How to use this Sim Welcome! Your username is: NCEA Accounting 1.5 - Achievement Standard 90980 Interpret accounting information for sole proprietors Resource Title: Qwerty Computers - Home Revision Sim This sim is designed to work on Excel 2007 or later. You may need to enable macros if you get an error message. Click on the tabs (below) to navigate the sim. Excel Basic Tutorial Achievement Achievement with Merit Achievement with Excellence Interpret accounting information for sole proprietors. Soundly interpret accounting information for sole proprietors Comprehensively interpret accounting information for sole proprietors Introduction to the Assessment This activity requires you to interpret accounting information for various sole proprietors. You will have access to a range of tasks which you must complete using the resources and information provided in the sim. You are to write your answers in the spaces provided in the worksheets in this workbook. The tasks available are as follows: Short Questions Practice Test (Gareth's Gadgets) *Home Sim versions only Mock Test (Qwerty Computers) Use of Good Accounting Practice: When preparing the financial statements: Use the Student Note Space provided for carrying figures All figures should be stated to two decimal places, and rounded correctly to the nearest one cent.
Analysis Ratios - Formulae Sheet Mark-up % Gross profit % Gross profit Cost of goods sold Gross profit Distribution costs % Distribution costs Administrative expense % Finance cost % Total expense % Profit for the year % Current ratio Administrative expenses Finance costs Total expenses Profit for the year Current assets Current liabilities Liquid ratio Equity ratio Current assets (inventory + prepayments) Current liabilities bank overdraft (secured) Equity Total assets Percentage change Year 2 Year 1 Year 1
NCEA Acctg 1.5 - Interpret accounting information for sole proprietors - Qwerty Computers 3 of 11 Short Questions 1. Enter the answer in Your Answer box on the right. 2. Click Answer button on the left. 3. Your answer, mark and steps will be displayed on the right. 4. Click on New Question to generate a new question of the same type. 5. Click the All New Questions button if you want to clear everything and start the worksheet from the beginning. Question 1 New Question Answer Video Question 2 New Question Answer Video Question 3 New Question Answer Video The directors of a company provide the following information: $5,000 Your answer: $4,500 Solution: 0.7:1 Bank Overdraft $630 $4,000 Mark: Equipment $19,000 $3,500 $3,000 Long Term Loan $2,500 Step 1: The formula for the current ratio is Current $2,500 Petty Cash $200 $2,000 assets / Current liabilities Inventory $520 $1,500 Step 2: Current assets: petty cash, inventory & Accounts Receivable $2,500 $1,000 accounts receivable (200+520+2500=$3220) Accounts Payable $4,000 $500 Step 3: The current liabilities are: bank overdraft & $0 accounts payable (630 + 4000 = $4630) What is the current ratio? Current assets Current Step 4: Therefore, the current ratio is 3020/4630 = liabilities 0.7:1 A company profit and loss account includes: 1000 Your answer: Solution: 900 Dividend 620 800 Mark: Increase in Stock 200 Overheads 410 600 Step 1: Assume the sales figure is x Purchases 420 Step 2: Cost of Goods Sold = 420-200 = 220 Costs 400 Step 3: 0.3x = x - COGS - 410 If the profit for the year percentage is 30%, what is the figure for sales? 200 Step 4: 0.7x = 630 (Round to the nearest cent) Step 5: x = 630/0.7 = 900 0 A company provides you with the following information Your answer: Solution: 0.89:1 Property, Plant & Equipment 90,000 Mark: Equity 110,000 Mortgage 33,000 Step 1: The formula for the equity ratio is Equity / Inventory 16,000 Total assets Goodwill 18,000 Step 2: The assets are Property, Plant & Equipment, Inventory and Goodwill. So assets = 90000 + What is the equity ratio? Step 3: 16000 + 18000 = $124000 Equity ratio = 110000/124000 = 0.89:1
NCEA Acctg 1.5 - Interpret accounting information for sole proprietors - Qwerty Computers 4 of 11 Question 4 New Question Answer Video Question 5 New Question Answer Video A company provides the following figures: 120,000 % Change: Increase/Decrease 100,000 2011 2012 Solution: 2.31% Increase 104,000 108,000 80,000 Mark: Gross Profit 16,000 17,000 60,000 40,000 Gross Step 1: Profit Step 2: Calculate the percentage change in the gross profit ratio between 2011 and 2012 20,000 0 2011 2012 A company has the following figures in 2012: 120,000 Your answer: 100,000 Solution: 1.36:1 Current Assets 108,000 80,000 Mark: Current Liabilities 62,000 60,000 Secured Bank Overdraft 6,000 Step 1: The formula for the liquid ratio is: 40,000 Inventory 25,000 20,000 Prepayments 6,900 0 Step 2: (108000 - (25000 + 6900)) Ratio = What is the liquid ratio? (62000-6000) Step 3: 76100/56000 = 1.36:1 Step 3: Gross profit ratio = gross profit / sales 2011 ratio = 16000/104000. 2012 ratio = 17000/108000 Difference = (2011-2012) / 2011 = (0.1538-0.1574)/0.1538 = -0.0226 = 2.31% Increase
NCEA Acctg 1.5 - Interpret accounting information for sole proprietors - Qwerty Computers 5 of 11 Qwerty Computers is a computer store that sells computer products, owned by Abi. Task 1 Expenses The chart below summarises some of the Income Statement data for Qwerty Computers for the year ended 31 March 2012. Qwerty Computers Income Statement data for the year ended 31 March 2012 - $250,000 How sales are distributed: Cost of goods sold: Distribution costs: $140,000 $38,000 Administrative expenses: $19,000 Finance costs: $5,700 Profit for the year: $47,300 New Questions Question 1 Complete the Analysis Measures Chart below for Qwerty Computers. Percentages for 2011 are provided. Note: Percentages are to be rounded to the nearest whole number Analysis Measures Chart for Qwerty Computers Analysis Measure Distribution cost % 2011 28% 2012 Administrative expense % 19% Finance cost % 1% Total expense % 48% Working Area Auto-Marking Question 2 Choose the option which best explains what the 2011 distribution cost of 28% means for Qwerty Computers The distribution cost percentage in 2011 for Qwerty Computers was 28%. This means:
NCEA Acctg 1.5 - Interpret accounting information for sole proprietors - Qwerty Computers 6 of 11 Question 3 Fully explain ONE possible reason for the trend in the finance cost percentage from 2011 to 2012 for Qwerty Computers A possible reason for the trend in the finance cost percentage changing from 2011 to 2012 could be: Therefore: Question 4 Abi had a target of marking the administrative expense percentage 5%. She is disappointed she was unable to reach this target. Justify a recommendation that would allow Abi to reach the administrative expense percentage target for Qwerty Computers in the future Recommendation - Abi could: Justification - This would mean: Therefore the company's administrative expenses would decrease.
