Osborne Books Tutor Zone Foundation Certificate Synoptic Practice assessment 1 Osborne Books Limited, 2016
2 f o u n d a t i o n c e r t i f i c a t e s y n o p t i c t u t o r z o n e 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%.
p r a c t i c e s y n o p t i c a s s e s s m e n t 1 3 Task 1: 12 marks You have worked at Pet Stores for six weeks and have been working closely with your manager, Simone to 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 in duration 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 time each task takes to complete. It is very important that you complete the management accounts tasks by the end of the identified day and the financial accounts tasks by the day and time indicated. Monthly work schedule management accounts Week 1 Monday Tuesday Wednesday Thursday Friday Cost coding (2 hours) Product cost analysis (1 hour) Labour cost report (1 hour) Week 2 Data gathering (1 hour) Data gathering (1 hour) Product cost analysis (1 hour) Budget report (2 hours) Budget report (2 hours) Week 3 Material cost report (1 hour) Week 4 Variance analysis (1 hour) Variance analysis (1 hour) Weekly work schedule financial accounts Task Task to be completed each week by: Task duration Day Time Prepare payments to suppliers Wednesday 11:00 1 hour Process sales invoices and credit notes Monday 14:00 2 hours Process purchase invoices and credit notes Monday 16:00 2 hours Record receipts and payments into the cash book Friday 11:00 2 hours Contact customers with outstanding debts Tuesday 10:00 1 hour Update petty cash book Thursday 11:00 1 hour Prepare remittance advices to accompany payments to suppliers Wednesday 13:00 1 hour Reconcile supplier statements with purchase ledger Tuesday 14:00 2 hours
4 f o u n d a t i o n c e r t i f i c a t e s y n o p t i c t u t o r z o n e You are planning your work at the start of the day on Monday of week 4. You have been asked to attend a 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 the task descriptions in the column on the right. (7 marks) Choose from the following tasks: Contact customers with outstanding debts Lunch Prepare payments to suppliers Update petty cash book Product cost analysis Budget report Process purchase invoices and credit notes Record receipts and payments into the cash book Labour cost report Data gathering Prepare remittance advices to accompany payments to suppliers Cost coding Variance analysis Reconcile supplier statements with purchase ledger Process sales invoices and credit notes Meeting Material cost report Monday, week 4 to-do list (in order of completion) Task 1 09.00-10.00 Task 2 10.00-11.00 Task 3 11.00-12.00 Task 4 12.00-13.00 Task 5 13.00-14.00 Task 6 14.00-15.00 Task 7 15.00-16.00
p r a c t i c e s y n o p t i c a s s e s s m e n t 1 5 (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 Credit Cash Bank
6 f o u n d a t i o n c e r t i f i c a t e s y n o p t i c t u t o r z o n e Task 2: 12 marks You have been working with Simone looking at the different roles and tasks involved in the Accounting Department and the importance of solvency. (a) Match the task with the job role. (5 marks) Task Advertise for new member of the team in purchase ledger Job role Credit Control Assistant Enter the receipts into the cash book Enter the hours worked from clocking in cards to timesheets Cashier Human Resources Manager Payroll Assistant Prepare contracts of employment Chase customers who have not paid their invoices (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
p r a c t i c e s y n o p t i c a s s e s s m e n t 1 7 (c) Match the tasks to the appropriate accountant. Either Financial or Management Accountant. (3 marks) 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 staff in 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
8 f o u n d a t i o n c e r t i f i c a t e s y n o p t i c t u t o r z o n e 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 Making 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 Payment method 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 the CREDIT side of the cash book. (4 marks) Receipt from HMRC Receipt for bank interest Debit card payment for vehicle insurance BACS transfer for payment of wages DEBIT CREDIT Simone gives you the totals from the discount received day book: Discount received day book Details 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
p r a c t i c e s y n o p t i c a s s e s s m e n t 1 9 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
1 0 f o u n d a t i o n c e r t i f i c a t e s y n o p t i c t u t o r z o n e (a) Reconcile the bank account with the cash book and complete the bank reconciliation statement below. (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 posted to 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
p r a c t i c e s y n o p t i c a s s e s s m e n t 1 1 1 Simone asks you to check an email to be sent to Bleasby about a rent increase in the property you rent out. (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 am writing 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
1 2 f o u n d a t i o n c e r t i f i c a t e s y n o p t i c t u t o r z o n e Task 5: 12 marks During your induction, you spent some time with Ellie who deals with suppliers and is involved in improving the sustainability policy. (a) Select which two areas relate to the social element of the sustainability policy. (2 marks) (a) (b) (c) (d) Energy saving schemes Supporting colleagues with training Reduction of emissions Supporting a local charity event by letting staff help out As part of Corporate Social Responsibility (CRS), Pet Stores is considering changing suppliers but needs to complete the manufacturing account first. Simone asks you to calculate the figures within the manufacturing account using the information provided: Closing inventory of finished goods 40,702 Closing inventory of raw materials 43,677 Purchase of raw materials 108,740 Direct labour 60,000 Opening inventory of work-in-progress 36,740 Opening inventory of finished goods 47,230 Manufacturing overheads 23,000 Closing inventory of work-in-progress 30,699 Opening 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
p r a c t i c e s y n o p t i c a s s e s s m e n t 1 1 3 Task 6: 24 marks Simone provides you with a list of balances, some include VAT some do not, she also tells you that there is a balance brought forward owing to HMRC on the VAT account of 4,570: VAT amount in the discounts received day book 320 Irrecoverable debt including VAT 564 VAT amount in the discounts allowed day book 570 VAT payment to HM Revenue and Customs 4,570 Total in the purchases day book not including VAT 14,800 Total in the sales returns day book including VAT 960 Total in the sales day book including VAT 34,740 VAT amount on cash sales 3,360 (a) Enter the correct amount to be recorded in the VAT control account and identify whether the transactions 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)
1 4 f o u n d a t i o n c e r t i f i c a t e s y n o p t i c t u t o r z o n e The following month, your colleague Tamara tells you that a purchase invoice was omitted from the accounts. 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 from HMRC? (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.
p r a c t i c e s y n o p t i c a s s e s s m e n t 1 1 5 Task 7: 12 marks Pet Stores pays its employees monthly and maintain a wages control account. A summary of last month s payroll transactions is shown below: Item Gross wages 10,477 Income tax 1,410 Employees National Insurance contributions 1,003 Employer s National Insurance contributions 1,445 Trade 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
1 6 f o u n d a t i o n c e r t i f i c a t e s y n o p t i c t u t o r z o n e (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 did not 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 the incorrectly totalled total column in the sales day book shown below. Sales day book Date Details Invoice number Total VAT Net 20-X 1 Sep Billsthorpe SI2369 1,176 196 980 4 Sep Smith SI2370 15,096 2,516 12,580 12 Sep Lead Ltd SI2371 12,000 2,000 10,000 17 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