ACCOUNTING - Department of Education...Oct 11 Cash sales 438 Oct 13 Cartex Petroleum 702 1 132 EFT Sales 2 955 Oct 16 Wages-J. McCall 2 500 Electro Games 1 764 Drawings-M.Shott 3 000

© Copyright for part(s) of this examination may be held by individuals and/or organisations other than the Office of Tasmanian Assessment, Standards and Certification.

Tasmanian Certificate of Education

External Assessment 2019

ACCOUNTING (ACC315116)

Time Allowed:

Working time: 3 hours

Plus 15 minutes recommended reading time

On the basis of your performance in this examination, the examiners will provide results on each of the

following criteria taken from the course document:

Criterion 1 Describe accounting and financial terms, concepts and principles.

Criterion 2 Apply double-entry accounting terms, concepts and processes to record and control financial information.

Criterion 3 Apply accrual accounting terms, concepts and processes to select and organise data to prepare financial reports.

Criterion 4 Apply financial concepts and processes to prepare and assess financial information and make business decisions.

Criterion 6 Communicate financial ideas and information.

PLACE YOUR CANDIDATE

LABEL HERE

Candidate Instructions

1. You MUST make sure that your responses to the questions in this examination paper show your

achievement in the criteria being assessed.

2. There are FOUR sections to this paper.

3. You must answer: BOTH questions from Section A in Section A answer booklet provided

ALL questions from Section B in Section B answer booklet provided

BOTH questions from Section C in Section C answer booklet provided

ALL questions from Section D in Section D answer booklet provided.

4. The recommended time to be spent on a section is given in the instructions of that section.

5. It is recommended that calculators are used.

6. All formulae required for this examination are on the External Examination Formula Sheet provided.

7. All written responses must be in English.

Pages: 20

Questions: 10

ACC315116 Page 2 of 20

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Answer BOTH questions in this section.

Use the Section A answer booklet supplied.

This section is worth 35 marks. It is recommended you spend approximately 35 minutes on this section.

This section assesses Criterion 1 and 6.

Question 1

(a) Answer ALL of the following questions:

i. What is a bank reconciliation statement? Identify TWO pieces of information provided by the

bank reconciliation statement.

ii. What is a chart of accounts? Identify TWO reasons why a chart of accounts is useful for a

business.

iii. Explain the meaning of “Owners Equity”. Identify TWO ways in which Owners Equity is

increased.

iv. Define a non-current liability. Give TWO examples of a non-current liability.

(4 x 3 = 12 marks)

(b) Answer ONE of the following:

Either

i. Identify and describe TWO limitations of the Accounting reports (Income Statement and Balance Sheet) in providing information to users of such reports.

Or

ii. Identify and describe TWO examples of non-financial information useful to assessing performance of a business.

(1 x 3 = 3 marks)

(c) Answer TWO of the following.

i. Distinguish between internal and external users of accounting reports.

ii. Distinguish between a current asset and a non-current asset.

iii. How does accrual accounting differ from cash-based accounting?

iv. Distinguish an unearned revenue from an accrued revenue.

(2 x 4 = 8 marks)

Section A continues.

SECTION A


Section A (continued)

Question 2

(a) Answer TWO of the following. Provide appropriate examples.

i. Explain the nature of items recorded as Property Plant and Equipment in a Balance Sheet.

ii. What is the accounting period assumption and how does it affect the preparation of the

accounting reports?

iii. Explain the meaning of historical cost (objectivity) as it applies to the preparation of

accounting reports.

iv. Explain the role of the stocktake in a business using a perpetual inventory system.

(2 x 3 = 6 marks)

(b) Answer TWO of the following.

i. Explain the effect on reported profit if a business does not account for accrued expenses as required by the matching principle.

ii. Explain to your business manager why a provision is made for Bad and Doubtful Debts even though the debts may not yet be proven to be uncollectable.

iii. Identify and explain the accounting assumption that is breached should a business owner claim personal expenses as expenses of their business. Describe the likely effect on the accounting reports.

iv. What is meant by ‘relevance’ in preparation of accounting reports, and what may be the consequence of ignoring this qualitative characteristic?

