business studies...2018.1 j.21/22/23_ms 4/96 page 4 ofdeb95 exams pre-junior certificate...
TRANSCRIPT
J.21/22/23
Pre-Junior Certificate Examination, 2018
Business Studies
Marking Scheme
Ordinary Pg. 4
Higher Paper I Pg. 42
Paper II Pg. 74
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Pre-Junior Certificate Examination, 2018
Business Studies
Ordinary and Higher Level
Table of Contents
Ordinary Level
Section A (100 marks)
Q.1-20 .................................................................. 4
Section B (300 marks)
Q.1 Household Budget Question ....... 14
Q.2 Final Accounts and Balance Sheet Question .............................................. 17
Q.3 Banking and Writing a Letter Question .............................................. 20
Q.4 Forms of Business Question ......... 24
Q.5 Business Documents Question ... 28
Q.6 Household Analysed Cash Book and Sources of Finance Question ....... 31
Q.7 Economics, Inflation and National Budget Question ............ 34
Q.8 Marketing and Sales Promotion Question .............................................. 38
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Higher Level – Paper 1
Section A (80 marks)
Q.1-20 .................................................................. 42
Section B (160 marks)
Q.1 Household Budget Question ....... 52
Q.2 Club Account Question ................. 55
Q.3 Factors of Production, Inflation and Economic Awareness Question .............................................. 58
Q.4 Consumer Question ........................ 62
Q.5 Personal Banking and Savings Question .............................................. 66
Q.6 People at Work Question .............. 69
Higher Level – Paper 2
Paper (160 marks)
Q.1 Books of First Entry, Ledger and Trial Balance Question ................... 74
Q.2 Purchasing, Business Documents and Bookkeeping Question ......... 76
Q.3 Forms of Business Question ......... 80
Q.4 Final Accounts and Balance Sheet Question .............................................. 84
Q.5 Channels of Distribution and Business Insurance Question ....... 88
Q.6 Cash Flow Forecast Question ...... 92
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Pre-Junior Certificate Examination, 2018
Business Studies
Ordinary and Higher Level
Explanation
Conventions Used
1. A dash – before an answer indicates that the answer is a separate answer, which may be considered as independent of any other suggested answers to the question.
2. A single forward slash / before an answer indicates that the answer is synonymous with that which preceded it. Answers separated by a forward slash cannot therefore be taken as different answers.
3. A double forward slash // is used to indicate where multiple answers are given but not all are required.
4. Round brackets ( ) indicate material which is not considered to be essential in order to gain full marks.
5. Answers which are given in this marking scheme should not be considered as the only possible answers that may be accepted. Answers which are synonymous with or equivalent to those in this marking scheme are also acceptable.
6. ‘etc.’ is used in this marking scheme to indicate that other answers may be acceptable. In all other cases, only the answer given or ‘words to that effect’ may be awarded marks.
Current Marking Scheme
Assumptions about these marking schemes on the basis of past SEC marking schemes should be avoided. While the underlying assessment principles remain the same, the exact details of the marking of a particular type of question may vary from a similar question asked by the SEC in previous years in accordance with the contribution of that question to the overall examination in the current year. In setting these marking schemes, we have strived to determine how best to ensure the fair and accurate assessment of students’ work and to ensure consistency in the standard of assessment from year to year. Therefore, aspects of the structure, detail and application of the marking schemes for these examinations are subject to change from past SEC marking schemes and from one year to the next without notice.
Copyright
All rights reserved. This marking scheme and corresponding papers(s) are protected by Irish (EU) copyright law. Reproduction and distribution of these materials or any portion thereof without the written permission of the publisher is prohibited except for the immediate use within a classroom.
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Pre-Junior Certificate Examination, 2018
Business Studies
Ordinary Level Marking Scheme (400 marks)
SECTION A (100 marks)
Answer all 20 questions. Each question carries 5 marks.
1. What do the following letters stand for? (Write each answer in full in the space provided.) (3 + 2) (5)
PRSI – pay related social insurance
VAT – value added tax
2. State two reasons why clubs prepare accounts. (5)
Any 2: (3 + 2) – to find out how much money was spent and received during the year // – to determine the income and expenditure of the club // – to calculate the profit or loss of any fundraising activities undertaken by the club // – to determine if the club has a surplus or deficit for the year / to find out whether the shop / bar / restaurant
within the club is profitable // – to plan for the future, i.e. to see if the club can afford to purchase new machinery and equipment // – to assess whether the club would be able to repay any future loans // – to show the bank manager when making loan applications - lender will want to know if the club has the
ability to repay the loan / has sufficient fixed assets to provide collateral against the loan // – to supply the necessary information and accounts when applying for government or local authority grants
and subsidies // – to determine if the club has any tax liabilities - Revenue Commissioners require annual tax returns
and accounts // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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SECTION A (cont’d.)
3. Place the following customers’ surnames in alphabetical order: (2 + 1 + 1 + 1) (5)
SHANE MORRIS SEAN MOORE CATHAL MOLLOY COLIN MORONEY
(i) – Cathal Molloy
(ii) – Sean Moore
(iii) – Colin Moroney
(iv) – Shane Morris
4. Indicate whether the following jobs are in the PRIMARY, SECONDARY or SERVICES sector by ticking () the most appropriate box in each case: (2 + 2 + 1) (5)
JOB PRIMARY SECONDARY SERVICES
(i) Builder
(ii) Accountant
(iii) Fisherman
5. The following are meter readings taken from an electricity bill. Calculate the number of units used and the total charge. Enter your answers in the appropriate spaces. (5)
Electricity Meter Readings Workings:
Present 54,228 Units used = 54,228 – 52,165 = 2,063 units (3) Charge = 2,063 × 0⋅23
= €474⋅49 (2)
Previous 52,165
No. of units used 2,063
Rate per unit €0⋅23
Total Charge € 474⋅49
Accept correct figure only.
Award full marks for correct answer even if no workings are shown. Figures in brackets show the breakdown of marks if the final answer is incorrect or incomplete. Allow 3 marks for correct figure for ‘No. of units used’ (2,063) without workings if further work is incorrect.
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SECTION A (cont’d.)
6. Place a tick () after each statement showing whether it is TRUE or FALSE: (2 + 2 + 1) (5)
TRUE FALSE
A consumer is a person who buys goods and/or services for resale. A special offer is a promotion by a retailer to encourage customers to buy certain goods.
A guarantee is a written promise by a manufacturer to be responsible for correcting any unforeseen faults in its goods within a stated period of time.
7. The following figures are taken from the books of Hall Ltd: (5)
Opening Stock €14,500 Cash in Hand €11,800 Trade creditors €23,200 Debtors €45,400
Enter and total the Current Assets in the following extract from the Balance Sheet of Hall Ltd as at 31 December 2017:
Extract from Balance Sheet of Hall Ltd as at 31-12-2017
CURRENT ASSETS €
Cash in Hand (1) 11,800 (1)
Debtors (1) 45,400 (1)
TOTAL CURRENT ASSETS 57,200 (1)
Accept correct figure only.
Deduct 2 marks for each additional entry (incorrect).
8. To a teenager in Ireland, which of the following are NEEDS and which are WANTS? Tick () the correct box in each case. (2 + 2 + 1) (5)
NEEDS WANTS
(i) Clothes
(ii) Mobile Phone
(iii) Concert Tickets
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SECTION A (cont’d.)
9. Complete the following sentence: (5)
‘Opportunity Cost’ is
Any 1: (5) – the loss of another item (3) which could have been provided / purchased instead with the same
money / finances / resources (2) // – as a result of limited money / finances / resources (2) choices must be made - opportunity cost
refers to the choices lost as a result of a decision made (3) // – when an individual / family / business / government is confronted with making a choice between
two items because of limited resources (2), the item not selected is the opportunity cost - opportunity forgone (3) // etc.
Figures in brackets show the breakdown of marks if the answer is incomplete. Underlined phrases or equivalent must be included to receive the partial marks shown. Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material. Allow 3 marks for incomplete answer with some merit.
10. In each space below, write the correct word from the following list: (3 + 2) (5)
PROPOSAL FORM POLICY ASSESSOR CLAIM FORM ACTUARY
(Three of the words above do not complete any of the sentences below.)
(i) The document which must be completed when seeking compensation from an insurance
company in the event of a loss is called a ________________________________.
(ii) The title of the person sent by an insurance company to calculate the amount of the loss is
________________________________.
11. Ciaran Doyle wishes to insure his house for €295,000. He receives the following quotation from an insurance company:
Insurance Premium on Buildings: €2·60 per €1,000
Calculate the cost of the insurance premium that Ciaran will have to pay. (5)
Workings:
Answer: Premium =
000,1
000,295 (1)(1)
× 2·60 (1)
= €767 (2) Premium: € 767
Accept correct figure only.
Award full marks for correct answer even if no workings are shown. Figures in brackets show the breakdown of marks if the final answer is incorrect or incomplete.
2018 JC Business Studies [OL]
(1)
(1)
CLAIM FORM
ASSESSOR
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SECTION A (cont’d.)
12. Give one example of Current Expenditure and one example of Capital Expenditure by a farmer. (3 + 2) (5)
Current Expenditure
Any 1: – farm wages / farm labour // – renting / leasing land // – purchase of diesel / fuel // – ESB / electricity bills / water charges // – purchase of seed / fertiliser / weed spray // – purchase of feed / hay / silage / maize / oats for animals // – veterinary fees // – accountancy fees // – tractor repairs / machinery repairs / repairs // – interest on farm loans / overdraft / bank fees // – fees paid for agricultural contractors, e.g. silage contractors // – purchase of dry stock for finishing before selling (less than 1 year) // etc.
Accept answer only if purpose / reason explicitly stated.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
Capital Expenditure
Any 1: – purchase of land // – purchase of tractor / machinery / equipment // – construction of farm buildings / sheds / milking parlours // – repairs / improvements to farm buildings / sheds / milking parlours // – land drainage / reclamation // – purchase of calves / cows / sheep / goats for breeding / restocking / milking - not for selling on // etc.
Accept answer only if purpose / reason explicitly stated.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
13. Complete the following sentence: (5)
‘Bankruptcy’ is
Any 1: (5) – a legal process (2) which declares that a person or company (1) is unable to pay debts (1)
owed to creditors (1) // – a legal procedure (2) for liquidating the assets / property of an individual or business (1)
which cannot fully pay its debts (1) owed to creditors (1) // etc.
Figures in brackets show the breakdown of marks if the answer is incomplete. Underlined phrases or equivalent must be included to receive the partial marks shown. Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material. Allow 3 marks for incomplete answer with some merit.
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SECTION A (cont’d.)
14. A mobile phone company offers the following bill pay tariff plans. (5)
Light Use
250 minutes Unlimited texts
5GB data
€12·50 per month
Medium Use
500 minutes Unlimited texts
5GB data
€20·00 per month
Heavy Use
1,000 minutes Unlimited texts
5GB data
€45·00 per month
Calculate which tariff plan offers the best value for money. Show your answer and workings.
– Light use = 250 minutes for €12·50 per month
= 250
5012⋅
= €0·05 per minute / 5c per minute (1)
Medium use = 500 minutes for €20·00 per month
= 500
0020⋅
= €0·04 per minute / 4c per minute (1)
Heavy use = 1,000 minutes for €45·00 per month
= 000,1
0045⋅
= €0·045 per minute / 4·5c per minute (1)
Best value = Medium use (2)
Award full marks for correct answer even if no workings are shown. Figures in brackets show the breakdown of marks if the final answer is incorrect or incomplete.
15. Consumers are increasingly using the internet to purchase goods online. State two benefits of shopping online for consumers. (5)
Any 2: (3 + 2) – no need to leave own home / savings in time // – convenience / no driving to shop and finding parking nearby // – cheaper than high street store due to lower cost base as company can be located anywhere // – larger variety may be available due to less restrictions on space or finances for stock / demonstration // – consistency between advertised price and site price // – sometimes no cost of delivery // – information on product comparison easily available // – price comparison available online // – available to buy any time / 24/7 // – easy to cancel order / return goods // – sometimes no taxes payable // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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SECTION A (cont’d.)
16. Column 1 shows a list of information technology terms. Column 2 is a list of possible explanations for these terms. (One explanation does not refer to any of the terms.) (5)
Column 1 – Terms Column 2 – Explanations
1. Memory A. Program used to prepare budgets and accounts
2. Software B. Method of sending messages through the internet
3. Spreadsheet C. Programs which instruct a computer how to perform tasks
D. Used to store information for immediate use in a computer
Match the two lists by placing the letter of the correct explanation under the relevant number below: (2 + 2 + 1)
1. 2. 3.