NCEA Acctg 1.5 - Interpret accounting information for sole proprietors - Qwerty Computers 7 of 11 Question 5 Abi is pleased with the improvement in the total expense percentage. Fully explain ONE possible way that Qwerty Computers has managed to decrease its total expense percentage. A possible reason for how Qwerty Computers has managed to decrease its total expense percentage could be: Qwerty Computers could of done this by: The total expense percentage would, as a result: The total profit for the year would: Justification - Because:
NCEA Acctg 1.5 - Interpret accounting information for sole proprietors - Qwerty Computers 8 of 11 Task 2 Profitability The pie graph below summarises the profitability from the Income Statement data for Qwerty Computers for the year ended 31 March 2012 Qwerty Computers Income Statement data for the year ended 31 March 2012 How every dollar of sales is made up Profit for the year, $47,300 Total expenses, $62,700 Cost of goods sold, $140,000 for Qwerty Computers for the year ended 31 March 2011 were $215000 Question 1 Complete the Analysis Measures Chart below for Qwerty Computers. Percentages for 2011 are provided. Note: Percentages are to be rounded to the nearest whole number Working Area Auto-Marking Analysis Measures Chart for Qwerty Computers Analysis Measure 2011 2012 % change in sales N/A Mark-up % 63% Gross profit % 29% Profit for the year % 6%
NCEA Acctg 1.5 - Interpret accounting information for sole proprietors - Qwerty Computers 9 of 11 Question 2 Choose the option which best explains what the 2011 profit for the year percentage of 6% means for Qwerty Computers The profit for the year percentage of 6% in 2011 means: Question 3 Abi is not pleased with the percentage change in sales. Justify a recommendation that would allow Abi to improve the sales for Qwerty Computers in the future Recommendation - Abi could: Justification - This would mean: Therefore the percentage of sales would increase. Question 4 Fully explain ONE possible reason for the trend in the mark-up percentage from 2011 and 2012, and give the impact this has had on the trend in the gross profit percentage. A possible reason for the trend in the mark-up percentage from 2011 to 2012 could be: This would have the following impact on the gross profit percentage: Justification - The gross profit percentage would be impacted this way because: Consequence - Therefore:
NCEA Acctg 1.5 - Interpret accounting information for sole proprietors - Qwerty Computers 10 of 11 Task 3 Liquidity & Financial Stability The table below summarises the Statement of Financial position for Qwerty Computers as at 31 March 2012 Qwerty Computers Statement of Financial Position as at 31 March 2012 Current Assets $ Current Liabilities $ Bank 3,100 Accounts payable 24,000 Accounts receivable 17,000 GST payable 4,200 Inventory 33,000 Total assets as at 31 March 2012: $146100 Equity as at 31 March 2012: $62900 Question 1 Complete the Analysis Measures Chart below for Qwerty Computers. Percentages for 2011 are provided. Note: Percentages are to be rounded to the nearest whole number Working Area Auto-Marking Ratio Current ratio Liquid ratio Equity ratio Analysis Measures Chart for Qwerty Computers 2011 2012 1.58:1 0.81:1 0.58:1 Question 2 Choose the option which best explains what the 2011 liquid ratio of 0.81:1 means for Qwerty Computers The liquid ratio for Qwerty Computers in 2011 was 0.81:1. This means:
NCEA Acctg 1.5 - Interpret accounting information for sole proprietors - Qwerty Computers 11 of 11 Question 3 Fully explain ONE possible reason for the trend in the equity ratio from 2011 to 2012 for Qwerty Computers A possible reason for the trend in the equity ratio from 2011 to 2012 could be: Therefore: Question 4 Abi is not pleased with the liquid ratio. Justify a recommendation that would allow Abi to improve the liquid ratio for Qwerty Computers in the future Recommendation - Abi could: Justification - This would mean: Therefore the liquid ratio would increase. Question 5 Fully explain ONE possible reason for the difference between the current ratio and the liquid ratio for Qwerty Computers in 2011. A possible reason for the difference between the current ratio and the liquid ratio in 2011 could be: Justification - Therefore: