ACCOUNTINGWritten examination
Friday 4 November 2016 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
9 9 100
• Studentsarepermittedtobringintotheexaminationroom:pens,pencils,highlighters,erasers,sharpeners,rulersandonescientificcalculator.
• StudentsareNOTpermittedtobringintotheexaminationroom:blanksheetsofpaperand/orcorrectionfluid/tape.
Materials supplied• Questionbookof10pages.• Answerbookof17pages.
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.
©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2016
Victorian Certificate of Education 2016
2016ACCOUNTINGEXAMQB 2
Question 1 (13marks)MMESportssellsawiderangeofsportinggoodstoschoolsandrecreationcentres.Goodsaresoldoncredit,withamark-upof50%oncost.
Schedule of Debtors as at 1 January 2016MainvilleCouncil $54000BatesPrimarySchool 2800RECSports 4400BalanceasperDebtorsControl $61200
Sales Journal (summary)
Date 2016
Debtor Invoice No.
Cost of Sales
Sales GST Debtors Control
31Jan. Totalstodate – 36000 54000 5400 59400
Cash Receipts Journal (summary)
Date 2016
Details Rec. No.
Bank Disc. Exp.
Debtors Control
Cost of Sales
Sales Sundries GST
31Jan. Totalstodate
– 49520 2450 49000 1800 2700 – 270
Additional information• 14Jan. BatesPrimarySchoolreturned$600(plusGST)ofsportingequipment
(CreditNote435).• 25Jan. MMESportsreceivedlegaladvicethatRECSportswouldbeabletopayonly
25centsforeverydollarowed.Theoutstandingaccountis$4400.
a. RecordtheadditionalinformationintheGeneralJournalprovided. Narrationsarenotrequired. 5marks
b. CompletetheDebtorsControlaccountprovided. Youarerequiredtobalancethisaccount. 5marks
c. Withreferencetoonequalitativecharacteristic,explaintheimportanceofpreparingaScheduleofDebtors. 3marks
3 2016ACCOUNTINGEXAMQB
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Question 2 (8marks)DMDesignssellsarangeofframedpictures.Ithasreceivedthefollowingdocument.Someoftheamountshavebeenremoved.
Statement of Account
Aust ImportsPOBox340 Date:31Mar.2016MiddleTown3243Ph:0383202456
StatementofAccountfor:DM Designs
Date Details Debit Credit Balance
Mar. 1 Balance 12500dr
13 Rec.940–cash
Rec.940–discount 250 6050dr
15 Inv.2560 15950dr
19 CrN.356 550
Creditterms:2/14,n/30
a. CompletetheStatementofAccountprovided. 2marks
b. ShowhowtheAustImportsaccountwouldappearintheCreditorsSubsidiaryLedgerofDMDesignsforMarch2016.
Youarenotrequiredtobalancetheaccount. 4marks
c. ExplainhowtheStatementofAccountassistsinternalcontrolforDMDesigns. 2marks
2016ACCOUNTINGEXAMQB 4
Question 3 (10marks)BusnextpaysinsuranceinadvanceinMarcheachyearforthe12-monthperiod1Aprilto31March.Thebusinessreportsannuallyon30June.On1July2015,thebalanceinthePrepaidInsuranceExpenseaccountwas$2700.On27March2016,thebusinesspaidthenextpremiumof$4356includingGST.Thisamountincludedapriceincrease.
a. PreparetheGeneralJournalentriesrequiredtoadjustandclosetherelevantaccountson 30June2016.
Narrationsarenotrequired. 4marks
b. ShowhowthePrepaidInsuranceExpenseaccountwouldappearintheGeneralLedgerat30June2016afterallentrieshavebeenposted.
Youarerequiredtobalancetheaccount. 3marks
c. Withreferencetooneaccountingprinciple,explainthepurposeofclosingthe GeneralLedger. 3marks
5 2016ACCOUNTINGEXAMQB
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Question 4 (16marks)MixMGamessellselectronicgames.Allstockismarkedupby100%oncost.Thebusinesspreparesreportseverysixmonths,inJuneandDecember.
Pre-adjustment Trial Balance (extract) as at 30 June 2016
Debit CreditSales 210000PrepaidSalesRevenue 4100Wages 67000AdvertisingExpense 45000CostofSales 105000CartageIn 3200DeliveryExpense 560DiscountRevenue 340SalesReturns 1340Loan 7200StockControl 35000
Additional information• Wagesof$2300areowingat30June.• Theloan(interestonly)wastakenouton1February2016at8%perannum.Nointerest
hasbeenpaidtodate.• PrepaidSalesRevenueat30Juneis$1600.• Vehiclescosting$120000(plusGST)werepurchasedon1June2015.Theyhavean
estimatedusefullifeofeightyearsandanestimatedresidualvalueof$24750.Thevehiclesaredepreciatedatarateof20%perannumusingthereducingbalancemethod.