D C A
17. Answer either (A) or (B). (5)
(A) Balance the following Bank Account and bring down the balance at the end of the month:
Dr Bank Account Cr
Date Details F Total Date Details F Total
2018 € 2018 €
Jan. 1 Balance b/d 1,140 Jan. 12 Purchases GL2 2,680
16 Cash Sales GL3 6,700 28 Wages GL6 3,390
31 Balance c/d 1,770 (2)
7,840 (1) 7,840 (1)
Feb. 1 Balance b/d 1,770 (1)
OR
(B) Balance the following Bank Account by completing the last three lines of the ‘Balance’ column:
Bank Account
Date Details F Dr Cr Balance
2018 € € €
Jan. 1 Balance b/d 1,140
12 Purchases GL2 2,680 (1,540) (2)
16 Cash Sales GL3 6,700 5,160 (2)
28 Wages GL6 3,390 1,770 (1)
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SECTION A (cont’d.)
18. Laura Kealy received her net wages in cash. Her employer used the least number of notes and coins possible when putting the cash in Laura’s pay envelope. Using the Note/Coin Analysis Slip below, calculate Laura’s net wage: (5)
NOTE/COIN ANALYSIS
€100 €50 €20 €10 €5 €2 €1 50c 20c 10c 5c 2c 1c
3 1 2 1 2 1 1 1 2
– Laura’s net wage: 3 × €100 = 300⋅00 (1) 1 × €50 = 50⋅00 2 × €20 = 40⋅00 90⋅00 (1) 1 × €5 = 5⋅00 2 × €2 = 4⋅00 9⋅00 (1) 1 × 50c = 0⋅50 1 × 20c = 0⋅20 1 × 10c = 0⋅10 0⋅80 (1) 2 × 2c = 0⋅04 (1) 399⋅84
Award full marks for correct answer even if no workings are shown. Allow 1 mark for each correct digit if the final answer is incorrect or incomplete.
19. The following line graph shows the annual sales for Tiger Ltd for the last seven years: (2 + 2 + 1) (5)
0
50
100
150
200
250
300
350
400
2011 2012 2013 2014
Year
Am
ou
nt
(�'0
00
)
2015 2016 2017 20182010
Tiger Ltd - Annual Sales (�'000)
Using the above graph, answer each of the following questions:
Questions Answers
(i) Identify the year that had the highest sales. – 2016
(ii) What were the company’s sales in 2017? € 350,000
(iii)
What was the increase in sales between 2011 and 2017? € 200,000 [350,000 – 150,000]
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SECTION A (cont’d.)
20. A consumer who returns a faulty good that cannot be repaired is entitled to either: (3 + 2) (5)
– a refund OR – a replacement
Complete both boxes.
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Notes:
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SECTION B (300 marks)
1. Household Budget Question (60)
Answer all parts of this question:
The following is a budget for the Graham household for four months, January to April, 2018:
Opening Cash in Hand is €780.
Planned Income:
Gary Graham earns €1,900 net per month and expects this to increase by €150 per month from 1 March 2018.
Alison Graham earns €2,650 net per month and expects this to decrease by €350 per month from 1 February 2018.
Child benefit is expected to be €420 per month.
Planned Expenditure:
House rental is €900 per month but this will increase by €125 per month from 1 March 2018.
The Graham household pays a car insurance premium of €1,020 per year, payable monthly from 1 January 2018.
The Graham household pays a health insurance premium of €210 per month. This premium will increase by €25 per month from 1 April 2018.
Household costs are expected to be €1,600 per month, except in April, when they are expected to be €300 extra.
Car running costs are expected to be €180 per month for Gary and €130 per month for Alison. Gary’s car is due for a service in February, which is expected to cost an extra €350.
Electricity bills for light and heat are expected to be €170 in February and €145 in April, while heating oil will cost €650 in March.
The household pays €75 per month for television channels. The annual television licence will cost €160 in April.
Education costs will include a school tour costing €450 in February and a deposit of €200 for Transition Year payable in April.
Birthday presents will be €200 in January and a wedding gift will cost €250 in April.
Entertainment is expected to cost €275 each month except in February, when it will cost an extra €150.
The Graham household has booked a holiday costing €3,400. A deposit of €750 must be paid in January, a further instalment of €1,250 in March and the balance in April.
(A) Complete the blank Household Budget form (on page 9 of the Booklet) using all the above figures. (50)
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1. Household Budget Question (cont’d.)
(A) (cont’d.)
GRAHAM HOUSEHOLD JAN FEB MAR APR TOTAL
PLANNED INCOME € € € € €
Gary Graham - salary 1,900 (½) 1,900 (½) 2,050 (½) 2,050 (½) 7,900 (½)
Alison Graham - salary 2,650 (½) 2,300 (½) 2,300 (½) 2,300 (½) 9,550 (½)
Child benefit 420 (½) 420 (½) 420 (½) 420 (½) 1,680 (½)
A. TOTAL INCOME 4,970 (½) 4,620 (½) 4,770 (½) 4,770 (½) 19,130
PLANNED EXPENDITURE
Fixed
House rental 900 (½) 900 (½) 1,025 (½) 1,025 (½) 3,850 (½)
Car insurance 85 (½) 85 (½) 85 (½) 85 (½) 340 (½)
Health insurance 210 (½) 210 (½) 210 (½) 235 (½) 865 (½)
Subtotal 1,195 (½) 1,195 (½) 1,320 (½) 1,345 (½) 5,055
Irregular
Household costs 1,600 (½) 1,600 (½) 1,600 (½) 1,900 (½) 6,700 (½)
Car running costs 310 (½) 660 (½) 310 (½) 310 (½) 1,590 (½)
Light and heat ⎯ (½) 170 (½) 650 (½) 145 (½) 965 (½)
Television costs 75 (½) 75 (½) 75 (½) 235 (½) 460 (½)
Education costs ⎯ 450 (½) ⎯ 200 (½) 650 (½)
Subtotal 1,985 (½) 2,955 (½) 2,635 (½) 2,790 (½) 10,365
Discretionary
Presents 200 (½) ⎯ 250 (½) 450 (½)
Entertainment costs 275 (½) 425 (½) 275 (½) 275 (½) 1,250 (½)
Holiday costs 750 (½) –– 1,250 (½) 1,400 (½) 3,400 (½)
Subtotal 1,225 (½) 425 (½) 1,525 (½) 1,925 (½) 5,100
B. TOTAL EXPENDITURE 4,405 (½) 4,575 (½) 5,480 (½) 6,060 (½) 20,520 (½)
Net cash (A – B) 565 (½) 45 (½) (710)(½) (1,290)(½) (1,390)(½)
Opening cash 780 (½) 1,345 (½) 1,390 (½) 680 (½) 780 (½)
Closing cash 1,345 1,390 680 (610)(1) (610)(1)
Allow full marks for student’s own figure if consistent with previous work. Accept correct figure only, i.e. both figures must be the same and correct.
(B) Calculate the annual health insurance premium for the Graham household. Show your answer and workings. (Answer in the space provided on page 9 of the Booklet.) (5)
– January - March: 3 months (1) × €210 (1) 630 (2) April - December: 9 months (1) × €235 (1) 2,115 (2) Total €2,745 (1)
Accept correct figure only.
Award full marks for correct answer even if no workings are shown. Figures in brackets show the breakdown of marks if the final answer is incorrect or incomplete.
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1. Household Budget Question (cont’d.)
(C) The Graham household intends to install a new kitchen in their home in May at a cost of €2,500. State whether this expenditure will be fixed, irregular or discretionary. Explain your answer. (Answer in the space provided on page 9 of the Booklet.) (5)
Expenditure (2)
– discretionary
Explanation
Any 1: (3) – non-essential expenditure // – non-essential item which is only a one-off expense // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
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2. Final Accounts and Balance Sheet Question (60)
Answer all parts of this question:
The following Trial Balance was taken from the books of Quinn Ltd on 31 December 2017, the end of its financial year. The Authorised Share Capital is 450,000 ordinary shares at €1 each.
Trial Balance of Quinn Ltd as at 31 December 2017 Dr Cr
€ €
Cash Sales 390,000
Cash Purchases 240,000
Carriage Inwards 7,000
Opening Stock at 1 January 2017 24,300
Wages 59,500
Advertising 7,600
Insurance 9,200
Interest on Bank Overdraft 1,700
Telephone 1,350
Dividend Paid 14,800
Bank Overdraft 16,200
Cash in Hand 2,750
Issued Share Capital 350,000
Buildings 280,000
Machinery 70,000
Motor Vehicles 38,000
756,200 756,200
Closing Stock at 31 December 2017 was €17,200.
(A) From the above figures, prepare:
(i) A Trading, Profit and Loss Appropriation Account for Quinn Ltd for the year ended 31 December 2017. (Answer on page 10 of the Booklet.) (21)
(ii) A Balance Sheet as at 31 December 2017. (Answer on page 11 of the Booklet.) (24)
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2. Final Accounts and Balance Sheet Question (cont’d.)
(A) (cont’d.)
Trading, Profit and Loss Appropriation Account of Quinn Ltd for the year ended 31/12/2017
€ € € Sales 390,000 (1) Less Cost of Sales
Opening Stock 24,300 (1) Purchases 240,000 (1) Carriage Inwards 7,000 (1) 247,000 271,300 (1) Less Closing Stock (17,200)(1)
Cost of Goods Sold (254,100)(1) Gross Profit (1) 135,900 (2) Less Expenses
Wages 59,500 (1) Advertising 7,600 (1) Insurance 9,200 (1) Interest on Bank Overdraft 1,700 (1) Telephone 1,350 (1) (79,350)(1)
Net Profit (1) 56,550 (2) Less Appropriations
Dividend Paid (14,800)(1) Profit & Loss a/c balance 41,750 (1)
Allow full marks for student’s own figure if consistent with previous work. Accept correct figure only.
Balance Sheet of Quinn Ltd as at 31/12/2017 (2)
€ € Fixed Assets (2)
Buildings 280,000 (1)Machinery 70,000 (1)Motor Vehicles 38,000 (1)
388,000 Current Assets (2)
Cash in Hand 2,750 (1) Closing Stock 17,200 (1) 19,950
Current Liabilities (2) Bank Overdraft (16,200)(1)
Working Capital 3,750 (1)Total Net Assets 391,750 (1) Financed By (2)
Auth’d. (1) Issued (1)Share Capital 450,000 (1) 350,000 (1)Profit & Loss a/c balance 41,750 (1)
Capital Employed 391,750 (1)
Allow full marks for student’s own figure if consistent with previous work. Accept correct figure only.
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2. Final Accounts and Balance Sheet Question (cont’d.)
(B) (i) Explain the term ‘Carriage Inwards’ in the above Trial Balance. (Answer on page 11 of the Booklet.) (5)
Any 1: (5) – an expense (1) paid by a buyer / company (1) to transport (1)
purchases / raw materials / goods purchased (1) into the business (1) // – a cost (1) incurred by a buyer / company (1) for transporting (1)
purchases / raw materials / goods purchased (1) to its premises (1) // – transport / delivery costs (2) incurred by a company (1) to get
purchases / raw materials / goods purchased (1) delivered to its premises (1) // etc.
Figures in brackets show the breakdown of marks if the answer is incomplete. Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
(ii) Calculate the Net Profit as a percentage of Cash Sales using the formula provided:
1
100
SalesCash
ProfitNet ×
Show your answer and workings. (Answer on page 11 of the Booklet.) (10)
– % Net Profit = 1
100
SalesCash
ProfitNet ×
= 000,390
550,56 (4)
)4( ×
1
100
= 14·5% (2) Allow full marks for student’s own figure if consistent with previous work. Accept correct figure only.
Award full marks for correct answer even if no workings are shown. Figures in brackets show the breakdown of marks if the final answer is incorrect or incomplete.
(4)
(4)
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3. Banking and Writing a Letter Question (60)
Answer all parts of this question:
Maria Lynch lives in 49 Riverview, Athy, Co. Kildare. On 9 January 2018, she enquired about opening an account in Bank of Ireland, Main Street, Stradbally, Co. Laois.
On 10 January 2018, Paul Cox, Branch Manager, Bank of Ireland, wrote to Maria. He thanked her for her enquiry. He also stated that he had made an appointment to meet her at 11.30 a.m. on Wednesday, 17 January 2018, in the branch to discuss her banking needs. In his letter, he outlined three differences between a current account and a deposit account. In conclusion, Paul said that he hoped this information would be helpful and he looked forward to meeting Maria on Wednesday.
