 21,000 12,600 8,400
of prots
Mar 31 880
Balances c/d
33,400 23,700 14,980 33,400 23,700 14,980
2010 2010
Apr 1 — — 880 Apr 1 21,400 8,650 —
Balance b/d Balance b/d

26.3
Simpson and Young
Tradign and Prot and Loss Appropriation Account
for the year ended 30 June 2010
£ £
Sales 254,520
LessCost of sales: t
s
n
Opening stock 18,000 u
o
Add Purchases 184,980 c
c
202,980 a

LessClosing stock 19,000 183,980 ip

h
Gross prot 70,540 s
r
e
LessExpenses: n
t
r
Wages and salaries (32,700 500) 33,200 a
P
Rent, Rates and insurance (3,550 250) 3,300 :
6
Electricity 980 2
Stationery and printing 420 r
e
t
Motor expenses 3,480 p
a
General ofce expenses 1,700
h
Depreciation: Motor van (20% of 16,000) 3,200 C
Ofce equipment (10% of 5,600) 560 46,840
Net prot 23,700
Less interest on capital:
Simpson (10% of 50,000) 5,000
Young (10% of 20,000) 2,000 7,000
16,700

Share of prots:
Simpson 3/5ths
Young 2/5ths 10,020
6,680 16,700
81

Simpson and Young

Balance Sheet as at 30 June 2010
Cost Accumulated Net Book
Depreciation Value
£ £ £
Fixed assets
http://slidepdf.com/reader/full/edexcel-igcse-accounting-answers 81/92
Buildings 28,000 28,000
Ofce equipment 8,400 3,360 (W1) 5,040
 Motor vans 16,000 8,200 (W2) 7,800
52,400 11,560 40,840
7/21/2019 Edexcel IGCSE Accounting Answers
Current assests
Stock 19,000
Debtors 28,000
Prepayments 250

Cash
Less at bank
Current liabilites 7,250 54,500
Creditors 15,200
Accruals 500 15,700
Net current assets 38,800
79,640
Financed by:
Capital accounts Simpson Young Total
Balance b/f 50,000 20,000 70,000

Current accounts
Balance b/f 640 300
Add Share fo prot 10,020 6,680
Add Interest on capital 5,000 2,000
15,660 8,980
LessDrawings 10,000 5,000
s
5,660 3,980 9,640
t
n 79,640
u
o
c
c
a (W1) Provision for depreciation on office equipment:
ip 8,400 5,600 560 3,360
h
s
r
e
(W2) Provision for depreciation on motor vans:
n
t
r 16,000 11,000 3,200 8,200
a
P
:
6
2
r
e
t
p
a
h
C

82

26.4X
(a)
Michael and Morgan
Prot and Loss Account (Including Appropriation)
for the year ended 30 September 2009
£ £
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Gross Prot 385,000
Add Discounts Received 15,000
 400,000
Less Expenses
7/21/2019 Administrative Expenses Edexcel
6,790 IGCSE Accounting Answers
Advertising (7,375 125) 7,500
Rent and rates (12,000 1,500) 10,500
Wages and salaries (135,000 5,000) 140,000
Depreciation - Shop ttings * 12,000 176,790
Net Prot 223,210
Less Salary - Michael 30,000
193,210
Share of prots: Michael 2/5ths 77,284
Morgan 3/5ths 115,926
193,210

(b)
Michael — Current Account
Oct 01 Balance b/d 1,500 Sep 30 Salary 30,000
Sep 30 Drawings 9,650 Sep 30 Prot share 77,284
Sep 30 Balance c/d 96,259 Sep 30 Advertising 125
107,409 107,409
Oct 01 Balance b/d 96,259
s
t
n
u
(c) o
c
Michael and Morgan c
a
Balance Sheet Extract as at 30 September 2009 ip
h
Micheal Morgan Total s
r
e
Capital Accounts Balance 50,000 40,000 90,000 n
t
r
Current Accounts a
P
Balance (1,500) 2,000 :
6
Add Share of Prots 77,284 115,926 2
r
Add Salary 30,000 e
t
Add Advertising 125 p
a
105,909 117,926 h
C
LessDrawings 9,650 8,200
96,259 109,726 205,985
295,985

