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HKDSE BAFS (Accounting Module) Paper 1 Practice Paper
HKDSE BAFS Accounting Module Paper 1
HKDSE BAFS Accounting Module Paper 1 practice paper: 10 original questions, 100 marks in 60 minutes, covering depreciation, bank reconciliation, inventory, doubtful debts.
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Paper details Level: S6 | Subject: BAFS (Accounting) | Paper: 1 | Time: 60 minutes | Marks: 100 | Questions: 10
Section A Financial Accounting (50 marks)
Questions 1-2
| # | Question | Answer and marking notes |
|---|---|---|
| 1 | A company bought a machine on 1 April 2025 for $180,000 with an estimated residual value of $20,000 and a useful life of 5 years. The year end is 31 December. (a) Using the straight-line method, compute the 2025 depreciation charge and the net book value at 31 December 2025. (b) Using the reducing-balance method at 25% per year, compute the 2025 charge and the year-end net book value. | (a) Annual charge = ($180,000 – $20,000) / 5 = $32,000; nine months: $32,000 x 9/12 = $24,000; NBV = $180,000 – $24,000 = $156,000. (b) Reducing balance ignores residual value: $180,000 x 25% x 9/12 = $33,750; NBV = $146,250. Marking: straight-line base must exclude residual value; both methods need the 9/12 time factor. |
| 2 | At 30 June 2025 a firm has a debit cash book (bank column) balance of $42,500. The bank statement shows unpresented cheques $8,400 and deposits not yet credited $12,600. Bank charges $350, an insurance standing order $1,200 and a dishonoured customer cheque $900 are not yet in the cash book, while bank interest of $150 is also unrecorded. (a) Compute the adjusted cash book balance. (b) Compute the bank statement balance and state the rule for each type of adjustment. | (a) Adjusted cash book = $42,500 – $350 – $1,200 – $900 + $150 = $40,200. (b) Statement balance = $40,200 + $8,400 – $12,600 = $36,000. Rule: items missing from the cash book are adjusted in the cash book first; unpresented cheques are added back and uncredited deposits deducted when moving to the statement. |
Questions 3-5
| # | Question | Answer and marking notes |
|---|---|---|
| 3 | Using perpetual records and the weighted average method: 1 June purchase 100 units at $40; 8 June purchase 200 units at $46; 12 June issue 150 units; 18 June purchase 100 units at $52; 25 June issue 120 units. Compute (a) the cost of each issue, (b) the closing inventory at 30 June and (c) the cost of sales. | (a) After 8 June the average is ($4,000 + $9,200) / 300 = $44; issue of 150 costs $6,600 leaving 150 units worth $6,600. After 18 June the average is ($6,600 + $5,200) / 250 = $47.2; issue of 120 costs $5,664. (b) Closing 130 units x $47.2 = $6,136. (c) Cost of sales = $6,600 + $5,664 = $12,264. Marking: a new average is required after every purchase. |
| 4 | An ageing of receivables shows: not due $120,000 (1%), 1-30 days overdue $60,000 (3%), 31-60 days $30,000 (8%) and over 60 days $15,000 (25%). The allowance for doubtful debts brought forward is $6,000 credit. (a) Compute the required allowance and this year charge. (b) If bad debts of $2,500 (all from the over-60 group) were written off during the year, recompute both figures. | (a) Required = $1,200 + $1,800 + $2,400 + $3,750 = $9,150; charge = $9,150 – $6,000 = $3,150. (b) After write-off the allowance stands at $3,500 and the over-60 balance falls to $12,500 (25% = $3,125); required = $8,525; charge = $8,525 – $3,500 = $5,025. Marking: the write-off and the charge are two separate steps. |
| 5 | A company has sales of $1,200,000 (all on credit), cost of sales $780,000, average inventory $65,000 and year-end receivables $150,000. Compute (a) gross profit and gross margin, (b) inventory turnover and days, (c) receivables turnover and collection period (365 days), and (d) give one plausible reason for a long collection period. | (a) Gross profit = $420,000, margin = 35%. (b) Turnover = $780,000 / $65,000 = 12 times; days = 365/12 = 30.4. (c) Receivables turnover = $1,200,000 / $150,000 = 8 times; collection period = 365/8 = 45.6 days. (d) Long credit terms granted, weak credit control, or year-end bunching of sales. |