(A) Write the letter that Paul Cox sent to Maria Lynch on 10 January 2018. (40) (Answer on page 12 of the Booklet.)
Letter Features
Sender’s name, – Paul Cox, title and address: Bank / Branch Manager,
Bank of Ireland, Main Street, Stradbally, Co. Laois (2)
Allow full marks if ‘title’ included under ‘signature’. Allow 1 mark if only two elements included.
Date: – 10 January 2018 (2)
Recipient’s name – Maria Lynch, and address: 49 Riverview, Athy, Co. Kildare (2)
Letter reference: – Opening a Bank Account (with Bank of Ireland) (2)
Opening: – Dear Ms. Lynch (2)
Closing: – Yours sincerely / Yours faithfully (small ‘s’ or ‘f’) (2)
Signature: – Paul Cox (2)
Body of Letter
Acknowledge receipt of enquiry (2)
– I wish to thank you for your recent enquiry / your enquiry yesterday / your enquiry of 9 January (2018)
Appointment (4)
– I have arranged an appointment to meet you (1) at 11.30 a.m. on Wednesday, 17 January 2018 (1), in the branch (1) to discuss your banking needs (1)
Figures in brackets show the breakdown of marks if the answer is incomplete.
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3. Banking and Writing a Letter Question (cont’d.)
(A) (cont’d.)
Body of Letter (cont’d.)
Differences
Any 3: (3 × 4) – a current account may have an overdraft facility whereas only the amount in a deposit
account can be withdrawn // – a cheque book is provided with a current account but not with a deposit account // – cash withdrawals from a current account can be made through an automated teller
machine / ATM whereas cash withdrawals from a deposit account cannot // – payments can be made by standing order / direct debit / credit transfer / cheque / debit
card from a current account whereas cash must be withdrawn from a deposit account to make payments //
– transactions can be conducted via internet banking / telephone banking with a current account whereas these facilities are not available with a deposit account //
– a current account is normally used for regular transactions whereas a deposit account is used for savings //
– charges may apply to a current account but not to a deposit account // – a deposit account offers interest on the balance whereas receiving interest on a current
account is dependent on the financial institution and could require a minimum balance in the account // etc.
Expect comparison between accounts for full marks - allow maximum of 2 marks for correct statement in relation to either account if difference between accounts not mentioned.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
Closing Statement (2)
– I hope this information will be helpful (1) and I look forward to meeting you on Wednesday / next Wednesday / next week / on 17-01-2018 (1)
Figures in brackets show the breakdown of marks if the answer is incomplete.
Overall
Presentation / Neatness (2)
Marks to be awarded for clear and neat presentation.
English (4 × 1)
Marks to be awarded for: – paragraphs, i.e. the use of a number of paragraphs and not one long paragraph – punctuation, e.g. full stops, commas, etc. – grammar, e.g. correct use of words, tenses, etc. – spelling, i.e. correct spelling of most words
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3. Banking and Writing a Letter Question (cont’d.)
(B) In order to open a bank account, new customers are required to produce proof of identity and address.
Give one example which Maria could show of each of these proofs. (6) (Answer on page 13 of the Booklet.)
Proof of identity
Any 1: (3) – passport // – driving licence // etc.
Accept other appropriate answers.
Proof of address
Any 1: (3) – utility / household bill // – electricity bill // – gas bill // – telephone bill // etc.
Accept other appropriate answers.
(C) When Maria called to the bank on 17 January 2018, she opened a current account. She lodged a cheque for €240 and notes totalling €135 to her account. Her Account Number is 70164321 and the Sorting Code for the branch is 90-11-32.
Complete the lodgement slip and counterfoil using the blank document provided (14) (on page 13 of the Booklet).
LODGEMENT RECORD SUBJECT TO VERIFICATION € ONLY LODGEMENT
(For Accounts at this Branch Only) Bank of Ireland
Name(s)
Please specify Account: Current Saving Other
7 0 1 6 4 3 2 1
Name(s) Maria Lynch (1)
Account No. (1)
Address 49 Riverview, Athy, Co. Kildare (1)
€ 375 00
Branch Stradbally (1) Date 17/01/18 (1) Amount (1)
Paid in by Maria Lynch (1)
Cashier’s Stamp and Initials
€
Branch Sort Code 9 0 1 1 3 2
Customer’s Account Number Tax
7 0 1 6 4 3 2 1
055288 Account No. (1)
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Notes Coin Total Cash
Total Cheques
Total €
Account Number
Note: Cheques, etc., are accepted subject to examination and verification. Though credited to account when paid in, they should not be drawn against until cleared. Customers should keep details of cheques lodged.
Thank you for banking with us. 055288
Maria Lynch (1)
(1) 135 00
(–) 135 00
(1) 375 00
(1)
(1)(1) 240 00
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Notes:
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4. Forms of Business Ownership Question (60)
Answer all parts of this question:
(A) Bill Dillon has recently decided to set up his own printing business.
(i) Explain, with examples, the difference between work and employment. (8) (Answer on page 14 of the Booklet.)
Work
Explanation (2)
– any activity that requires effort
Accept student’s own wording if equivalent meaning conveyed.
Example
Any 1: (2) – homework // – washing dishes // – chores at home // etc.
Accept other appropriate answers.
Employment
Explanation (2)
– work carried out in return for payment / financial reward / wages / salary
Accept student’s own wording if equivalent meaning conveyed.
Example
Any 1: (2) – person teaching in school // – person painting a house for pay // etc.
Accept other appropriate answers.
(ii) State two advantages that Bill might gain from running his own business. (8) (Answer on page 14 of the Booklet.)
Any 2: (2 × 4) – greater job satisfaction / more motivating and satisfying than working for someone else // – more financially rewarding / earn an income / get to keep all the profits // – being his own boss - better lifestyle, making his own decisions, deciding his own hours,
doing something he enjoys and is good at // – free to pursue any line of business - work in a field that he likes / has a good idea or hobby
he wishes to turn into a successful business // – using his own resources, i.e. training, skills, experience, in a way he wants // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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4. Forms of Business Ownership Question (cont’d.)
(A) (cont’d.)
(iii) State two disadvantages that Bill might experience in running his own business. (8) (Answer on page 14 of the Booklet.)
Any 2: (2 × 4) – must be able to provide all the finance required to start up and run the business // – may lose all the capital he has invested in the business if it fails // – may not have limited liability and may be responsible for all the debts of the business
from his own personal resources // – may become unemployed if the business fails / fewer social welfare entitlements
if made unemployed as a consequence of the business failing // – may have to work long hours to oversee all aspects of the business // – difficult to take time off as presence may be required all the time // – stressful, which may have health and social consequences for the individual // – responsible for all areas of the business // – may not have all the necessary skills / qualifications to oversee all aspects of the business // – no guarantee of a regular income / income may be unstable as profits may be very low /
fluctuating / non-existent // – possible mental / psychological strain due to the risk of failure // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
(B) Limited liability is a major advantage of setting up a private limited company.
(i) Explain the term ‘limited liability’. (Answer on page 14 of the Booklet.) (4)
Any 1: (4) – if a company goes bankrupt (2), shareholders will lose only the amount they invested (2) // – if a company goes bankrupt (2), shareholders’ responsibility for the debts is limited to the
amount they invested in the company (2) // etc.
Figures in brackets show the breakdown of marks if the answer is incomplete. Underlined phrases or equivalent must be included to receive the partial marks shown. Accept student’s own wording if equivalent meaning conveyed.
(ii) Explain two other advantages of forming a private limited company. (Answer on page 15 of the Booklet.) (8)
Any 2: (2 × 4) – if the company needs to expand, it can raise more capital by issuing more shares // – decision-making is shared so less likely to make bad ones // – company has its own legal identity / it can sue or be sued in its own name // – continuity of existence if shareholder(s) die or leave // – banks are more likely to lend to private limited companies // – many skills / talents available - can attract best employees / managers // – companies pay lower rates of tax than sole traders or partnerships on profits made // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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4. Forms of Business Ownership Question (cont’d.)
(B) (cont’d.)
(iii) State one disadvantage of forming a private limited company. (4) (Answer on page 15 of the Booklet.)
Any 1: (4) – more expensive to set up // – must comply with more rules and regulations // – more information available to the public and competitors // – views / ideas of shareholders must always be considered before key decisions are made // – individuals with small shareholdings may have little or no say in the running of the company // – in larger companies the shareholders have no involvement in the day-to-day running of the
company // – profits are shared among all shareholders // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
(iv) Explain two differences between a sole trader and a private limited company. (8) (Answer on page 15 of the Booklet.)
Any 2: (2 × 4)
Ownership // – a sole trader has one owner whereas a private limited company can have between 1 and 99 / 149 shareholders
Liability // Any 1: – a sole trader has unlimited liability
whereas a private limited company has limited liability // – a sole trader can lose personal assets (in the event of a
default on debt) whereas the losses of shareholders of a private limited
company are limited to the amount they have invested in the company // etc.
Control // – a sole trader has complete control (makes all decisions) whereas in a private limited company control is shared between shareholders - those with more shares have a greater say
Profits – a sole trader keeps all the profits after tax (and incurs all the losses) whereas in a private limited company profits are distributed between the shareholders (as dividends) according to the size of their shareholding
Allow 2 marks for correct statement under each heading for either Sole Trader or Private Limited Company but without comparison.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
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4. Forms of Business Ownership Question (cont’d.)
(C) Printex Ltd is a private limited company with four departments: Sales, Production, Finance and Human Resources.
Fill in the six blank spaces on the Organisational Chart of Printex Ltd (on page 15 of the Booklet). (6 × 2) (12)
Shareholders
Board of Directors
Managing Director
Sales Department
Production Department
Finance Department
HR Department
Accept other appropriate departments, e.g. IT, marketing, purchasing, etc.
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5. Business Documents Question (60)
Answer all parts of this question:
Cyril Feeney is the Purchasing Manager at Bedroom World Ltd, Dublin Road, Mitchelstown, Co. Cork. On 12 January 2018, he sends an order (No. 410) to Ben Byrne, The Manager, Munster Furniture Ltd, Shannon Business Park, Tarbert, Co. Kerry, for the following goods:
36 Natural Oak Bedside Lockers Model NOBL 20 @ €40·00 each
20 Cherry Wood Chests of Drawers Model CWCD 30 @ €85·00 each
15 Cherry Wood Dressing Tables Model CWDT 15 @ €70·00 each
28 Fabric Bedroom Chairs Model FBC 22 @ €95·00 each
(A) (i) What business document would Cyril Feeney have checked before sending the Order to Munster Furniture Ltd? (Answer on page 16 of the Booklet.) (5)
Any 1: (5) – quotation // – price list
(ii) From the above details, complete the blank Order No. 410 (on page 16 of the Booklet). (16)
Bedroom World Ltd Dublin Road, Mitchelstown, Co. Cork
ORDER No. 410
Telephone: 025-24321 e-mail: [email protected] VAT Reg. No. IE 6157892
Date: 12/01/2018 (1)
Ben Byrne / The Manager
Munster Furniture Ltd
Shannon Business Park
Tarbert
Co. Kerry
Please supply the following goods:
QUANTITY DESCRIPTION MODEL No.
PRICE EACH €
36 (½) Natural Oak Bedside Lockers (1) NOBL 20 (½) 40⋅00 (½)
20 (½) Cherry Wood Chests of Drawers (1) CWCD 30 (½) 85⋅00 (½)
15 (½) Cherry Wood Dressing Tables (1) CWDT 15 (½) 70⋅00 (½)
28 (½) Fabric Bedroom Chairs (1) FBC 22 (½) 95⋅00 (½)
Signed: Cyril Feeney (1) Title: Purchasing Manager (1)
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(1)
(1)
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5. Business Documents Question (cont’d.)
(B) All the goods ordered are in stock, except for the Chests of Drawers. The Bedside Lockers, Dressing Tables and Bedroom Chairs are delivered by truck to Bedroom World Ltd on 17 January 2018. Cyril checks the goods when they arrive and signs the Delivery Docket. The truck driver then hands him Invoice No. 2444, dated 17 January 2018.
Trade Discount on all goods is 15% and VAT on all goods is 20%. From the above details, complete the blank Invoice No. 2444 (on page 17 of the Booklet). (30)
Munster Furniture Ltd Shannon Business Park, Tarbert, Co. Kerry
INVOICE No. 2444
Telephone: 068-36246 e-mail: [email protected] VAT Reg. No. IE 3152478
Date: 17/01/2018 (2)
Your Order No.: 410 (2)
Cyril Feeney / Purchasing Manager
Bedroom World Ltd
Dublin Road
Mitchelstown
Co. Cork
QUANTITY DESCRIPTION MODEL No.