(2 x 3 = 6 marks)


Answer ALL questions in this section.

Use Section B answer booklet supplied.


This section assesses Criterion 2.

Question 3

The following are some transactions relating to a business commenced on July 1, 2018 by Marg Wilson.

A perpetual inventory system is used. GST of 10% is included where indicated.

The following events and transactions are some that occurred in the year ended June 30, 2019.

Date Transaction

July 1 Commenced business with assets of cash ($20 000), a computer system ($3 500) and a motor vehicle ($45 000). A loan taken out to purchase the vehicle of which $30 000 remains outstanding was also brought into the business as a liability.

July 26 Paid the lease on business premises in cash $6 600 (GST Incl.). Cheque No. 820.

August 6 Made credit purchase of inventory for $1 452 from supplier Wells and Co. (GST Incl.). Tax invoice 6870.

September 12 Sold goods on credit to Graeme Hall for $1 188 (GST Incl.). The goods had a recorded cost of $720. Tax invoice 2760.

October 4 Returned inventory purchased on August 6 to Wells and Co. for credit. This inventory had been recorded at cost of $240. Credit Note 82.

November 28 A correcting entry is made for an amount of $440 which had been wrongly debited to account receivable A. Brown, when it should have been to account receivable J. Brown.

January 23 A single entry to record owner’s drawings of $650 from the business comprised of $450 in cash and $200 in GST-free inventory.

February 14 An amount of $550 owed by account receivable G. Trotter was written off as a bad debt (GST Incl.).

June 30 A stocktake revealed that actual inventory on hand amounted to $16 500 whereas the value as recorded in inventory records amounted to $16,800.

June 30 Made balance day adjustment of $1 120 for commission revenue earned but not yet received.

(18 marks)

You are required to provide General Journal entries for the transactions shown above.

Make sure that you:

(a) Record GST in all applicable entries.

(b) Enter dates and narrations for each entry.

Section B continues.

SECTION B


Section B (continued)

Question 4 The following extract of accounts shows recording of a transaction on January 23 (A) and a transaction on

January 29 (B).

Sales

Date Particulars $ Date Particulars $

Jan.23 J Smith (A) 7 700

Sales Returns


Jan 29 J Smith (B) 3000

J Smith


Jan

23

Sales (A) 8 470 Jan

29

Sales Returns/GST

Clearing (B)

3 300

GST Clearing


Jan

29

J Smith (B) 300 Jan

23

J Smith (A) 770

Question 4 continues.


Question 4 (continued)

Alternative account structure

Sales

Date Particulars Dr $

Cr $

Bal $

Jan 23 J Smith (A) 7 700 7 700 Cr

Sales Returns


Cr $

Bal $

Jan 29 J Smith (B) 3 000 3 000 Dr

J Smith


Cr $

Bal $

Jan 23 Sales (A) 8 470 8 470 Dr

Jan 29 Sales Returns/GST Clearing (B) 3 300 5 170 Dr

GST Clearing


Cr $

Bal $

Jan 23 J Smith (A) 770 770 Cr

Jan 29 J Smith (B) 300 470 Cr

You are required to:

(a) Explain the transaction marked (A).

(b) Explain the transaction marked (B).

(c) Identify where Sales Returns would be recorded in the Accounting Reports.

(2 +2 + 1 = 5 marks)

Section B continues.


Section B (continued)

Question 5

Mike Shott owns Shotts Game Store. He pays some accounts by cheque, but others are by direct transfer.

His main receipts are from cash and EFT (electronic funds transfer) transactions; but some customers pay

by direct deposit.

Cash receipt and cash payments records are updated daily from the online bank statement.

The following details relate to cash at bank transactions for Shotts Game Store during October 2019.

