O-LevelAccountingSources and recording of data7707/23 · Oct/Nov 2022 · Q220 Marks

Rasheed started a business on 1 October 2021. He maintains a petty cash book in the business. A monthly imprest of $100 is restored on the first day of each month.

(a)State two advantages of maintaining a petty cash book.[2]
(b)Complete Rasheed's petty cash book for the month of September 2022 on the next page. Balance the petty cash book and bring down the balance on 1 October 2022. Clearly show the amount required to restore the imprest. Rasheed's transactions for the month of September 2022 were as follows. September 2 Paid taxi fare $12 7 Paid purchases ledger account of Crystal $16 13 Bought postage stamps $10 18 Paid purchases ledger account of Kalpa $15 25 Paid bus fare $5 29 Paid cleaner $28 Rasheed – Petty Cash Book Total Received $ Date Details Total paid $ Travel $ Postage $ Cleaning $ Ledger accounts $[8]
(c)Record the entries which would be made in the following accounts in September 2022. It is not necessary to total or balance the accounts. Rasheed Postage account Date Details $ Date Details $ Purchases ledger Crystal account Date Details $ Date Details $[2]
(d)Prepare the inventory account at 30 September 2022. Balance the account and bring down the balance on 1 October 2022. Rasheed Inventory account Date Details $ Date Details $[2]
(e)At the end of his first year in business Rasheed would like to compare his financial performance with other businesses. Explain to Rasheed three problems of inter-firm comparison.[6]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2022). The mark or mark type is shown in brackets.

[2] Reduces number of entries in main cash book (1)
Reduces the number of entries in ledger accounts (1)
Allows chief cashier to delegate work/enables him/her to concentrate on more important tasks (1)
Can provide training for junior employee (1)
Accept other valid points Max (2)
[8] Rasheed - Petty Cash Book
Total Received $ 100 Sept 1 Cash
Sept 2 Taxi fare 12 Travel 12 (1)
Sept 7 Crystal 16 Ledger accounts 16 (1)
Sept 13 Postage stamps 10 Postage 10 (1)
Sept 18 Kalpa 15 Ledger accounts 15 (1)
Sept 25 Bus fare 5 Travel 5 (1)
Sept 29 Cleaner 28 Cleaning 28 (1)
86 (Total Paid)
17 (Travel total)
10 (Postage total)
28 (Cleaning total)
31 (Ledger accounts total) (1)OF
Sept 30 Balance c/d 14
100 (Grand Total)
Oct 1 Balance b/d 14
Cash/Bank 86 (1)* For both balance and restoration OF
[2] Rasheed Postages account
Date 2022 Sep 30 Details Petty cash $ 10 (1)
Purchases ledger Crystal account
Date 2022 Sep 7 Details Petty cash $ 16 (1) OR Sep 30
[2] Rasheed Inventory account
Date 2022 Sep 30 Details Income statement $ 8600 (1)
Date 2022 Sep 30 Details Balance c/d $ 8600
Oct 1 Balance b/d $ 8600 (1)
[6] Must compare with business in same trade (1)
Businesses in different trades will have different profit margins, types of assets and expenses etc. (1)
Must compare with a business of approximately the same size /same amount of capital (1)
Size of business can affect purchasing power, amount and type of non-current assets etc.(1)
Must compare with same type of business organisation (1)
Must compare with a sole trader business as a company and a partnership may have different types of costs and have to appropriate the profit between owners (1)
Financial statements will not contain non-monetary items (1)
Factors such as goodwill, location, skill of workforce, staff morale etc. are not disclosed (1)
Only a limited amount of information will be available/may be difficult to obtain information about other businesses (1)
The age of non-current assets, average inventory, future plans, budgets, etc. are not available (1)
Businesses may use different accounting policies (1)
Different methods of deprecation may be used which affect profits and value of non-current assets (1)
Businesses may use different operating policies (1)
Renting/owning premises, using funds from loans/capital, selling on credit/ cash affect the business performance (1)
Financial years may end on different dates (1)
One business may have year-end when inventory is low/high which affect profit calculations and assets (1)
Should compare with business which has been established for approximately same amount of time (1)
Longer-established businesses have had time to build up goodwill and no more start-up costs (1)
Up to (2) each for any 3 aspects of problems of comparison.