PRICE EACH €
TOTAL €
36 (1) Natural Oak Bedside Lockers (1) NOBL20 (1) 40⋅00 (1) 1,440⋅00 (1)
15 (1) Cherry Wood Dressing Tables (1) CWDT15 (1) 70⋅00 (1) 1,050⋅00 (1)
28 (1) Fabric Bedroom Chairs (1) FBC22 (1) 95⋅00 (1) 2,660⋅00 (1)
Total (Excluding VAT) 5,150⋅00 (2)
Trade Discount 772⋅50 (2)
Carriage Paid E & O E
Subtotal 4,377⋅50
VAT 875⋅50 (2)
Total (Including VAT) 5,253⋅00 (2)
Allow full marks for student’s own figure if consistent with previous work. Accept correct figure only.
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(1)
(1)
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5. Business Documents Question (cont’d.)
(C) On 22 January 2018, after receiving a cheque from Bedroom World Ltd in full payment for the goods, Ben Byrne issues a receipt on behalf of Munster Furniture Ltd. On the same day, this transaction is entered into the bank account of Munster Furniture Ltd.
Enter the cheque payment in the bank account of Munster Furniture Ltd. (Use only one of the bank accounts on page 18 of the Booklet.) (9)
Dr Munster Furniture Ltd – Bank Account CrDate Details F € Date Details F €
22/01/18 (3)
Sales / Bedroom World Ltd (3)
ACB 5,253⋅00
(3)
OR
Munster Furniture Ltd – Bank Account Date Details F Dr Cr Balance
22/01/18 (3) Sales / Bedroom World Ltd (3) ACB 5,253⋅00 (3)
Allow full marks for student’s own figure if consistent with previous work.
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6. Household Analysed Cash Book and Sources of Finance Question (60)
Answer all parts of this question:
The Egan household uses an Analysed Receipts and Payments Account (Analysed Cash Book) to record receipts and payments. All money received is lodged in their bank current account on the same day and all payments are made by cheque.
On 1 January 2018, the Egan household had a balance of €185 in the bank.
The household had the following transactions during January 2018:
Jan. 3 Received Joe Egan’s salary €1,800
5 Paid for groceries €210 Cheque No. 61
7 Purchased petrol for car €55 Cheque No. 62
9 Paid for car insurance €740 Cheque No. 63
12 Bought heating oil for house €600 Cheque No. 64
15 Received child benefit €280
16 Paid electricity bill €145 Cheque No. 65
19 Bought tickets for football match €195 Cheque No. 66
20 Received Maura Egan’s salary €1,050
22 Paid for groceries €185 Cheque No. 67
24 Paid for birthday party €280 Cheque No. 68
27 Paid for repairs and service to car €255 Cheque No. 69
(A) State two methods, other than cash or cheque, by which the Egan household could pay for its financial transactions. (Answer on page 18 of the Booklet.) (6)
Any 2: (2 × 3) – debit card // – credit card // – direct debit // – standing order // – credit transfer // – online / internet banking // – pre-pay / pre-payment / meter // – bank draft / travellers’ cheques // – postal / money order // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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6. Household Analysed Cash Book and Sources of Finance Question (cont’d.)
(B) The Egan household wishes to buy a new car costing €12,500. They can use only one of the following sources of finance:
Hire Purchase Bank Overdraft Term Loan
(i) Describe how two of the above sources of finance are repaid. (Answer on page 18 of the Booklet.) (10)
Any 2: (2 × 5)
Hire Purchase
Any 1: – the borrower pays an upfront deposit (2) plus monthly / regular instalments (1)
which include interest (1) over an agreed period of time (1) // – the borrower pays an initial deposit (2) followed by monthly / regular instalments (1)
including interest (1) until fully repaid (1) // – a deposit is paid (2) and the balance including interest (1) is repaid in fixed monthly /
regular instalments (1) over an agreed period of time (1) // – the borrower pays a deposit (2) and an agreed number of monthly / regular instalments (1)
which include interest (1) charged at a fixed rate of interest (1) // etc.
Bank Overdraft
Any 1: – a bank allows a customer (1) to write cheques or withdraw money (1)
from his/her current account (1) up to a stated limit (1) and the customer agrees to pay (a variable / unfixed rate of) interest on the overdrawn balance (1)
– short-term loan (1) which must normally be repaid within a year (1) where a customer can withdraw money / funds (1) from his/her current account (1) in excess of the balance in the account (1) // etc.
Term Loan
Any 1: – loan from a bank / financial institution (1) that is repaid over a period of 1 to 5 years (1)
and the loan and interest are repaid in monthly instalments (1) where the rate of interest may be fixed or floating (2) //
– medium-term loan (1) from a bank / financial institution (1) over a set period of time (1) which is repaid in monthly instalments (1) including interest charged (1) // etc.
Figures in brackets show the breakdown of marks if the answer is incomplete. Underlined phrases or equivalent must be included to receive the partial marks shown. Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
(ii) Which of the above is the most suitable source of finance for the Egan household? Give one reason for your answer. (Answer on page 18 of the Booklet.) (3)
Any 1: (3)
Hire Purchase
Any 1: – easily obtained - finance arranged by the seller / no need to apply to financial
institution directly // – not strict on checking credit rating // – monthly repayments are fixed and can be made over an agreed period of time // – use of the car is obtained immediately (once deposit is paid) // etc.
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6. Household Analysed Cash Book and Sources of Finance Question (cont’d.)
(B) (ii) (cont’d.)
Term Loan
Any 1: – no deposit required upfront // – generally cheapest financial option available // – immediate ownership / ownership passes to the buyer immediately // – under the hire purchase option, ownership would pass to the buyer only when
the last instalment is paid // etc.
Allow 1 mark for ‘Hire Purchase’ or ‘Term Loan’ with no reason or an incorrect reason given. Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
(C) Write up the Analysed Receipts and Payments Account (Analysed Cash Book) of the Egan household for the month of January 2018. Use the following money column headings:
Debit (Receipts) side: Bank Salary Child Benefit Credit (Payments) side: Bank Groceries Light and Heat Car Entertainment
Total each analysis column and balance the Bank columns at the end of January. (Answer on page 19 of the Booklet.) (41)
Dr Analysed Receipts and Payments Account (Analysed Cash Book) of the Egan Household for January 2018
Cr
Date Details Bank Salary Child B. Date Details Chq Bank Groc. L. & H. Car Entertain. € € € € € € € €
2018 2018 1/1 Balance 185 (1) 5/1 Groceries 61 210(1) 210 (1) 3/1 Salary 1,800 (1) 1,800 (1) 7/1 Petrol 62 55(1) 55(1)
15/1 Child Benefit 280 (1) 280 (1) 9/1 Car Insurance 63 740(1) 740(1)20/1 Salary 1,050 (1) 1,050 (1) 12/1 Heating Oil 64 600(1) 600 (1)
16/1 Electricity 65 145(1) 145 (1) 19/1 Tickets 66 195(1) 195(1) 22/1 Groceries 67 185(1) 185 (1) 24/1 Birthday 68 280(1) 280(1) 27/1 Car Repairs 69 255(1) 255(1) 2,665 395 (1) 745 (1) 1,050(1) 475(1)
31/1 Balance c/d 650(2) 3,315 2,850 (1) 280 (1) 3,315
1/2 Balance 650 (1)
Column headings - Dr side (1) Column headings - Cr side (1) Date column - Dr side (1) Date column - Cr side (1) Details column - Dr side (1) Details column - Cr side (1) Cheque No. column - Cr side (1)
Allow full marks for student’s own figure if consistent with previous work. Accept correct figure only.
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7. Economics, Inflation and National Budget Question (60)
Answer all parts of this question:
(A) The four factors of production are land, labour, capital and enterprise.
(i) Name the reward/payment associated with each factor of production. (4 × 2) (8) (Answer on page 20 of the Booklet.)
Land
– rent
Labour
– wages
Capital
– interest
Enterprise
– profit / profit or loss
(ii) Explain two of the factors of production. (10) (Answer on page 20 of the Booklet.)
Any 2: (2 × 5)
Land Any 1: – anything provided by nature which can be used in the
production of goods and services, including climate, soil, forests, minerals, rivers, seas, etc. //
– all the ‘gifts’ of nature, e.g. land, mineral resources, water, climate, etc. //
– the physical land and other natural resources available for production // etc.
Labour Any 1: – all human effort used in the production of goods
and services // – people who are available for work in factories, offices
or on the land, i.e. employees, workers // – the availability of human effort and skills for the production
of goods and services // – the human input into the production process // etc.
Capital Any 1: – anything man-made used in the production of goods
and services // – money used to help run a business - used to buy premises,
machinery, equipment, etc.; used to build factories, offices, infrastructure, etc. //
– money invested to purchase man-made goods, such as machinery, buildings, roads, which are used to produce goods and services // etc.
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7. Economics, Inflation and National Budget Question (cont’d.)
(A) (ii) (cont’d.)
Enterprise Any 1: – combines all the other factors together, takes the risk
and sets up a business // – the people known as entrepreneurs who have ideas for
a business and are willing to take risks // – the people known as entrepreneurs who combine and
organise the other factors of production to produce goods and services //
– a special quality that brings the other factors of production together with the hope of making a profit - the person or business who possesses this quality, and is prepared to take the risk, is known as an entrepreneur // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
(B) It is important for Ireland’s economy to maintain a low rate of inflation.
(i) Explain the term ‘inflation’. (Answer on page 20 of the Booklet.) (6)
Any 1: (6) – a sustained increase / rise (2)
in the general / overall level of prices (for goods and services) in a country (2) from one period to the next / over a period of time (usually a year) (2) //
– an increase / rise (2) in the cost of living (2) over a period of time (usually a year) / as measured by the Consumer Price Index (CPI) (2)
Accept student’s own wording if equivalent meaning conveyed. Figures in brackets show the breakdown of marks if the answer is incomplete. Accept other appropriate material.
(ii) State two causes of inflation. (Answer on page 20 of the Booklet.) (6)
Any 2: (2 × 3) – an increase in the cost of production, e.g. raw materials / wages / rents / energy // – an increase in the price of labour / wages and salaries // – if demand is greater than supply, it will drive up prices // – excessive demand in the market due to cheap money / excessive money supply // – increases in the taxes that affect prices, e.g. VAT / excise duty // – increase in the price of imported raw materials, e.g. oil // – increase in demand when people have more disposable income // – increase in the mark-up on products / increase in suppliers’ profit margins // – increase in interest rates // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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7. Economics, Inflation and National Budget Question (cont’d.)
(B) (cont’d.)
(iii) Explain one benefit for Ireland’s economy of a low rate of inflation. (6) (Answer on page 21 of the Booklet.)
Any 1: (6) – less demand by trade unions for wage increases as rises in the cost of living are minimal // – fall in the cost of living / increase in standard of living / income will enable more goods
and services to be bought // – consumers are encouraged to spend more as saving option seen as less attractive // – increases consumer confidence, which in turn can lead to more goods being purchased // – helps to achieve economic growth by keeping business costs low, e.g. wages, raw materials,
etc., maximising sales and profits // – makes the supply of Irish goods and services to foreigners more competitive, which in turn
increases exports / the sale of goods and services abroad // – more people visit Ireland as prices are kept low // – new jobs created as foreign firms are attracted to Ireland due to wages and other costs being
under control / new jobs created in line with increased consumption // – more income from taxation can in turn be used to help less advantaged groups // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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7. Economics, Inflation and National Budget Question (cont’d.)
(C) The following figures were presented on budget day as projections for 2018:
Main items of Income and Expenditure €000
Income from PAYE, PRSI and USC 8,360
Income from VAT 5,170
Education and Skills Expenditure 4,850
Health Services Expenditure 6,240
Social Welfare (Social Protection) Expenditure 3,180
(i) Using all the above information, prepare the National Budget for the year 2018. (12) (Answer on page 21 of the Booklet.)
(ii) Indicate whether it is a ‘surplus’ or a ‘deficit’ budget. (2) (Answer on page 21 of the Booklet.)
National Budget for the year 2018 €000 €000
Income PAYE, PRSI and USC (1) 8,360 (1) VAT (1) 5,170 (1) 13,530 Expenditure Education and Skills (1) 4,850 (1) Health Services (1) 6,240 (1) Social Welfare / Social Protection (1) 3,180 (1) (14,270) Deficit (2) (740)(2)
Allow full marks for student’s answer if consistent with figure calculated. Accept correct figure only.