Cash Receipts Cash Payments

Date Details $ Date Details Chq.No. $

Oct 4 Cash sales 950 Oct 2 Wages-J. McCall 2 500

EFT Sales 4 540 Drawings-M.Shott 3 000

Oct 11 Lotti’s Leisure 1876 Oct 6 Commercial Insurance 701 1 350

Happy Harry’s 980 Oct 10 Gametime Supplies 790

Oct 11 Cash sales 438 Oct 13 Cartex Petroleum 702 1 132

EFT Sales 2 955 Oct 16 Wages-J. McCall 2 500

Electro Games 1 764 Drawings-M.Shott 3 000

Oct 18 Cash sales 782 Oct 19 Rent-Ace Real Estate 703 890

EFT Sales 3 347 Oct 22 Leisure Supplies 1 298



Oct 31 Commission 125 Stationery Supplies 704 438

Bank Reconciliation Statement as at September 30, 2019

$ $

Debit balance as per bank statement 835

Add Unpresented cheques

671 85

685 97

692 183 365

Credit balance as per Cash at bank account 1 200




The bank statement for October 2019 is shown below.

Shott’s Game Store

Statement of Account

Date Particulars Dr Cr Balance

Oct 1 Balance brought forward 835 Dr

671 85 920 Dr

Oct 2 J McCall-transfer 2 500 3 420 Dr

M Shott-transfer 3 000 6 420 Dr

Oct 4 EFT Sales 950 5 470 Dr

Oct 5 Cash/Cheques 4 540 930 Dr

692 183 1 113 Dr

Oct 8 701 1 350 2 463 Dr

Oct 10 Lotti’s Leisure-direct deposit 1 876 587 Dr

Gametime Supplies-transfer 790 1 377 Dr

Happy Harry’s-direct deposit 980 397 Dr

Oct 11 EFT Sales 2 955 2 558 Cr

Electro Games-direct deposit 1 764 4 322 Cr

Oct 12 Cash/Cheques 438 4 760 Cr

Oct 16 J McCall-transfer 2 500 2 260 Cr

M Shott-transfer 3 000 740 Dr

Oct 18 EFT Sales 3 347 2 607 Cr


702 1 123 2 266 Cr

Oct 22 Leisure Supplies-transfer 1 298 968 Cr

Oct 25 EFT Sales 3 070 4 038Cr


Oct 30 J McCall-transfer 2 500 2 096 Cr

M Shott-transfer 3 000 904 Dr

Oct 31 Electro games-direct deposit 320 584 Dr

Interest on O/D 52 636 Dr

Bank fees and charges 16 652 Dr


ACC315116 Page 10 of 20


Additional Information:

The bank has accepted responsibility for an error in recording cheque number 702. The error has not yet

been corrected.

Answer ALL of the following:

(a) Enter appropriate entries into, and total, the Cash Receipts for the month ended October 31, 2019.

(b) Enter appropriate entries into, and total, the Cash Payments for the month ended October 31, 2019.

(c) Prepare and balance the Cash at Bank ledger account for October. The T-account format or

columnar format may be used.

(d) Prepare the Bank Reconciliation Statement for Shotts Game Store as at October 31, 2019.

(2 + 3 + 4 + 8 = 17 marks)

ACC315116 Page 11 of 20


Use Section C answer booklet supplied.


This section assesses Criterion 3.

Question 6

A trial balance was extracted as at June 30, 2019 from the general ledger of Waugh Paints - a paint and

associated products retailer and wholesaler.

Additional Information:

The following balance day adjustments have yet to be made.

A stocktake reveals inventory on hand at $53 500.

Insurance is paid annually in advance. The last payment of $6 000 was made on January 31, 2019.

Interest on the term deposit is received quarterly (3 monthly) with the next payment of $720 due to be received on July 31, 2019.

A provision for doubtful debts of $1 200 is to be created.

Shop fittings are depreciated at 10% straight line and paint mixing equipment at 15% diminishing balance.

Prepare BOTH of the following:

(a) A properly classified Income Statement in narrative form for Waugh Paints for the year ended June 30, 2019.

