CANDIDATE – PLEASE NOTE!

PRINT your name on the line below and return

this booklet with your answer sheet. Failure to

do so may result in disqualification. TEST CODE 01239010
FORM TP 2021027 JANUARY 2021

CA R I B B E A N E X A M I N A T I O N S C O U N C I L

CARIBBEAN SECONDARY EDUCATION CERTIFICATE®

EXAMINATION

PRINCIPLES OF ACCOUNTS

Paper 01 – General Proficiency

1 hour 30 minutes

07 JANUARY 2021 (p.m.)

READ THE FOLLOWING INSTRUCTIONS CAREFULLY.

1. This test consists of 60 items. You will have 1 hour and 30 minutes to answer them.

2. In addition to this test booklet, you should have an answer sheet.

3. Each item in this test has four suggested answers lettered (A), (B), (C), (D). Read each item you
are about to answer and decide which choice is best.

4. On your answer sheet, find the number which corresponds to your item and shade the space having
the same letter as the answer you have chosen. Look at the sample item below.

Sample Item

Prime cost is calculated by adding direct

factory expenses to the Sample Answer

(A) cost of goods sold A B C D

(B) cost of materials used
(C) sale of finished goods
(D) sale of non-current assets

The best answer to this item is “cost of materials used”, so (B) has been shaded.

5. If you want to change your answer, erase it completely before you fill in your new choice.

6. When you are told to begin, turn the page and work as quickly and as carefully as you can. If you
cannot answer an item, go on to the next one. You may return to that item later.

7. You may use a silent, non-programmable calculator to answer items.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

Copyright © 2020 Caribbean Examinations Council

All rights reserved.
01239010/J/CSEC 2021
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1. Which of the following businesses are 5. When a trial balance fails to agree, the
MOST likely to have raw materials, difference is entered in the
inventory, working-in-progress inventory
and finished goods inventory together on (A) Provision account
the Statement of Financial Position? (B) Suspense account
(C) Reserve account
(A) garage (D) Control account
(B) shoe factory
(C) supermarket
(D) bus company 6. Mrs Allen invested $20 000, Mrs Brown
invested $5 000 and Mr Cable invested
$5 000 in the same business. The loss
2. How does an increase in bad debts affect a sustained during the year was $1 000. The
sole trader’s financial statements? partnership agreement is silent on the item
of losses, although profits are to be split in
(A) Increases the net profit the ratio 2:2:1 in favour of Allen, Brown
(B) Decreases the net profit and Cable respectively. How much of the
(C) Increases the gross profit loss must be borne by Mr Cable?
(D) Decreases the gross profit
(A) $200
(B) $240
Item 3 refers to the following information. (C) $300
(D) $400
On 1 January 2016, $10 000 was paid
towards an advertising campaign. Of this
amount, $7 000 was used by 31 December 7. Which of the following accounts are usually
2016. transferred to the trading and profit and loss
account?
3. What was the amount of advertising prepaid
at year’s end? (A) Wages, premises, drawings
(B) Drawings, wages, purchases
(A) $ 3 000 (C) Commission received, wages,
(B) $ 7 000 purchases
(C) $10 000 (D) Purchases, furniture, commission
(D) $17 000 received

4. Rent expense which is still owing at the end 8. Which of the following financial statements
of the period must be debited in the profit shows the value of a business’ assets?
and loss account and shown in the balance
sheet as a liability. Which accounting (A) Trading Account
concept does this represent? (B) Cash Flow Statement
(C) Profit and Loss Account
(A) Accrual (D) Statement of Financial Position
(B) Consistency
(C) Going concern
(D) Money measurement

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Item 9 refers to the following information as shown in a cash account.

Cash Account
2017 2017
$ $
1 May Balance b/d 400 3 May 50
1 May Sales 150 7 May 20
5 May Sales 75 9 May 150
___ 30 May Balance c/d 405
$625 $625

9. From the account above, which of the following figures will be posted to the Trial Balance?

(A) $150
(B) $400
(C) $405
(D) $625

Items 10–11 refer to the following 12. An example of a capital expenditure is

information. money spent for

Janice purchased 20 items priced at $10 (A) paying rent

each, receiving a 5% trade discount. One (B) paying wages
month later, she paid her bill by cheque, (C) purchasing goods
taking advantage of a 10% cash discount (D) purchasing a new building
offer.

