Accounting Friday 26 October 2012 Paper One Question book

Transcription

1 2012 Senior External Examination Accounting Friday 26 October 2012 Paper One Question book 9 am to 12:10 pm Time allowed Perusal time: 10 minutes Working time: 3 hours Examination materials provided Paper One Question book Paper One Response book Equipment allowed QSA-approved equipment non-programmable calculator Directions You may write in this book during perusal time. Paper One has three parts, each of equal value: Part A Knowledge, interpretation and evaluation Part B Routine practical procedures Part C Challenging practical application Attempt all questions. Suggested time allocation Part A: 50 minutes Part B: 70 minutes Part C: 60 minutes Assessment Assessment standards are at the end of this book. After the examination session Take this book when you leave.

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3 Part A Knowledge, interpretation and evaluation Part A has seven questions. Respond to all questions. Write your responses in the response book. Suggested time allocation: 50 minutes. Question 1 Explain the difference between the terms recognising the revenue and realising the revenue. Question 2 Why does a business owner or manager need to prepare an income statement when the information can already be found in the profit and loss determining accounts in the ledger? Question 3 Define balance day adjustments, and explain their relationship to the matching principle. Question 4 Explain the difference between relevance and reliability as it applies to financial information. Question 5 When allowing credit to customers it is important to obtain the appropriate credit approval. Describe two controls which should be carried out before credit is offered to potential customers. Question 6 Read each of the statements below. Draw on the concept of accrual accounting and, in particular, balance day adjustments to calculate the expense for the accounting period. Explain your reasons. Assume the accounting period is 1 July 2011 to 30 June a. $700 was paid for the telephone expense in the accounting period. At the end of the period $170 was still to be paid. b. Wages paid in the period were $ At 1 July, there was $1000 accrued from the previous period. At 30 June, accrued wages were $2000. c. Advertising paid during the period was $ This included an amount of $6000 paid on balance day for the next three months Accounting Paper One Question book 1

4 Question 7 The following text explains the cash control system used in the business of Miss Paula Stevens. Read the text and respond to the task below. Banking is usually done at the end of each week. During the week, any money received is kept in an unmarked bag, well hidden at the back of the cupboard in Miss Stevens office. Every Monday morning, Miss Stevens signs a few blank cheques for any payments that may need to be made. These cheques are left in the bag with the money. Any small purchases are paid immediately from the cash left in the cupboard. The business receives a bank statement at the end of each month and Miss Stevens secretary has a quick look to see if the amounts are approximately the same. She then files it in a filing cabinet. Miss Stevens also employs an assistant, Emily, whose duties include receiving cash and writing out receipts for this money. Miss Stevens prefers to record other transactions herself, but as Miss Stevens is very rarely in the office, Emily has taken over the recording of all accounting transactions. Write a response of approximately words to Miss Stevens that: outlines any deficiencies of the cash control system makes recommendations that could improve this system. End of Part A Accounting Paper One Question book

5 Part B Routine practical procedures Part B has three questions. Respond to all questions. Suggested time allocation: 70 minutes. Write your responses in the response book. Question 1 C Willis has provided you with the following information and asks you to: a. Complete the cash journals. b. Complete the Cash at Bank ledger A/c. c. Prepare a Bank Reconciliation Statement as at 29 February C Willis Bank Reconciliation Statement as at 31 January 2012 $ Credit balance as per bank statement Add: Deposit not yet credited Less: Unpresented cheque no Debit balance as per Cash at Bank A/c $ C Willis Cash Receipts Journal (extract) Date Rec. No. Particulars Bank 2012 Feb 4 CRS Sales Commission Revenue B Joyce CRS Sales N Leah CRS Sales E Poutney F Rosales CRS Sales Question 1 continues overleaf 2012 Accounting Paper One Question book 3

