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FoundationCertificateSynoptic Practice assessment 1

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I n f o r m a t i o n

The total time for this practice assessment is 2 hours.The total mark for this practice assessment is 100. The marks for each sub-task are shown alongside the task.Read the scenario carefully before attempting the questions.

S c e n a r i o

The tasks are set in a business situation where the following conditions apply:• You are employed as an Accounts Assistant in the finance function at Pet Stores.• The finance function includes the financial and management accounting teams.• Pet Stores uses a manual bookkeeping system.• Double entry takes place in the general ledger. Individual accounts of trade receivables and trade

payables are kept in the sales and purchases ledger as subsidiary accounts.• The cash book and petty cash book should be treated as part of the double entry system unless the

task instructions state otherwise.• The VAT rate is 20%.

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Task 1: 12 marksYou have worked at Pet Stores for six weeks and have been working closely with your manager, Simoneto understand the tasks involved in your role. You work from 09.00 to 16.00, Monday to Friday of each week. Each finance period is four weeks induration so you plan your work in a four week cycle.The work schedules below show the days when routine tasks must be completed and the amount of timeeach task takes to complete. It is very important that you complete the management accounts tasks by theend of the identified day and the financial accounts tasks by the day and time indicated.

Weekly work schedule – financial accounts

Task Task to be completed each week by: Task duration Day TimePrepare payments to suppliers Wednesday 11:00 1 hourProcess sales invoices and credit notes Monday 14:00 2 hoursProcess purchase invoices and credit notes Monday 16:00 2 hoursRecord receipts and payments into the cash book Friday 11:00 2 hoursContact customers with outstanding debts Tuesday 10:00 1 hourUpdate petty cash book Thursday 11:00 1 hourPrepare remittance advices to accompany payments to suppliers Wednesday 13:00 1 hourReconcile supplier statements with purchase ledger Tuesday 14:00 2 hours

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Monday Tuesday Wednesday Thursday FridayWeek 1 Cost coding

(2 hours)Product costanalysis (1 hour)

Labour costreport (1 hour)

Week 2 Data gathering (1 hour)

Data gathering (1 hour)

Product costanalysis (1 hour)

Budget report (2hours)

Budget report(2 hours)

Week 3 Material costreport (1 hour)

Week 4 Variance analysis(1 hour)

Variance analysis(1 hour)

Monthly work schedule – management accounts

You are planning your work at the start of the day on Monday of week 4. You have been asked to attenda staff meeting at 10am to 11am and lunch should be taken at 12pm to 1pm. (a) Complete your to-do list for today, Monday of week 4. Refer to the management and financial

accounts schedules and list the tasks in order of completion in the table set out below. Write thetask descriptions in the column on the right. (7 marks)Choose from the following tasks:

Monday, week 4 to-do list (in order of completion)Task 1 09.00 -10.00Task 210.00 -11.00Task 311.00 -12.00Task 412.00 -13.00Task 513.00 -14.00Task 614.00 -15.00Task 715.00 -16.00

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• Contact customers with outstanding debts

• Prepare payments to suppliers

• Update petty cash book

• Product cost analysis

• Budget report

• Process purchase invoices and credit notes

• Record receipts and payments into thecash book

• Labour cost report

• Data gathering

• Lunch

• Prepare remittance advices to accompanypayments to suppliers

• Cost coding

• Variance analysis

• Reconcile supplier statements withpurchase ledger

• Process sales invoices and credit notes

• Meeting

• Material cost report

(b) Identify which week you are less busy. (1 mark)

Your colleague has partly completed balancing the cash book.

Details Cash Bank VAT Trade Details Cash Bank VAT Cash Trade receivables purchases payable £ £ £ £ £ £ £ £ £ £

Balance b/f 2,410 Balance b/f 840

P Smith 624 104 520 T Simon 84 14 70

Cash Bank

Turner 6,451 6,451 S Tina 1,080 1,080

(c) What will the balance carried down be for both the cash and bank? (2 marks)

Balances Amount £Cash Bank

(d) Identify whether the bank and cash balance brought down will be a debit or a credit. (2 marks)

Balances Debit CreditCash Bank

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Task 2: 12 marksYou have been working with Simone looking at the different roles and tasks involved in the AccountingDepartment and the importance of solvency.(a) Match the task with the job role. (5 marks)

Task Job role

(b) Which of the following tasks could improve the solvency of the business? (3 marks)

