Accounting Monday 26 October 2015 Paper Two Question book

Transcription

1 2015 Senior External Examination Accounting Monday 26 October 2015 Paper Two Question book 1:15 pm to 4:25 pm Time allowed Perusal time: 10 minutes Working time: 3 hours Examination materials provided Paper Two Question book Paper Two Response book Equipment allowed QCAA-approved equipment non-programmable calculator prepared-task material completed during the year to use when responding to Part B Questions 2 and 3 Paper Two is an open-book examination. You may refer to any paper-based written or printed materials you have brought into the examination room. You may write on your material at any time during the examination. Directions You may write in this book during perusal time. Paper Two has three parts, each of equal value. Attempt all questions. Suggested time allocation Part A: 60 minutes Part B: 60 minutes Part C: 60 minutes Assessment Paper Two assesses the following assessment criteria: Knowledge, interpretation and evaluation Routine practical procedures Challenging practical application Assessment standards are at the end of this book. After the examination session Take this book when you leave. The prepared task material will be collected by the supervisor. For all Queensland schools

2 Planning space

3 Part A Knowledge, interpretation and evaluation Part A has two questions. Respond to both questions. Write your responses in the response book. Suggested time allocation: 60 minutes. Question 1 Richard Sengstock, owner of the local vacuum cleaner business, Sparkle and Shine, wants to increase his market share of the local vacuum cleaner industry and has provided you with the two options he has under consideration. To help him with this decision, he has asked you to provide the answers to the questions listed below. He has supplied the following information. Fixed costs $ Variable costs Selling price $80 per vacuum cleaner $420 each a. What is the contribution margin for the vacuum cleaners? b. How many vacuum cleaners must he sell to break even? c. What dollar value of sales must he make to break even? d. How many vacuum cleaners must he sell to make a profit of $75000? e. Option 1: Larger premises have become available which will make it easier for Richard to display his vacuum cleaners and become more visible to customers. He estimates his fixed costs will increase to $ How many more vacuum cleaners must he sell (above his current figures) to maintain the profit of $75000 if he was to move? Option 2: If he remains at his present location, Richard Sengstock could attract more customers by undercutting his competitors and reduce the selling price of each vacuum cleaner by $40. He would need to increase his marketing costs by $2000 to advertise this price reduction. How many more vacuum cleaners must he sell (above his current figures) to maintain the profit of $75000 if he was to reduce the price? f. Which option would you advise Richard Sengstock to consider as the better of the two? Justify your decision. Question 2 You are to analyse and interpret the financial records from Kingston Rural Supplies, a business specialising in selling farm and fencing supplies. Prepare a report of approximately words for the owner, Ralph Kingston. He is particularly concerned about the business s earning capacity, financial stability and the effectiveness of his management skills. He has asked you to concentrate only on the following: Gross Profit Ratio Net Profit Ratio Current Ratio Debt Ratio Rate of Turnover of Accounts Receivable Turnover of Inventories. 1

4 In your report: a. Analyse the changes that have occurred for each ratio and the reasons for the changes, making reference to the financial data provided. b. Recommend the practices needed to rectify the weaknesses identified by your analysis of the ratios and the business s records Industry averages Gross Profit Ratio 40.46% 37.09% 48.5% Net Profit Ratio 10.43% 10.03% 16.7% Current Ratio 1.33:1 1.20:1 2.8:1 Debt Ratio 97.21% 89.98% 45% Rate of Turnover of Accounts Receivable 55 days 58 days 45 days Rate of Turnover of Inventories 141 days 147 days 90 days Additional information Accounting classifications 2014 $ 2015 $ Cash Sales Credit Sales Cost of Goods Sold Gross Profit Total Expenses Net Profit Inventories Accounts Receivable Total Current Assets Total Assets Total Current Liabilities Total Liabilities Owner s Equity End of Part A 2

5 Part B Routine practical procedures Part B has three questions. Respond to all questions. Write your responses in the response book. Suggested time allocation: 60 minutes. Question 1 You have been provided with the Income Statement and Balance Sheet for DGJ Enterprises and have been asked to complete the following tasks: a. Reconstruct the following ledger accounts: Inventories Accounts Payable Accounts Receivable Capital Insurance Wages b. Prepare a Cash Flow Statement for the year ended 30 June Assume there is no GST and all sales/purchases of assets and capital and/or drawings were in cash. DGJ Enterprises Income Statement for the Year ended 30 June 2015 $ $ Sales Cash Credit Less Cost of Goods Sold Gross Profit Add Other Operating Revenue Rent Received Less Other Operating Expenses Selling Expenses 3500 Wages Insurance 6000 Rates 7500 Interest Expense Net Profit $

