Accounting Tuesday 8 November 2011 Paper One Question book

Transcription

1 Senior External Examination Accounting Tuesday 8 November Paper One Question book 9 am to 12:10 pm Time allowed Perusal time: 10 minutes Working time: 3 hours Examination materials provided Paper One Question book Paper One Response book Equipment allowed QSA-approved equipment non-programmable calculator Directions You may write in this book during perusal time. Paper One has three parts, each of equal value: Part A Knowledge, interpretation and evaluation Part B Routine practical procedures Part C Challenging practical application Attempt all questions. Suggested time allocation Part A: 60 minutes Part B: 50 minutes Part C: 70 minutes Assessment Assessment standards are at the end of this book. After the examination session Take this book when you leave.

2 Planning space

3 Part A Knowledge, interpretation and evaluation Part A has three questions. Respond to all questions. Write your responses in the response book. Suggested time allocation: 60 minutes. Question 1 K Doyle is the sole proprietor of a clothing store. She often buys and sells on credit and records all transactions as soon as they occur, despite the fact that her accounts receivable often take over a month to pay her. A business associate mentioned to Ms Doyle that he had heard of a simpler method of accounting, but could not really tell her anything about it. She has asked you for advice about her method of accounting. You are to prepare a memorandum of approximately words for Ms Doyle, clearly outlining your advice on the matters below: Clearly identify and explain the two common methods of accounting. Identify the method of accounting Ms Doyle is currently using. Recommend the method Ms Doyle should adopt if she wishes to obtain a more accurate profit/loss figure. Make sure you justify your recommendation. Why is recognition of revenue a particular problem for Ms Doyle? Explain what prepaid expenses and accrued revenues are. State which financial report they appear in and how they would be classified. Define balance day adjustments and explain their relationship to the matching principle. Question 2 Read the newspaper article below. Banks to pay out on fraud Banks have vowed to reimburse customers who are the victims of fraud, following a police investigation into alleged breaches of phone and internet banking security. Account holders have reportedly been swindled out of millions of dollars through major security flaws. Australian Bankers Association chief executive David Bell said banks took fraud very seriously. Mr Bell said customers were fully reimbursed if it could be proven they were victims of outright fraud. Australian Consumers Association finance policy officer Catherine Wolthuizen said banks had a responsibility to ensure their customers funds were protected because they had encouraged people to switch to electronic banking. Banks have urged customers to take up electronic banking by charging them lower fees (and saying) that the security of those transactions is the same as if they went into a branch, she said. Ms Wolthuizen said the breach of security was not a cause of panic, because the overwhelming majority of transactions will still be secure. ACA are investigating how procedures could be adjusted. Respond to the following questions. a. What is the banks attitude toward fraud? Is this sufficient? b. Identify two strategies from the article that banks could adopt to improve their e-business processes. c. Using the strategies you identified, outline two recommendations that banks could implement to improve their controls over cash. Accounting Paper One Question book 1

4 Question 3 George Williams owns and operates a wholesale business at Southport that specialises in selling costume jewellery such as watches, necklaces and earrings to retail outlets, but also sells directly to the public. He employs an accountant, an accounts clerk, two cash register operators, a part-time sales assistant, and a student who works Thursday nights and Saturdays. George has a number of concerns relating to his controls over cash, inventory and accounts receivable and payable, and has asked you for some advice. He provides you with the following information about his business trading practices: The accountant prepares and signs cheques for payments at the end of each month. The accounts clerk is responsible for banking the cash daily. However, if he is busy he will sometimes lock the cash in the safe and take it to the bank when he has time the next day. The business has many credit customers, some of whom seem to take too long to pay their accounts. Detailed records of stock are not kept as George feels his years of experience in the industry allow him to estimate the appropriate levels of stock on hand and profits to be expected. When the stock arrives, George, or one of his employees (whoever is available), unpacks and stores the jewellery on the shelves, wherever a space can be found. The invoices are put into a special folder for payment when the accountant has time to write out the cheques. Write words to George in well-structured paragraphs outlining three weaknesses of his present system of controls over his assets. Include valid recommendations on how he can improve his controls in order to minimise loss. Comprehensively explain the weaknesses outlined and your proposed recommendations. End of Part A 2 Accounting Paper One Question book

