Accounting Tuesday 28 October 2014 Paper One Question book

Transcription

1 2014 Senior External Examination Accounting Tuesday 28 October 2014 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 QCAA-approved equipment non-programmable calculator Directions You may write in this book during perusal time. Paper One 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 One 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. For all Queensland schools

2 Planning space

3 Part A Knowledge, interpretation and evaluation Part A has five questions. Respond to all questions. Write your responses in the response book. Suggested time allocation: 60 minutes. Question 1 The following ledger account is recorded in the books of Pam s Bric-a-Brac: Ledger of Pam s Bric-a-Brac Date Particulars F Dr Cr Balance Briggs & Co March 1 Sales & GST Dr 3 Sales Returns & GST Dr 5 Cash at Bank Dr 12 Sales & GST 1200??? Answer the following questions: a. In what format is this ledger account? b. What type of account is this ledger account? c. Is Briggs & Co an Accounts Receivable or Accounts Payable? Explain why. d. Calculate the GST amount included in the sale on March 1. e. Is the GST Collected or Credit Received? f. What would be the final balance of this account? g. What transaction took place on March 5? Question 2 Shortly after starting a new business, you realise the need for a bank loan in order to purchase office equipment. In evaluating the loan request, the banker asks about the assets and liabilities of your business. In particular, she wants to know the amount of your owner s equity. a. Provide a definition for assets, liabilities and owner s equity, including an example for each classification. b. What is the mathematical relationship between the three classifications? Question 3 Explain the difference between capital and revenue expenditure, and provide examples of each to support your explanation. 1

4 Question 4 Flowers by Design have been struggling with the high cost of wages associated with keeping their shop open for the same hours as the local supermarket, which has recently started to sell flowers. They wish to implement e-business principles to expand their customer base and streamline their business operations. One strategy for implementation is the establishment of a website to enable the sale of flowers and other gift products to a larger number of customers. In approximately 250 words: define the term e-business explain three benefits for customers wanting to trade online with Flowers by Design outline two control measures the business would need to implement to ensure they have a safe and reliable website. Question 5 Mr Dodd owns a sporting goods business called Dodd s Sporting Needs. He has two stores in the city and maintains an office at one of these stores. He employs Stacey McKee as the full-time office manager and also employs two store managers, two shop assistants and one part-time/casual shop assistant. Stacey feels that it is her responsibility as the office manager to control the cash flow of the business. All unpaid invoices are kept in a folder and Stacey allows one day per month to pay the outstanding accounts through the cash payments journal. Mr Dodd allows Stacey to sign the cheques in his absence. All staff are paid on a weekly basis through a direct deposit from the business s bank account to their own bank accounts. At the end of each working day, Stacey visits the other store to collect the day s takings. A discrepancy between the cash register tape and the actual cash in the till does not occur very often and, when it does, Stacey makes up the difference from petty cash. In the event of an excess of cash this is added to the petty cash. The following day Stacey records the cash register summary amount in the cash receipts journal and does the banking from the previous day on her way to the second store in the afternoon. She completes the deposit slip on arrival at the bank. A bank statement is received by the business on the first day of every month. Stacey records the balance of the account on a slip of paper which she brings to the attention of Mr Dodd. She then shreds the statement in order to prevent unauthorised access to this information. As a consultant for Mr Dodd, prepare a memorandum (approximately 350 words in length) that will: explain why cash control is important to Dodd s Sporting Needs identify and explain why the current cash control practices and procedures are either appropriate or inappropriate recommend alternative practices and procedures that could be implemented to improve the inappropriate controls over cash. End of Part A 2

5 Part B Routine practical procedures Part B has four questions. Respond to all questions. Write your responses in the response book. Suggested time allocation: 60 minutes. Question 1 You are employed as the stock control manager at Shady Days, a small firm which uses the perpetual inventory system and sells sunglasses. The details of this product are recorded on a stock card and the product is GST-free. You are required to: a. Prepare the stock ledger card for sunglasses using the FIFO method. b. Prepare the general ledger journal entry to show any stock shortage or surplus. The following transactions occurred for the month of September. Sept 1 50 units of sunglasses on hand at a value of $250 2 Purchased 600 units on $6 per unit 7 Sold 400 units on credit for $ Returned 20 units originally purchased on 2 Sept 15 Purchased 500 units on $5 per unit 17 Sold 550 units on credit for $ $450 originally sold on 17 Sept were returned 26 Purchased 750 units on $4 per unit 28 Sold 800 units on credit for $ A stocktake revealed 150 units of sunglasses were on hand. 3

6 Question 2 Doneman s Used Furniture has provided you with the following information and asked you to: a. Complete the cash journals. b. Complete the Cash at Bank account. c. Prepare a Bank Reconciliation Statement as at 31 October Doneman s Used Furniture Bank Reconciliation Statement as at 30 September 2014 $ Debit balance as per bank statement 240 Add: Unpresented cheques no no no Less: Deposits not yet credited 635 Debit balance as per Cash at Bank A/c $133 Doneman s Used Furniture Cash Receipts Journal (Extract) Date Receipt No. Particulars F Details Bank 2014 Oct Rent Revenue CRS Sales CRS Sales Commission Revenue 325 CRS Sales 410 K Goodwin B Kennedy