(iii) Give two examples of Government capital expenditure on Health Services. (6) (Answer on page 21 of the Booklet.)
Any 2: (2 × 3) – construction of new hospitals / medical units // – purchase of fixtures and fittings / beds for hospitals // – provision of ambulances // – purchase of medical technology / medical / diagnostic / therapeutic equipment // – provision of IT / computers / telecommunications technology // etc.
Accept other appropriate answers.
(iv) Which government department is responsible for preparing the National Budget in Ireland? (Answer on page 21 of the Booklet.) (4)
Any 1: (4) – (Department of) Finance // – (Department of) Public Expenditure and Reform
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8. Marketing and Sales Promotion Question (60)
Answer all parts of this question:
Safe Play Ltd is a small manufacturing company which produces hurling helmets. The company has decided to carry out market research to see if it can increase sales in 2018.
(A) (i) What is meant by the term ‘market research’? (4) (Answer on page 22 of the Booklet.)
Any 1: (4) – the collection, recording and detailed examination of all information relating to the transfer
of goods and services from the producer to the consumer // – the collection, recording and analysing of information about a particular market // – finding out everything there is to know about a potential market // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
(ii) Explain the difference between ‘desk research’ and ‘field research’. (10) Give one example in each case. (Answer on page 22 of the Booklet.)
Explanation (2 × 3) Example (2 × 2)
Desk research
– accessing information already available from other sources // – e.g. annual reports, internet, own files, CSO / government publications, newspaper
and magazine articles // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers and supporting material.
Field research
– going into the market place to carry out surveys and studies to obtain new information // – e.g. questionnaires, surveys, interviews - face-to-face, telephone // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers and supporting material.
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8. Marketing and Sales Promotion Question (cont’d.)
Joe Flynn is the sales representative for Safe Play Ltd in Munster. In 2017, his sales of hurling helmets in each county were as follows:
County: CLARE CORK KERRY LIMERICK TIPPERARY WATERFORD
Quantity: 2,000 4,500 750 3,250 5,000 1,500
The company sells its hurling helmets at €55·00 each.
(B) (i) Calculate the value of total sales of hurling helmets for Safe Play Ltd in Munster in 2017. Show your answer and workings (on page 22 of the Booklet). (6)
– Total sales (units) = 2,000 + 4,500 + 750 + 3,250 + 5,000 + 1,500 = 17,000 (2)
Total sales (value) = 17,000 × €55 (2) = €935,000 (2)
Accept correct figure only.
Award full marks for correct answer even if no workings are shown. Figures in brackets show the breakdown of marks if the final answer is incorrect or incomplete.
(ii) Safe Play Ltd expects sales to increase by 20% nationwide in 2018. Calculate the value of expected sales of hurling helmets for Safe Play Ltd in County Cork in 2018. Show your answer and workings (on page 22 of the Booklet). (6)
– Increase in sales (units) = 4,500 × 100
20
= 900 (2)
Expected sales (units) = 4,500 (1) + 900 = 5,400 (1)
Expected sales (value) = 5,400 × €55 (1) = €297,000 (1)
Allow full marks for student’s own figure if consistent with previous work. Accept correct figure only.
Award full marks for correct answer even if no workings are shown. Figures in brackets show the breakdown of marks if the final answer is incorrect or incomplete.
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8. Marketing and Sales Promotion Question (cont’d.)
(B) (cont’d.)
(iii) Show the given sales figures in the form of a Bar Chart. (Answer on page 23 of the Booklet.) (22)
Title (2) Vertical axis correctly labelled (1) Horizontal axis correctly labelled (1) Bars correctly graphed and labelled (6 × 3) Each bar correctly graphed (2), each bar correctly labelled (1).
2018 JC Business Studies [OL]
1,000
2,000
3,000
4,000
5,000
0
(3) (3) (3) (3) (3) (3)
Sales of Hurling Helmets in Munster, 2017 (2)
County (1)
Sal
es(1
)
Cla
re
Co
rk
Ker
ry
Lim
eric
k
Tip
per
ary
Wat
erfo
rd
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8. Marketing and Sales Promotion Question (cont’d.)
(C) Product, Price, Promotion and Place are known as the Four Ps of Marketing. Explain briefly how each of the Four Ps applies to Safe Play Ltd (one sentence in each case). (Answer on page 23 of the Booklet.) (12)
Product
Any 1: (3) – getting the right product or service / appealing image / branding / unique selling point // – quality up to standard / good design / packaging // – meeting consumers’ demands // etc.
Price
Any 1: (3) – charge enough to make a profit // – set a fair / right price // – be in line with competitors // – create a demand for the goods / hurling helmets // etc.
Promotion
Any 1: (3) – using the best form of advertising // – aiming the advertising at the right type of customer / potential customer // – attract new customers as well as encouraging existing customers // – sales promotions / competitions - buy one, get second one half-price // – product endorsement - get well-known players to wear their helmets // etc.
Place
Any 1: (3) – selling your product / service in the best places - wholesaler, retailer, internet, etc. // – look for new places to sell - sell direct to customers online / sell through local GAA clubs
and schools // – sell where there are most potential customers / target customers // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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Pre-Junior Certificate Examination, 2018
Business Studies
Higher Level – Paper I Marking Scheme (400 marks)
SECTION A (80 marks)
Answer all twenty questions. Each question carries 4 marks.
1. The following initials relate to Income and Expenditure. What do they stand for? (2 + 1 + 1) (4)
VAT – value added tax
PRSI – pay related social insurance
USC – universal social charge
2. Identify two examples of input devices and two examples of output devices used in Information Technology: (4)
Input devices
Any 2: (2 × 1) – scanner // – keyboard // – mouse / pointing stick / trackball // – touchpad // – monitor / touch-screen // – digital camera / camcorder / webcam // – floppy disk / CD / DVD drive // – joy-stick // – modem // – microphone // – light pen // – USB stick // – memory card // – barcode reader / barcode scanner // etc.
Output devices
Any 2: (2 × 1) – screen / monitor // – printer / plotter // – floppy disk / CD / DVD // – speaker / headphones // – webcam // – USB stick / data key // – modem // – MP3 player / iPod // – memory card // etc.
Do not accept ‘printout’ as an appropriate answer for ‘output device’. Accept other appropriate answers.
examsDEB
Name/version:
Printed: Whom:
Checked:
To: Ret’d:
Updated: Whom:
Name/version:
Complete (y/n): Whom: 2005 Print Stamp.doc
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SECTION A (cont’d.)
3. Complete the Balance Sheet (extract) below by filling in the four unshaded areas, numbered (i) to (iv): (4)
Balance Sheet (extract) as on 31/12/2017
€ €
Fixed Assets 450,000
Current Assets (i) 270,000 (1)
Less Current Liabilities 85,000
(ii) Working Capital (1) (iii) 185,000 (1)
(iv) Total Net Assets (1) 635,000
Do not accept ‘Capital Employed’ as an appropriate answer for (iv).
4. The following figures appear in a company’s Final Accounts:
Gross Profit €175,000 Sales €650,000 Total Expenses €85,000
Net Profit Percentage is calculated as follows: 1
100
Sales
ProfitNet ×
Using the above figures, calculate the Net Profit Percentage. Show your workings. (4)
– Net Profit = Gross Profit – Total Expenses = 175,000 – 85,000 = €90,000
Net Profit % = 1
100
Sales
ProfitNet ×
= 000,650
000,90
)1()1( ×
1
100
= 13⋅846153... = 13⋅85% (2)
Accept correct figure only.
Award full marks for correct answer even if no workings are shown. Figures in brackets show the breakdown of marks if the final answer is incorrect or incomplete. Penalise 1 mark if final answer not rounded, i.e. 13·85%, 13·8% or 14%.
2018 JC Business Studies [HL] - Paper I
(1)(1)
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SECTION A (cont’d.)
5. (i) Explain the term ‘Import Substitution’. (2) (4)
– replacement of imported goods or services (1) with Irish-produced / home-produced ones (1)
Figures in brackets show the breakdown of marks if the answer is incomplete. Underlined phrases or equivalent must be included to receive the partial marks shown. Accept student’s own wording if equivalent meaning conveyed.
(ii) What effect would Import Substitution have on the Balance of Trade of a country?
Any 1: (2) – it would improve the Balance of Trade (1) as (visible / invisible) imports would be reduced (1) // – it would increase the surplus / decrease the deficit (1) in the Balance of Trade (1) // etc.
Figures in brackets show the breakdown of marks if the answer is incomplete. Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
6. On 9 January 2018, J. Milton, a restaurant owner, bought equipment on credit from K. Doran for €5,800. There was no VAT on this transaction.
Complete the following ledger accounts of J. Milton showing the names of the accounts and the relevant details, numbered (i) to (iv): (4)
Dr (i) Equipment a/c (1) Cr
Date Details € Date Details €
2018 Jan. 9
(ii) K. Doran (1) 5,800
Dr (iii) K. Doran a/c (1) Cr
Date Details € Date Details €
2018 Jan. 9
(iv) Equipment (1) 5,800
Do not accept ‘Machinery’ as an appropriate answer.
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SECTION A (cont’d.)
7. Complete and balance the Creditors Control Account on 31 January 2018 from the following information: (4)
€ Creditors balance on 1 January 2018 9,700 Total credit purchases for January 12,900 Total cash paid to creditors in January 8,800
Dr Creditors Control Account Cr
Date Details F € Date Details F €
31/01/18 Bank 8,800 (1) 01/01/18 Balance b/d 9,700 (1) 31/01/18 Balance c/d 13,800 (1) 31/01/18 (Credit) Purchases 12,900 (1)
22,600 22,600
01/02/18 Balance b/d 13,800
OR
Creditors Control Account
Date Details F Dr Cr Balance € € €
01/01/18 Balance b/d 9,700 (1) 31/01/18 (Credit) Purchases 12,900 (1) 22,600 31/01/18 Bank 8,800 (1) 13,800 (1)
8. (i) Explain the term ‘Impulse Buying’. (4)
Any 1: (2) – buying something which is not part of one’s budget // – buying something on the spur of the moment // – buying something without thinking of the cost // – buying something without considering the financial consequences // – the unplanned buying of something that may not be needed // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
(ii) Outline one possible consequence of impulse buying.
Any 1: (2) – may lead to scarcity of money for regular bills such as electricity, rent, etc. // – may force individual to borrow money / take a loan / use credit card unnecessarily to finance
non-essential purchases // – individual may receive a bad credit rating if unable to pay back promptly loans taken out // – may lead to opportunity cost - having to sacrifice one item as a consequence of buying another
on impulse // etc.
Accept student’s own wording if equivalent meaning conveyed. Allow 1 mark for ‘overspending’ without further explanation. Accept other appropriate material.
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SECTION A (cont’d.)
9. Tick () the appropriate column(s) to indicate where in the final accounts the following items should be entered on 31/12/2017: (4 × 1) (4)
Trading A/c Profit & Loss A/c Balance Sheet
Issued Share Capital
Depreciation
Stock (01/01/2017)
10. Outline two reasons why a company would prepare a Business Plan. (4)
Any 2: (2 × 1) – to establish the company’s objectives into the future // – to establish short-term / medium-term / long-term targets against which achievement can be measured // – to identify strengths, weaknesses, opportunities and threats (SWOT) to the business // – to support an application for finance, e.g. loans from banks / grants from government agencies // – to set out a framework within which to run the business / to focus the management of the business
on what is important // – to determine the size of financial commitments // – to attract further investment from existing shareholders / to show potential investors // – to identify ways to promote the business/products / to identify new markets / sales possibilities in
existing markets // – to show the resources, financial and non-financial, required to achieve the company’s goals // – to reduce risk by helping entrepreneurs think through their ideas very carefully // – to give the directors of a company the map to follow to reach its business objectives // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
Name two headings used when preparing a Business Plan.
Any 2: (2 × 1) – objectives / aims / goals // – details of the business // – history of the business // – legal / ownership structure // – management structure / details of key personnel // – production / product / service // – finance / financial plan / cash flow // – sales / market research / size of target market // – sales promotion / marketing / marketing mix // – company details // – fixed assets // – future projections // etc.
Accept other appropriate answers.
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SECTION A (cont’d.)
11. (i) Enter the following balances in the partially completed General Journal of Henry Ltd: (4)
1 January 2018 Buildings €616,500 Creditors €36,700
(ii) Calculate the Ordinary Share Capital:
Henry Ltd – General Journal
Date Details F Dr Cr
€ €
01/01/18 Bank Overdraft CB1 15,800
Buildings GL1 616,500 (1)
Creditors CL1 36,700 (1)
Ordinary Share Capital GL2 564,000 (1)
Assets, Liabilities and Share Capital of Henry Ltd on this date. 616,500 616,500 (1)
Allow mark only if both figures in debit and credit columns correct.
