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ACCOUNTINGWritten examination
Friday 20 November 2020 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
10 10 100
• Studentsarepermittedtobringintotheexaminationroom:pens,pencils,highlighters,erasers,sharpeners,rulersandonescientificcalculator.
• StudentsareNOTpermittedtobringintotheexaminationroom:blanksheetsofpaperand/orcorrectionfluid/tape.
Materials supplied• Questionbookof9pages• Answerbookof22pages
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.
©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2020
Victorian Certificate of Education 2020
2020ACCOUNTINGEXAMQB 2
Question 1 (12marks)EyeWearsellssunglassestoretailstoresaroundVictoria.Thesunglassesarepurchasedandsoldinboxesof25.ThebusinessusestheFirstIn,FirstOut(FIFO)costassignmentmethodforrecordinginventory.ThebusinesshasprovidedthefollowinginformationforMarch2020.
1March Openinginventory: • 70boxesat$400each(plusGST) • 30boxesat$450each(plusGST)
5March Creditsaleof14boxesfor$600each(plusGST)
19March Cashpurchaseoffiveboxesfor$420each(plusGST)
20March Cashsaleof70boxesfor$600each(plusGST)
28March Creditpurchaseof30boxesfor$400each(plusGST)
31March Closinginventoryasperphysicalstocktake:53boxes
Additional information• CertifiedUVlabelsareprovidedtoEyeWearatacostof$15(plusGST)perboxof
sunglasses.• Theowneradvisesthatasnewmodelsofsunglassesforthenewseasonbecomeavailable,
thesunglassesonhandwillbereducedtosellat$400(plusGST)perbox.Freedeliverytoretailstoreswillalsobeincludedatatotalcostof$200(plusGST)toEyeWear (Memo41).
a. Calculatethetotalcostoftheclosinginventoryat31March2020asperthephysicalstocktake. 3marks
b. Calculatethetotalvalueoftheinventoryat31March2020afterapplyingthelowerofcostandnetrealisablevalueinventoryvaluationmethod. 2marks
c. Recordthenecessaryentriesfor31March2020intheGeneralJournal. Narrationsarenotrequired. 4marks
d. On1April2020,EyeWeardonatedfourboxesofsunglassestoalocalschool.
Explainhowthisdonationmeetsthedefinitionofoneaccountingelement. 3marks
InstructionsAnswerallquestionsintheanswerbookprovided.
3 2020ACCOUNTINGEXAMQB
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Question 2 (4marks)KitchenCentralreceivedthefollowingdocument.
Wood n SetTax invoice Invoice No: W58 Date: 24/04/2020To: KitchenCentral
Description Quantity Unit price Subtotal
Handcarvedplatesset 8 $500 $4000
Terms: 3/7,n/30
GST Total amount due
$400$4400
a. Describethetransactionthatledtothisdocument. 2marks
b. On30April2020,KitchenCentralsettledtheaccountwithWoodnSet.
Recordtheentrytosettletheaccounton30April2020intheGeneralJournal. Anarrationisnotrequired. 2marks
Question 3 (6marks)TheaccountantforMusicTimeshassuppliedthefollowinginformation.
2018 2019 2020
Gross Profit Margin 60% 64% 68%
Net Profit Margin 33% 33% 31%
TheownerofMusicTimesstatesthatassaleshaveremainedconstantoverthethree-yearperiod,thisshowsthatthebusinesshasachievedfavourableprofitability.
Usingtheinformationprovided,discusswhethertheowner’sstatementisjustified.
2020ACCOUNTINGEXAMQB 4
Question 4 (10marks)MayfairFurniturereportsonamonthlybasis.WagesarepaidonthelastFridayofeachmonth.OnTuesday30June2020,wagesowingtoemployeestotalled$1200.
a. Recordthebalancedayadjustmentrequiredon30June2020intheGeneralJournal. Anarrationisnotrequired. 1mark
b. Withreferencetooneaccountingassumption,explainwhythisbalancedayadjustmentisnecessary. 3marks
c. Wagesof$13800werepaidonFriday31July2020(Chq.234).
RecordthispaymentintheGeneralJournal. Anarrationisnotrequired. 3marks
d. MayfairFurniturehasrecentlypurchasedfurnitureforuseinitsofficeadministrationareaatacostof$10000(plusGST).Theownerhassuggestedthatthisfurnitureshouldberecordedasinventorybecauseitmightbesoldatalaterdate.Theaccountanthasstatedthatrecordingitinthiswaywouldbeabreachoffaithfulrepresentation.
Justifytheaccountant’sstatement. 3marks
5 2020ACCOUNTINGEXAMQB
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Question 5 (14marks)Ando’sImportsreportsannuallyon31December.