* Workings £
Shop ttings : Cost 76,000
Less : Depreciation to date 28,000
48,000

Reducing Balance Method 25% 3 £48,000 £12,000

83

Answers
Chapter 27: Limited company accounts
27.1
http://slidepdf.com/reader/full/edexcel-igcse-accounting-answers (a) 83/92
C Blake Ltd
Appropriation Account for the year ended 31 December 2009
 £ £
7/21/2019 Net prot b/d Edexcel IGCSE Accounting Answers 11,340
LessAppropriations
Transfer to General Reserve 1,500
Dividends payable:
Preference dividend 10% (£10,000 3 10%) 1,000
Ordinary dividend 12.5% (£60,0003 12.5%) 7,500 10,000
Retained prots carried forward to next year 1,340

C Blake Ltd
(b)
Balance Sheet as at 31 December 2009
Fixed Assets £ £ £
Buildings at cost 50,000
Equipment at cost 45,000

LessAccumulated depreciation 4,500 40,500

90,500
Current Assets
Stock 8,800
ts Debtors 4,120
n
u LessProvision for doubtful debts 350 3,770
o
c Bank (balancing gure) 9,660
c
a Cash 2,160
y
n 24,390
ap Less Creditors: amounts falling due within one year
m
o Creditors 3,550
c
d Dividends payable (£1,000 1 £7,500) 8,500 12,050 12,340
tie 102,840
im Less Creditors: amounts due after more than one year
L
: Debentures 30,000
7
2 72,840
r
e Financed by:
t
p Share Capital
a
h
C Called-up share capital
60,000 ordinary £1 shares 60,000
10,000 preference £1 shares 10,000 70,000
Revenue reserves
General reserve 1,500
Prot and loss account 1,340 2,840
72,840

Note: The Authorised Share Capital is 90,000 £1 ordinary shares and 10,000 - 10% preference shares.

84

27.2X
(a)
Reynolds Ltd
Prot and Loss Appropriation Account for the year ended 30 September 2010
£ £
http://slidepdf.com/reader/full/edexcel-igcse-accounting-answersNet prot 70,000 84/92
Add Retained prots b/f from last year 30,000
 100,000
LessAppropriations:
7/21/2019 General reserve 8,000
Edexcel IGCSE Accounting Answers
Dividends payable:
Ordinary shares — (150,0003 6p) Paid 9,000
— (150,0003 14p) Proposed 21,000
Preference shares — (7%3 50,000) Proposed 3,500 41,500
Retained prots carried to next year 58,500

(b)
Reynolds Ltd
Balance Sheet as at 30 September 2010 (Extract)
£ £
Financed by:
Called-up share capital
Preference shares 50,000
Ordinary shares 150,000
200,000
Revenue Reserves
ts
General Reserve (45,0001 8,000) 53,000 n
u
Prot and loss account 58,500 111,500 o
c
311,500 c
a
y
n
a
Note: The Authorised Share Capital is 200,000 £1 ordinary shares and 50,000 - 7% preference shares. p
m
o
c
d
e
it
im
L
:
7
2
r
e
t
p
a
h
C

85

27.3 Chang Ltd

Trading and Prot and Loss Account
for the year ended 31 December 2010
Sales 316,810
LessCost of goods sold:
Opening stock 25,689
http://slidepdf.com/reader/full/edexcel-igcse-accounting-answers Add Purchases 201,698 85/92
227,387
 LessClosing stock 29,142 198,245
Gross prot 118,565
7/21/2019 LessExpenses
Edexcel IGCSE Accounting Answers
Wages and salaries (54,207 1 581) 54,788
Rent (4,300 2 300) 4,000
Lighting expenses 1,549

