SAMPLE ASSESSMENT TASKS ACCOUNTING AND FINANCE GENERAL YEAR 12

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1 SAMPLE ASSESSMENT TASKS ACCOUNTING AND FINANCE GENERAL YEAR 12

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3 1 Sample assessment task Accounting and Finance General Year 12 Task 1 Unit 3 Assessment type: Project Conditions Period allowed for completion of the task: two weeks Some of the task requirements may be completed in class. Task weighting 10% of the school mark for this pair of units 1. Complete the table below, outlining the characteristics of three different types of business ownership: sole trader, partnership and small proprietary company. (10 marks) Characteristics Sole trader Partnership a) number of owners One owner Small proprietary company b) liability of owners c) ability to raise capital d) distributions of profits e) transfer of ownership f) accounting/legal entity g) continuity of existence 2. Explain two advantages and two disadvantages of each type of business ownership (sole trader, partnership and small proprietary company). Note: Do not provide the same advantage or disadvantage for different types of business ownerships i.e. do not use the same information more than once. (12 marks) 3. Describe three sources of finance suitable for purchasing a business. (6 marks) 4. In order to obtain finance from a financial institution to purchase a business, financial and legal information may be requested: describe three items that may be required. (6 marks)

4 2 5. Identify what the acronym GST stands for and define this term. (2 marks) 6. Explain four GST legal requirements for sole traders and/or partnerships. (4 marks) 7. (a) Explain the concept of bankruptcy as outlined in the Bankruptcy Act (2 marks) (b) Outline three disadvantages of becoming bankrupt. (3 marks) Total = 45 marks

5 3 Marking key for sample assessment Task 1 Unit 3 1. Complete the table below, outlining the characteristics of different types of business ownership. Characteristics of different types of business ownership Answer could include, but is not limited to, any of the following for each business type: Characteristics Sole trader Partnership 1 10 (0.5 marks per characteristic) Small proprietary company a) number of owners Less than 50 b) liability of owners Unlimited liability Unlimited liability Limited liability c) ability to raise capital Limited Limited Shareholders d) distributions of profits Not shared Shared Directors decide e) transfer of ownership If business sold If part of agreement Shares may be sold f) accounting/legal entity Accounting entity Accounting entity Legal entity g) continuity of existence No No Yes

6 4 2. Explain two advantages and two disadvantages of each type of business ownership (sole trader, partnership and small proprietary company). Note: Do not provide the same advantage or disadvantage for different types of business ownerships i.e. do not use the same information more than once. Explains two advantages of sole trader, partnership and small proprietary company Answer could include, but is not limited to, any two of the following for each business type: Advantages of sole trader one owner doesn t need to consult with others ease of formation the owner makes all business financial and operational decisions the owner keeps all profits Advantages of partnership ease of formation business responsibilities may be shared among the partners losses may be shared among the partners additional capital and expertise may be contributed by partners Advantages of small proprietary company separate legal entity limited liability ability to raise capital through shares Explains two disadvantages of sole trader, partnership and small proprietary company Answer could include, but is not limited to, any two of the following for each business type: 1 6 (1 mark per advantage) Subtotal /6 1 6 (1 mark per disadvantage) Disadvantages of sole trader unlimited liability not a legal entity sources of finances may be limited limited expertise in all aspects of business operation Disadvantages of partnership unlimited liability not a legal entity business profits shared mutual agency each partner responsible for the implications of business actions of other partners Disadvantages of small proprietary company ownership of the company and control of the company are separated shareholders aren t able to make decisions on behalf of the company high cost of establishment (when compared with sole trader and partnership) many rules and regulations need to be followed Subtotal /6 Total /12 Note: A duplicated advantage or disadvantage for a particular business type does not receive a second mark.

7 5 3. Describe three sources of finance suitable for purchasing a business. Describes in detail an appropriate source of finance for purchasing a business States an appropriate source of finance for purchasing a business 2 (per source of finance) 1 (per source of finance) Total /6 Answer could include, but is not limited to, the following types of finance: bank loan loans available for either a short term or long term for either current or non-current assets mortgage long-term finance, generally for non-current assets lease the business is able to hire and use a non-current asset over a period of time and then purchase at the expiration of the lease overdraft facility for businesses to keep withdrawing funds from their cash accounts when the balance reaches zero loans from family and friends 4. In order to obtain finance from a financial institution to purchase a business, financial and legal information may be requested: describe three items that may be required. 2 Describes in detail an appropriate type of financial or legal information (per type of information) 1 States an appropriate type of financial or legal information (per type of information) Total /6 Answer could include, but is not limited to: certificate of registration or incorporation and/or copy of business name registration details of any security offered, such as property valuations, certificate of titles evidence of financial performance, such as income statement and balance sheet, personal or business tax returns, bank statements business plan cash flow projections any leases or hire purchase details 5. Identify what the acronym GST stands for and define this term. Correctly identifies what the GST acronym stands for 1 Correctly defines GST 1 Total /2 Answer could include, but is not limited to: GST stands for goods and services tax Definition of GST could be either of the following: GST is a federal tax collected by business which imposes a 10% levy on most goods and services GST is a broad-based consumption tax levied on most goods and services conducted by business carrying on an enterprise in Australia

