Unit 3 VCE Accounting Exams2007 to 2010

Examiner’s Gripes!

General Advice

• Theses slides contain information that is predominantly taken from the VCE Accounting Exam Assessment Reports

• http://www.vcaa.vic.edu.au/vce/studies/account/exams.html

Attempt All Questions!

Correct titles

• Ledger titles:- creditors control, debtors control, stock control, gst clearing etc

• Bank/discount revenue or bank/discount expense when discounts are involved

Stock on stock cards/stock control/cost of sales =

Debtors Control =

Cost price!

Selling price!

Cash Flow Statements

Cash only!!

Cash Flow Statements Cash only

Cost of sales discount

Credit sales

NO!

Read the theory questions carefully!

Eg Qu 2.1.2 2010 paper

• 2.1.2 Explain why businesses adopt the FIFO cost assignment method.

2 marks

5% got 2 m, 13% got 1 mark, 82% got 0 marks

Answers

Needed two answers

1. FIFO may be used when a business is physically unable to identify individual stock items which have different cost prices

2. Management may adopt FIFO rather than label every item with cost price.

3. Easier method of cost allocation

Incorrect answers

• FIFO is used to ensure oldest stock sold first.• FIFO makes sure that you do not get caught

with too much stock• FIFO is used so that goods are sold before

their use by date.

GST clearing account

• Theory poorly answered – therefore learn deliberately for this exam paper.

2009 Paper

• In cash flow statements, use collections or receipts from debtors (NOT debtors control)

Dates

• Post end of month dates from journals to ledgers (mainly) except

• Individual dates for sundries in ledger accounts

• Subsidiary ledgers – record dates when transaction occurs

Aliens!

An alien is an item which simply does not belong in a certain report or record. Aliens can lose you a mark.

Eg the item ‘Cost of Sales’ does not involve a flow of cash therefore does NOT go in Cash Flow Statement

Abbreviations

• Do not use unless absolutely necessary• Can use bank rather than cash at bank• Usually given sufficient room to add full titles• Do not do this:- COGS (Cost of Goods Sold), Off Exp (Office

Expenses) and AGP (Adjusted Gross Profit) are not acceptable and will be penalised.

Arrows and lines

• Should not be used ie do not use arrows to denote an increase or to replace the word eg ‘overstated.

• If a table is presented with choices such as Overstated and Understated, one of these two choices must be used as the response (refer to Question 1.7). Arrows or lines should not be used on such questions.

Question 1.7

• A credit sale that occurred in June has not been recorded.

Required:- State the effect of this omission on the Profit and Loss Statement. 3 marks

3 marks

Solution to 1.7

Trick: Stock Gain

basically there would be less stock on hand if the sale was recorded, so the difference between the stock take and the stock card would be larger, meaning the stock gain would be higher, thus, at present it is understated.

Question 2.2.3

• Similarly, if students are asked to state Increase/Decrease/No change, one of these three responses must be used when answering such questions (refer to Question 2.2.3)

• Treated as incorrect responses

Question 2.2.3

• State the effect the discount revenue has on the Balance Sheet of CARS R US as at 30 June 2009.

3 marks

Question 2.2.3

Question 2.2.3 Solution

2008 Paper

• Check dates!• Over the whole examination students had to

deal with reporting periods of one month, three months and a complete year.

• Students needed to read the questions carefully to ensure they understood the period of time being dealt with. Often students did not adequately read the dates

• Check no. of linesDo not use a few words, if four lines to answer

theory question, assessors are expecting it to be mostly filled.

Balance Accounts

• A second issue this year involved the specific instruction to ‘balance’ a particular account.

• Despite this instruction, many students did not balance the accounts provided and subsequently could not achieve full marks on such questions

• Eg 1.2.2

Question 1.2.2 2008

1.2.2 Show how the following General Ledger accounts would appear after all journals have been posted

at 30 September 2008.• Cash at Bank (You are not required to balance this

account.)• Creditors Control (You are not required to balance this

account.)• GST Clearing (You are required to balance this account.)• Stock Control (You are required to balance this account.)1 + 2 + 4 + 4 = 11 marks

Adding balances

Note!

• Many students did not seem to realise that the GST Settlement amount of $2500 must be recorded as a debit to the GST Clearing account.

• Titles were again an issue for some, as the word ‘Control’ was omitted by some students. Consequential errors were not penalised, and many

• different dollar values were recorded, depending on the students’ responses to Question 1.2.1.

• This question specifically asked students to balance the account and one mark was deducted if this task was not completed.

This account was completed quite well by most students. One mark was allocated for the two ‘Cost of Sales’ entries and these items had to be posted separately. One mark was allocated for each of the two debit entries, representing cash and credit purchases. The last mark was allocated to the ‘Stock Loss’, which was omitted by many students. Other concerns:- incorrect titles (‘Purchases’ was often used instead of ‘Creditors Control’ and ‘Bank’). Note that ‘Cost of Sales’ is the only acceptable title for the two credit entries shown above. Some students used ‘Cost of Goods Sold’, which should only be used as a heading in the Profit and Loss Statement.

Question 1.2.1

• A similar issue existed with Question 1.2.1. Asked to total the special journals provided.

• It was disappointing to note yet again that some students did not take due care and complete all parts of the question.

• One notable difference on the 2008 examination was that students were not asked to state an accounting principle or qualitative characteristic. Two principles were provided in Question 1.1.1 and students had to apply these principles to the financial information provided.

2007 Papers

• Many students quote relevance as most appropriate characteristics to questions – not always so! Qu 1.1.3

Remember!

• Two questions = 45 marks each• Total 90 marks• Allow 1minute per mark!

Tips!

• Exam papers, exam papers, exam papers• Summarize accounting unit 3 on 2 sides of A4

paper!• Read the chapters you understand least, each

night before you go to bed.

All the Best!