Accounting Unit 3 practice exam 2011 and suggested solutions · Students are permitted to bring...

ACCOUNTING UNIT 3

© VCTA Published April 2011 page 1

Accounting Unit 3 practice exam 2011 and suggested solutions

Phil Hutton Matthew Christopher

Camberwell Grammar School

The following VCE Accounting Unit 3 practice exam consists of two questions, each worth 45 marks. An answer book and suggested solutions follow the question book.

Please note that the questions and solutions have no official status and teachers should refer to the Victorian Curriculum and Assessment Authority website http://www.vcaa.vic.edu.au for further information.

The practice exam and solutions are based on the authors’ interpretation of the VCE Accounting Study Design.

Teachers are advised to preview and evaluate all practice exam material before distributing it to students.

Disclaimer: This practice examination has been written by the authors (Phil Hutton and Matthew Christopher) for use with students of VCE Accounting. This does not imply that it has been endorsed by the Victorian Curriculum and Assessment Authority (VCAA). While every care is taken, we accept no responsibility for the accuracy of information or advice contained in Compak. Teachers are advised to preview and evaluate all Compak classroom resources before using or distributing them to students.

http://www.vcaa.vic.edu.au/

ACCOUNTING UNIT 3


ACCOUNTING UNIT 3

Practice written examination 2011

Reading time: 15 minutes Writing time: 1 hour 30 minutes

QUESTION BOOK

Structure of book

Number of questions Number of questions to be answered

Number of marks

2

2 90

Students are permitted to bring into the examination room: pens, pencils, highlighters, erasers, sharpeners, rulers and one scientific calculator.

Students are NOT permitted to bring into the examination room: blank sheets of paper and/or white-out liquid/tape.

Materials supplied Question book

Answer book Instructions Answer both questions in the answer book.

All written responses must be in English.

Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.

NOTE: This practice examination has no official status and represents an indication only of the type of questions that VCAA examiners may set.

ACCOUNTING UNIT 3


Question 1

U Esby’s Computers

Ursula Esby runs a small computer store called U Esby’s Computers, selling local and imported computer componentry (parts) to businesses. Ursula uses a double-entry accrual accounting system and records stock transactions with the perpetual inventory system. Other features of her accounting system include:

• the use of control accounts and subsidiary records for debtors, creditors and stock

• the FIFO cost assignment method for stock

• reports are prepared quarterly.

Ursula’s bookkeeper recorded her transactions for the quarter ending 31 March 2011. The totals for the special journals and the entries for the General Journal are shown below.

Cash Receipts Journal Date 2011

Details Rec. No.

Bank Disc. Exp.

Debtors Cost of Sales

Sales GST Sundries

31 Mar. Totals to date 158 067 1 605 53 500 38 608 96 520 9 652 0

Cash Payments Journal

Date 2011

Details Chq No.

Bank Disc. Rev.

Creditors Stock Control

Wages Drawings GST Sundries

31 Mar. Totals to date

125 550 650 55 000 23 000 25 450 15 500 2 750 4 500*

* Sundries consist of a prepaid insurance payment on 1 February.

Sales Journal

Date 2011

Debtor Invoice No.

Cost of Sales Sales GST Total Debtors

31 Mar. Totals to date 19 888 49 720 4 972 54 692

Purchases Journal

Date 2011

Creditor Invoice No.

Stock GST Total Creditors

31 Mar. Totals to date 62 250 6 225 68 475

ACCOUNTING UNIT 3


General Journal

Date Particulars General Ledger Subsidiary Ledger

Debit Credit Debit Credit

21 Jan. Drawings 2 000

Stock Control 2 000

(Owner withdrew 1 computer. Memo #225)

3 Feb. Prepaid Rent Expense 4 500

Prepaid Insurance Expense

4 500

(Correcting entry for 3 months rent incorrectly recorded as Prepaid Insurance. Memo #226)

Ursula discovers that the following documents from the period have not been recorded.