Section B Cost Accounting and Financial Management (50 marks)
Questions 6-7
| # | Question | Answer and marking notes |
|---|---|---|
| 6 | A product sells for $120 with variable cost $72 per unit and fixed costs of $384,000 per year. Compute (a) unit contribution and the contribution margin ratio, (b) break-even units and revenue, (c) the margin of safety in units and dollars at sales of 10,500 units, and (d) the units needed to earn a target profit of $96,000. | (a) Contribution = $48 per unit, ratio = 40%. (b) Break-even = $384,000 / $48 = 8,000 units = $960,000. (c) Margin of safety = 2,500 units = $300,000. (d) Target units = ($384,000 + $96,000) / $48 = 10,000. Marking: fixed costs are added back when computing target volume. |
| 7 | July cash budget data: opening cash $25,000; cash sales $180,000; 40% of June credit sales of $200,000 is collected in July; payments are purchases $150,000, wages $60,000 and equipment $40,000. (a) Compute July cash receipts. (b) Compute the 31 July cash balance. (c) How much must equipment spending be cut to keep a minimum closing balance of $50,000? | (a) Receipts = $180,000 + $80,000 = $260,000. (b) Closing = $25,000 + $260,000 – $150,000 – $60,000 – $40,000 = $35,000. (c) Shortfall = $15,000, so equipment spending must fall by at least $15,000 to $25,000. Marking: non-cash items such as depreciation must be excluded. |
Questions 8-10
| # | Question | Answer and marking notes |
|---|---|---|
| 8 | A and B are partners with capital of $400,000 and $240,000. The agreement gives salaries of $120,000 and $96,000, interest on capital at 5% per year, interest on drawings of $4,000 and $2,500, and residual profit shared 3:2. Profit for the year is $480,000. (a) Compute the residual profit. (b) Compute each partner total. (c) Verify that the two totals equal the year profit. | (a) Residual = $480,000 – $120,000 – $96,000 – $20,000 – $12,000 + $4,000 + $2,500 = $238,500. (b) A = $143,100 residual share plus salary and interest less drawings = $279,100; B = $95,400 + $96,000 + $12,000 – $2,500 = $200,900. (c) $279,100 + $200,900 = $480,000. Marking: interest on drawings is added back, interest on capital uses original capital. |
| 9 | A trial balance has a credit excess of $3,000, shown as a $3,000 credit balance in the suspense account. Errors found: (i) the sales day book was overcast by $1,500; (ii) a purchase of $2,000 was completely omitted; (iii) sundry expenses of $500 were credited to the sundry expenses account. (a) Give the correcting entries, stating the suspense account direction. (b) Compute and explain the closing suspense balance. | (a)(i) Dr Sales $1,500, Cr Suspense $1,500. (ii) Dr Purchases $2,000, Cr Suspense $2,000. (iii) Dr Suspense $500, Cr Sundry expenses $500. (b) Suspense credit $3,000 – $1,500 – $2,000 + $500 = $0, so the difference is fully located and the account is cleared. Marking: a one-sided wrong-direction posting requires the opposite side in suspense. |
| 10 | A manufacturer reports: raw materials opening $40,000, purchases $260,000, closing $55,000; direct labour $180,000; factory overheads $96,000; work in progress opening $18,000 and closing $22,000. Compute (a) raw materials consumed, (b) prime cost, (c) production cost and (d) cost of goods completed. | (a) Materials used = $40,000 + $260,000 – $55,000 = $245,000. (b) Prime cost = $425,000. (c) Production cost = $425,000 + $96,000 = $521,000. (d) Completed goods = $521,000 + $18,000 – $22,000 = $517,000. Marking: closing stock is always deducted and WIP is adjusted only after production cost. |
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A TutorZone practice paper; original questions and passages, not publisher material.