5 Part B Routine practical procedures Part B has two questions. Respond to both questions. Suggested time allocation: 50 minutes. Write your responses in the response book. Question 1 You are the bookkeeper for Thomas Electrical Store in Brisbane. The business buys and sells on credit only. It uses the perpetual inventory system to manage its two lines of stock Product AAA and Product BBB. Use the information below to: a. Prepare the Stock Ledger Card for Product AAA using the FIFO method. b. Prepare the Stock Ledger Card for Product BBB using the Weighted Average method. Round Unit cost and Total cost columns to two decimal places. Product AAA (FIFO method): June 1 Inventory Balance 200 $4 per unit 10 Purchased 600 $4.50 per unit 12 Sold 300 units 15 Purchased 200 $5 per unit 17 Returned 50 units that were purchased on 10 June 27 Sold 500 units 29 Customer returned 10 units (sold on 27 June) 30 Stocktake revealed 145 units in stock Product BBB (Weighted Average method): June 1 Inventory Balance 200 $6 per unit 8 Purchased 300 $5.40 per unit 17 Sold 255 units 20 Purchased 185 $6.20 per unit 22 Returned 50 units (purchased on 8 June) 25 Sold 200 units 28 Customer returned 20 units (sold on 25 June) 30 Stocktake revealed 170 units in stock Accounting Paper One Question book 3

6 Question 2 Use the following documentation to: a. Complete the Cash Journal extracts. b. Prepare the Cash at Bank A/c. c. Complete a Bank Reconciliation Statement. M Curtis Cash Receipts Journal (extract) Date Rec. No. Particulars Bank July 2 CRS Sales CRS EFTPOS Sales Accounts Receivable (T Smith) CRS Sales CRS EFTPOS Sales CRS Sales Accounts Receivable (M Love) M Curtis Cash Payments Journal (extract) Date Chq. No. Particulars Bank July Accounts Payable (K Bignell) Drawings Equipment Purchases Wages Sales Returns M Curtis General Ledger (extract) Cash at Bank A/c Date Particulars Debit Credit Balance July 1 Balance Dr 4 Accounting Paper One Question book

7 M Curtis Bank Reconciliation Statement as at 30 June $ $ Credit balance as per bank statement Add: Deposits not yet credited Less: Unpresented cheques: No Debit balance as per Cash at Bank A/c $ Bank of Australia Bank Statement Account Name: M Curtis Account No Date Transaction Debit Credit Balance $ $ $ July 1 Balance Cr Deposit Cr 2 Deposit Cr 3 EFTPOS deposit Cr Cr Cr 12 Deposit Cr Cr Cr Bank fee Cr 17 Deposit Cr EFTPOS deposit Cr 22 Deposit Cr Cr 28 Reversal insufficient funds (T Smith) Cr Unpaid cheque fee Cr EFTPOS fee Cr 29 Bank interest Cr End of Part B Accounting Paper One Question book 5

8 Part C Challenging practical application Part C has one question. Suggested time allocation: 70 minutes. Write your responses in the response book. Question 1 Use the information of J Green (a GST-inclusive trading business) below to: a. Complete the General Journal. (Narrations are not required.) b. Complete the Cash Receipts Journal. c. Post to the Accounts Receivable Ledger. d. Post to the following accounts in the General Ledger: i. Accounts Payable Control A/c ii. Accounts Receivable Control A/c. e. Prepare the Schedule of Accounts Receivable. Balance of Ledger Accounts as at 1 November Accounts Receivable Control A/c $7410 T Willis $2200, W Mackay $1500, R Ryan $2110, R Jackson $1600 Accounts Payable Control A/c $1540 Provision for Doubtful Debts A/c $200 Transactions to be recorded on 30 November : Received $440 from B Travis whose account was previously written off as a bad debt. Charged R Jackson $100 interest on his overdue account. T Willis was declared bankrupt. Received part payment of 30c in the dollar. The remainder to be written off as a bad debt. D Francis charged J Green $25 interest on an overdue account. It was realised that the sale made on 10 November to S Black was for $330 (GST inclusive). Create a new provision for doubtful debts of 7% of the closing Accounts Receivable balance. (Round to the nearest dollar.) J Green Sales Journal Date Tax Inv. No. Accounts Receivable Post Ref. Sales GST Clearing Accounts Receivable Control Cr Cr Dr Nov W Mackay S Black $ $ $ Accounting Paper One Question book

9 J Green Purchases Journal Date Ref. No. Accounts Payable Post Ref. Inventories GST Clearing Accounts Payable Control Dr Dr Cr Nov D Francis AA10 M Curtis $ $40.00 $ J Green Cash Receipts Journal Date Rec. No. Particulars Post Ref. Sales Other Accounts Receivable Control GST Clearing Bank Nov R Ryan Rent Revenue CRS Sales W Mackay CRS Sales Interest Revenue J Green Cash Payments Journal Date Chq. No. Particulars Post Ref. Inventories Other Accounts Payable Control GST Clearing Bank Nov Electricity P Jones Furniture Purchases $ $ $ $ $ End of Part C End of Paper One Accounting Paper One Question book 7