(25 marks)

(b) A properly classified Balance Sheet in narrative form for Waugh Paints for the year ended June 30, 2019.

(20 marks)


SECTION C

ACC315116 Page 12 of 20


Waugh Paints

Trial Balance as at June 30, 2019

$ $

Capital-J.Waugh 231 310

Cash at bank 8 650

Inventory 53 780

Office wages 92 000

Sales 1 209 000

Lease expense - building 42 000

Delivery van expenses 23 100

Sales returns 6 700

Shop staff wages 130 000

Insurance 7 400

Bank charges 2 100

Cost of goods sold 880 000

Interest on term deposit 2 680

Accounts receivable 15 600

General office expenses 10 000

Paint mixing equipment 18 000

Term deposit (due June 2022) 78 000

Communications expense 3 560

Shop fittings 22 000

Advertising 16 000

Accumulated depreciation shop fittings 6 800

Accumulated depreciation paint mixing equipment 3 200

Goodwill 10 000

Accounts payable 47 600

GST Clearing 8 300

Drawings 90 000

$1 508 890 $1 508 890

Section C continues.

ACC315116 Page 13 of 20

Section C (continued)

Question 7

The following cash transactions relate to the operations of Rapid Logistics for the financial year ended

June 30, 2019.

$

Cash sales 72 400

Receipts from accounts receivable 290 000

Capital introduced 25 000

Proceeds of sale of surplus equipment 2 300

Other operating expenses 56 800

Dividends from investment in shares 2 800

Cash payments for materials 10 000

Proceeds of sale of shares held as investment 10 000

Purchase of new trailer 69 000

Interest revenue 690

Payments to suppliers 102 000

Proceeds of borrowing from Transport Finance Co. 12 000

Payments to employees 92 000

Additional information:

The balance of the Cash at Bank account as at July 1, 2018 was $12 650.

The balance of the owner’s Capital account at July 1, 2018 was $100 000, and at June 30, 2019

was $121 000.

Net profit for the period was $76 000.

Drawings made by the owner through the period were in cash.

You are required to:

(a) Calculate the value of owner’s drawings.

(b) Prepare a properly classified Statement of Cash Flows for Rapid Logistics for the year ended

June 30, 2019.

(5 + 15 = 20 marks)

ACC315116 Page 14 of 20


Use Section D answer booklet supplied.


This section assesses Criterion 4 and 6.

Question 8

The following account balances have been extracted from the Income Statement and Balance Sheet of a

business for the financial year 2018 and 2019.

2018

$

2019

$

Sales 228 000 232 000

Sales Returns 2 600 2 900

Cost of Goods Sold 122 300 123 110

Selling Expenses 12 000 15 000

Administrative expenses 12 000 14 000

Finance expenses 8 000 10 000

Owner’s Equity 600 000 620 000

Calculate, for 2019:

(a) Gross profit ratio

(b) Net profit ratio

(c) Rate of return on owner’s equity

(3 x 2 = 6 marks)

Section D continues.

SECTION D

ACC315116 Page 15 of 20

Section D (continued)

Question 9

The following data is extracted from the accounting records of a business for 2017, 2018 and 2019.

Income Statement summary

2017

$,000

2018

$,000

2019

$,000

Sales 430 420 300

Less Cost of Goods Sold 140 143 110

Gross profit 290 277 190

Less expenses

Selling expense 48 51 64

Administrative expense 70 85 93

Finance expense 52 54 58

Total expenses 170 190 215

Net profit (loss) 120 87 (25)

Balance Sheet summary

2017

$,000

2018

$,000

2019

$,000

Current assets Cash at bank 32 29 0

Accounts receivable 120 125 128

Inventory 178 189 195

Prepaid expense 2 3 2

Total current assets 332 346 325

Total non-current assets 1 125 1 156 1 121

Total assets 1 457 1 502 1 446

Current liabilities

Bank overdraft 0 0 11

Accounts payable 190 198 206

Total current liabilities 190 198 217

Total non-current liabilities 800 750 700

Total liabilities 990 948 917

Net assets 467 554 529

Owner’s Equity

Capital at beginning of year 347 467 554

Add Net profit/(Loss) 120 87 (25)