(a) Chasing outstanding money owed by customers(b) Entering transactions into the petty cash book (c) Preparing the financial accounts (d) Preparing the VAT return(e) Banking cheques received (f) Negotiating longer payment terms with suppliers

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Advertise for new member of theteam in purchase ledger

Enter the receipts into the cashbook

Enter the hours worked fromclocking in cards to timesheets

Prepare contracts of employment

Chase customers who have notpaid their invoices

Credit Control Assistant

Cashier

Human Resources Manager

Payroll Assistant

(c) Match the tasks to the appropriate accountant. Either Financial or Management Accountant. (3marks)

Task Accountant

Task:

Prepare budgets

Prepare financial accounts

Cost a new product

Accountant:

Management Accountant

Financial Accountant

On a staff night our your colleague Jasmin, mentions that she is annoyed because another member of staffin the same team is paid £5,000 a year more than her. (d) What ethical principle has been breached? (1 mark)

(a) Confidentiality (b) Integrity (c) Objectivity (d) Familiarity

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Task 3: 12 marks Simone suggests that this month you are ready to be more involved in the accounting tasks. (a) For each situation select the most appropriate payment method. (4 marks)

Situation Payment methodMaking a payment by post to pay for an advert you placed in the local newspaper Paying the rent monthly. The amount does not vary. Paying a mobile telephone bill. The amount varies each month Paying staff wages direct into employees bank accounts

Select from the following: Standing order, Faster payment, Cheque, Direct debit.State whether the transactions below will be posted to the DEBIT side of the cash book or theCREDIT side of the cash book. (4 marks)

DEBIT CREDITReceipt from HMRC Receipt for bank interest Debit card payment for vehicle insurance BACS transfer for payment of wages

Simone gives you the totals from the discount received day book:

Discount received day bookDetails Total VAT Net £ £ £Totals 2,700 450 2,250

(b) What will the entries be in the general ledger? (3 marks)

Account name Amount £ Debit Credit

One of Pet Stores suppliers, Wholesale Supplies, issued a credit note for £110 plus VAT. (c) Record the journal entry to be made into the purchase ledger account of Wholesale Supplies.

(1 mark)

Account name Amount £ Debit Credit

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Task 4: 16 marks

During your training in July, you went through how to complete a bank reconciliation with your manager,Simone. Simone asks you to complete the bank reconciliation for August.

Simone provides you with the bank statement and cash book for August below.

Bank statement

Date 20-X Details Paid out Paid in Balance £

01-Aug Opening balance 5471 C

02-Aug Counter credit 708 6179 C

10-Aug Cheque 002458 47 6132 C

12-Aug Counter credit 241 6373 C

15-Aug Cheque 002459 630 5743 C

25-Aug Shelby Ltd 1256 6999 C

27-Aug Cheque 002460 108 6891 C

27-Aug Bleasby 3695 10586 C

27-Aug Cheque 002461 809 9777 C

D = Debit, C=Credit

Cash book

Date Details Bank Date Details Bank

01-Aug Balance b/d 5424 19-Aug 002459 Tower Supplies 630

01-Aug Counter credit 708 20-Aug 002461 LJ King 809

10-Aug Counter credit 241 21-Aug 002462 Smithson 744

23-Aug Counter credit 1256 21-Aug 002460 R Rowe 108

25-Aug TW Harris 360

27-Aug Bleasby 3695

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(a) Reconcile the bank account with the cash book and complete the bank reconciliation statementbelow. (6 marks)

Bank reconciliation statement £

Balance as per bank statement

Add

Total to add

Less

Total to subtract

Balance as per cash book

(b) Calculate the balance c/d as at from the cash book in part (a). (1 mark)£

Simone has just informed you that the transaction dated 27 August for a receipt from Bleasby was postedto the sales account but it should have been posted to the rent received account.(c) Record the journal entries in the general ledger to correct this error. (4 marks)

Account name Amount £ Debit Credit

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Simone asks you to check an email to be sent to Bleasby about a rent increase in the property you rentout.(d) Review the draft email and highlight five errors. Errors may be wrongly spelt, incorrectly used or

technically incorrect. (5 marks)

Hi Mr Hemming,

You current monthly rent is £3,695 to rent the factory at Highfields Industrial Estate. I amwriting to give you 3 monthes’ notice that from 1st Decmber 20-X the rent wil increase to£4,000 per month.

If you have any quieries please do not hesitate to contact me.

