2017 Accounting Written examination€¦ · ACCOUNTING Written examination Friday 10 November 2017 ... • Interest on the Bank Term Deposit is 6% p.a. and is received annually. The

ACCOUNTINGWritten examination

Friday 10 November 2017 Reading time: 3.00 pm to 3.15 pm (15 minutes) Writing time: 3.15 pm to 5.15 pm (2 hours)

QUESTION BOOK

Structure of bookNumber of questions

Number of questions to be answered

Number of marks

8 8 100

• Studentsarepermittedtobringintotheexaminationroom:pens,pencils,highlighters,erasers,sharpeners,rulersandonescientificcalculator.

• StudentsareNOTpermittedtobringintotheexaminationroom:blanksheetsofpaperand/orcorrectionfluid/tape.

Materials supplied• Questionbookof12pages• Answerbookof18pages

Instructions• Writeyourstudent numberinthespaceprovidedonthefrontcoveroftheanswerbook.• Answerallquestionsintheanswerbook.• AllwrittenresponsesmustbeinEnglish.

At the end of the examination• Youmaykeepthisquestionbook.

Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.

©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2017

Victorian Certificate of Education 2017

2017 ACCOUNTING EXAM QB 2

Question 1 – continued

Question 1 (19 marks)YZ Sportz sells a range of sporting gear, including off-road bikes and accessories. The XT100 BMX bike is sold for $380 plus GST.

Stock Card

Product: XT100 BMX bike Cost Assignment Method: FIFO

Date 2017

Details IN OUT BALANCE

Qty Cost Total Qty Cost Total Qty Cost Total

1 March Balance 10 160 1 600

3 March Inv. 234 4 160 640 6 160 960

9 March Inv. 242 2 160 320 4 160 640

Additional information• 12March AdeliveryofXT100BMXbikesarrived.Invoice670containedthefollowingdetails: – 10 bikes at a cost of $170 each (plus GST) – atotaldeliverychargeof$50(plusGST)• 16March Acustomer,BWest,returnedoneXT100BMXbike(CrN.243).• 20March Sevenbikesweresoldforcash(Rec.9877): – twoXT100BMXbikesfor$380(plusGST)each – fiveBV400mountainbikesfor$520(plusGST)each• 23March ThesupplierreleasedanupdatedXT100BMXbikewithbuilt-inbluetooth

datasharing.YZSportznowexpectstoselltheremainingXT100BMXbikesfor $140 (plus GST) each to clear as much of this older stock as possible (Memo 122).

3 2017 ACCOUNTING EXAM QB

TURN OVER

a. Complete the Stock Card using the additional information provided. 4 marks

b. Justifyyourtreatmentofthedeliverychargeon12March. 2 marks

c. Recordthetransactionon16MarchintheGeneralJournalprovided. A narration is not required. 3 marks

d. Withreferencetooneaccountingprinciple,explainyourtreatmentofthetransactionon 23 March. 3 marks

e. Calculate the net sales revenue for XT100 BMX bikes during March. 2 marks

f. ‘StockCardsareawasteoftime’,saidthefirst-timebusinessownerofYZSportztotheaccountant.‘IfIwanttokeepacheckonstock,Iwillgoandcountit!’

ExplainthebenefitsofusingStockCards. 3 marks

g. ThefollowinginformationisprovidedforYZSportz.

Stock Turnover

2014 2015 2016

80

70

60

50

40days

30

20

10

0

Stock Turnover (in days)

ThetrendinStockTurnovercouldbecausedbyeitherpositiveornegativefactors.

Provide one positive factor and onenegativefactorthatmayhaveledtothetrendinStockTurnovershownabove. 2 marks

2017ACCOUNTINGEXAMQB 4

Question 2–continued

Question 2 (13marks)BestChemistisapharmacyinalargeregionaltowninVictoria.Itpurchasesstockoncreditfromavarietyofsuppliersandusesacontrolaccountforcreditors.Salesarelargelyonacashbasis.

Creditorsbalancesat1April2017wereasfollows:PharmaC $4400MMHealth 6600Vitaworld 11000Westco 3630GlobalPills 13200BalanceinCreditorsControl $38830

Purchases Journal

Date 2017

Creditor Invoice Number

Stock Control

GST Creditors Control

Apr.3 SalonSupplies 4710 1650 165 1815

5 Westco 1230 850 85 935

12 Healthtabs A265 1400 140 1540

14 MMHealth 1741 2650 265 2915

18 Westco 1259 1200 120 1320

22 PharmaC BG45 560 56 616

30 Total $8 310 $831 $9 141

Cash Payments Journal

Date 2017

Details Chq. No. Bank Disc. Rev.