Pre-adjustment Trial Balance as at 31 December 2019
Account Debit Credit
AccountsPayable 19000
AccountsReceivable 55000
AccumulatedDepreciationofEquipment 21000
Bank 21500
Capital 160300
CostofSales 195000
CreditSales 350000
Drawings 37000
Equipment 36000
Inventory 82000
TermDeposit(12months) 40000
PrepaidInsurance 5800
Wages 78000
$550 300 $550 300
Additional information• Aphysicalstocktakeon31December2019showedinventoryof$82000.• InAugust2019,aninsurancepolicywaspaidfortheyearcommencing1September2019
atacostof$3600(plusGST).• Newequipmentcosting$6000(plusGST)waspurchasedon30June2019.• Allequipmentisdepreciatedusingthestraight-linemethodandisexpectedtohavea
usefullifeofthreeyearsandaresidualvalueof10%.• Thetermdepositwasestablishedon1March2019.Interestonthetermdepositis3%per
annumpayableatmaturity.
a. Recordthenecessaryadjustmentsandallclosingentriesrequiredon31December2019intheGeneralJournalprovided.
Narrationsarenotrequired. 11marks
b. Explainwhysomeaccountsareclosedattheendofeachreportingperiodwhileotheraccountsarebalanced. 3marks
2020ACCOUNTINGEXAMQB 6
Question 6 (9marks)EducationFactoryreportsmonthly.On1August2020,thebalanceintheAllowanceforDoubtfulDebtsledgeraccountwas$3500cr.DuringAugust,netcreditsaleswere$100000(plusGST).Thisincludedacreditsaleof$12000(plusGST)toBellLearningon2August.On12August,EducationFactoryreceivednotificationthatBellLearninghadbeendeclaredbankruptandthatitwouldrepayonly60centsineverydollarowed.On30August,EducationFactoryreceivedthepaymentfromBellLearning.On31August,EducationFactorydecidedtoincreasetheAllowanceforDoubtfulDebtsto6%ofnetcreditsales.
a. CalculatetheamountreceivedfromBellLearning. 2marks
b. CompletetheGeneralLedgeraccountsprovidedforAugust2020. 7marks
Question 7 (9marks)KeywordComputersreportsmonthly.Ithasrecentlysoldsomeoldercomputerstomakewayfornewmodels.TheDisposalofComputersledgeraccountisprovidedbelow.
Disposal of Computers
Date Cross-reference $ Date Cross-reference $
28Oct. Computers 20000 28Oct. AccumulatedDepreciationofComputers
15000
Bank 3000
LossonDisposalofComputers
2000
20000 20000
a. Describetheentriesfor:• Computers• AccumulatedDepreciationofComputers• Bank 3marks
b. Explainwhythelossondisposalofthecomputershasoccurred. 3marks
c. ExplaintheimpactthedisposalofthecomputerswillhaveoneachofthefinancialreportsofKeywordComputerson31October2020. 3marks
7 2020ACCOUNTINGEXAMQB
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Question 8 (22marks)RightfieldSportsreportsmonthlyandusesa100%mark-uponinventory.
Rightfield Sports Balance Sheet as at 31 August 2020
Assets LiabilitiesCashatBank $21400 AccountsPayable $13200Inventory 127000 GSTClearing 16500PrepaidRent 3500 AccruedInterest 180MotorVehicles 86000 Loan(2020) 12000
41 880lessAccumulatedDepreciation
ofMotorVehicles (26000)Owner’s Equity Capital
170020
$211 900 $211 900
Additional information relating to September 2020• Sales–allonacashbasis–were$56000(plusGST).• Purchases–alloncredit–were$30000(plusGST).Credittermsare4/14,n/30,and
thediscountisalwaystaken.AccountsPayableclosingbalanceat30Septemberwas$18700cr.
• Rentispaidtwomonthsinadvanceandwaslastpaidon1August.• Depreciationofmotorvehiclesis30%perannumusingthereducingbalancemethod.• Theloanandallinterestoutstandingwererepaidon15September.Interestis6%per
annum.• Wagesexpensewas$7500,with$400owingat30September.• $8000(plusGST)waspaidforAdvertisingandonly40%wasusedinSeptember.• NoGSTsettlementswiththeAustralianTaxationOffice(ATO)occurredinSeptember.
a. Reconstructthefollowingledgeraccounts:• AccountsPayable• GSTClearing 6marks
b. PreparetheOperatingActivitiessectionoftheCashFlowStatementforSeptember2020. 5marks
c. PreparetheIncomeStatementforSeptember2020. 7marks
d. InAugust2020,thebusiness’sNetCashFlowfromOperatingActivitieswas$12200whileNetProfitwas$14000.
Explain,giving twoexamples,howthebusiness’sNetProfitcanbehigherthanitsNetCashFlowfromOperatingActivities. 4marks
2020ACCOUNTINGEXAMQB 8
Question 9 (9marks)Timetrackersellstechnologydevicesforathletes.Theaccountanthasprovidedthefollowinggraphsfortheyears2018,2019and2020.