10. The value of the trade discount is Item 13 refers to the following information
from a sole trader for the month of April.
(A) $10
(B) $19 Purchases
(C) $20 5 April 200 g @ $6 per g
(D) $29 10 April 600 g @ $3 per g

Sales
11. Which of the following would Janice 12 April 100 g @ $7 per g
have to pay if she had missed the discount 17 April 100 g @ $9 per g
period?
13. Using the LIFO method, closing stock would
(A) $171 be valued at
(B) $180
(C) $190 (A) $ 1 800
(D) $200 (B) $ 2 250
(C) $ 2 400
(D) $ 4 000

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14. Which of the following statements is 17. Which of the following lists of activities
TRUE about a trade discount? show the correct order of the stages in the
accounting cycle, before final accounts?
(A) Offered as an incentive for early
payments from buyers (A) Posting to ledger, journalizing, trial
(B) Given on the basis of bulk purchase balance
orders (B) Posting to ledger, trial balance,
(C) Allowed only for cash transactions journalizing
(D) Recorded in the accounting book (C) Journalizing, posting to ledger, trial
balance
(D) Journalizing, trial balance, posting
15. Which of the following statements BEST to ledger
explain the term ‘consistency’ as used in
accounting?
Item 18 refers to the following information.
(A) Procedures in accounting are subject
to change each year. Bank a/c
(B) Firms can choose different methods Balance b/d 20 000 Purchases 15 000
each year to reflect the best Sales 2 000 Balance c/d ?
financial results.
(C) Separate methods of depreciation
can be used in determining profits 18. Which of the following is the closing
for taxation purposes. balance of the Bank Account?
(D) The accounting treatment for
depreciation, once fixed, must be (A) $2 000
treated in the same way thereafter. (B) $3 000
(C) $5 000
(C) $7 000
16. Which of the following documents
would be sent to a customer who was
undercharged? 19. The book of original entry used to record the
purchase of a non-current asset on credit is
(A) Invoice the
(B) Credit Note
(C) Debit Note (A) General Journal
(D) Advice Note (B) Petty Cash Book
(C) Purchases Book
(D) Sales Book

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20. The ABC Company received a cheque 23. A credit balance of $45 on the electricity
from Mr Murray for $300. How must this expense account indicates that
transaction be recorded in ABC’s books?
(A) $45 was paid in electricity
(A) Debit Bank Account (B) electricity is prepaid by $45
Credit Cash Book $300 (C) electricity is accrued by $45
(D) the firm is owed $45 for electricity
(B) Debit Mr Murray’s Account
Credit Cash Book $300
Item 24 refers to the following information.
(C) Debit Bank Account
Credit Mr Murray’s Account 24. On 1 May, a petty cashier received an
imprest of $150. During the month, petty
(D) Debit Mr Murray’s Account cash expenditures amounted to $77, and
Credit Mr Murray’s Account $2 was received from a member of staff
who made a personal telephone call.

21. The purchase of a motor van on credit How much cash is needed to restore the
from Things Car Motors Co. for use in a imprest on 31 May?
business should be recorded as
(A) $ 73
(A) Debit Motor Vehicle Account, (B) $ 75
Credit Bank Account (C) $ 77
(D) $150
(B) Debit Motor Van Expense Account,
Credit Bank Account
25. In order to avoid writing numerous cheques
(C) Debit Purchases Account, for small amounts, a firm may set up a
Credit Things Car Motors Co.
Account (A) bank draft
(B) general journal
(D) Debit Motor Vehicle Account, (C) petty cash fund
Credit Things Car Motors Co. (D) bank standing order
Account

26. The total credit of the bank column of a

22. A company declares a dividend of 15%. three-column cash book is greater than the
What is the value of the dividend warrant total debit. The MOST likely reason for
sent to the shareholder who owns 1500 $1 this situation is that
ordinary shares?
(A) there was an overdraft
(A) $ 100 (B) transactions were omitted from the
(B) $ 225 debit side
(C) $1 500 (C) some figures were overstated on
(D) $1 515 the credit side
(D) the incorrect transactions were
entered on the credit side

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Item 27 refers to the following information 29. How would the purchase of equipment on
which was extracted from the cash book of credit affect a firm’s Statement of Financial
Dandy Dare. Position?