Capital at end of year 467 554 529


ACC315116 Page 16 of 20


Calculated ratios

2017 2018 2019 Industry

average

Quick asset ratio (liquidity) 0.80:1 0.78:1 0.59:1 0.81:1

Current ratio (liquidity) 1.75:1 1.75:1 1.50:1 1.92:1

Debt ratio (stability) 67.95% 63.12% 63.42% 52.8 %

Equity ratio (stability) 32.05% 36.88% 36.58% 47.2 %

Gross profit ratio 67.44% 65.95% 63.33% 68%

Net profit ratio 27.91% 20.71% -8.33% 32%

Rate of return on Owner’s Equity 19.6% 17.04% -4.62% 19%

You are required to analyse the Income Statement and Balance Sheet data and the calculated ratios and:

(a) Comment upon the profitability of the business.

(b) Comment on the liquidity of the business.

(c) Comment on the financial stability of the business.

(d) Provide one recommendation to management based on the information given.

(8+6+6+4 = 24 marks)

Section D continues.

ACC315116 Page 17 of 20

Section D (continued)

Question 10

Grobest Pty Ltd is a business servicing the agriculture sector. The company intends to develop a seed

cleaning service in addition to its existing operations, and will borrow to fund the necessary machinery.

The Cash Budget for 3 months ending February 29, 2020 is shown below.

Grobest Pty Ltd

Cash Budget for the three months ended February 29, 2020

December January February

Estimated cash receipts

Cash Sales 5 800 5 900 6 100

Receipts from accounts receivable 16 000 16 620 17 000

Consultancy fees received 2 400 3 000 4 000

Proceeds of loan 125 000

Receipts from seed cleaning 4 300

Dividends on shares owned 1 800

Total estimated receipts 24 200 152 320 31 400

Estimated cash payments

Payments to accounts payable 8 500 8 000 8 100

Sundry administrative expenses 1 050 1 100 1 100

Rental of property 4 000 4 000 4 000

Loan repayment 2 800 2 800 4 600

Purchase and installation of seed

cleaner 156 000

Total estimated payments 16 350 171 900 17 800

Bank balance at start of month 5 800 13 650 (5 930)

Excess of receipts over payments 7 850 13 600

Excess of payments over receipts (19 580)

Bank balance at end of month 13 650 (5 930) 7 670

Answer ALL of the following questions relating to the Cash Budget for Grobest Pty Ltd.

(a) Comment on the change in the estimated cash position over the 3 months of the budget period.

(b) Identify the issue that faces Grobest Pty Ltd in January and the cause of that issue.

(c) Suggest and assess TWO courses of action available to Grobest Pty Ltd to address this issue.

(2 + 4 + 4 = 10 marks)

ACC315116 Page 18 of 20

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ACC315116 Page 19 of 20

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ACC315116 Page 20 of 20

This examination paper and any materials associated with this examination (including answer booklets, cover sheets, rough note

paper, or information sheets) remain the property of the Office of Tasmanian Assessment, Standards and Certification (TASC).





ANSWER BOOKLET – Section A

Clearly show which question you are answering in the answer booklet.

Marker’s Use Only

Question 1 – Criterion 1

(a) (b) (c)


(a) (b)

Criterion 6


LABEL HERE

Pages: 12


BLANK PAGE


Marker’s Use Only

Question 1

Students MUST indicate which part is being answered.


Marker’s Use Only




Marker’s Use Only




Marker’s Use Only




Marker’s Use Only

Question 2



Marker’s Use Only




Marker’s Use Only



ACC315116 Page 10 of 12

Marker’s Use Only



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ANSWER BOOKLET – Section B

Clearly show which question you are answering in the answer booklet.