7 Doneman s Used Furniture Cash Payments Journal (Extract) Date Cheque No. Particulars F Details Bank 2014 Oct Wages Rates 250 Electricity Purchases Wages D Martin Advertising 240 Doneman s Used Furniture Bank Statement Date Particulars Debit Credit Balance 2014 Oct 1 Balance 240 Dr C/c Cr 2 C/c Cr Cr 4 C/c Cr Cr 5 Bank Fee Cr 14 C/c Cr Cr T Watson (Dishonoured Cheque) Cr Cr 19 C/c Cr 21 Interest Revenue Cr 29 Debits Tax Cr 5

8 Question 3 Rose Red Recyclers has presented you with the following figures for various stock items on hand and has asked you to calculate the value of the stock, based on the concept of Lower of Cost or Net Realisable Value. Complete the table in your response book to determine what the value of each stock item would be, as well as the total value of the stock to be recorded in the inventory control account in the financial reports as at 30 June Inventory item Quantity Cost per item Total cost NRV per item Total NRV Lower of cost and NRV $ $ $ $ $ Item A 20 36? 33?? Item B 95 80? 85?? Item C ? 44?? Item D ? 31?? Item E ? 191?? Total value of stock? Question 4 On 1 November 2012, Gail Anderson, the proprietor of Anderson s Auto Electrics, purchased Machinery on credit from Bob s Machine Sales for $26400 including GST. Freight and installation costs of $2200 including GST and insurance of $1650 including GST were paid by two separate cheques on that day. The machinery was expected to last for four years and have an estimated residual value of $3200. Depreciation of 30% is to be charged according to the diminishing balance method. On 31 March 2014 the machinery was traded in with another machine from Bob s Machine Sales for $13200 including GST. New machinery was purchased from this company at a cost of $35200 including GST. The estimated life of this machine is five years, the residual value is $8000 and the straight line method of depreciation is to be used. You are required to: a. Record the journal entries from 1 November 2012 to 30 June Clearly show your calculations of depreciation amounts and round to the nearest dollar. Note: narrations and closing entries are not required. b. Prepare the Machinery, Accumulated Depreciation on Machinery and Disposal of Machinery accounts in the ledger. c. Show how the non-current asset accounts would appear in the Balance Sheet as at 30 June 2013 and 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 Partially completed cash and credit journals have been provided for Jamie s Jewels. The additional transactions below are to be recorded in the appropriate journals. All amounts are inclusive of GST, where applicable, and document numbers are to follow those already given in the journals. June 20 Cash sales $264, cost price $ Sold goods on credit to W Walters, $187, cost price $80 22 Received $484 from T Haddow for rent 23 Received a cheque from W Walters, $ Purchased goods on credit from S Smith $451 Paid S Smith amount outstanding from previous month 25 Y Yates was declared bankrupt. Received 50c in the $. His account is to be written off as a bad debt. (This account includes GST.) 26 Paid P Provan $ Charged G Gordon interest on her outstanding account $26 28 Paid electricity $ Provision for Doubtful Debts Account to be $80. The balance of this account was $50 at the end of May 30 G Gordon advised that the outstanding account from May was actually $210 and not $260 and therefore the interest charged should only be $21. Upon checking our source documents, it was discovered that G Gordon was incorrectly charged $260 for the GST free sales of $210. Correct these errors. You are required to: a. Complete the Sales, Purchases, Cash Receipts and Cash Payments Journals, including posting instructions and totals. b. Prepare the General Journal. c. Post the journal entries to the following accounts in the General Ledger: Accounts Receivable Control A/c Provision for Doubtful Debts A/c Accounts Payable Control A/c. d. Post the journal entries to the Accounts Receivable and Accounts Payable Subsidiary Ledgers. e. Prepare a Schedule of Accounts Receivable and Accounts Payable. 7

10 Accounts Receivable Balances as at 31 May 2014 Accounts Payable Balances as at 31 May 2014 B Blackwood 300 P Provan 140 W Walters 150 S Smith 480 G Gordon 260 Y Yates 154 $ 864 $ 620 Sales Journal of Jamie s Jewels Tax Inv. Accounts GST Accounts Receivable COGS/ Date No. Receivable Sales Clearing Control Inventories 2014 June B Blackwood G Gordon Purchases Journal of Jamie s Jewels Date Tax Inv. No. Accounts Payable Inventories GST Clearing Accounts Payable Control 2014 June P Provan

11 Jamie s Jewels Cash Receipts Journal (Extract) Date Receipt Accounts Receivable GST COGS / No. Particulars Sales Other Control Clearing Bank Inventories 2014 June 7 CRS Sales B Blackwood Jamie s Jewels Cash Payments Journal (Extract) Date Cheque Accounts Payable GST No. Particulars Inventories Other Control Clearing Bank 2014 June Wages Inventories Furniture End of Part C End of Paper One 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) 2014 Copyright protects this material. Copyright in the Senior External Examination is owned by the State of Queensland and/or the Queensland Curriculum and Assessment Authority. Copyright in some of the material included in the paper is owned by third parties. Except as permitted by the Copyright Act 1968 (Cwlth), reproduction by any means (photocopying, electronic, mechanical, recording or otherwise), making available online, electronic transmission or other publication of this material is prohibited without prior written permission of the relevant copyright owner/s. The Queensland Curriculum and Assessment Authority requires to be recognised as the source of the Senior External Examination and requires that its material remain unaltered. Enquiries relating to copyright in this material, which is owned by the State of Queensland or the Queensland Curriculum and Assessment Authority, should be addressed 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