(A) Increase asset; Increase liability

$
(B) Increase asset; Decrease liability
(C) Decrease asset; Increase liability
Balance per cash Book 560
(D) Decrease asset; Decrease liability
Total unpresented cheques 120

Lodgement not entered on 150 30. P. John has a credit balance b/f of $25 on
bank statement his rent revenue account. This means that
for the year $25 rent revenue

27. What is the balance per bank statement? (A) is prepaid

(B) is accrued
(A) $120 (C) must be paid
(B) $150 (D) has been paid
(C) $340
(D) $530
31. The balance in a cash account indicates

Item 28 refers to the following summary (A) how much profit was made
of receipts and payments for the month of (B) the cash held by the business
March for an NGO. (C) the true worth of the business
(D) how much is owed to the business
$

Subscriptions received 300 Item 32 refers to the following balances

extracted from Mrs Martin’s Ledger.
Rent paid 60
$
Purchase of games and 150
equipment Opening inventory 7 000

Postage of circulars 20 Purchases 4 000

Sales 10 000
Proceeds from book sale 250
Sundry expenses 1 100
28. Which of the following is the cash balance Closing inventory 3 400
at 31 March?

(A) $180 32. What was the cost of goods sold by Mrs
(B) $280 Martin?
(C) $320
(D) $620 (A) $2 400
(B) $2 600
(C) $6 400
(D) $7 600

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Item 33 refers to the following balances at 35. Depreciation of office machines should
the end of a financial period. be transferred to which of the following
accounts?
$
(A) Trading
Motor vehicles 2 000 (B) Manufacturing
(C) Profit and Loss
Payables 3 000 (D) Appropriation
Receivables 2 000

Capital 11 000 36. A photocopying machine valued at $5000

is depreciated at 10% using the straight line
Building 10 000 method. What is its book value after TWO
years?
33. Which of the following is the total amount/
value of the assets? (A) $4 000
(B) $4 050
(A) $12 000 (C) $4 500
(B) $13 000 (D) $4 980
(C) $14 000
(D) $15 000

34. Which of the following financial documents

shows the net earnings of a business?

(A) Income Statement

(B) Appropriation Account
(C) Statement of Financial Position
(D) Receipts and Payments Account

37. A businessman bought a new computer for $6 000. He paid $4 000 in cash and traded in his old
computer. Which of the following entries should be used to record this transaction?

Dr. Cr.
(A) Debit New Computer $6 000
Credit Old Computer $2 000
Credit Cash $4 000

(B) Debit Old Computer $2 000

Debit Cash $4 000
Credit New Computer $6 000

(C) Debit New Computer $4 000

Debit Cash $2 000
Credit Old Computer $6 000

(D) Debit New Computer $2 000

Debit Cash $4 000
Credit New Computer $6 000
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38. The matching concept directs a business to 41. Which of the following accounts is NOT
match the nominal?

(A) assets with liabilities (A) Furniture

(B) debtors with the company (B) Commission
(C) Statement of Financial Position (C) Carriage Inwards
with the Income Statement (D) Discount Allowed
(D) income for the period with
expenses incurred for that period
42. Which of the following errors would a trial
balance help to detect?
Item 39 refers to the following information.
(A) The clerk forgot to journalize a
$ transaction
Opening capital 75 000 (B) A journal entry was posted twice
(C) The junior accounts clerk used a
Additional capital 25 000
wrong amount in journalizing
Net profit 10 000 (D) An error occurred in calculating
Closing capital 80 000 the total of the purchase returns
journal
39. The amount of drawings is

(A) $ 5 000 43. Under which of the following conditions

(B) $20 000 would a trial balance still balance?
(C) $30 000
(D) $45 000 I. A transaction was completely left
out.
II. Both a debit and a credit entry were
Item 40 refers to the following information. overstated by the same amount.
III. Both a debit and a credit entry were
understated by the same amount.
$
(A) I and II only
Inventory at 1 January 2019 1 500
(B) I and III only
Purchases during the month 1 200 (C) II and III only
(D) I, II and III
Cost of goods sold 1 400

40. Which of the following is the value of

inventory at the end of January?