10 Assessment standards from the 2007 senior external syllabus for Accounting Criterion Standard A Standard B Standard C Standard D Standard E Knowledge, interpretation and evaluation recalls, describes and explains a comprehensive range of relevant facts, concepts, and principles applies an extensive knowledge of accounting concepts and principles to analyse and interpret information to solve problems and make valid decisions and recommendations communicates a comprehensive range of accounting information and understandings clearly, accurately and cohesively in written form, using appropriate terminology. recalls, describes and explains a substantial range of relevant facts, concepts and principles applies knowledge of accounting concepts and principles on most occasions to analyse and interpret information to solve problems and make valid decisions and recommendations communicates a substantial range of accounting information and understandings which are usually expressed clearly, accurately and cohesively in written form, using appropriate terminology. recalls and describes relevant facts and generally explains concepts and principles analyses and generally interprets accounting information to make valid decisions communicates a range of accounting information and understandings in written form, in a manner which is generally clear and accurate, using some appropriate terminology. states some relevant facts and concepts identifies relevant facts from accounting information communicates some accounting information in written form, although the communication sometimes lacks clarity and accuracy. states some facts communicates little accounting information in written form, and this communication lacks clarity and accuracy. Routine practical procedures accurately applies fundamental accounting concepts to select and organise relevant data to record a wide range of routine transactions consistently demonstrates knowledge of fundamental accounting concepts to correctly process accounting information in usual situations accurately prepares and effectively presents accounting reports. applies fundamental accounting concepts to select and organise relevant data to record a wide range of routine transactions in most situations usually demonstrates knowledge of fundamental accounting concepts to correctly process accounting information in usual situations accurately prepares and presents accounting reports on most occasions. applies fundamental accounting concepts to select and organise relevant data to record a range of routine transactions generally processes accounting information correctly in usual situations prepares and presents accounting reports with some inaccuracies. selects relevant data and records routine transactions on some occasions occasionally processes some accounting information correctly in usual situations prepares and presents accounting reports which frequently lack accuracy. seldom records routine transactions accurately rarely processes accounting information correctly in usual situations rarely prepares and presents accounting reports accurately. 8 Accounting Paper One Question book

11 (continued) Criterion Standard A Standard B Standard C Standard D Standard E Challenging practical application effectively applies accounting knowledge and concepts to accurately record a variety of transactions which include complex elements applies accounting knowledge and concepts to consistently and correctly process accounting information which includes complex elements accurately prepares and effectively presents accounting reports involving complex processing consistently and effectively solves problems involving complex practical processes. usually applies accounting knowledge and concepts to accurately record a variety of transactions which include complex elements applies accounting knowledge and concepts to correctly process, in most situations, accounting information which includes complex elements accurately prepares and effectively presents, on most occasions, accounting reports involving complex processing usually solves problems involving complex practical processes. generally applies accounting knowledge and concepts to accurately record transactions which include complex elements follows a given procedure to process accounting information which includes complex elements prepares and presents accounting reports involving complex processing with varying degrees of accuracy solves problems involving complex practical processes on some occasions. occasionally records accurately transactions which include complex elements follows a given procedure, in part, to process accounting information which includes complex elements prepares and presents accounting reports involving complex processing with little accuracy. seldom records transactions or processes information which include complex elements rarely prepares or presents accounting reports involving complex processing. Accounting Paper One Question book 9

12 Queensland Studies Authority 154 Melbourne Street, South Brisbane PO Box 307 Spring Hill QLD 4004 Australia T F The State of Queensland (Queensland Studies Authority) Copyright protects this material. Copyright in the Senior External Examination is owned by the State of Queensland and/or the Queensland Studies Authority. Copyright in some of the material may be owned by third parties. Except as permitted by the Copyright Act 1968 (Cwlth), reproduction by any means (photocopying, electronic, mechanical, recording or otherwise), making available online, electronic transmission or other publication of this material is prohibited without prior written permission of the relevant copyright owner/s. The Queensland Studies Authority requires to be recognised as the source of the Senior External Examination and requires that its material remain unaltered. Enquiries relating to copyright in this material, which is owned by the State of Queensland or the Queensland Studies Authority, should be addressed to: Manager Publishing Unit publishing@qsa.qld.edu.au