DOCUMENT 1

U ESBY’S COMPUTERS ABN: 463 675 734 54 Balwyn Road Balwyn North VIC 3128 Date: 31 March 2011

MEMO 227

To: Abdulah Mohhamed, Accountant Re: Donation of Stock Abdulah please note that I gave 4 computer systems costing $10 500 in total to loyal customers in country Victoria affected by the recent flooding. I am hopeful that this will enhance our reputation and lead to future sales in the area. Kind regards Ursula Esby

ACCOUNTING UNIT 3


DOCUMENT 2

U ESBY’S COMPUTERS ABN: 463 675 734 54 Balwyn Road Balwyn North VIC 3128 Date: 31 March 2011

MEMO 228

To: Abdulah Mohhamed, Accountant Re: Debtor – Dellios Traders I have received a letter from Zhang and Zhao, Chartered Accountants, stating that Dellios Traders has been declared bankrupt. It had a cheque attached for $6 000 (Cheque #455662) and stated that we will not receive the other $24 000 owed. Please make the necessary entries in our records and send them a receipt for the payment (Receipt #2445). Kind regards Ursula Esby

DOCUMENT 3

COASTAL TRADING 150 Orchard Road Street SINGAPORE 787572 Date: 31 March 2011 Tax Invoice No: 265432 Customer: U ESBY’S COMPUTERS 54 BALWYN ROAD BALWYN NORTH VIC 3128 AUSTRALIA Item Quantity Unit Price Total Price 22” LCD Monitors 1 500 500 26” LCD Monitors 1 650 650 TOTAL SGD 1 150

Terms 2/7 Net 30 Note: All prices are in Singapore dollars

Ursula’s accountant has advised her that on 31 March 2011 the conversion for the above transaction would be $920 Australian dollars.

ACCOUNTING UNIT 3


DOCUMENT 4

SUN & YE IMPORTS Date: 31 March 2011

26 Hutton Street

Clayton VIC 3210

ABN: 832 543 395

Statement of Account

For: U Esby’s Computers

54 Balwyn Road

Balwyn North VIC 3128

Date Details Debit Credit Balance

1/01/2011

6/01/2011

7/01/2011

18/01/2011

26/02/2011

Balance

Invoice G242

Receipt 476

Discount

Receipt 491

Invoice G312

36 000

24 500

24 990

510

9 000

25 500 Dr

61 500 Dr

36 510 Dr

36 000 Dr

27 000 Dr

51 500 Dr

Payment terms: 30 days from invoice date

Days outstanding Current 30–60 60+

Amount outstanding 0 24 500 27 000

Required

1.1.1 Record the relevant documents into the appropriate journals. Total the special journals. (Narrations are not required in the General Journal.)

2 + 2 + 1 + 2 + 1 = 8 marks

1.1.2 Complete the Stock Control and Cash at Bank ledger accounts using the information contained in the journals.

5 + 3 + 1 = 9 marks

1.1.3 Using the Stock Control account in question 1.1.3 for reference, explain the purpose of a cross reference in a ledger account.

2 marks

1.1.4 Referring to the General Journal entry on 3 February, record the appropriate journal entry at the end of the reporting period. (A narration is required.) (Memo #229)

3 marks

1.1.5 Referring to the appropriate accounting principle, justify the value at which you recorded Document 3 in the journals of U Esby’s Computers.

2 marks

1.1.6 Explain why a business such as Sun and Ye Imports would issue a Statement of Account.

2 marks

ACCOUNTING UNIT 3


1.1.7 Explain how U Esby’s Computers should use Document 4 to make their accounting records and reports more reliable.

2 marks

1.2 U Esby’s Computers’ Creditors Subsidiary Ledger for April is set out below.

Creditor—Sun & Ye Imports

Date 2011

Cross Reference $ Date 2011

Cross Reference $

3 Apr. Bank 27 000 1 Apr. Balance 51 500

20 Apr. Bank 24 500 4 Apr. Stock Control/ 4 500

GST Clearing 450

18 Apr. Stock Control/ 11 700

GST Clearing 1 170

Creditor—Coastal Trading

Date 2011


Cross Reference $

2 Apr. Bank 2 352 1 Apr. Balance 2 400

Disc. Rev. 48 6 Apr. Stock Control/ 5 000

GST Clearing 500

Creditor—Cummings Computers

Date 2011


Cross Reference $

8 Apr. Bank/ 7 524 3 Apr. Stock Control/ 7 200

Disc. Rev. 396 GST Clearing 720

25 Apr. Bank 4 000 15 Apr. Stock Control/ 6 400

GST Clearing 640

26 Apr. Stock Control/ 2 200

GST Clearing 220

ACCOUNTING UNIT 3


Required

1.2.1 Use the entries in the Subsidiary Ledger accounts to reconstruct the Credit Purchases Journal and relevant entries in the Cash Payments Journal. You are to total the Credit Purchases Journal and the highlighted columns in the Cash Payments Journal.