Bad debts 748

Provision for doubtful debts (938 2 861) 77
General expenses 32,168
Deprecation: Machinery (55,000 3 10%) 5,500 98,830
Net prot 19,735
Add Retained prots b/f from last year 34,280
54,015
LessProposed dividend 10,000
Retained prots c/f to next year 44,015

Balance Sheet as at 31 December 2010

ts Fixed Assets
n Premises 65,000
u
o Machinery 55,000
c
c LessAggregated depreciation (15,800 1 5,500) 21,300 33,700
a
y Current Assets 98,700
n
a
p Stock 29,142
m Debtors 21,784
o
c LessProvision for doubtful debts 938 20,846
d Prepayments 300
tie
Bank 23,101
im
L 73,389
:
7 Less Creditors falling due wihtin one year
2
r Dividend payable 10,000
e
t Creditors 17,493
pa Expenses owing 581 28,074
h
C Net current assets 45,315
144,015
Financed by:
Capital and reserves
Called -up share capital 100,000
Revenue reserves
Prot and loss account 44,015
144,015

86

27.4X
(a)
Wayland Limited
Appreciation Account for the year ended 31 December 2010
£ '000's £ '000's

http://slidepdf.com/reader/full/edexcel-igcse-accounting-answersNet prot 250 86/92

Add Prot and Loss Balance 1st January 2010 195
445
 Less Appropriations
Transfer to general reserve 25
7/21/2019 Edexcel IGCSE Accounting Answers
Preference dividend (6% 3 250,000) 15
Ordinary dividend 2 (Interim Dividend) 20
2 (8% 3 750,000) 60 120
Retained prots carried forward 325

(b)
Wayland Limited
Balance Sheet as at 31 December 2010
Cost Aggregate Net Book
Depreciation Value
£ '000's £ '000's £ '000's
Fixed Assets
Land and buildings 1,500 — 1,500
Fixtures and ttings 50 10 40
Motor vehicles 85 15 70
1,635 25 1,610
ts
Current Assets n
u
Stock 165 o
c
Debtors 103 c
a
Bank 107 375 y
n
a
Current Liabilities
Creditors 135 p
m
Value added tax 25 o
c
Dvidends Payable: d
Preference shares 15 tie
Ordinary shares 60 235 im
L
Working capital 140 :
7
1,750 2
r
Creditors: amounts falling due after one year 5% 250 e
t
debentures ap
1,500 h
Capital and Reserves C

Called up capital
Ordinary shares 750
6% Preference shares 250 1,000
Capital reserves
Share premium 100
Revenue Reserves

General reserve 75
Prot and loss account shareholders' funds 325 400
1,500

87

Answers
Chapter 28: Analysis and interpretation
of nancial statements
http://slidepdf.com/reader/full/edexcel-igcse-accounting-answers 28.1 (a) M Ltd N Ltd 87/92
(i) Current ratio
 ________
£200,000 ________
£130,000
£50,000
4:1 £65,000
2:1
7/21/2019 Edexcel IGCSE Accounting Answers
(ii)Acid test ratio
___________________
£200,000 2 £100,000 __________________
£130,000 2 £64,000
£50,000 2:1 £65,000
1:1

(iii)Stockturn
______________________
£288,000
2.6 times ____________________
£187,500
3.0 times
£120,000 1 £100,000 4 2 £60,000 1 £64,000 4 2
ts
n (iv)Debtors : Sales ratio
e
m ________
£60,000 ________
£62,500
te £360,000
12 months 2 months £250,000
12 months 3 months
ta
s
l
a (v) Creditors : Purchases ratio
icn ________
£50,000 ________
£65,000
a £268,000
12 months 2.2 months £191,500
12 months 4 months
ifn
f
o (vi) Gross profit %
n ________
£72,000 ________
£62,500
ito £360,000
100% 20% £250,000
100% 25%
ta
er
pr (vii)Net profit %
te ________
£43,200
100% 12%
________
£35,000
100% 14%
in £360,000 £250,000
d
n
a (viii)Rate of return on shareholders' sunds
iss
________
£43,200 ________
£35,000
ly £350,000
100% 12.3 % £255,000
100% 13.7%
a
n
A
:
8 (b) Briefly N Ltd gives a better return to shareholders because of (viii) above.
2
r Reasons include:
e
t
•