6 C Willis Cash Payments Journal (extract) Date Chq. No. Particulars Bank 2012 Feb K Barker Inventories Telephone Expense S Brown L Guenzler Inventories Wages Plant and Equipment Statement of Account C Willis Date Transaction Debit Credit Balance 2012 $ $ $ Feb 1 Opening Balance CR Deposit CR Interest CR Account service fee CR State Govt debit tax CR 4 Deposit CR 7 Deposit CR CR CR 12 Deposit CR 16 Deposit CR CR 18 Deposit CR 20 Deposit CR Cheque book CR 24 Deposit CR CR 27 Deposit CR CR 28 Deposit CR Accounting Paper One Question book

7 Question 2 M Brown sells the following products, recording inventories using a perpetual system of inventory control. Item code: Product A Product B Item description: Sun visors Sunscreen lotion Location: Storeroom Storeroom Recording method: FIFO Weighted average Units on hand: 70 $5 each as at 1 September 2012 During the month, the following transactions took place: 50 $5 each as at 1 September 2012 Sept 1 Purchased 600 units of Product $6 each 3 Sold 50 units of Product $15 each 6 Sold 400 units of Product $10 each 7 Purchased 500 units of Product $5 each 9 Purchased 70 units of Product $4 each 15 8 units of Product A sold on the 3rd were returned in a saleable condition 16 Returned 20 units of Product B purchased on the 7th 22 Sold 550 units of Product $9 each Purchased 25 units of Product $6 each 26 Purchased 750 units of Product $4 each Returned 12 units of Product A purchased on the 9th units of Product B sold on the 22nd were returned in a saleable condition 29 Sold 800 units of Product $9 each 30 Sold 71 units of Product $16.50 each Additional information All values are net (exclusive) of GST. A physical stocktake at the end of the month revealed 37 units of Product A and 150 units of Product B were on hand. You are required to: a. Prepare the stock cards for Product A and Product B (round off to two decimal points). b. Prepare general journal entries to show any discrepancies found. Part B continues overleaf 2012 Accounting Paper One Question book 5

8 Question 3 Process the following accounting data to prepare all necessary General Journal entries to record these transactions from 1 January 2011 to 30 June The financial year ends on 30 June each year. Note: Narrations and cash journals are not required. On 1 January 2011 Monster Enterprises purchased a motor vehicle from Phillips Ltd on credit costing $16000 (plus GST) with a residual value of $4000. Depreciation on this vehicle is to be calculated using the straight-line method, with the estimated life being three years. On this date, the annual insurance was paid, costing $500 cash (plus GST). On 1 February 2012 the motor vehicle was traded in to K Yates on credit. The trade-in value was $12000 (plus GST). A new vehicle was bought on credit from K Yates for $22000 (plus GST). The new vehicle is to be depreciated at the rate of 25% per annum using the reducing balance method. Note: Round all calculations to two decimal places. End of Part B Accounting Paper One Question book

9 Part C Challenging practical application Part C has one question. Suggested time allocation: 60 minutes. Write your responses in the response book. Question 1 You are required to use the following information of A Trader to prepare the: a. General Journal (narrations are not required). Note: A Trader does not use Sales and Purchases journals; all entries are to be made through the General Journal. b. Columnar Cash Receipts and Cash Payments journals (receipt numbers start at 10 and cheque numbers at 20). c. Accounts Receivable Ledger. d. Accounts Receivable Control, Accounts Payable Control, Bad & Doubtful Debts, and the Provision for Doubtful Debts accounts in the General Ledger (extract). A Trader had the following balances as at 1 June 2012: Accounts Receivable balances $ S Smith 2200 M Johnson 4000 H Hopeful 3300 Other accounts Accounts Payable Control 4000 Provision for Doubtful Debts 750 Question 1 continues overleaf 2012 Accounting Paper One Question book 7