a. PreparetheGeneralJournalentriesrequiredtorecordtheadditionalinformation. Narrationsarenotrequired. 8marks
b. Completethememo,describingatransactionon3June2016thatwouldresultinthe StockControlaccountbalancedecreasingby$250. 1mark
c. PreparetheIncomeStatementforthesixmonthsended30June2016. 7marks
2016ACCOUNTINGEXAMQB 6
Question 5 (10marks)OldeWorldeTradersisseekingtovalueitsstockonhandat30June2016.Theownerhasaskedforadviceonvaluingthefollowingtwoitems:Stock item 43:AnantiquechairwaspurchasedinOctober2015for$420(plusGST).Itwasthenre-coveredinahigh-qualitymaterialfor$250(plusGST).Theestimatedsellingpriceis$1800(plusGST).Deliveryisanextra$50(plusGST),tobepaidbythecustomer.Stock item 57:Adiningsetting,includingonetableandsixchairs,waspurchasedinSeptember2015for$1200(plusGST).Restorationcostsofthesettingtotalled$800(plusGST).Twoofthechairswereunabletobecompletelyrestoredandthesellingpriceofthediningsettingwillbereducedfrom$2500(plusGST)to$1750(plusGST).Deliverytothecustomeris$100 (plusGST)andwillbepaidbyOldeWorldeTraders.
a. Completethetableprovidedtodeterminethecorrectvaluationforeachitem. 4marks
b. PreparetheGeneralJournalentryarisingfromthevaluationprocesson30June2016. Anarrationisnotrequired. 2marks
c. Explainthevaluationofstockitem57andtheeffectthatthevaluationhasontheIncomeStatementandtheBalanceSheet. 4marks
7 2016ACCOUNTINGEXAMQB
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Question 6 (14marks)ThefollowinginformationhasbeenextractedfromthefinancialreportsofXYZTraders. Thebusinessreportsonanannualbasis.
XYZ TradersBalance Sheet (extract) as at
30 June 2015 30 June 2016Bank – 26000StockControl 38300 45200
Machinery 125000 140000AccumulatedDepreciationof Machinery (85000) (80000)
Bank(Overdraft) 17500 –Loan 55000 45000Capital 155000 220000
Income Statement (extract) for the year ended 30 June 2016GainonDisposalofMachinery 5000DepreciationofMachinery 18500NetProfit 45000
Additional information• On1July2015,thebusinesstraded-inoldmachinerywithacarryingvalueof$14000.• Thebusinesspaidcashforthebalanceofthenewmachinery.
a. ShowhowthefollowingaccountswouldappearintheGeneralLedgerafteralldetailsofthesaleandpurchaseofmachineryhavebeenposted:• Machinery• AccumulatedDepreciationofMachinery• DisposalofMachinery
Youarenotrequiredtobalancetheaccounts. 7marks
b. ExplainhowaGainonDisposalofanassetoccurs. 2marks
c. CalculatetheNetCashFlowthatwouldbereportedintheCashFlowStatementfortheyearended30June2016. 1mark
d. Theownertoldtheaccountantthattheywerepleasedtoseetheimprovementinthecashbalance.TheaccountantrepliedthatthemostimportantconcernwastohaveapositiveCashFlowfromOperations.
Justifytheaccountant’sstatement. 4marks
2016ACCOUNTINGEXAMQB 8
Question 7 (10marks)TheaccountantofAimeTradersobtainedindustryaveragedatarelatingtokeyfinancialratiosfortheyearended30June2016.ThefollowingtablecomparesAimeTraders’ratioswiththeindustryaverage.
Key indicator Aime Traders Industry average
ReturnonOwner’sInvestment 15.7% 14.9%
ReturnonAssets 9.9% 12.6%
AssetTurnover 1.9times 2.2times
DebtRatio 54% 34%
GrossProfitMargin 45% 40%
NetProfitMargin 5.2% 5.7%
a. DiscusstheprofitabilityofAimeTraders,asshownbythedataabove. 6marks
b. ExplaintheimplicationsforAimeTradersofhavingaDebtRatiothatissignificantlyhigherthantheindustryaverage. 4marks
9 2016ACCOUNTINGEXAMQB
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Question 8 (4marks)GreensGardenCentrehaspurchasedanewvehicle.Indeterminingtheappropriatedepreciationmethodforthevehicle,theaccountanthasprovidedthefollowingestimates.
20160
50000
100000
150000carryingvalue ($)
200000
250000
Vehicle – Carrying value at 30 JuneReducing balance method
2017 2018 2019
year
2020 2021 2022
20160
50000
100000
150000carryingvalue ($)
200000
250000
Vehicle – Carrying value at 30 JuneStraight-line method
2017 2018 2019
year
2020 2021 2022
Selectandjustifythemostappropriatedepreciationmethodforthevehicle.Inyourresponse,considertheeffectofthechosendepreciationmethodontheBudgetedIncomeStatementfortheyearending30June2018andtheBudgetedBalanceSheetasat30June2018.