12. A house is valued at €375,000 and insured for €300,000. The cost of insurance is €1⋅70 per €1,000 cover.
(i) Calculate the annual premium. (2)
– Annual premium = 1,000
300,000 × 1⋅70 (1)
= 300 × 1⋅70 = €510 (1)
(ii) Calculate the compensation payable if flood damage to the house amounts to €85,000. (2)
– Compensation payable = 375,000
300,000 × 85,000 (1)
= €68,000 (1)
Accept correct figure only.
Award full marks for correct answer even if no workings are shown. Figures in brackets show the breakdown of marks if the final answers are incorrect or incomplete. Do not penalise if ‘€’ symbol is omitted from final answer.
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SECTION A (cont’d.)
13. Explain two limitations of using final accounts to assess the performance of a business. (4)
Any 2: (2 × 2) – it only analyses past figures, which are quickly obsolete / out of date // – it does not allow for seasonal fluctuations // – different businesses use different accounting bases and therefore company comparisons
may not be accurate // – gives a limited picture of a business under the following:
- future change in fashion, which may make the products of the business less attractive // - change in exchange rates, which makes goods / materials more expensive // - industrial relations difficulties within the business / management/staff relationships /
staff morale // - changes in the economy / economic climate // - monopoly position / number of competitors / competition in the market // - influences of national / international inflation rates // - figures for fixed assets in the Balance Sheet may not be correct - over- / under-valued // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
14. Select the correct document from the following list to complete the four unshaded areas in the table below: (4 × 1) (4)
Statement Receipt Returns Quotation
Buyer sends Seller sends
1. Letter of Enquiry 2. Quotation
3. Order 4. Invoice
5. Returns 6. Credit Note
7. Statement
8. Cheque 9. Receipt
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SECTION A (cont’d.)
15. (i) The Gross National Product (GNP) for a country in 2016 was €2,800 million. In 2017, it was €2,926 million.
Calculate the rate of economic growth from 2016 to 2017. (Show your workings.) (2)
– Rate of economic growth = Year)(PreviousGNP
GNPinIncrease ×
1
100
= 800,2
800,2926,2 − /
800,2
126 (1) ×
1
100
= 4·5% (1)
Accept correct figure only.
Award full marks for correct answer even if no workings are shown. Figures in brackets show the breakdown of marks if the final answer is incorrect or incomplete.
(ii) State two benefits of economic growth to a country. (2)
Any 2: (2 × 1) – more goods and services available for consumption // – more economic activity / more investment / more jobs created // – increase in government revenue from taxation // – increases in government spending / increase in the quality of government services provided // – decrease in the National Debt as the government has to borrow less // – decrease in the general level of taxation and charges for services // – increase in incomes / higher wages / increase in the standard of living // – decrease in levels of unemployment / decrease in welfare payments // – decrease in number of debt defaults by borrowers // – lower levels of emigration // – decrease in business failures due to more demand / economic activity // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
16. Explain the term ‘Collateral/Security’. (4) (4)
– item of value pledged to a lender (1) when borrowing money (1) which may be sold/kept by the lender (1) should the borrower fail to pay back the loan (1) // etc.
Figures in brackets show the breakdown of marks if the answer is incomplete. Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
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SECTION A (cont’d.)
17. Column 1 is a list of Retailers. Column 2 is a list of statements that can be matched to these Retailers. (One statement does not refer to any of the Retailers.) (4)
Retailers Statements
1. Department Store A. Group of retailers who agree to buy stock
from one particular wholesaler only
2. Mail Order Firm B. Retailer that has a number of branches
around the country
3. Voluntary Group C. Branch set up and operated by another person
with the permission of the owner
4. Franchise D. Retail organisation that sells goods
through the post
E. Large store that sells many different types
of goods under one roof
Match the two lists by placing the letter of the correct statement under the relevant number below: (4 × 1)
1. 2. 3. 4.
E D A C
18. Enter the following transaction in the Sales Returns Book of Hanley Ltd:
On 19 January 2018, Curry Ltd returned goods €4,700 to Hanley Ltd (Credit Note No. 39). The VAT rate on these goods was 23%. (4)
Hanley Ltd – Sales Returns Book
Date Details CNNo.
F Net€
VAT€
Total €
19/01/18 (½) Curry Ltd (½) 39 (½) DL (½) 4,700 (1) 1,081 5,781 (1)
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SECTION A (cont’d.)
19. Complete the Profit & Loss Appropriation Account by filling in the three unshaded areas, numbered (i) to (iii), from the following information: (4)
Authorised Share Capital €900,000
Issued Share Capital €750,000
Dividends declared 8%
Profit & Loss Appropriation Account for year ending 31/12/2017
€
Net Profit 145,000
Less Dividends (i) 60,000 (2)
(ii) Retained Profit / Reserves (1) (iii) 85,000 (1)
Other acceptable headings: ‘Retained Earnings’, ‘Profit Retained’, ‘Revenue Reserve’, ‘Profit and Loss (Closing) Balance’.
20. Tick () the appropriate columns to indicate whether the following sources of finance are short term, medium term or long term: (4 × 1) (4)
Source of Finance Short Term Medium Term Long Term
Hire Purchase Loan
Charge Card
Bank Overdraft
Sale and Leaseback
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SECTION B (160 marks)
Answer any four questions. Each question carries 40 marks.
1. Household Budget Question (40)
Answer all parts of this question:
(A) On page 9 of Section A is a partially completed summary of the Burke household budget from March to June 2018. You are required to complete this budget by entering the appropriate figures into the ‘Total’ column and the missing figures for ‘Total Outgoings’, ‘Net Cash’, ‘Opening Cash’ and ‘Closing Cash’.
On 1 March 2018 the Burke household had cash in hand of €642. (11)
March April May June Total for periodMarch-June
€ € € € €
TOTAL INCOME 3,100 3,100 3,300 3,300 12,800 (½)
TOTAL EXPENDITURE 3,350 2,475 3,500 2,645 11,970 (½)
Savings 300 300 300 300 1,200 (½)
(Total Expenditure and Savings) TOTAL OUTGOINGS
3,650 2,775 (½) 3,800 (½) 2,945 (½) 13,170 (½)
Net Cash (550)(½) 325 (½) (500)(½) 355 (½) (370) (½)
Opening Cash 642 (½) 92 (½) 417 (½) (83)(½) 642 (½)
Closing Cash 92 (½) 417 (½) (83)(½) 272 272 (1)
Allow mark for student’s own figure if consistent with previous work. Allow mark for student’s own figure if consistent with ‘Closing Cash’ figure from previous month. Allow mark for correct and matching figure only.
(B) Answer the following parts in the spaces provided on pages 9 and 10 of Section A.
(i) What is a budget? (3)
Any 1: (3) – a forecast / plan (1) of future income and expenditure (1) for a specific time period (1) // – a financial plan (1) of expected income and expenditure (1) for a specific time period (1) // – an estimate (1) of income and expenditure (1) for a set period of time (1) // – a statement (1) of estimated income and expenses (1) for a set period of time (1) // etc.
Accept student’s own wording if equivalent meaning conveyed. Figures in brackets show the breakdown of marks if the answer is incomplete. Accept other appropriate material.
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1. Household Budget Question (cont’d.)
(B) (cont’d.)
(ii) Give two reasons why the Burke household would prepare a budget. (4)
Any 2: (2 × 2) – to estimate total income for each month and for the period in total // – to estimate total expenditure for each month and for the period in total // – to identify which months will have a surplus or deficit // – to estimate whether or not there will be a surplus and what might be done with that surplus // – to estimate whether or not there will be a deficit and how it might be eliminated or financed // – to identify expensive months / times of year / to show in which months / times of year there
will be numerous bills in order that they can spread out payments // – to identify the main areas of expenditure within the household budget // – to ensure that they live within their household income / to ensure they have enough money
to pay all their bills // – to plan to live within their income / plan income and expenditure // – budgeting is the basis for good financial management // – to support a loan application / to show to a bank / credit union when asking for a
loan / mortgage // – to project the closing cash at the end of each month // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
(iii) Name one month the Burke household plans to have a deficit and identify the amount of the deficit. (2)
Any 1: (2) – March, €550 // – May, €500
Must include both month and amount of deficit to be awarded marks. Accept months and figures if consistent with student’s own figures in completed budget.
(iv) Suggest two ways of overcoming this deficit. (4)
Any 2: (2 × 2) – cut down on expenditure (can use example) // – reduce the amount they intend to save // – increase and stabilise income per month, e.g. undertake overtime // – cut back on discretionary expenditure / rearrange expenditure // – spread payments more evenly throughout the year // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
(v) Does the Burke household plan to live within its income for the period March to June 2018? Give one reason for your answer. (2)
Any 1: (2) – no - they had an overall deficit of €370 // – yes - they have saved €1,200, which could be used to pay off the deficit
No marks awarded for ‘yes’/‘no’ without a correct corresponding reason. Accept answers if consistent with student’s own figures in completed budget.
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1. Household Budget Question (cont’d.)
(C) Jason Burke is applying to his bank for a loan of €12,000 to purchase a new car.
(i) Explain two requirements that Jason must satisfy before the bank will grant him a loan. (Answer on page 10 of Section A.) (6)
Any 2: (2 × 3) – income level // - to ensure he has the ability to repay the loan // – employment details // - to see if his job is temporary or permanent,
to check the stability of his job // – present savings / record of savings // - to check that he is living within his means,
has he saved regularly with the institution // – existing loans / present borrowings // - to check against over-borrowing // – credit history details / repayment - to see if previous loans were repaid on time, history of previous loans // to check his creditworthiness // – security / collateral / guarantee // - to ensure that the loan will be repaid if he fails
to make the loan repayments // – amount of loan // - to ensure he is capable of making repayments // – purpose of loan // - to ensure he is using the loan appropriately and
for the purpose that it was given for // – length of repayment plan // etc. - to ensure that he does not put excessive pressure
on his financial resources // etc.
Allow 1 mark for requirement stated if not developed. Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers and supporting material.
(ii) State two rights and two responsibilities that Jason would have as a borrower. (Answer on page 11 of Section A.) (8)
Rights
Any 2: (2 × 2) – to be informed of the APR // – to be informed of the cash price and the total credit price / total cost of loan // – to be informed of the number of repayments / instalments // – to be informed of the amount of each repayment / instalment // – to be informed in advance if a deposit / final payment is required // – to receive written details of the agreement // – to pay off the loan earlier than agreed // – to cancel the loan within 14 days of signing the loan agreement / a cooling-off period
to allow for a change of mind // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
Responsibilities
Any 2: (2 × 2) – to budget properly to meet the repayments // – to ensure that the loan is repaid fully and on time / – to provide true and accurate information on the application form / to be honest when
filling in application forms // – to use the loan for the purpose for which it was granted // – to inform his lender of any change in circumstances before he falls behind with his
loan repayments // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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2. Club Account Question (40)
Answer all parts of this question:
Harriers Athletics Club, Nenagh, Co. Tipperary, had the following Assets and Liabilities on 1 January 2017:
Clubhouse €380,000 Equipment €65,000 Long Term Loan €95,000 Cash €8,300
Below is a summary of the Club’s financial transactions for the year ended 31 December 2017:
Receipts: €
Subscriptions 17,950
Club Lotto 9,460
Annual Sponsorship 2,500
Competition Fees 6,380
Payments: €
Purchase of Minibus 26,500
Competition Expenses 3,440
Light and Heat 1,950
General Expenses 5,700
Insurance 4,430
Additional information on 31 December 2017:
(i) Subscriptions prepaid €1,250
(ii) Light and Heat due €280
(iii) Insurance prepaid €510
(iv) Equipment to be depreciated by 12%.
(v) Minibus to be depreciated by 20%.
(A) Prepare a statement calculating the Club’s Accumulated Fund on 1 January 2017. (6)
Statement of Accumulated Fund (of Harriers Athletics Club) as at 01/01/2017 (1)
€ € Assets Clubhouse 380,000 (1) Equipment 65,000 (1) Cash 8,300 (1) 453,300 Liabilities Long Term Loan 95,000 (1) (95,000) Accumulated Fund 358,300 (1)
Accept correct figure only. Allow 1 mark for ‘Accumulated Fund’ if mark not awarded for title at the top of the statement.
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2. Club Account Question (cont’d.)