8 6 6. Explain four GST legal requirements for sole traders and/or partnerships. Explains the GST legal requirements for sole traders and partnerships Answer could include, but is not limited to: must register for GST if they have an annual turnover above $75,000 must have registered for an ABN may decide not to register for GST if their turnover is below $75,000 may choose not to register for GST if they believe the record keeping will be too great must complete a BAS statement for each tax period 1 4 (1 per requirement) Total /4 7. (a) Explain the concept of bankruptcy as outlined in the Bankruptcy Act (b) Outline three disadvantages of becoming bankrupt. Explains the concept of bankruptcy 2 States the meaning of bankruptcy but incorrectly explains the concept or does not 1 explain it Answer could include, but is not limited to: when people are unable to pay their debts and their affairs are administered by a registered trustee people who have unmanageable debt and who voluntarily lodge a petition to become bankrupt and have that petition upheld people who are unable to pay a creditor the amount owing of $5000 or more, and have the creditor apply to have the person declared bankrupt 1 3 Outlines three disadvantages of becoming bankrupt (1 mark per disadvantage) Answer could include, but is not limited to: business and personal assets may be sold to cover debt creditors can continue to demand payment for secured debts ability to travel overseas will be affected as permission to travel is required and passport may have to be surrendered ability to obtain future credit will be affected government rates and charges (council rates, water rates) still need to be paid credit rating is negatively affected as reporting agencies keep a record of bankruptcy for up to five years or longer Total /5

9 7 Sample assessment task Accounting and Finance General Year 12 Task 9 Unit 4 Assessment type: Test Conditions Time for the task: 30 minutes under invigilated conditions Calculators may be used Task weighting 5% of the school mark for this pair of units Multiple-choice Please circle your selected response. (4 marks) 1. Which one of the following set of terms is all classified as assets? (a) cash, accounts receivable, motor vehicles (b) depreciation, plant and machinery, rent receivable (c) plant and machinery, allowance for doubtful debts, cash (d) cash, accumulated depreciation, allowance for doubtful debts 2. Which one of the following describes the historical cost accounting principle? Historical cost records an asset (a) based on the purchase price paid by the business. (b) based on the value of the asset that the market is willing to pay. (c) by the amount that it will cost the business to replace the asset. (d) based on the cost minus the salvage value. 3. Which one of the following is not an advantage of the straight line method of depreciation? (a) it is easy to calculate (b) only one calculation is needed (c) depreciation added to maintenance costs rise as the asset ages (d) the cost of the asset is spread evenly through its useful life 4. Which of the following would not be included in the cost of an asset? (a) installation costs (b) insurance for the next 12 months (c) cost of freight for delivery of machine (d) insurance in transit

10 8 Practical Question 5 (16 marks) Larry s Lawns operates as a sole trader doing small, private gardening work. It purchased three new lawn mowers on 1 January Each mower cost $12,500 and each required a trailer costing $500. Trailers also had to be registered at a cost of $300 each. On that date, it paid insurance for the year at a cost of $65 per mower. Larry s Lawns uses the STRAIGHT LINE method to depreciate its assets. Lawn mowers are expected to last for five years and to be sold for $2,500 each at the end of this period. Required Show the General Journal entries to record the depreciation charges to the end of June Workings

11 9 General Journal Larry s Lawns Date Details Debit Credit

12 10 Marking key for sample assessment Task 9 Unit 4 Multiple-choice Answers 1 (a) 2 (a) 3 (c) 4 (b) 1 4 (1 mark per correct answer) Practical Question 5 Show the General Journal entries to record the depreciation charges to the end of June Workings Calculations 12,500 (1) (1) = 13,000 (1) 3 13,000 X 3 = 39,000 (1) 7,500 (1) = 31,500/5 (1) = 6,300 per annum (1) 4 Depreciation for year ending 30 June ,300/12(1) x 6 (1) = 3,150 2 Depreciation for year ending 30 June ,300 per annum (1) 1 Total /10 General Journal Larry s Lawns Date Details Debit Credit 2015 Depreciation 3,150 June 30 1 Accumulated depreciation 3,150 1 Depreciation charge for six months Depreciation 6,300 June 30 1 Accumulated depreciation 6,300 1 Depreciation charge for year 1 Subtotal /6