Creditors Control

Wages Sundries GST

Apr.1 Wages 145 8 000 8 000

8 PharmaC 146 4100 300 4400

12 Westco 147 1 800 1 800

15 Wages 148 8 000 8 000

18 Drawings 149 2000 2000

30 Total $23 900 $300 $6 200 $16 000 $2 000

5 2017ACCOUNTINGEXAMQB

TURN OVER

At30Aprilthefollowingtwodocumentshadnotbeenrecorded.

WESTCO CreditNoteNo.711Nelson Cr 26April2017 Perth

To:BestChemistFor:Returnof damagedgoods $310 GST $31 Total $341

PJ Cabinets InvoiceNo.2568Martin StreetMelbourne 28/4/17

SuppliedtoBestChemistDisplaycabinets $4750Installation $400 $5150 plusGST $515 InvoiceTotal $5665

a. RecordthetwodocumentsintheGeneralJournalprovided. Narrationsarenot required. 4marks

b. ShowhowWestco’saccountwouldappearintheCreditorsSubsidiaryLedgerafteralljournalshavebeenposted.

Youarerequiredtobalancetheaccount. 4marks

Theownerrecentlyadvisedheraccountant,‘Don’tpaythecreditorstooquickly.Theycanwaitabitlongerthanthecreditterms.Theywantourbusiness!’

c. Statetwowayscreditorsmightrespondiftheowner’sadvicewerefollowed. 2marks

d. JustifywhyBestChemistmaintainsaSubsidiaryLedgerforcreditorsbutnotfordebtors. 3marks


Question 3 (7marks)MatuaMowerssellstheMaxiMowersbrandoflawnmowers.Thebusinesssellsforcashandcredit. DocumentsrelatingtoalltransactionsforthemonthofJuly2017areshownbelow.

Matua MowersDate:6July2017Receipt No.137Supplied:14MaxiMowersFor:Cashsales Amount:$4200 plus GST: ?

Matua MowersDate:9July2017To:AglyInsuranceFor:InsuranceThis cheque:$1430(GSTincluded)Cheque No. 988

Matua MowersDate:15July2017Invoice No.605Supplied:9MaxiMowersAccount:Mike’sMowing Amount:$2700 plus GST: ?

Matua MowersDate:20July2017Credit Note No.21Returned:1MaxiMowerAccount:Mike’sMowing Amount:$300 plus GST: ?

Cals ComputersDate:22July2017Invoice No.445Supplied:ComputerequipmentAccount:MatuaMowers Amount:$5600 plus GST: ?

Victory MowersDate:23July2017Invoice No.121Supplied:20MaxiMowersAccount:MatuaMowers Amount:$4000 plus GST: ?

Matua MowersDate:31July2017Memo333Accountant–PleasepayoutstandingGSTtotheAustralianTaxationOffice(ATO)attheendofthemonth.Signed:MMatua

CompletetheGSTClearingaccountforthemonthofJuly.Youarenotrequiredtobalancetheaccount.


TURN OVER

Question 4 (3marks)Thefollowingfinancialindicatorsareprovidedfortwoseparatebusinesses.

Business A Business B

Return on Assets 24% 24%

Return on Owner’s Investment 28% 42%

ExplainhowtheReturnonAssetscanbeidenticalforeachbusinessyettheReturnonOwner’sInvestmentissignificantlydifferent.


Question 5 – continued

Question 5 (22 marks)CLU Lipsticks is a small business that sells quality lipsticks. Reports are prepared annually on 30 June. The accountant has provided the following extract from a Pre-adjustment Trial Balance as at 30 June 2017.