4 + 1 = 5 marks

1.2.2 Complete the Creditors Control account in the General Ledger.

4 marks

Required

1.3.1 Using all the information in Question 1, complete the Cash Flow Statement for U Esby’s Computers for the three months ending 30 June 2011. Some of the information has been included for you.

6 marks

Cash Receipts Journal

Date 2011

Details Rec. No.

Bank Disc. Exp.


Sales GST Sundries

30 June Totals 214 040 1 910 63 750 40 800 102 000 10 200 40 000*

* Sundries consist of a loan from the NBA Bank.


Date 2011

Details Chq No.

Bank Disc. Rev.



30 June Totals 148 265 1 250 62 345 21 000 26 120 15 500 3 150 21 400*

* Sundries consist of:

Interest on Loan $500

Loan (Repayment) $3 000

Accrued Wages $2 200

Office Equipment $6 000

GST Clearing $5 200

Prepaid Rent Expense $4 500

1.3.2 During the reporting period some of the Prepaid Rent Expense was consumed. Explain why all of the Rent Expense is shown as ‘Prepaid’ in the answer book.

2 marks

Total: 45 marks

ACCOUNTING UNIT 3


Question 2

Bikemart

Cameron Armstrong owns and manages a business that buys and sells bicycles, bicycle accessories, and bicycle carriers for cars. His business is called Bikemart. Cameron maintains a double-entry accounting system using a perpetual inventory system for stock, the accrual method for recording and reporting, and the FIFO method for cost assignment of his stock. The following two accounts are maintained as Control accounts.

Balances at 1 January 2011 Debtors Control $16 000

Stock Control $45 000

Cameron’s Capital at 1 January 2011 is $285 000.

Cost assignment: FIFO Stock item: Bicycle Carriers

Date 2011

Particulars IN OUT BALANCE

Qty

Unit Cost

Total

Qty

Unit Cost

Total

Qty

Unit Cost

Total

1 Jan. Balance 600 25 15 000

1 Jan. Inv. A719 80 25 2 000 680 25 17 000

3 Jan. Inv. 300 200 25 5 000 480 25 12 000

15 Jan. Inv. A877 100 26 2 600 480

100

25

26

14 600

20 Jan. Inv. 301 400 25 10 000 80

100

25

26

4 600

26 Jan. Inv. A980 200 26 5 200 80

300

25

26

9 800

29 Jan. Inv. 302 80

120

25

26

2 000

3 120

180

26

4 680

30 Jan. Memo X54 3 26 78 177 26 4 602

ACCOUNTING UNIT 3


Additional Information:

• Memorandum X54 is for 3 bicycle carriers, which Cameron withdrew for his own family.

• All bicycle carrier stock is bought and sold on credit.

• GST is charged at 10% on all purchases and sales.

• There were no bad debts during January 2011.

• A physical stocktake done on 31 January 2011 revealed 175 bicycle carriers in the store. (Memorandum X59).

Required

2.1 Suggest one advantage of a firm maintaining control accounts.

1 mark

2.2 The balance of the Stock Control account at 1 January 2011 is different to the balance for bicycle carriers on the stock card at the same date. Provide a reason for this.

1 mark

2.3 Use the stock card to calculate the Cost of Sales for bicycle carriers.

1 mark

2.4 Stock is sold at a mark-up of 200%. Use the stock card to calculate the Credit Sales of bicycle carriers.

1 mark

In addition to the buying and selling of bicycle carriers as shown on the Stock Card above, the firm buys and sells bicycles and bicycle accessories.

The following transactions relate to these other items during January 2011 (not the bicycle carriers).

Cash Sales $ 50 000

Credit Sales $ 250 000

Cost of Sales $ 100 000

Other information: GST charged on ALL Credit Sales $ 31 036

GST received on Cash Sales $ 5 000

Receipts from Debtors $ 340 000

Discounts allowed to Debtors $10 000

Required

2.5 Complete the Debtors Control account for January to determine its balance at 31 January 2011. Record this balance in the account.

4 marks

2.6 Record the adjustment on the Stock Card as a result of the stocktake.

2 marks

ACCOUNTING UNIT 3


2.7 Suggest a possible reason for the findings of the stocktake, other than theft or a mistake in the counting of stock during the stocktake.

1 mark

The GST Clearing account for January 2011 is as follows:

GST CLEARING

Date Cross Reference $ Date Cross Reference $

31 Jan. Bank 1 13 000 1 Jan. Balance

13 000

Bank 20 000 31 Jan. Debtors Control

31 036

Creditors Control

2 25 000 Bank

3 5 000

Balance 8 964

58 000

58 000

Required

2.8 Identify the reason for the entries marked 1, 2 and 3.

3 marks

The business had Equipment costing $200 000 at 1 January 2011 and depreciates it at 10% per annum. The cash purchase of further equipment for $40 000 took place on 2 January 2011.

Required

2.9.1 Calculate the Depreciation of Equipment Expense for January 2011.

2.9.2 Record the depreciation adjustment in the General Journal. (A narration is not required.) 2 + 2 = 4 marks

Although wages are paid weekly, there was still $1 800 owing to employees at 31 January 2011.

Required

2.10 Prepare the General Journal entry to record the wages adjustment. (A narration is not required.)

2 marks

ACCOUNTING UNIT 3


During January 2011, Cameron wrote a memorandum to correct an error made in the accounts.

Memorandum No X60 31/01/11

TO: Jim Green, Accountant

Reason: Correction of Error

Three bicycle carriers were incorrectly recorded as being withdrawn by me for personal use by my family. These carriers are in fact used as display advertising in stores to promote sales.

Signed: C. Armstrong

Required

2.11 Prepare the General Journal entry to record the necessary correction. Refer to the Stock Card. (A narration is not required.)

2 marks

2.12.1 Identify the effect on Net Profit if the correction in 2.11 was not made. Would Net Profit be overstated, understated, or have no effect?

1 mark

2.12.2 Identify the effect on Owner’s Equity if the correction in 2.11 was not made. Would Owner’s Equity be overstated, understated or have no effect?

1 mark

2.13 Referring to a qualitative characteristic, explain the purpose of Cameron recording this request to his accountant in a memorandum to correct an error.

2 marks

The following cash outflows took place during January 2011 in addition to the non-cash expenses and adjustments shown above. Paid to Creditors ($300 000)

Wages ($60 000)

Accrued Wages ($2 000)

GST Settlement ($13 000)

GST Paid to Suppliers ($20 000)

Advertising ($15 000)

Administration ($8 000)

Drawings ($80 000)

Equipment ($40 000)

ACCOUNTING UNIT 3


Required

2.14 Prepare a Classified Profit and Loss Statement for the reporting period. This is to include all sales of bicycles, bicycle accessories and bicycle carriers.

7 marks

2.15 Calculate total expenses and then complete a Profit and Loss Summary account for January 2011. Revenues for the month totalled $360 360.

1 + 2 = 3 marks

2.16 Referring to the Profit and Loss Statement for January 2011, justify your treatment of discounts as an expense.

2 marks

2.17 Show how the Owner’s Equity section of the Balance Sheet would appear at 31 January 2011.

3 marks

2.18 The owner, Cameron Armstrong, is aware that although Bikemart is making a satisfactory profit, its cash flow has deteriorated causing the bank account to go into overdraft. He is concerned that by charging depreciation on the assets, their carrying value is falling, thereby not providing sufficient cash to eventually replace the assets.

Required

2.18.1 Is Cameron correct to be concerned? Justify your answer

2.18.2 Using the information in the question, explain how a profit has been made in January while the bank has fallen into overdraft.

2 + 2 = 4 marks

Total: 45 marks

ACCOUNTING UNIT 3


ACCOUNTING UNIT 3

Practice written examination 2011

Reading time: 15 minutes Writing time: 1 hour 30 minutes

ANSWER BOOK

Instructions

A question book is provided with this answer book.

Answer all questions in the spaces provided in this book.

