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NCEA Level 1 Accounting 90976 (1.1) page 1 of 4

SAMPLE ASSESSMENT SCHEDULE

Accounting 90976 (1.1): Demonstrate understanding of accounting concepts for smallentities

Assessment Criteria

Achievement Merit Excellence

Demonstrate an understanding ofaccounting concepts for smallentities means recognising anddescribing accounting concepts.

Demonstrate an in-depthunderstanding of accountingconcepts for small entities meansexplaining accounting concepts.

Demonstrate a comprehensiveunderstanding of accountingconcepts for small entities meansapplying accounting concepts witha clear relationship to the smallentity.

Evidence Statement

One Expected Coverage Achievement Merit Excellence

(a) Purpose: to show income,expenses, and net profit.

THREE of:

in (a), describesthe purpose of anincome statement

in (b) (i),identifies TWOrelevant users

in (b) (ii), brieflystates a reasonfor the interestwithout explainingit

in (c), statesthat business andpersonalexpenses must bekept separate

in (d), statesthat the life of abusiness isdivided up intospecified periods.

TWO of:

in (b) (ii), givesa reason why aspecific userwould beinterested in theincome statementand links it toSimply Sports

in (c),recognises howthe accountingentity conceptapplies byexplaining thatSamanthasfinances must bekept separatefrom those of thebusiness

in (d), appliesthe concept ofperiod reporting toSimply Sports byexplaining that its

life is divided intospecified periodsin order to makecomparisons.

In (c), recogniseshow the adviceillustrates theaccounting entityconcept andexplains whySamanthaspersonal expensesshould not beincluded in theincome statementbut rather be treatedas drawings.

ANDIn (d), applies theconcept of periodreporting to SimplySports by explainingthat its life is dividedinto annual periods(or reference to thedate year ended 31March) so that itsposition AND / ORperformance can becompared over

time.

(b) (i)

(ii)

Users include:

creditors

banks

suppliers

owner (Samantha)

employees.

Reason for interest:

Creditors to see the ability of

Simply Sports to repay debt. Banks to see whether to

extend further credit to SimplySports.

Suppliers to see whetherthey should continue selling toSimply Sports on credit.

Owner to see ifSimplySports is making a profit.

Employees to see ifSimplySports can offer them ongoingemployment.

(c) Illustration of accounting entity:Samantha must record herpersonal telephone expense asdrawings. This is becauseSamanthas financial affairs/personal finances must be keptseparate from Simply Sportsfinancial affairs.

(d) Illustration of period reporting: Thelife ofSimply Sports is divided intoyearly periods for the year ended

31 March, so that financialstatements can be prepared thatmeasure performance / positionand make comparisons (of an itemfor example profit).

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Two Expected Coverage Achievement Merit Excellence

(a) Identifying transactions: (SeeAppendix A).

THREE of:

in (a),recognises andidentifies three

correct capital orrevenueexpenditures

in (b) (i), statesthe displaycabinets are usedto make sales /income

in (b) (ii), statesthat they are theonly ones to usethe display

cabinets in (b) (iii),

states pasttransaction

in (c), statesthat assets arerecorded atoriginal purchaseprice

in (d), statesthat transactionsare reported to

the period theyrelate.

TWO of:

in (b) (i),explains the linkof how the display

cabinets will beused (to displayinventory) andwhat income theywill create (sales)

in (b) (ii),explains incontext to SimplySports and thedisplay cabinets

in (c), explainsin context to

Simply Sportsand theequipment beingrecorded atoriginal purchaseprice

in (d), explainsin context toSimply Sportsand the insurancebeing reported tothe period itrelates.

In (c), applies howSimply Sports willuse the displaycabinets (to displayinventory) and how

its use will createan inflow of cash(make sales andcreate an inflow ofcash).

AND

In (d), applies howSimply Sports willreport the insuranceto the period itrelates by reportingit to the Income

Statement as aninsurance expense(or as an assetprepayments in theBalance Sheet).

(b) (i)

(ii)

(iii)

Reason not an asset:

Simply Sports will use the display

cabinets to display the inventory inorder to make sales and create aninflow of cash.

Only Simply Sports can use thedisplay cabinets /Simply Sportsrestricts others from using displaycabinet.

Past Transaction.

(c) Application of historical cost policy:Simply Sports will record itsequipment at its original purchaseprice.

(d) Illustration of accrual basis: SimplySports will report the amount ofinsurance prepaid as adecreasing (insurance) expensefor the current period in theIncome Statement (or as an assetin the balance sheet).

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Appendix A

Transaction Capital expenditure Revenue expenditure

Purchase of the new displaycabinets Freight paid to deliver the

display cabinets Installation of the displaycabinets Annual insurance for thedisplay cabinets

Appendix B

Simply Sports accounting equation extract

BankAccountsreceivable

Shopfittings

ExpensesAccounts

payableLoan Equity Income

A - 400 +400

B +2000 +2000

C -450 +50 -400