ap M Ltd's current ratio is higher. This indicates that M Ltd is in a better liquidity
h position.
C •
N Ltd’s stock turnover is higher than that of M Ltd. This shows that N Ltd manages
its sales performance more effectively.
•
The gross prot percentage of N Ltd is 5% higher than that of M Ltd. This is due to
better purchasing and selling prices. Net prot margins differ by a smaller margin
of 2% suggesting, that M Ltd has tighter control of its overhead expenses when
compared with its sales volume (8% compared with 11%)

88

28.2 (a)
Cruise Furnishings Holmes Supplies
_____ _____
(i) Gross prot margin 600
1,800
100 33 __
1
3%
600
2,400 100 25%

(ii) Net prot margin _____

150
100 8.33% _____
160
100 6.67%
1,800 2,400

(iii) Current ratio ____

210 3.18 : 1 ____
180 3:1
http://slidepdf.com/reader/full/edexcel-igcse-accounting-answers 66 60 88/92

(b) Rate of stock tunover for Cruise Furnishings

 (b) Rate of stock tunover for Cruise Furnishings
_____
1200
120
10 Times a year
7/21/2019 Edexcel IGCSE Accounting Answers
(c)
Profitability
Both businesses are making good net profits, Cruise £150,000 and Holmes
£160,000. However, both the gross profit percentage and net profit percentage
for Cruise is better than Holmes, with the net profit percentage being 8.33% for
Cruise against Holmes 6.67%. This could be due to Cruise selling goods at a higher
price and their cost of sales being lower.
ts
Liquidity n
e
The current ratio for both Cruise and Holmes are very similiar with cruise being m
slightly higher at 3.18 : 1 against Holmes 3 : 1. If we calculate the acid test, i.e, we te
remove stock from the calculation, ta
s
l
a
Cruise Holmes icn
__________
210 2 111 __________
180 2 120 a
1.5 : 1 1:1
66 60 ifn
then Cruise is in a stronger position since it could raise £1.50 for every £1 owed f
o
compared to Holmes who could raise £1 for every £1 of debt. n
Conclusion ito
ta
Whilst Holmes has a greater turnover than Cruise the company is not as re
profitable. In terms of liquidity again Cruise is in a stronger position which may in p
r
part be due to Holmes long term liabilities of £2,070,000. te
idn
n
a
iss
ly
a
n
A
:
8
2
r
e
t
pa
h
C

89

28.3X (a)
Year Ended

28.02.2009 29.02.2010

Net Profit Margin

_________
Net profit ____
100 ______
16,000 ____
100 45.71% ______
26,000 ____
100 50%
http://slidepdf.com/reader/full/edexcel-igcse-accounting-answers Sales 1 35,000 1 52,000 1 89/92
 (b)
Mark — up
7/21/2019 Edexcel IGCSE Accounting Answers
____________
Gross Profit ____
100 _______
21,600 ________
35,500
Cost of Sales 1 *13,400
100 161.19% **16,500
100 215.15%

*2,9001 14,500 2 4,000 13,400 **4,0001 19.500 2 7,000 16,500

(c)
Rate of stock turnover
ts _____________
Cost of sales ________________
13,400 _________________
16,500
n Average Stock 2,900 1 4,000 4 2 4,000 1 7,000 4 2
e
m 3.88 times 3 times
te
ta
s
l (d)
ia
cn Overall the profitability of the buisness is improving with the Net Profit % increasing
a from 45.71% to 50%. Mark-up has also increased considerably from 161.19% to 215.15%.
n
fi However, the stock is taking longer to sell/turnover a decrease from 3.88 to 3 times
f
o a year. This is possibly due to the business stock in hand increasing from £2,900 at the
n beginning of the first financial year to £7,000 at the end of February 2010?
o
ti
ta
er
pr
te

din
n
a
iss
ly
a
n
A
:
8
2
r
e
t

ap
h
C

90

Answers

Chapter 29: Computers and

accounting systems
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29.1 90/92
To: Director of Finance
 From: Administrative Assistant
Date: June 2010
7/21/2019 Re: Proposed Integrated Computerised Accounting System
Edexcel IGCSE Accounting Answers

