S4 BAFS Paper: Accounting Cycle, Trial Balance And Financial Statements (100 Marks)

S4 BAFS Paper: Accounting Cycle, Trial Balance and Financial Statements (100 marks)

2026-11-11

S4 BAFS – accounting cycle and financial statements

S4 BAFS paper: 6 questions, 22 parts, 100 marks, 75 minutes on double entry, trial balance, year-end adjustments, depreciation, financial statements and ratio analysis.

Download　Question paper PDF　|　Answer key PDF

Paper details　S4 BAFS accounting practice paper covering double entry, trial balance, accruals and prepayments, straight-line and reducing-balance depreciation, income statement and ratio analysis. Six questions, 22 parts, 100 marks, 75 minutes, with answers and marking notes.

Section A: Double Entry (15 marks)

Mr Chan started a trading firm on 1 January with capital of 500,000 dollars paid into the firm bank account. During the year the firm bought equipment for 180,000 dollars cash, bought inventory on credit for 60,000 dollars, made cash sales of 95,000 dollars and repaid a supplier 25,000 dollars. All amounts are in dollars.

#	Question	Answer and marking notes
1	Write the double entry for the capital introduced.	Answer: debit bank 500,000 dollars, credit capital 500,000 dollars. Both sides of the accounting equation rise by 500,000 dollars.
2	Write the double entry for the credit purchase of inventory.	Answer: debit purchases 60,000 dollars, credit payables 60,000 dollars. Purchases rise and a liability is recorded.
3	Calculate the payables balance after the repayment to the supplier.	Answer: 60,000 – 25,000 = 35,000 dollars (credit balance).
4	Calculate the cash and bank balance at the year end.	Answer: 500,000 – 180,000 + 95,000 – 25,000 = 390,000 dollars. Equipment purchase and repayment are cash outflows.

Section B: Trial Balance (15 marks)

A firm has these balances on 31 December: cash 390,000 dollars, inventory 60,000 dollars, equipment 180,000 dollars, purchases 60,000 dollars, rent 45,000 dollars, wages 72,000 dollars, payables 35,000 dollars, capital 500,000 dollars, sales 95,000 dollars. One bank loan is not yet listed.

#	Question	Answer and marking notes
5	Calculate the debit total of the trial balance.	Answer: 390,000 + 60,000 + 180,000 + 60,000 + 45,000 + 72,000 = 807,000 dollars.
6	Find the amount of the unlisted bank loan.	Answer: recorded credits are 35,000 + 500,000 + 95,000 = 630,000 dollars, so the loan is 807,000 – 630,000 = 177,000 dollars.
7	Year-end depreciation has not been recorded. Is the trial balance still in balance? Explain.	Answer: it is still in balance. Depreciation debits an expense and credits accumulated depreciation by the same amount, so both totals rise equally.
8	If a credit purchase of 20,000 dollars is entered in purchases only, what are the debit and credit totals, and what is the difference?	Answer: debits become 807,000 + 20,000 = 827,000 dollars while credits stay at 807,000 dollars, so the debit side exceeds the credit side by 20,000 dollars.

Section C: Year-end Adjustments (18 marks)

The year end is 31 December. Rent of 96,000 dollars was paid on 1 January for 15 months, up to 31 March next year. Utilities of 18,000 dollars were paid, of which 3,000 dollars relates to next year. Wages of 8,500 dollars are unpaid and bank interest of 2,400 dollars is unrecorded.

#	Question	Answer and marking notes
9	Calculate the monthly rent.	Answer: 96,000 / 15 = 6,400 dollars per month.
10	Calculate the rent expense for the year and the prepaid rent.	Answer: expense = 6,400 x 12 = 76,800 dollars; prepaid = 6,400 x 3 = 19,200 dollars.
11	Calculate total expenses after adjustment (rent, utilities and wages only).	Answer: 76,800 + (18,000 – 3,000) + 8,500 = 100,300 dollars, against 96,000 + 18,000 = 114,000 dollars before adjustment.
12	By how much do these adjustments, including the unrecorded interest, raise net profit?	Answer: expenses fall by 114,000 – 100,300 = 13,700 dollars and interest income of 2,400 dollars is added, so net profit rises by 13,700 + 2,400 = 16,100 dollars.

Section D: Depreciation (18 marks)

Equipment costs 180,000 dollars, has an estimated residual value of 20,000 dollars and a useful life of 5 years. The firm is considering the straight-line method and the reducing-balance method at 40 per cent per year. The equipment was bought on 1 January and a full year of depreciation applies.

#	Question	Answer and marking notes
13	Calculate the annual depreciation under the straight-line method.	Answer: (180,000 – 20,000) / 5 = 32,000 dollars.
14	Calculate the net book value at the end of year 3 under the straight-line method.	Answer: 180,000 – 32,000 x 3 = 84,000 dollars.
15	Calculate the depreciation for years 1 and 2 under the reducing-balance method.	Answer: year 1 = 180,000 x 40 per cent = 72,000 dollars; year 2 = (180,000 – 72,000) x 40 per cent = 43,200 dollars.
16	Calculate the net book value at the end of year 2 under the reducing-balance method and compare it with the straight-line figure for the same date.	Answer: reducing balance = 180,000 – 72,000 – 43,200 = 64,800 dollars; straight line = 180,000 – 64,000 = 116,000 dollars, so the reducing-balance figure is 51,200 dollars lower.

Section E: Income Statement (19 marks)

Sales for the year are 950,000 dollars. Opening inventory is 60,000 dollars, purchases 520,000 dollars and closing inventory 80,000 dollars. Expenses are rent 76,800 dollars, wages 188,000 dollars, depreciation 32,000 dollars and utilities 15,000 dollars.

#	Question	Answer and marking notes
17	Calculate the cost of goods sold.	Answer: 60,000 + 520,000 – 80,000 = 500,000 dollars.
18	Calculate the gross profit.	Answer: 950,000 – 500,000 = 450,000 dollars.
19	Calculate total expenses.	Answer: 76,800 + 188,000 + 32,000 + 15,000 = 311,800 dollars.
20	Calculate net profit for the year and state the effect of overstating closing inventory by 10,000 dollars.	Answer: net profit = 450,000 – 311,800 = 138,200 dollars. Overstating closing inventory by 10,000 dollars understates cost of goods sold by 10,000 dollars, so net profit is overstated at 148,200 dollars.

Section F: Ratio Analysis (15 marks)

Use the data in Section E: sales 950,000 dollars, cost of goods sold 500,000 dollars, net profit 138,200 dollars, opening inventory 60,000 dollars and closing inventory 80,000 dollars. Give answers to two decimal places.

#	Question	Answer and marking notes
21	Calculate the gross profit margin, net profit margin, average inventory and inventory turnover.	Answer: gross profit margin = 450,000 / 950,000 x 100 = 47.37 per cent; net profit margin = 138,200 / 950,000 x 100 = 14.55 per cent; average inventory = (60,000 + 80,000) / 2 = 70,000 dollars; inventory turnover = 500,000 / 70,000 = 7.14 times.
22	The firm plans to raise the gross profit margin to 50 per cent. If sales and other expenses stay the same, what must cost of goods sold fall to, and what is the new net profit margin?	Answer: target cost of goods sold = 950,000 x 50 per cent = 475,000 dollars, a cut of 25,000 dollars; new gross profit 475,000 dollars, new net profit = 475,000 – 311,800 = 163,200 dollars and the new net profit margin = 163,200 / 950,000 x 100 = 17.18 per cent.

Find a tutor — free Tutor Registration →

A TutorZone practice paper; original questions and passages, not publisher material.