10 Transactions for June 2012, inclusive of GST where appropriate, were: June 2 Purchased goods from P Peters $ Cash sales $7700. The cost price was $ H Hopeful paid $ Charged M Johnson $30 interest on overdue account 11 Cash purchases $ Sold goods to H Hopeful $660. The cost price was $ We were notified by S Smith s lawyer that he was declared bankrupt. We agreed to accept 30c in the $1 from him. Write the balance off as a bad debt 19 Paid P Peters $ Received $3300 from XYZ Co. for rent 27 Paid telephone $ Paid wages $ Incorrectly charged M Johnson $30 interest on the 10th instead of H Hopeful. Correct the error. Additional information The desirable closing balance for Provision for Doubtful Debts is to be $290 in the next accounting period. End of Part C End of Paper One Accounting Paper One Question book

11 Assessment standards from the Accounting Senior External Syllabus 2007 Criterion Standard A Standard B Standard C Standard D Standard E Knowledge, interpretation and evaluation recalls, describes and explains a comprehensive range of relevant facts, concepts, and principles applies an extensive knowledge of accounting concepts and principles to analyse and interpret information to solve problems and make valid decisions and recommendations communicates a comprehensive range of accounting information and understandings clearly, accurately and cohesively in written form, using appropriate terminology. recalls, describes and explains a substantial range of relevant facts, concepts and principles applies knowledge of accounting concepts and principles on most occasions to analyse and interpret information to solve problems and make valid decisions and recommendations communicates a substantial range of accounting information and understandings which are usually expressed clearly, accurately and cohesively in written form, using appropriate terminology. recalls and describes relevant facts and generally explains concepts and principles analyses and generally interprets accounting information to make valid decisions communicates a range of accounting information and understandings in written form, in a manner which is generally clear and accurate, using some appropriate terminology. states some relevant facts and concepts identifies relevant facts from accounting information communicates some accounting information in written form, although the communication sometimes lacks clarity and accuracy. states some facts communicates little accounting information in written form, and this communication lacks clarity and accuracy. Routine practical procedures accurately applies fundamental accounting concepts to select and organise relevant data to record a wide range of routine transactions consistently demonstrates knowledge of fundamental accounting concepts to correctly process accounting information in usual situations accurately prepares and effectively presents accounting reports. applies fundamental accounting concepts to select and organise relevant data to record a wide range of routine transactions in most situations usually demonstrates knowledge of fundamental accounting concepts to correctly process accounting information in usual situations accurately prepares and presents accounting reports on most occasions. applies fundamental accounting concepts to select and organise relevant data to record a range of routine transactions generally processes accounting information correctly in usual situations prepares and presents accounting reports with some inaccuracies. selects relevant data and records routine transactions on some occasions occasionally processes some accounting information correctly in usual situations prepares and presents accounting reports which frequently lack accuracy. seldom records routine transactions accurately rarely processes accounting information correctly in usual situations rarely prepares and presents accounting reports accurately Accounting Paper One Question book 9

12 (continued) Criterion Standard A Standard B Standard C Standard D Standard E Challenging practical application effectively applies accounting knowledge and concepts to accurately record a variety of transactions which include complex elements applies accounting knowledge and concepts to consistently and correctly process accounting information which includes complex elements accurately prepares and effectively presents accounting reports involving complex processing consistently and effectively solves problems involving complex practical processes. usually applies accounting knowledge and concepts to accurately record a variety of transactions which include complex elements applies accounting knowledge and concepts to correctly process, in most situations, accounting information which includes complex elements accurately prepares and effectively presents, on most occasions, accounting reports involving complex processing usually solves problems involving complex practical processes. generally applies accounting knowledge and concepts to accurately record transactions which include complex elements follows a given procedure to process accounting information which includes complex elements prepares and presents accounting reports involving complex processing with varying degrees of accuracy solves problems involving complex practical processes on some occasions. occasionally records accurately transactions which include complex elements follows a given procedure, in part, to process accounting information which includes complex elements prepares and presents accounting reports involving complex processing with little accuracy. seldom records transactions or processes information which include complex elements rarely prepares or presents accounting reports involving complex processing Accounting Paper One Question book

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