Points in favour of the new system:

•
Faster data input and automatic processing.
•

Greater accuracy especially via automatic processing.

•
Documentation such as invoices, credit notes, statements, remittance
advices produced automatically.
•
Up-to-date information on customers’ accounts, etc. is readily
available.
•
Provides management information.
•
The system may be linked to the internet to allow for transactions
such as ordering goods to be carried out electronically.
•
Provides access to the organisation’s bank account via the internet.
•
More efcient and makes better use of resources.
s
m
Arguments against the new system tes
The cost of the installation plus ongoing costs of maintenance and
•

y
s
updating software. g
Training costs of staff.
•
itn
Staff resentment of new system.
•
n
u
System downtime may be disruptive.
•
o
c
Fraudulent access can seriously affect business operation and
• c
a
protability. d
Security measures that are necessary. an
•

Health and safety issues associated with using computers.

• sr
te
u
29.2 Measures a medium-sized company may adopt to safeguard the security of its p
financial data and records would include: m
o
•
All company’s nancial information should be regarded as condential C
except where legislation states otherwise. Staff should be made aware of this :
9
requirement in the company’s code of conduct. 2
r
•
Staff should be allocated passwords to monitor accessibility to specic areas e
t

• of work. need to be changed frequently.

Passwords ap
h
•
Installation of anti-virus computer packages to prevent the threat of fraud. C
•
Ensure data is saved and backed up regularly.
•
Store back-up data in an off-site location if deemed necessary.
29.3X Refer to text, Sections 29.3 and 29.4.

91

29.4X (a) Benefits to a small business when it has the use of internet facilities would
include:
•
access to web sites to obtain further information in many areas including
competitors, product ranges, location of customers/suppliers etc
•
transactions such as ordering, purchasing, selling, making payments to
customers and staff, receiving monies etc., can all be carried out online
•
the use of email for correspondence is quick, efcient and cost effective.

http://slidepdf.com/reader/full/edexcel-igcse-accounting-answers (b) A web designer would bring many benefits to a business as follows: 91/92
•
development of initial user-friendly web site
•
maintain an up-to-date web site
 •
develop online facilities for business to offer online ordering and purchasing
7/21/2019 from suppliers
Edexcel IGCSEand sales to customers
Accounting Answers
•
promote a range of company products/services over a wider area which
could lead to increased sales and ultimately greater prots
•
advertising and marketing benets to a larger consumer market.

(c) The disadvantages of offering a web site service:

•
keeping the web site up-to-date
•
the cost of maintaining the web site
•
ensuring that the web site is user friendly with appropriate easy to navigate
links.
29.5X Benefits of investing in a computerised accounting system would include:
•
quick and easy to install
•
capital outlays reasonable since packages are now much cheaper
•
less time to carry out book-keeping/accounting transactions
s •

easier/less onerous work

m
tes
•
more nancial information available for management
y
•
greater accuracy
s
g
•
can process documents, e.g. invoices, credit notes, statements, payslips etc
itn
n Adverse effects:
u cost and disruption on installation
•

o
c training
•

c
a reluctance to change by staff
•

d •

an security issues
health risks
sr
•

te
•
problems if the system goes down.
u
p 29.6 Other business uses for a computerised accounting system would be:
m •
Payroll
o
C •
Book-keeping
:
9
•
Budgeting
2
r
•
Preparation of nancial statements
e •
Cash management.
t
pa
h
C

92

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