Refer to the Instructions on the front cover of the question book.

Name ……………………………………………………....... Teacher ……………………………........

Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.

ACCOUNTING UNIT 3


Question 1


1.1.1 Cash Receipts Journal

Date 2011

Details Rec. No.

Bank Disc. Exp.


Sales GST Sundries



Date 2011

Details Chq No.

Bank Disc. Rev.




125 550 650 55 000 23 000 25 450 15 500 2 750 4 500*


Sales Journal

Date 2011

Debtor Invoice No.



Purchases Journal

Date 2011




ACCOUNTING UNIT 3


General Journal



2 + 2 + 1 + 2 + 1 = 8 marks

1.1.2 Stock Control

Date 2011


Cross Reference $

1 Jan. Balance 65 300

Cash at Bank

Date 2011


Cross Reference $

1 Jan. Balance 58 700

5 + 3 + 1 = 9 marks

ACCOUNTING UNIT 3


1.1.3

Explanation

2 marks

1.1.4 General Journal



3 marks

1.1.5

Principle

Explanation

2 marks

1.1.6

Explanation

2 marks

1.1.7

Explanation

2 marks

ACCOUNTING UNIT 3


1.2.1 Purchases Journal

Date 2011




Date 2011

Details Chq No.

Bank Disc. Rev.



4 + 1 = 5 marks

1.2.2 Creditors Control

Date 2011


Cross Reference $

4 marks

ACCOUNTING UNIT 3


1.3.1

U ESBY’S COMPUTERS Cash Flow Statement for the three months ended 30 June 2011

CASH FLOWS FROM OPERATING ACTIVITIES $ $

Cash Sales 102 000

Payments to Creditors (61 095)

Wages Expense (26 120)

Prepaid Rent Expense (4 500)

Purchases of Stock (21 000)

GST Paid (3 150)

Net Cash Flows from Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES

Net Cash Flows from Investing Activities

CASH FLOWS FROM FINANCING ACTIVITIES

Loan Repayment (3 000)

Net Cash Flows from Financing Activities

Cash Surplus (Deficit)

Bank Balance as at 1 April 2011

Bank Balance as at 30 June 2011

6 marks

ACCOUNTING UNIT 3


1.3.2

Explanation

2 marks

Question 2

Bikemart

2.1

One advantage

1 mark

2.2

Reason

1 mark

2.3 Calculate the Cost of Sales for bicycle carriers.

1 mark

2.4 Calculate the Credit Sales for bicycle carriers.

1 mark

ACCOUNTING UNIT 3


2.5 Debtors Control

Date 2011


Cross Reference $

4 marks


Cost assignment: FIFO Stock item: Bicycle Carriers

Date 2011


Qty

Unit Cost

Total

Qty

Unit Cost

Total

Qty

Unit Cost

Total

1 Jan. Balance 600 25 15 000

1 Jan. Inv A719 80 25 2 000 680 25 17 000

3 Jan. Inv 300 200 25 5 000 480 25 12 000

15 Jan. Inv A877 100 26 2 600 480

100

25

26

14 600

20 Jan. Inv 301 400 25 10 000 80

100

25

26

4 600

26 Jan. Inv A980 200 26 5 200 80

300

25

26

9 800

29 Jan. Inv 302 80

120

25

26

2 000

3 120

180

26

4 680

30 Jan. Memo X54 3 26 78 177 26 4 602

2 marks

2.7

Reason

1 mark

ACCOUNTING UNIT 3


2.8 Identify the reason for the entries in the GST Clearing account marked 1, 2 and 3.

1.

2.

3.

3 marks


2 marks

2.9.2 Record the depreciation adjustment in the General Journal. (A narration is not required.)

General Journal



2 marks


General Journal



2 marks

ACCOUNTING UNIT 3



General Journal



2 marks

2.12.1 Identify the effect on Net Profit. (Tick the correct box.)

Overstated Understated No effect

1 mark

2.12.2 Identify the effect on Owners Equity. (Tick the correct box.)


1 mark

2.13

Qualitative characteristic

Explanation

2 marks

ACCOUNTING UNIT 3


2.14

BIKEMART Classified Profit and Loss Statement for January 2011

$ $

7 marks

2.15.1 Calculate total expenses for January.

1 mark

2.15.2 Complete the following account.

Profit and Loss Summary

Date 2011


Cross Reference $

2 marks

ACCOUNTING UNIT 3


2.16 Justification of discounts as an expense.

2 marks

2.17

Balance Sheet (extract) as at 31 January 2011

$ $

3 marks

2.18.1

Explanation

2 marks

2.18.2

Explanation

2 marks

Total: 45 marks

ACCOUNTING UNIT 3


Solutions to Unit 3 practice exam 2011

Question 1


1.1.1

Cash Receipts Journal

Date 2011

Details Rec. No.