(B) Prepare:
(i) A Receipts and Payments Account for the year ended 31 December 2017. (12)
Receipts and Payments Account (of Harriers Athletics Club) for the year ended 31/12/2017 (1)
€ € 01/01/17 Balance b/d 8,300 (1) 31/12/17 Purchase of Minibus 26,500 (1)31/12/17 Subscriptions 17,950 (1) Competition Expenses 3,440 (1)
Club Lotto 9,460 (1) Light and Heat 1,950 (1) Annual Sponsorship 2,500 (1) General Expenses 5,700 (1) Competition Fees 6,380 (1) Insurance 4,430 (1) 31/12/17 Balance c/d 2,570 (1) 44,590 44,590
01/01/18 Balance b/d 2,570
Accept correct figure only.
Allow ½ marks earned by figures for transposition. Allow 1 mark only for headings if vertical format used. No adjustments accepted in Receipts and Payments a/c - if so, no marks awarded.
(ii) An Income and Expenditure Account for the year ended 31 December 2017. (16)
Income and Expenditure Account (of Harriers Athletics Club) for the year ended 31/12/2017 (1)
€ € € Income
Subscriptions 17,950 (1) – Subscriptions prepaid 31/12/2017 (1,250)(1) 16,700 Club Lotto 9,460 (1) Annual Sponsorship 2,500 (1) Competition Fees 6,380 (1) – Competition Expenses (3,440)(1) 2,940 31,600
Expenditure Light and Heat 1,950 (1) + Light and Heat due 31/12/2017 280 (1) 2,230 General Expenses 5,700 (1) Insurance 4,430 (1) – Insurance prepaid 31/12/2017 (510)(1) 3,920 Depreciation: Equipment [12% of €65,000] 7,800 (1) Minibus [20% of €26,500] 5,300 (1) 13,100 24,950
Surplus/Excess Income over Expenditure (1) 6,650 (1)
Accept correct figure only. Do not accept ‘profit’ as an appropriate answer.
If no headings are used, the first detail with figure signifies the heading/list. If vertical format used, income must be listed first. If not, allow ½ marks for correct figures. If debit/credit format used, expenses must be on the debit side. If presented in complete reversal,
allow ½ marks for correct figures.
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2. Club Account Question (cont’d.)
(C) At the AGM, the club treasurer presents members with a report on the accounts.
(i) Explain two reasons why the club treasurer prepares this report. (4)
Any 2: (2 × 2) – to inform members if the club is operating within its income (surplus/deficit) / to give
members a summary of the club’s Income and Expenditure Account for the year // – to inform members of the club’s cash position at the end of the year / to give members
a summary of the receipts and payments of the club for the year // – to inform members of the main sources of income / membership numbers / subscriptions paid
during the year // – to give members details of the club’s assets and liabilities / Balance Sheet / strengths and
weaknesses at the end of the year // – to inform members of any items of major capital expenditure / unusual items of expenditure
during the year // – to inform members of any day-to-day borrowings required during the year // – to act as a basis for future financial decisions, e.g. subscription changes, fundraising needed,
borrowings required, proposed investments, etc., which may be decided on by the members of the club at the AGM //
– to support applications for loans / funding / grants that the club may be eligible for // – to compare the financial performance of the club during the year with that of the previous
year // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
(ii) Apart from preparing accounts, list two other duties of a club treasurer. (2)
Any 2: (2 × 1) – responsible for the day-to-day finances of the club // – to collect subscriptions / monies due and issue receipts / keep records of these // – to make payments / issue cheques / pay cash / pay bills / pay suppliers on behalf of the club
(and to keep records of them) // – to keep cash in a safe place and to make bank lodgements as necessary // – to open bank account / manage bank account / manage bank overdraft / loans on behalf
of the club // – to advise the executive committee of the club on financial matters // – to keep the financial records of the club up to date // – to identify if / when fundraising activities are required // – to prepare reports / financial updates / highlight financial difficulties for regular meetings // – to complete applications for loans / funding / grants // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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3. Factors of Production, Inflation and Economic Awareness Question (40)
Answer all parts of this question:
(A) (i) State and explain the four factors of production, giving one example in each case. (12)
Factor identified (4 × 1) Explanation (4 × 1) Example (4 × 1)
– land Any 1: - anything provided by nature which is used in the
production of goods and services, including climate, soil, forests, minerals, rivers, seas, etc. //
- all the ‘gifts’ of nature, e.g. land, mineral resources, water, climate, etc. //
- the physical land and other natural resources available for production // etc.
– labour Any 1: - all human effort used in the production of goods
and services // - people who are available for work in factories,
offices or on the land, i.e. employees, workers // - the availability of human effort and their skills for
the production of goods and services // - the human input into the production process // etc.
– capital Any 1: - anything man-made used in the production of goods
and services // - money used to help run a business - used to buy
premises, machinery, equipment, etc.; used to build factories, offices, infrastructure, etc. //
- money invested to purchase man-made goods, such as machinery, buildings, roads, which are used to produce goods and services // etc.
– enterprise Any 1: - combines all the other factors together, takes the risk
and sets up a business // - the people known as entrepreneurs who have ideas
for a business and are willing to take risks // - the people known as entrepreneurs who combine and
organise the other factors of production to produce goods and services //
- a special quality that brings the other factors of production together with the hope of making a profit - the person or business who possesses this quality, and is prepared to take the risk, is known as an entrepreneur // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
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3. Factors of Production, Inflation and Economic Awareness Question (cont’d.)
Answer all parts of this question:
(A) (cont’d.)
(ii) Name the reward/payment associated with each factor of production. (4 × 1) (4)
Land
– rent
Labour
– wages
Capital
– interest
Enterprise
– profit / profit and loss
(B) Ireland’s rate of inflation has remained lower than 2% per annum for several years.
(i) Explain the term ‘inflation’. (3)
Any 1: (3) – a sustained increase / rise (1)
in the general / overall level of prices (for goods and services) in a country (1) from one period to the next / over a period of time (usually a year) (1) //
– an increase / rise (1) in the cost of living (1) over a period of time (usually a year) / as measured by the Consumer Price Index (CPI) (1)
Accept student’s own wording if equivalent meaning conveyed. Figures in brackets show the breakdown of marks if the answer is incomplete. Accept other appropriate material.
(ii) State two causes of inflation. (4)
Any 2: (2 × 2) – an increase in the cost of production, e.g. raw materials / wages / rents / energy // – an increase in the price of labour / wages and salaries // – if demand is greater than supply, it will drive up prices // – excessive demand in the market due to cheap money / excessive money supply // – increases in the taxes that affect prices, e.g. VAT / excise duty // – increase in price of imported raw materials, e.g. oil // – increase in demand when people have more disposable income // – increase in the mark-up of products / increase in suppliers’ profit margins // – increase in interest rates // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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3. Factors of Production, Inflation and Economic Awareness Question (cont’d.)
(B) (cont’d.)
(iii) Explain why a low rate of inflation in Ireland is desirable. (3)
Any 1: (3) – a very low rate / a rate lower than 2% / a rate of approximately 1% runs the risk of deflation (2)
and a much higher rate / a rate higher than 2% / a rate of 3% or higher puts too much pressure on prices and wage demands (1) //
– a steady / constant low rate of inflation / a rate of approximately 2% (1) creates more stability and confidence to invest (2) //
– a steady / constant low rate of inflation / a rate of approximately 2% (1) will lead to economic growth (1), which in turn will increase profits for businesses / increase levels of employment / lower unemployment (1) //
– if inflation is higher than that in countries we are exporting to (1), then exports to these countries will become less competitive / more expensive to buy over time (2) // etc.
Accept student’s own wording if equivalent meaning conveyed. Figures in brackets show the breakdown of marks if the answer is incomplete. Accept other appropriate material.
(iv) State the effect of low inflation on each of the following: (6)
• Irish manufacturers exporting their produce;
Any 1: (3) – sales abroad may increase as the cost of raw materials / wages will not rise
dramatically, giving manufacturers the confidence to export their produce to other markets and remain competitive in those markets //
– quantity sold in export markets will rise as prices remain relatively constant if competing products come from higher-inflation countries // etc.
Accept other appropriate answers.
• People who have borrowed money from financial institutions.
Any 1: (3) – lower interest payments on loans as low inflation will keep interest rates down // – more disposable income as lower interest payments on loans // – more disposable income if wage rises exceed the rate of inflation // – may encourage further borrowing if available // – real value of their debt will not be eroded by low inflation // – low inflation will keep wages down, so the ratio of wages to debt will not increase // etc.
Accept other appropriate answers.
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3. Factors of Production, Inflation and Economic Awareness Question (cont’d.)
(C) The campaign for a ‘living wage’ is an initiative to encourage businesses to pay a wage, which is higher than the national minimum wage, that reflects the true cost of living.
(i) Explain two benefits to businesses of adopting this initiative. (4)
Any 2: (2 × 2) – fewer demands by trade unions for wage increases as small rises in inflation / cost of living
have less impact // – workers become more productive as they are better rewarded // – increased worker morale will lead to higher productivity / higher quality of service // – lower absenteeism and staff turnover as staff are better paid // – reduced recruitment and training costs due to reduction in staff turnover // – increased consumer spending as workers have more disposable income to spend // – workers become more responsible as they feel more appreciated / higher participation
to up-skill as workers feel more appreciated // – good for public relations and may lead to higher sales / profits // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
(ii) State two possible effects of the universal introduction of the ‘living wage’ on Ireland’s economy. (4)
Any 2: (2 × 2)
Positive effects – increases consumer confidence due to less industrial strife, which in turn can lead to more
goods and services being purchased // – more disposable income will lead to greater spending in the economy // – stimulates economic growth / higher GDP due to increased consumer spending // – greater opportunities for government to invest in public services as more tax on wages and
spending is collected // – helps to achieve economic growth by keeping business costs low, e.g. wages, raw materials, etc.,
maximising sales and profits // – can pull working families out of poverty // etc.
Negative effects – raises costs for businesses as they are forced to pay additional wages, which in turn will
reduce their profitability // – businesses may increase their prices to offset wage increases, which in turn will lead to
increased inflation // – wage demands from other sectors seeking similar rises in pay // – may not have the anticipated effect on those it aims to target if prices / inflation rise in line
with wage increase // – greater levels of spending may lead to an overall increase in prices / inflation in the economy // – businesses less competitive in international markets / exports more expensive // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept either positive or negative effects. Accept other appropriate answers.
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4. Consumer Question (40)
Answer all parts of this question:
Ben Geary, living at River View, Goresbridge, Co. Kilkenny, decided to buy a second-hand car.
Ben read an advertisement in a newspaper for Murphy Motors Ltd, Dublin Road, Athy, Co. Kildare. It stated that all their second-hand cars were of the highest quality and were fully guaranteed for six months. On 4 January 2018, Ben visited the showroom of Murphy Motors Ltd. He was assured by the salesperson that all their used cars were fully guaranteed for six months. After test-driving an 8-year-old Ford Focus, he bought the car for €4,500 from the garage.
Three weeks later Ben noticed that the electric windows stopped working. He brought the car back to Murphy Motors Ltd but was informed that this fault was not covered under the guarantee.
On 28 January 2018, Ben wrote to the Sales Manager of Murphy Motors Ltd outlining the problem, expressing his disappointment with the response to date and seeking one form of redress.
(A) Write the letter that Ben sent to Murphy Motors Ltd on 28 January 2018. (18)
Letter features
Sender’s address: (1) – River View, Goresbridge, Co. Kilkenny
Recipient: (1) – Sales Manager Murphy Motors Ltd,
Dublin Road, Athy Co. Kildare
Must include both the title and the address of recipient to be awarded mark.
Date: (1) – 28 January 2018
Reference: (–) – (optional) Complaint regarding advertisement and guarantee of second-hand car
Salutation: (1) – Dear Sir/Madam / Dear Sir
Do not accept ‘To whom it concerns’ or ‘Dear Sales Manager’ as appropriate answers.
Sign off: (1) – Yours faithfully / truly / sincerely (small f / t / s)
Signature: (1) – Ben Geary (full name)
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4. Consumer Question (cont’d.)
(A) (cont’d.)
Body of letter (5 × 2)
– I wish to lodge a complaint about a second-hand car / an 8-year-old Ford Focus (car) I bought from your garage for €4,500 on 4 January 2018.
– Before visiting your showrooms, I read an advertisement for Murphy Motors Ltd in which it stated that all your second-hand cars were of the highest quality and were fully guaranteed for six months.
– When I visited your showroom (on 4 January 2018) I was assured by the salesperson that all your used / second-hand cars were fully guaranteed for six months.
– When the electric windows stopped working after just 3 weeks, I brought the car back to the garage and I was then informed that this fault was not covered under the guarantee.