CLU Lipsticks Pre-adjustment Trial Balance (extract) as at 30 June 2017

Account Debit Credit

Accumulated Depreciation – Vehicle 5 634

Advertising 3 900

Bank Term Deposit (matures 30 June 2020) 12 000

Cash at Bank 18 400

Cost of Goods Sold 78 000

Debtors Control 14 620

Discount Expense 980

Drawings 45 000

GST Clearing 6 930

Interest Expense 1 700

Loan – BLD Bank 24 000

Prepaid Rent Expense 3 900

Sales 171 600

Stock Control 22 400

Vehicle 44 134

Wages 41 800

Additional information at 30 June• Thevehicleisdepreciatedatarateof25%p.a.usingthereducingbalancemethod.Thevehiclehasa

useful life of four years and an expected residual value of $4 000.• InterestontheBankTermDepositis6%p.a.andisreceivedannually.Thetermdepositwas

established on 1 October 2016.• Rentispaidinadvanceandispaidtwiceayearon1Februaryand1August.Rentis$300permonth

(plus GST).• CLULipstickswasadvisedthatdebtorChilloCosmeticsisbankruptandCLULipstickswillreceive

only 20 cents in the dollar of the $890 owed. The cash is expected to be received in August 2017.• ApaymentforWagesof$280wasincorrectlyrecordedasapaymentforDrawings.• Theownerdonated$160ofstocktothelocalkindergartenforitsannualfundraiser.Theownerhad

not recognised this entry when conducting the stocktake.• Thestocktakeshowed$21860ofstockonhand.


TURN OVER

a. ExplainthepurposeofpreparingaPre-adjustmentTrialBalance. 2marks

b. RecordtheadditionalinformationintheGeneralJournalprovided. Narrationsarenotrequired. 14marks

c. ItcanbearguedthattheinclusionofdepreciationintheIncomeStatementbreachesaqualitativecharacteristic.ItcanalsobearguedthattheinclusionofdepreciationintheIncomeStatementissupportedbyanotherqualitativecharacteristicandanaccountingprinciple.

Discuss. 6marks


Question 6 (9 marks)Puddles Pizza purchased a gas-operated pizza oven for the business on 1 August 2016 for $7 500 (plus GST). The installation cost was a further $1 500 (plus GST). The business reports annually on 30 June. The pizza oven is depreciated using the straight line method. The life of the pizza oven is estimated at five years. The accountant advised the owner to include a zero residual value.On 31 August 2017 the business sold the pizza oven for $5 400 cash.

a. Complete the Disposal of Pizza Oven account in the General Ledger. 4 marks

b. Explain why a difference occurred between the sale price and the carrying value on 31 August 2017. 3 marks

c. Explain why a zero residual value for the pizza oven would be appropriate. 2 marks


TURN OVER

Question 7 (12marks)D&BTradershasbeenexperiencingdifficulttradingconditionsoverthelasttwoyears.Thebusinesshasreportedsuccessivelossesandthebankledgeraccountat1July2016showedacreditbalanceof$46000.From1July2016,thebusinessbeganofferingcredittocustomers,resultinginincreasedsalesandasmallprofit.Duringtheyearended30June2017,theownercontributedafurther$60000cashanddidnottakeanydrawingsfortheyear.Theownerbelievesthecashpositionhasimprovedandthatthebusinessisnowoperatingsatisfactorily.ThefollowinggraphshowsNetCashFlowsfortheyearended30June2017.

Operating Activities Investing Activities Financing Activities

$150 000$125 000$100 000

$75 000$50 000$25 000

0–$25 000–$50 000–$75 000

–$100 000

Net Cash Flows for the year ended 30 June 2017

a. Calculatethe: i. netincrease/decreaseincashpositionfortheyearended30June2017 1mark ii. CashatBankledgerbalanceat30June2017. 1mark

b. Usingtheinformationanddataprovidedabove,discusstheowner’sbeliefthatthebusinessisnowoperatingsatisfactorily. 6marks

c. Justifytwo strategiesthebusinesscouldconsidertoimproveitsliquidity. 4marks


Question 8 (15marks)TippyToysisanewbusinessthatwillcommencetradinginJuly2018.Saleswillbeonacashbasiswhilestockpurchaseswillbeoncredit.Credittermsare5/14,n/30.Theownerhasprovidedthefollowingestimatesforthesixmonthsending31December2018:• Sales(allexcludingGST)areexpectedtobe$25000permonthfromJulytoOctober,then

$45000inNovemberand$65000inDecember.• Thebusinesswilluseamark-upof100%oncost.• Stockpurchasesarebudgetedtobe$130000(plusGST).• Creditorsaretobepaidpromptlyandthediscountwillalwaysbetaken.TheCreditorsControl

balanceat31December2018isestimatedtobe$15000.• Wagesexpenseisexpectedtobe$7000permonth,payablefortnightly.Anaccrualof$144

willberequiredforwageson31December2018.• Advertisingof$2000(plusGST)willbepaidinJuly2018.Afurther$9000(plusGST)will

bepaidinNovemberforathree-monthadvertisingcampaigncommencing1December2018.• Insuranceforthefirstyearwillbe$8400(plusGST),tobepaidon1July2018.• Shoprentis$2000(plusGST)permonth,payablefourmonthsinadvance,withpayments

dueonthefirstdayofJuly,NovemberandMarcheachyear.• Shopfittingscosting$45000(plusGST)willbepurchasedoncredit(Inv.Z243)andreadyfor

useby1October2018.Theshopfittingsareexpectedtohaveausefullifeoffiveyearsandaresidualvalueof$15000.Theshopfittingswillbedepreciatedusingthestraightlinemethod.