Bank Disc. Exp.

Debtors Cost of

Sales

Sales GST Sundries


31 Mar. Dellios Traders

2 445 6 000 6 000

Total 164 067 1 605 59 500 38 608 96 520 9 652 0


Date 2011

Details Chq No.

Bank Disc. Rev.




125 550 650 55 000 23 000 25 450 15 500 2 750 4 500*


Sales Journal

Date 2011

Debtor Invoice No.



Purchases Journal

Date 2011




31 Mar. Coastal Trading 265 432 920 0 920

Total 63 170 6 225 69 395

ACCOUNTING UNIT 3


General Journal



31 Mar. Advertising 10 500

Stock Control 10 500

31 Mar. Bad Debts 24 000

Debtors Control 24 000

Debtor—Dellios Traders

24 000

2 marks are allocated to each entry in the Purchases Journal and the General Journal. 1 mark is allocated for the entry in the Cash Receipts Journal and 1 mark for totalling the journals.

2 + 2 + 1 + 2 + 1 = 8 marks

1.1.2 Stock Control

Date 2011


Cross Reference $

1 Jan. Balance 65 300 31 Mar. Advertising 10 500

31 Mar. Bank 23 000 Drawings 2 000

Creditors Control 63 170 Cost of Sales 38 608

Cost of Sales 19 888

Balance 80 474

151 470 151 470

Subtract 1 mark for each incorrect entry

ACCOUNTING UNIT 3


Cash at Bank

Date 2011


Cross Reference $

31 Mar. Cash Receipts 164 067 1 Jan. Balance 58 700

Balance 20 183 31 Mar. Cash Payments 125 550

184 250 184 250

Subtract 1 mark for each incorrect entry. 1 mark has been allocated for balancing the ledgers

5 + 3 + 1 = 9 marks

1.1.3

Explanation

It enables the corresponding entry in another ledger account to be found. It assists in the

audit trail. Answers should refer to an entry in the Stock Control account.

1 mark for the explanation. 1 mark for a reference to an entry in the account.

2 marks

1.1.4 General Journal



31 Mar. Rent Expense 3 000

Prepaid Rent Expense 3 000

(Adjusting entry for 2

months rent used. Memo

# 229)

1 mark is allocated for the correct accounts, 1 mark for the correct amount and 1 mark for the narration.

3 marks

1.1.5

Principle Monetary unit principle

Explanation The transaction was recorded at $920 as this is the Australian dollar conversion

of the invoice price. The monetary unit principle requires businesses trading in Australia to

record transactions in Australian dollars.

1 mark for the principle, 1 mark for the explanation.

2 marks

ACCOUNTING UNIT 3


1.1.6

Explanation

To document transactions between the two businesses to ensure that the records of the

two businesses agree. It also serves to remind the customer (U Esby Computers) of the amount

they owe and the amount overdue for payment.

2 points are required for 2 marks.

2 marks

1.1.7

Explanation

To check their journal entries and ledger accounts to ensure that their records match. This

provides a means of making sure that reports are free from error.

2 marks

1.2.1

Purchases Journal

Date 2011



3 Apr. Cummings Computers 7 200 720 7 920

4 Apr. Sun & Ye Imports 4 500 450 4 950

6 Apr. Coastal Trading 5 000 500 5 500


18 Apr. Sun & Ye Imports 11 700 1 170 12 870


30 Apr. TOTALS 37 000 3 700 40 700

ACCOUNTING UNIT 3



Date 2011

Details Chq No.

Bank Disc. Rev.