Kind regards

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Task 5: 12 marks During your induction, you spent some time with Ellie who deals with suppliers and is involved in improvingthe sustainability policy.(a) Select which two areas relate to the social element of the sustainability policy. (2 marks)

(a) Energy saving schemes(b) Supporting colleagues with training(c) Reduction of emissions(d) Supporting a local charity event by letting staff help out

As part of Corporate Social Responsibility (CRS), Pet Stores is considering changing suppliers but needsto complete the manufacturing account first. Simone asks you to calculate the figures within themanufacturing account using the information provided:

Closing inventory of finished goods £40,702Closing inventory of raw materials £43,677Purchase of raw materials £108,740Direct labour £60,000Opening inventory of work-in-progress £36,740Opening inventory of finished goods £47,230Manufacturing overheads £23,000Closing inventory of work-in-progress £30,699Opening inventory of raw materials £68,740

(b) Using the information above, calculate the following: (10 marks)

Direct materials used

Cost of goods sold

Manufacturing cost

Cost of goods manufactured

Direct cost

Task 6: 24 marks

Simone provides you with a list of balances, some include VAT some do not, she also tells you that thereis a balance brought forward owing to HMRC on the VAT account of £4,570:

VAT amount in the discounts received day book £320Irrecoverable debt including VAT £564VAT amount in the discounts allowed day book £570VAT payment to HM Revenue and Customs £4,570Total in the purchases day book not including VAT £14,800Total in the sales returns day book including VAT £960Total in the sales day book including VAT £34,740VAT amount on cash sales £3,360

(a) Enter the correct amount to be recorded in the VAT control account and identify whether thetransactions will be debits or credits. (12 marks)

Transactions Amount £ Debit Credit

VAT from the discounts received day book

VAT from irrecoverable debt

VAT from the discounts allowed day book

VAT payment to HM Revenue and Customs

VAT from the purchases day book

VAT from the sales returns day book

VAT from the sales day book

VAT on cash sales

(b) Calculate the closing balance on the VAT account following the adjustment in (a) above. (1 mark) £

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The following month, your colleague Tamara tells you that a purchase invoice was omitted from theaccounts. The invoice was for £840 plus VAT. (c) Calculate the revised balance on the VAT control account. (1 mark)

£

(d) Will the closing balance on the VAT control account represent an amount owed to HMRC or fromHMRC? (1 mark)

Owing to HMRC

Owed from HMRC

(e) In the box below, write a short report for non-finance staff containing: (9 marks)• A brief introduction outlining the areas you will be covering in the report• An explanation of what output tax is, giving an example• An explanation of what input tax is, giving an example• A description of what the balance brought down on a VAT control account will represent.Your report must be clear and structured appropriately.

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Task 7: 12 marksPet Stores pays its employees monthly and maintain a wages control account. A summary of last month’spayroll transactions is shown below:

Item £Gross wages 10,477Income tax 1,410Employees’ National Insurance contributions 1,003Employer’s National Insurance contributions 1,445Trade union fees £10 per month for 34 employees

Here is a list of the accounts that are used to record payroll entries:Bank, Employees’ National Insurance, Employer’s National Insurance, HM Revenue and Customs,Income Tax, Net Wages, Trade union, Wages control, Wages expense(a) Record the wages expense. (2 marks)

Account name Amount £ Debit Credit

Wages expense

Wages control

(b) Record the HM Revenue & Customs liability. (2 marks)

Account name Amount £ Debit Credit

Wages control

HM Revenue and Customs

(c) Record the trade union fees. (2 marks)

Account name Amount £ Debit Credit

Wages control

Trade union fund

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(d) Record the net wages paid to the employees. (2 marks)

Account name Amount £ Debit Credit

Wages control

Bank

You are assisting with the month end accounts. On 30 September a trial balance was extracted and didnot balance. The debit column totalled £102,000 and the credit column totalled £101,910.Simone tells you that an error has been found and relates to an entry made in the general ledger from theincorrectly totalled total column in the sales day book shown below. Sales day bookDate Details Invoice number Total VAT Net20-X 1 Sep Billsthorpe SI2369 1,176 196 9804 Sep Smith SI2370 15,096 2,516 12,58012 Sep Lead Ltd SI2371 12,000 2,000 10,00017 Sep Shelby SI2372 4,836 806 4,030 Totals 33,018 5,518 27,590

(e) Record the journal entry needed to remove the incorrect entry. (2 marks)

Account name Debit £ Credit £

(f) Record the journal entry needed to record the correct entry. (1 mark)

Account name Debit £ Credit £

(g) Record the journal entry needed to remove the suspense account balance. (1 mark)

Account name Debit £ Credit £

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