6 DGJ Enterprises Comparative Balance Sheet as at 30 June 2014 and $ $ Current Assets Accounts Receivable Control Inventories Control Prepaid Expenses Insurance Total Current Assets Non Current Assets Property Plant and Equipment Delivery Vehicles Land and Buildings Total Non Current Assets Total Assets $ $ Current Liabilities Bank Overdraft Accounts Payable Accrued Expenses Wages Total Current Liabilities Non Current Liabilities Mortgage Total Non Current Liabilities Total Liabilities Owner s Equity Total Owner s Equity Total Owner s Equity and Liability $ $

7 Question 2 Using the Accounting Package prepared task material that you brought into the examination room, respond to the following questions: a. List the Cost of Sales accounts that appear in the Profit and Loss Statement for the month of June and state their balances. b. Did the business make a profit or loss in the Profit and Loss Statement for June and what was the amount? c. What is the balance of the GST Liability from the Balance Sheet and is this amount to be paid to or received from the Australian Taxation Office? d. What was the balance of Petty Cash in the Balance Sheet? e. From the trial balance what was the increase or decrease in the Cash at Bank account for the month of June? f. Which customer owes Green Thumb Garden Centre money and for how much? g. Name the suppliers owed money and state the balances owed to these firms. h. What is the balance of inventory on hand as at 30 June 2015? i. State the number of units on hand as at 30 June 2015 for: i. Fruit trees? ii. Palms? j. From the bank reconciliation report, list the outstanding cheques which have not been cleared for the month of June. k. Outline the process to record the transaction on 5 June. l. Outline the process to record the transaction on 15 June. m. Outline the process to record the transaction on 16 June. n. Outline the process to record the transaction on 25 June. o. Outline the process to record the commission earned transaction on 30 June. Question 3 Using the Cash Budgets prepared task material that you brought into the examination room, respond to the following questions: a. In the table provided in your response book, complete the required amounts and formulas: From the Statement of Estimated Receipts from Accounts Receivable, the total expected receipts for the month of October From the Statement of Estimated Receipts from Accounts Receivable, the amount of credit sales from September that would likely be received in November From the Statement of Estimated GST Payments, the amount of the GST credit to be received in December for the anticipated machinery purchase From the Statement of Estimated GST Payments, the total amount of GST receivable from or payable to the ATO for December From the Cash Budget, the excess receipts over payments for September From the Cash Budget, the anticipated final bank account balance for December. Question 3 continues 5

8 b. In the table provided in your response book, state the amounts in the Cash Budget for the entries listed and the full process used to calculate each amount: Cash purchases for December Credit purchases for September Machinery for December Office expenses for November Excess receipts over payments for October. c. How much money for the loan should Fay Biggles apply for from the bank? Explain your response. d. Explain two strategies the business could implement to improve the cash budget situation. End of Part B 6

9 Part C Challenging practical application Part C has one question. Write your response in the response book. Suggested time allocation: 60 minutes. Question 1 Wayne Higgins, the owner of Higgins Fabrications, has employed you to complete the business s financial reports for the year ended 30 June He has provided the following trial balance and supplementary information for your use. You are required to prepare: a. Balance day adjustments (no narrations are required). b. A fully classified Income Statement. c. A fully classified Balance Sheet as at 30 June

10 Higgins Fabrications Trial Balance as at 30 June 2015 $ $ Account Dr Cr Accounts Payable Accounts Receivable Accumulated Depreciation Building Accumulated Depreciation Delivery Vehicles 3000 Bad and Doubtful Debts 3000 Bank 8240 Building Capital Cartage Outwards 960 Commission Expense 3500 Commission Revenue 6000 Cost of Goods Sold Delivery Vehicle Delivery Vehicle Expenses 1850 Drawings 1300 Electricity 6200 Goodwill Government Bonds GST Clearing 2680 Insurance 1800 Interest Expense 2530 Interest Revenue 1550 Inventories Land Loss on Disposal of Delivery Vehicle 500 Mortgage Office Salaries Petty Cash 100 Provision for Doubtful Debts 1200 Rates 3310 Sales Sales Returns Sales Salaries Stationery 920 $ $ Additional information: Inventories on hand as at 30 June 2015, $ Provision for Doubtful Debts is to be 10% of Accounts Receivable balance as at 30 June. Sales Salaries still owing, $520. Interest on Government Bonds is paid to us at 7.5% pa and we are presently owed 3 months interest. Electricity is to be divided equally between sales showroom and office. Insurance was paid on 1 March 2015 for a 12-month period. 8

11 Received 6 months Commission Revenue on 1 May Commission is paid to sales staff at a rate of 2.5% of the previous month s sales which were $ Depreciation on Building straight line over 20 years (residual value of $20000). Depreciation on Delivery Vehicle at 30% diminishing balance. End of Part C End of Paper Two 9

12 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. 10

13 (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. 11

14 The State of Queensland (Queensland Curriculum and Assessment Authority) 2015 Copyright enquiries should be made to: Manager Publishing Unit Queensland Curriculum & Assessment Authority PO Box 307, Spring Hill QLD 4004 Australia Level 7, 154 Melbourne Street, South Brisbane T F