2016ACCOUNTINGEXAMQB 10
Question 9 (15marks)AbconAirispreparingitsBudgetedCashFlowStatementforthethreemonthsending 30September2016.Thebusinessprovidedthefollowinginformation.
Balance Sheet (extract) as at 30 June 2016 30 September 2016 (actual) (budgeted)Current assetsDebtorsControl 71000 63000StockControl 45000 47000
Current liabilitiesCreditorsControl 25000 26000GSTClearing 16000 7300AccruedWages 750 890
Estimated Income Statement items for the three months ending 30 September 2016• CreditSales 200000• CostofSales 110000• DiscountRevenue 750• BadDebts 2000• DiscountExpense 1000• Wages 38000• Advertising 10000• DeliveryExpense 4000
Additional information• Allsalesandpurchasesofstockareoncredit.• Apaymentof$16000willbemadetotheAustralianTaxationOffice(ATO)in
September2016.• Paymentswillbemadeforwages,advertisinganddeliveryexpenses.
a. Calculatethefollowingforthethreemonthsending30September2016. i. Cashreceivedfromdebtors 3marks ii. Paymentstocreditors 5marks iii. GSTpaidoncashpayments 2marks
b. Usingtheinformationabove,completetheOperatingsectionoftheBudgetedCashFlowStatementforthethreemonthsending30September2016. 5marks
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.
©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2016
ACCOUNTINGWritten examination
Friday 4 November 2016 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 2016
STUDENT NUMBER
Letter
2016ACCOUNTINGEXAMAB 4
Question 1 –continued
Question 1 (13marks)a. 5marksMME SportsGeneral Journal
Date 2016
Details General ledger Subsidiary ledger
Debit Credit Debit Credit
b. 5marksDebtors Control
Date 2016
Cross-reference Amount Date 2016
Cross-reference Amount
1Jan. Balance 61200
2016ACCOUNTINGEXAMAB 6
Question 2 (8marks)a. 2marksStatement of Account
Aust ImportsPOBox340 Date:31Mar.2016MiddleTown3243Ph:0383202456
StatementofAccountfor:DM Designs
Date Details Debit Credit Balance
Mar. 1 Balance 12500dr
13 Rec.940–cash
Rec.940–discount 250 6050dr
15 Inv.2560 15950dr
19 CrN.356 550
Creditterms:2/14,n/30
b. 4marksDM DesignsCreditors Subsidiary ledger (extract)
Creditor – Aust Imports
Date 2016
Cross-reference Amount Date 2016
Cross-reference Amount
c. 2marks
Explanation
7 2016ACCOUNTINGEXAMAB
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Question 3 (10marks)a. 4marksBusnextGeneral Journal
Date 2016
Details General ledger Subsidiary ledger
Debit Credit Debit Credit
b. 3marksprepaid Insurance Expense
Date Cross-reference Amount Date Cross-reference Amount
20151July
Balance 2700
c. 3marks
Accounting principle
Explanation
2016ACCOUNTINGEXAMAB 8
Question 4 (16marks)a. 8marks
Working space
MixM GamesGeneral Journal
Date 2016
Details General ledger Subsidiary ledger
Debit Credit Debit Credit
b. 1mark
MixM GamesMemo: 44 3 June 2016
Signed: Amount: $
Question 4 –continued
9 2016ACCOUNTINGEXAMAB
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c. 7marksMixM Games
Income Statement for the six months ended 30 June 2016
$ $
Revenue
2016ACCOUNTINGEXAMAB 10
Question 5 –continued
Question 5 (10marks)a. 4marks
Stock item Calculation Value ($)
43
57
b. 2marksOlde Worlde TradersGeneral Journal
Date 2016
Details General ledger Subsidiary ledger
Debit Credit Debit Credit
2016ACCOUNTINGEXAMAB 12
Question 6 –continued
Question 6 (14marks)a. 7marks
Working space
XYZ TradersGeneral ledger
Machinery
Date Cross-reference Amount Date Cross-reference Amount
Accumulated Depreciation of Machinery
Date Cross-reference Amount Date Cross-reference Amount
Disposal of Machinery
Date Cross-reference Amount Date Cross-reference Amount
13 2016ACCOUNTINGEXAMAB
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b. 2marks
Explanation
c. 1mark
Working space
Net Cash Flow for the year ended 30 June 2016 $
d. 4marks
Justification
15 2016ACCOUNTINGEXAMAB
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b. 4marks
Explanation
Question 8 (4marks)
Depreciation method
Justification
2016ACCOUNTINGEXAMAB 16
Question 9 –continued
Question 9 (15marks)a.i. 3marks
Working space
Cash received from debtors $
ii. 5marks
Working space
payments to creditors $
iii. 2marks
Working space
GST paid on cash payments $
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