2 Apr. Coastal Trading

2 352 48 2 400

3 Apr. Sun & Ye 27 000 27 000

8 Apr. Cummings Comp.

7 524 396 7 920

20 Apr. Sun & Ye 24 500 24 500

25 Apr. Cummings Comp.

4 000 4000

30 Apr. TOTALS 65 376 444 65 820

Subtract 1 mark per incorrect entry. 1 mark is allocated for totals.

4 + 1 = 5 marks

1.2.2 Creditors Control

Date 2011


Cross Reference $

30 Apr. Bank/ Disc. Revenue 65 820 1 Apr. Balance 53 900

Balance 28 780 30 Apr. Stock Control/ GST Clearing

40 700

94 600 94 600

1 mark per entry. Entries will be consequential to the journal totals.

4 marks

ACCOUNTING UNIT 3


1.3.1 U ESBY’S COMPUTERS Cash Flow Statement for the three months ended 30 June 2011

CASH FLOWS FROM OPERATING ACTIVITIES $ $ Cash Sales 102 000

Receipts from Debtors 61 840

GST received 10 200 174 040

Payments to Creditors (61 095)

Wages Expense (26 120)

Prepaid Rent Expense (4 500)

Purchases of Stock (21 000)

GST paid (3 150)

Interest on Loan (500)

Accrued Wages paid (2 200)

GST Settlement (5 200) (123 765)

Net Cash Flows from Operating Activities

50 275

CASH FLOWS FROM INVESTING ACTIVITIES Office Equipment (6 000)

Net Cash Flows from Investing Activities (6 000)

CASH FLOWS FROM FINANCING ACTIVITIES Loan from NBA Bank 40 000

Drawings (15 500)

Loan Repayment (3 000)

Net Cash Flows from Financing Activities 21 500

Cash Surplus (Deficit) 65 775

Bank Balance as at 1 April 2011 (20 183)

Bank Balance as at 30 June 2011 45 592

Subtract 1 mark per error and 1 mark in total for incorrect totalling.

6 marks

ACCOUNTING UNIT 3


1.3.2

Explanation

At the time of the payment it was all prepaid. The Cash Flow Statement reflects the cash

journals. The fact that some has been expensed does not affect the cash flow.

2 points are required for 2 marks.

2 marks

Question 2

Bikemart

2.1

One advantage

Removes detail from the General Ledger. Provides a checking mechanism in relation to

subsidiary records. Enables the specialisation/allocation of duties.

1 mark

2.2

Reason

Stock control represents ALL stock, not just the bicycle carriers shown on the Stock Card.

The Stock Card represents one type of stock only.

1 mark

2.3 Calculate the Cost of Sales for bicycle carriers.

$5 000 + 10 000 + 2 000 + 3 120

= $20 120

1 mark

ACCOUNTING UNIT 3


2.4 Calculate the Credit Sales for bicycle carriers.

Sales = (1 + mark-up percentage) x cost price

= (1 + 200%) x $20 120 = $60 360

1 mark

2.5 Debtors Control

Date 2011


Cross Reference $

1 Jan. Balance 16 000 31 Jan. Bank/Discount Exp. 350 000

31 Jan. Credit Sales/GST Clearing

341 396 Balance 7 396

357 396 357 396

1 mark for each correct entry.

Subtract 1 mark for incorrect cross reference and 1 mark for incorrect date.

4 marks

ACCOUNTING UNIT 3



Cost assignment: FIFO Stock item: Bicycle carriers

Date 2011


Qty

Unit Cost

Total

Qty

Unit Cost

Total

Qty

Unit Cost

Total

1 Jan. Balance 600 25 15 000

1 Inv. A719 80 25 2 000 680 25 17 000

3 Inv 300 200 25 5 000 480 25 12 000

15 In A877 100 26 2 600 480

100

25

26

14 600

20 In 301 400 25 10 000 80

100

25

26

4 600

26 Inv. A980 200 26 5 200 80

300

25

26

9 800

29 Inv. 302 80

120

25

26

2 000

3 120

180

26

4 680

30 Memo X54 3 26 78 177 26 4 602

31 Memo X59 2 26 52 175 26 4 550

2 marks for whole line correct. Deduct 1 mark for omission of memo number. No loss of marks if date is omitted.

2 marks

2.7

Reason

The undersupply of stock by the supplier.