a. CalculatetheestimatedDiscountRevenueforthesixmonthsending31December2018. 1mark

b. PreparetheBudgetedIncomeStatementforthesixmonthsending31December2018. 8marks

At31December2018,theBankaccountandtheGSTClearingaccountintheGeneralLedgerwillbothhavecreditbalances.

c. PreparetheCurrentAssetssectionoftheBudgetedBalanceSheetasat31December2018. 4marks

d. Explainhowbudgetingimprovescontrolwithinabusiness. 2marks

END OF QUESTION BOOK

Instructions

• Aquestionbookisprovidedwiththisanswerbook.• Answerallquestionsinthespacesprovidedinthisbook.• Writeyourstudent numberinthespaceprovidedaboveonthispage.• RefertoInstructionsonthefrontcoverofthequestionbook.

Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.

©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2017

ACCOUNTINGWritten examination

Friday 10 November 2017 Reading time: 3.00 pm to 3.15 pm (15 minutes) Writing time: 3.15 pm to 5.15 pm (2 hours)

ANSWER BOOK

SUPERVISOR TO ATTACH PROCESSING LABEL HEREVictorian Certificate of Education 2017

STUDENT NUMBER

Letter

2017ACCOUNTINGEXAMAB 2

THIS PAGE IS BLANK

3 2017ACCOUNTINGEXAMAB

TURN OVER

THIS PAGE IS BLANK


Question 1 –continued

Question 1 (19marks)a. 4marks

Working space

Stock Card

Product: XT100 BMX bike Cost Assignment Method: FIFO

Date 2017

Details IN OUT BALANCE

Qty Cost Total Qty Cost Total Qty Cost Total

1March Balance 10 160 1600

3March Inv.234 4 160 640 6 160 960

9March Inv.242 2 160 320 4 160 640

b. 2marks

Justification


Question 1 –continuedTURN OVER

c. 3marksYZ SportzGeneral Journal

Date 2017

Details General Ledger Subsidiary Ledger

Debit Credit Debit Credit

d. 3marks

Accounting principle

Explanation

e. 2marks

Working space

Net Sales Revenue for XT100 BMX bikes during March $


f. 3marks

Explanation

g. 2marks

Positive factor

Negative factor



Question 2 (13marks)a. 4marksBest Chemist General Journal

Date 2017



b. 4marksBest Chemist Creditors Subsidiary Ledger (extract)

Creditor – Westco

Date2017

Cross-reference Amount Date2017

Cross-reference Amount

1Apr. Balance 3630


c. 2marks

1.

2.

d. 3marks

Justification


TURN OVER

Question 3 (7marks)

Working space

Matua MowersGeneral Ledger

GST Clearing

Date2017



1July Balance 650

Question 4 (3marks)

Explanation



Question 5 (22marks)a. 2marks

Explanation

b. 14marks

Working space



CLU LipsticksGeneral Journal

Date 2017




c. 6marks

Discussion


TURN OVER

Question 6 (9marks)

Working space

a. 4marksPuddles Pizza General Ledger

Disposal of Pizza Oven

Date2017



b. 3marks

Explanation

c. 2marks

Explanation



Question 7 (12marks)a.i. 1mark

Working space

Net increase/decrease in cash position for the year ended 30 June 2017 $

ii. 1mark

Working space

Cash at Bank ledger balance at 30 June 2017 $



b. 6marks

Discussion


Question 8–continued

c. 4marks

Justification

Question 8 (15marks)a. 1mark

Working space

Discount Revenue for the six months ending 31 December 2018 $

b. 8marks

Working space



Tippy ToysBudgeted Income Statement for the six months ending 31 December 2018

$ $

Revenue


c. 4marksTippy Toys

Budgeted Balance Sheet (extract) as at 31 December 2018

$ $

Current Assets

d. 2marks

Explanation

END OF ANSWER BOOK