Marker’s Use Only

CRITERION 2

Question 3

Question 4

(a) (b) (c)

Question 5

(a) (b) (c) (d)


LABEL HERE

Pages: 8


Marker’s Use Only Question 3

Date Particulars Debit ($) Credit ($)


Marker’s Use Only




Marker’s Use Only Question 4

(a)

(b)

(c)


Question 5

(a) (b)

Cash Receipts Cash Payments

Date Details $ Date Details Chq.

No.

$



Oct 11 Lotti’s Leisure 1876 Oct 6 Commercial Insurance 701 1 350

Happy Harry’s 980 Oct 10 Gametime Supplies 790

Oct 11 Cash sales 438 Oct 13 Cartex Petroleum 702 1 132

EFT Sales 2 955 Oct 16 Wages-J. McCall 2 500

Electro Games 1 764 Drawings-M.Shott 3 000

Oct 18 Cash sales 782 Oct 19 Rent-Ace Real Estate 703 890

EFT Sales 3 347 Oct 22 Leisure Supplies 1 298



Oct 31 Commission 125 Stationery Supplies 704 438

Sub-total Sub-total


Marker’s

Use Only (c) EITHER – T – Account format

Question 5

(continued) Cash at Bank Account


OR – Columnar Format

Cash at Bank Account


Balance

($)


Marker’s

Use Only

(d)

.................................................................................

.................................................................................

Question 5

(continued)

................................................................................. $








ANSWER BOOKLET – Section C

Marker’s Use Only

CRITERION 3

Question 6

(a) (b)

Question 7

(a) (b)


LABEL HERE

Pages: 8


Markers Use Only

Question 6

(a)

Entries Format Net Sales $ $ $

Less Cost of Sales

Gross Profit Add Other Revenue

Less Other Expenses

Selling and distribution expenses


Marker’s Use Only

General & administrative expenses $ $ $

Question 6(a) (continued)

Finance expenses

Net Profit/(Net Loss) $

Total

/25


Markers Use Only

(b)

Entries Format ASSETS $ $ $ $

Current Assets

Add Non-Current Assets

Other financial assets

Property, plant and equipment

Intangibles

Total Assets $


Marker’s Use Only

Less LIABILITIES $ $ $ $

Current Liabilities Question 6(b) (continued)

Entries Format

Non-Current Liabilities

Total Liabilities

$

NET ASSETS $ OWNER’S EQUITY

Total

/20


Marker’s Use Only

Question 7 .

(a)

/5


Marker’s Use Only

Question 7

(b)

Rapid Logistics Cash Flow Statement for the year ended June 30, 2019

$ $ $

Cash flows from operating activities

Inflows

Outflows

Net cash provided (used) by operations

Cash flows from investing activities

Inflows

Outflows

Net cash provided (used) by investing

Cash flows from financing activities

Inflows

Outflows

Net cash provided (used) by financing

Net increase (decrease) in cash held

Cash at beginning of reporting period

/15 Cash at end of reporting period








ANSWER BOOKLET – Section D

Marker’s Use Only


(a) (b) (c)

Question 9 – Criterion 4 Question 9 – Criterion 6 (a) (b) (c) (d)

Question 10 – Criterion 4 Question 10 – Criterion 6 (a) (b) (c)


LABEL HERE

Pages: 12


BLANK PAGE


Marker Use Only Question 8

(a) Gross profit ratio

Calculations

Answer:

(b) Net profit ratio

Calculations

Answer:

(c) Rate of return on owners equity Calculations

Answer:


Marker Use Only

Question 9 Students MUST indicate which part is being answered.


Marker Use Only

Question 9

(continued)


Marker Use Only

Question 9

(continued)

Total Criterion 4: Total Criterion 6:


Marker Use Only

Question 10 Students MUST indicate which part is being answered.

Question 10


Marker Use Only

Question 10

(continued)

Total Criterion 4:

Total Criterion 6:


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Documents

ACCOUNTING - Department of Education...Oct 11 Cash sales 438 Oct 13 Cartex Petroleum 702 1 132 EFT Sales 2 955 Oct 16 Wages-J. McCall 2 500 Electro Games 1 764 Drawings-M.Shott 3 000