The oversupply of stock to the customer.

1 mark

2.8 Identify the reason for the entries in the GST Clearing account marked 1, 2 and 3.

1. GST settlement to the ATO for amount owed for prior period.

2. GST incurred on the credit purchase of stock.

3. GST received from the cash sale of stock.

1 mark per correct entry. Expect, prior period, incurred and received.

3 marks

ACCOUNTING UNIT 3



200 000 + 40 000 = 240 000

240 000 x 10% = 24 000 per annum

= 2 000 for January

1 mark for adding $40 000 and 1 mark for calculating 1 month.

2 marks

2.9.2 Prepare the General Journal entry to record the depreciation adjustment. (A narration is not required.)

General Journal



31 Jan. Depreciation of Equipment

2 000

Accumulated Depreciation of Equipment

2 000

1 mark per correct line. Watch for consequentials in amount. Only 1 mark if entries reversed.

2 marks


General Journal



31 Jan. Wages Expense 1 800

Accrued Wages Exp. 1 800

1 mark per correct line. Watch for consequential amount.

2 marks

ACCOUNTING UNIT 3



General Journal



31 Jan. Advertising Expense 78

Drawings 78

1 mark per correct line. 1 mark only if entries are reversed.

2 marks

2.12.1 Identify the effect on Net Profit. (Tick the correct box.)


√

1 mark

2.12.2 Identify the effect on Owner’s Equity (Tick the correct box)


√

1 mark

2.13

Qualitative characteristic Reliability

Explanation The memorandum is a source document. It provides evidence that the event

was requested by the owner. The source document ensures that the information in the reports

Is free from error and bias.

1 mark for correct characteristic. 1 mark for evidence/explanation.

2 marks

ACCOUNTING UNIT 3


2.14

BIKEMART Classified Profit and Loss Statement for January 2011

REVENUES $ $

Credit Sales 310 360

Cash Sales 50 000 1 360 360

Less Cost of Goods Sold

Cost of Sales 1 120 120

Gross Profit 240 240

Less Stock Loss 1 52

Adjusted Gross Profit 240 188

Less Other Expenses

Depreciation of Equipment 1 2 000

Advertising Expense 1 15 078

Administration Expense 8 000

Wages Expense 1 61 800

Discount Expense 1 10 000 96 878

NET PROFIT 143 310

1 mark as shown; to include correct amount. Minus 1 mark in total for aliens or omission of administration expense. Minus 1 mark if no attempt to calculate net profit.

7 marks

ACCOUNTING UNIT 3


2.15.1 Calculate total expenses for January.

120 120 + 52 + 96 878 = 217 050

1 mark

2.15.2 Complete the following account.

Profit and Loss Summary

Date 2011


Cross Reference $

31 Jan. Total Expenses 217 050 31 Jan. Total Revenues 360 360

Capital 143 310

360 360 360 360

1 mark for correct entry of expenses and revenues. 1 mark for closing to capital and totals.

2 marks

2.16 Justification of discounts as an expense.

Discounts are a reduction in inflow of resources (the business receives less cash), which

decreases an asset (Debtors) and decreases Owner’s Equity.

1 mark for reduction in inflow and 1 for reduction in Owner’s Equity.

2 marks

2.17 Balance Sheet (extract) as at 31 January 2011

$ $

Capital as at 1 January 2011 1 285 000

Add Net Profit 1 143 310

428 310

Less Drawings 1 80 000 348 310

1 mark as shown. Minus 1 mark if no total shown.

3 marks

ACCOUNTING UNIT 3


2.18.1

Explanation Cameron should not be concerned as the charging of depreciation on an asset

does not cause a change in cash flow. It is not creating a fund to replace the asset; it is merely

allocating the cost of the asset over its useful life.

1 mark for not a cash flow. 1 mark for allocation of cost not a fund.

2 marks

2.18.2

Explanation The bank has fallen into overdraft because the cash outflows have exceeded the cash inflows. Some of these cash outflows were not expenses and do not therefore affect the Profit and Loss Statement. Examples are drawings and the purchase of equipment.

1 mark for explanation that cash differs from profit. 1 mark for examples.

2 marks

Accounting Unit 3 practice exam 2011 and suggested solutions · Students are permitted to bring...

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