Financial data, 2018–2020
$600000
$700000
$500000
$400000
$300000
$200000
$100000
0Total Assets Total Liabilities Capital Net Profit
Financial indicators, 2018–2020
300%
350%
250%
200%
150%
100%
50%
0%2018 2019 2020
2018
2019
2020
Key
Return on Owner’s InvestmentDebt Ratio
Key
a. AnalysetheinformationpresentedinthegraphsandprovidereasonsforthechangesintheReturnonOwner’sInvestmentandintheDebtRatio. 5marks
b. Explainoneadvantageandonedisadvantageofrelyingheavilyonborrowedfunds. 4marks
9 2020ACCOUNTINGEXAMQB
Question 10 (5marks)AbusinesshaspreparedavariancereportfromtheIncomeStatementforthemonthended 31July2020.Datatakenfromthereportisrepresentedinthegraphsshownbelow.
$130000
$140000
Sales Cost of Sales
$10000
$68000
$70000
$2000
Budget
Actual
Variance
Key
a. Statewhichvariancewouldbedescribedasfavourable. 1mark
b. Explainhowtheownerofthebusinessshouldinterpretthesegraphsandsuggestwhatappropriateactiontheycouldtakebasedonthisdata. 4marks
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.
©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2020
ACCOUNTINGWritten examination
Friday 20 November 2020 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 2020
STUDENT NUMBER
Letter
2020ACCOUNTINGEXAMAB 2
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Question 1 –continued
Question 1 (12marks)a. 3marks
Working space
Closing inventory at 31 March 2020 as per physical stocktake $
b. 2marks
Working space
Inventory at 31 March 2020 after applying inventory valuation method $
c. 4marksEyeWearGeneral Journal
Date 2020
Details Debit Credit
5 2020ACCOUNTINGEXAMAB
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d. 3marks
Accounting element
Explanation
2020ACCOUNTINGEXAMAB 6
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Question 2 (4marks)a. 2marks
Description
b. 2marksKitchen CentralGeneral Journal
Date 2020
Details Debit Credit
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Question 3 (6marks)
Discussion
2020ACCOUNTINGEXAMAB 8
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Question 4 –continued
Question 4 (10marks)a. 1markMayfair FurnitureGeneral Journal
Date 2020
Details Debit Credit
b. 3marks
Accounting assumption
Explanation
c. 3marksMayfair FurnitureGeneral Journal
Date 2020
Details Debit Credit
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d. 3marks
Justification
2020ACCOUNTINGEXAMAB 10
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Question 5 –continued
Question 5 (14marks)a. 11marks
Working space
11 2020ACCOUNTINGEXAMAB
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Question 5 –continuedTURN OVER
Ando’s ImportsGeneral Journal
Date 2019
Details Debit Credit
2020ACCOUNTINGEXAMAB 12
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b. 3marks
Explanation
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Question 6 (9marks)a. 2marks
Working space
Amount received from Bell Learning $
b. 7marksEducation FactoryGeneral Ledger
Accounts Receivable – Bell Learning
Date 2020
Cross-reference Amount Date 2020
Cross-reference Amount
Allowance for Doubtful Debts
Date 2020
Cross-reference Amount Date 2020
Cross-reference Amount
1Aug. Balance 3500
2020ACCOUNTINGEXAMAB 14
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Question 7–continued
Question 7 (9marks)a. 3marks
Computers
Accumulated Depreciation of Computers
Bank
b. 3marks
Explanation
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c. 3marks
Cash Flow Statement
Income Statement
Balance Sheet
2020ACCOUNTINGEXAMAB 16
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Question 8–continued
Question 8 (22marks)
Working space
a. 6marksRightfield SportsGeneral Ledger
Accounts Payable
Date 2020
Cross-reference Amount Date 2020
Cross-reference Amount
1Sep. Balance 13200
GST Clearing
Date 2020
Cross-reference Amount Date 2020
Cross-reference Amount
1Sep. Balance 16500
17 2020ACCOUNTINGEXAMAB
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Question 8–continuedTURN OVER
b. 5marksRightfield Sports
Cash Flow Statement (extract) for the month ended 30 September 2020
$ $
Cash Flow from Operating Activities
c. 7marksRightfield Sports
Income Statement for the month ended 30 September 2020
$ $
Revenue
2020ACCOUNTINGEXAMAB 18
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d. 4marks
Explanation
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CONTINUES OVER PAGE
2020ACCOUNTINGEXAMAB 20
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Question 9–continued
Question 9 (9marks)a. 5marks
Analysis
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b. 4marks
Advantage
Disadvantage
2020ACCOUNTINGEXAMAB 22
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Question 10 (5marks)a. 1mark
Favourable variance
b. 4marks
Explanation
END OF ANSWER BOOK
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