(A) $ 300
(B) $ 500
(C) $ 700
(D) $1 300

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44. In an effort to raise capital, a company 48. A business recorded only a percentage of its
offered 200 five per cent debentures at $100 true profits in its books. This is an example
each for subscription. Five per cent is an of
indication that the company will
(A) tax evasion
(A) increase its capital by 5% (B) profit-taking
(B) receive 5% of $20 000 as capital (C) professional incompetence
(C) pay 5% of $20 000 in interest to the (D) professional embezzlement
debenture holders
(D) receive 5% of $20 000 in interest
from the debenture holder 49. In the books of a partnership, the ledger entry
for interest on drawings should be:

45. In a cooperative society, the daily affairs (A) Debit appropriation

are administered by Credit Partner’s Capital Account

(A) the majority of shareholders (B) Debit Partner’s Current Account

(B) all members meeting together Credit appropriation
(C) the chairman of the board only
(D) persons elected or appointed to do (C) Debit Partner’s Capital Account
so Credit appropriation

(D) Debit appropriation

46. The MAIN objective of co-operatives is to Credit Partner’s Current Account

(A) settle disputes

(B) maximize profits Item 50 refers to the following list of
(C) generate revenue for members balances.
(D) maximize the welfare of members
$
47. P. Amos is employed at a rate of $7 per Cash at bank and in hand 5 000
hour. During a week, he worked his basic
40 hours. The income tax due on his wage Trade receivables 2 400
is $20, and he is also liable to pay national
Inventory in hand 4 600
insurance contributions of 5% of his gross
pay. What is his net pay? Accrued expenses 700

(A) $246 Trade payables 4 800

(B) $260
(C) $266 50. From the information above, the amount
(D) $280 of the working capital is

(A) $ 5 000
(B) $ 6 500
(C) $ 7 200
(D) $11 300

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51. Which of the following entries would NOT Item 54 refers to the following information
appear in a cash book? about two partners.

(A) Goods bought for cash $100 Jane and Max are in partnership sharing
(B) Goods sold for cheque $100 3 2
(C) Goods sold on credit $100 profits in the ratio and respectively.
5 5
(D) Payment for goods $100
The following balances are taken from
their books.
52. A proprietor withdraws cash or other assets
from a business. Which of the following Net profit $23 500
effects will it have on drawings or capital? Interest on capital
Jane $ 2 000
(A) Capital is increased. Max $ 1 000
(B) Capital is decreased. Salary: Max $ 2 500
(C) Drawings are decreased. Drawings:
(D) Neither drawings nor capital is Jane $ 1 500
affected. Max $ 1 400
Interest on drawings
Jane $ 150
53. Partnerships are formed for the purpose of Max $ 140

I. combining capital from different 54. How much money should Max receive as
persons his share of the residual profits?
II. benefiting from different skills and
specializations (A) $7 316
III. sharing ideas, experience and (B) $6 556
responsibilities (C) $5 964
(D) $3 876
(A) I and II only
(B) I and III only
(C) II and III only
(D) I, II and III

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Item 55 refers to the following list of 57. S & B Limited’s net income for the year
balances. was $89 000. Of this amount, $8000 was
transferred to general reserve, preference
dividend paid was $2400 and ordinary
$
dividends proposed was $6500. The value
Work in progress 1 January 1 600 of retained profits for the year was

Work in progress 31 1 700 (A) $72 100

December (B) $80 100
(C) $81 000
Cost of materials used 3 000
(D) $89 000
Indirect expenses 3 200

Factory wages 5 000 Item 58 refers to the following data for

Tarisha Ali, an employee of a bank.
55. Using the list of balances above, what is
the cost of goods produced? Monthly salary $ 3 500
Overtime $ 800
(A) $ 8 000
(B) $ 8 700 Income Tax Rate:
(C) $ 11 100
(D) $ 11 200 25% on every dollar above $2 000 of
monthly salary
30% on overtime earned
Item 56 refers to assets and liabilities of
Mr Jones. 58. The TOTAL income tax to be deducted
from Tarisha Ali is
$
(A) $ 615
Cash at bank 800 (B) $ 740
(C) $ 875
Inventory 400 (D) $1 075
Payables 600

Receivables 125 59. Peter Smith worked for 44 hours last week.
The rates are $3.50 per hour for a 40-hour
Bank overdraft 250 week and time and a half for overtime. What
was his gross income?
Cash in hand 500
(A) $147
56. Which of the following is Mr Jones’ capital (B) $154
amount? (C) $161
(D) $231
(A) $405
(B) $450
(C) $850
(D) $975

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Item 60 refers to the following information provided by a business.

Current Assets $6 000

Current Liabilities $1 100
Acid Test Ratio 5:1

60. The value of closing stock is

(A) $ 500
(B) $5 500
(C) $6 500
(D) $7 200

END OF TEST

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR WORK ON THIS TEST.

01239010/J/CSEC 2021
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TEST CODE: 0 1 2 3 9 0 1 0

SUBJECT: PRINCIPLES OF ACCOUNTS − Paper 01

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