– I am very upset / disappointed with this response and I request that you agree to fix the fault properly without delay.
– (no marks) I expect an immediate response. / I look forward to a prompt response.
Accept student’s own wording if equivalent meaning conveyed.
English (2)
Award 0-2 marks for English used in the letter under the following headings: – paragraphs, i.e. the use of a number of paragraphs and not one long paragraph – punctuation, e.g. full stops, commas, etc. – grammar, e.g. correct use of words, tenses, etc. – spelling, i.e. correct spelling of most words
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4. Consumer Question (cont’d.)
(B) (i) Name the consumer law which applies in this case. (3)
Any 1: (3) – Consumer Protection Act (2), 2007 (1) // – Consumer Information Act (2), 1978 (1)
Figures in brackets show the breakdown of marks if the answer is incomplete. Underlined phrases or equivalent must be included to receive the partial marks shown.
(ii) Explain the relevant principle of consumer law that has been broken in this case. (3) (3)
– against the law to publish any advertisement which is likely to mislead the public / to publish a false or misleading advertisement (1)
– Ben was given misleading information in the advertisement - it stated that all second-hand cars were of the highest quality and were fully guaranteed for six months (1)
– however, when a fault with the electric windows occurred, he was informed that this fault was not covered under the guarantee (1)
Figures in brackets show the breakdown of marks if the answer is incomplete. Underlined phrases or equivalent must be included to receive the partial marks shown. Accept other appropriate material.
(iii) Explain one other form of redress available to Ben. (2)
Any 1: (2) – proper repair of the fault by the garage // – replace the relevant part with a new one // – cash refund of the full price paid for the car
Do not accept same form of redress outlined in part (A). Underlined phrases or equivalent must be included to receive the partial marks shown.
(iv) Explain the term ‘Caveat Emptor’. (2)
Any 1: (2) – let the buyer beware // – a consumer should take all reasonable care when buying a product // – the buyer should take responsibility to carefully examine the goods before purchase // etc.
Accept student’s own wording if equivalent meaning conveyed.
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4. Consumer Question (cont’d.)
(C) (i) Identify three characteristics of a good consumer. (6)
Any 3: (3 × 2) – aware of his/her legal rights / aware of the relevant (consumer) law // – knows the organisations that provide consumer protection / that can help if he/she has
a problem // – is able to make a (valid) complaint when necessary // – will be well informed about / shop around when purchasing goods or services for best prices /
best products / best value for money // – will try to purchase goods which are good value and of good quality // – avoids impulse buying / does not fall victim to false economies by drafting a shopping list /
budget and sticking to it // – keeps all quotations, invoices, receipts, guarantees and other records filed away
in a safe place // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
(ii) State and explain two reasons why consumers need protection. (6)
Any 2: (2 × 3) – consumers need protection from goods/services which are faulty, damaged, poor quality
or unsafe // – consumers need protection against traders making false claims regarding prices,
e.g. price now €10 was €20, when it was never offered for sale at €20 // – consumers need protection against traders who provide misleading information or false
advertising in relation to goods or services for sale, e.g. describing shoes as being made from genuine leather when they are made from synthetic leather //
– to protect consumers against aggressive selling, e.g. pressuring consumers to buy now as the price will increase tomorrow //
– to protect consumers from exploitation by retailers // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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5. Personal Banking and Savings Question (40)
Answer all parts of this question:
(A) Miriam Clark has recently transferred her current account to a new bank. She was informed that she would regularly receive a Bank Statement from the bank.
(i) Name three legal requirements that a new customer must satisfy when opening a bank account. (6)
Any 3: (3 × 2) – proof of address, e.g. utility bill / electricity bill / gas bill / telephone bill // – proof of identity, e.g. passport / driving licence // – proof of age - customers must be over the age of 16 (to open a bank account without parental
or legal guardian consent) // – PPS number / Personal Public Service number // – source of income for large lodgements // etc.
Accept student’s own wording if equivalent meaning conveyed. Allow maximum of 1 mark for appropriate examples only. Accept other appropriate answers.
(ii) What is a ‘Bank Statement’? (2 × 2) (4)
– a document detailing all a customer’s bank transactions (1) (i.e. lodgements, payments, etc.) during a set period of time (1)
Any 2: – shows the opening and closing balances for the period of time (1) // – shows all payments and lodgements during the period of time (1) // – shows bank fees, interest charged or earned in that period of time (1)
Accept student’s own wording if equivalent meaning conveyed. Figures in brackets show the breakdown of marks if the answer is incomplete. Underlined phrases or equivalent must be included to receive the partial marks shown. Accept other appropriate material.
(iii) Suggest two possible reasons why the closing balance on a Bank Statement sometimes differs from the balance in a customer’s own records. (4)
Any 2: (2 × 2) – cheque(s) written not yet presented to the bank for payment // – bank statement issued before a lodgement was made // – customer forgot about a payment / direct debit / standing order / credit transfer / bank charges
taken directly out of the account and did not enter it into his/her own records // – bank charges / fees that a customer is unaware of until he/she receives a bank statement // – an error made by the bank / customer // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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5. Personal Banking and Savings Question (cont’d.)
(A) (cont’d.)
Miriam’s salary is transferred into her bank account using ‘Paypath’.
(iv) Explain one advantage of ‘Paypath’ to each of the following: (9)
• an employee;
Any 1: (3) – safer as money transferred directly to employee’s account / no risk of pay
packet being lost or stolen // – employee has 24-hour / immediate access to his/her account / money / reduces
any overdraft immediately / can withdraw cash from ATM // – more convenient as wages are lodged directly into an employee’s account /
as an employee does not have to go to a bank to cash his/her wages cheque // – easy access to money through online and telephone banking / makes it easier
to set up standing orders and direct debits so that individual can pay bills // – some banks offer free-transaction banking for a period of time / 18 months after
wages first paid through Paypath // – it is confidential, safe and efficient // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
• an employer;
Any 1: (3) – safer as there is no need for payday cash deliveries / as no handling of cash
- reduced risk of robberies / fraud taking place // – lower bank charges / less costly as the employer does not have all the costs
associated with individual cheques for each employee // – reduced processing costs in man-hours / less work than paying out cash to each
individual employee every week / fortnight / month // – reduced risk of errors, i.e. underpayment, overpayment, as wages calculated
by computer software and paid directly to employee’s bank account // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
• a bank.
Any 1: (3) – encourages employees to open a bank account if they do not already have one // – banks save on labour costs - processed by computers, less work than many
employees coming into the bank to lodge their wages / salaries // – revenue source as transaction fees are charged by the bank // – banks have first access to funds if they are owed money by the individual // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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5. Personal Banking and Savings Question (cont’d.)
(B) Miriam plans to invest her savings of €12,000 for four years in a special savings account earning 3⋅5% per annum simple interest. At the end of the four years, the return/interest will be subject to D.I.R.T. at the rate of 30% on gross earnings.
(i) What do the initials D.I.R.T. stand for? (2) (2)
– deposit interest retention tax
(ii) Calculate the net return/interest on Miriam’s investment. (6)
– Gross interest = 100
TimeRatePrincipal ××
= 100
453000,12 (1)(1)(1) ×⋅×
= €1,680
DIRT = 1,680 (1) × 30% (1) = €504
Net return / interest = 1,680 – 504 = €1,176 (1)
Accept correct figure only.
Award full marks for correct answer even if no workings are shown. Figures in brackets show the breakdown of marks if the final answers are incorrect
or incomplete.
(iii) Explain three factors Miriam should have considered before deciding where to invest her savings. (9)
Any 3: (3 × 3) – security - is the financial institution she is investing with reliable and sound / are her savings
guaranteed by the state / government // – return - is the rate of interest on her savings competitive with / greater than other financial
institutions // – access - how accessible is the capital invested during the investment term / how easy is it
to withdraw her savings without penalties been applied // – convenience - convenience of opening hours / location of the financial institution // – taxation - was there an alternative option where DIRT was not applicable, e.g. savings
certificates, savings bonds and instalment savings with An Post // – privacy - are account details private and confidential // – terms and conditions - is there a minimum or maximum deposit for the type of account
selected, do annual / management charges apply to the savings // – other benefits, e.g. ‘freebies’, free banking / bonus - would she receive any fringe benefits
if she had put her savings in another financial institution for a certain length of time / access to loans // etc.
Accept student’s own wording if equivalent meaning conveyed. Allow maximum of 2 marks for factor identified without sufficient explanation. Accept other appropriate answers.
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(1)
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6. People at Work Question (40)
Answer all parts of this question:
(A) Tom Howard has recently become self-employed in the catering and hospitality industry. In his spare time, he continues to volunteer with the Simon Community, a charity which helps homeless people.
(i) Explain, with an example, how ‘work’ differs from ‘employment’. (2 × 2) (4)
Work
– any productive human activity which requires effort (with or without payment)
Accept student’s own wording if equivalent meaning conveyed.
Any 1: – homework // – washing dishes // – chores at home // etc.
Allow maximum of 1 mark for example only. Accept other appropriate answers.
Employment
– work carried out in return for payment / financial reward / wages / salary
Accept student’s own wording if equivalent meaning conveyed.
Any 1: – person teaching in school // – person painting a house for pay // etc.
Allow maximum of 1 mark for example only. Accept other appropriate answers.
(ii) Outline two skills that Tom would develop while working in a voluntary organisation that would help him in running his own company. (4)
Any 2: (2 × 2) – communication // – planning and organisational skills // – decision-making and management skills // – analytical skills and problem-solving skills // – working as part of a team / working independently of others // – punctuality and good timekeeping // – awareness of legislation in relation to employment, health and safety // – computer skills (Word, Excel, Power Point, databases) and other systems // – administration and telephone skills // etc.
Allow maximum of 1 mark for skill identified without sufficient explanation. Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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6. People at Work Question (cont’d.)
(A) (cont’d.)
(iii) State two rewards and two risks of being self-employed. (8)
Rewards
Any 2: (2 × 2) – greater job satisfaction / more motivating and satisfying than working for someone else // – more financially rewarding / earn an income / get to keep all the profits // – likes being his/her own boss - better lifestyle, making his/her own decisions,
deciding his/her own hours, doing something he/she enjoys and is good at // – free to pursue any line of business - work in a field that he/she likes / has a good idea
or hobby he/she wishes to turn into a successful business // – using his/her own resources, i.e. training, skills, experience, in a way he/she wants // etc.
Risks
Any 2: (2 × 2) – must be able to provide all the finance required to start up and run the business // – may lose all the capital he/she has invested in the business if it fails // – may not have limited liability and may be responsible for all the debts of the business
from his/her own personal resources // – may become unemployed if the business fails / fewer social welfare entitlements
if made unemployed as a consequence of the business failing // – may have to work long hours to oversee all aspects of the business // – difficult to take time off as presence may be required all the time // – stressful, which may have health and social consequences for the individual // – responsible for all areas of the business // – may not have all the necessary skills / qualifications to oversee all aspects of the business // – no guarantee of a regular income / income may be unstable as profits may be very low /
fluctuating / non-existent // – possible mental / psychological strain due to the risk of failure // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
(B) Tom has recruited five part-time employees to expand his business. These employees are considering joining a Trade Union.
(i) State three responsibilities of an employee to an employer. (6)
Any 3: (3 × 2) – to do an honest day’s work // – to be punctual / to be on time for work / to attend every working day // – to follow instructions / directives regarding safety and hygiene // – to abide by the rules and regulations of the workplace // – to be honest in all dealings / courteous to customers at all times // – to co-operate with employer and fellow employees // – to respect the employer’s equipment and property / not to steal from the employer // – to protect and promote the good name of the employer / to be loyal to the employer,
e.g. not to reveal confidential information // – to honour the terms of the employee’s contract // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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6. People at Work Question (cont’d.)
(B) (cont’d.)
(ii) State three benefits of joining a Trade Union. (6)
Any 3: (3 × 2) – members would be informed of their rights and responsibilities as workers // – the trade union would represent its members in any dispute with their employer /
protect their interests and rights in any dealings with the management / employer // – aim to improve their pay to maintain their standard of living // – seek to maintain / improve good / safe working conditions in the workplace // – protect members’ rights, e.g. not to be unfairly dismissed, maternity and paternity leave // – can protect members against exploitation by their employer // – members can obtain a sense of security - somebody to represent him/her and greater strength
at the negotiating table // – a trade union can negotiate the best redundancy settlements in the scenario where there are
job losses // – as a member of a trade union, an employee is represented at talks with the government and
employers on a national basis to discuss pay level, safety issues and other concerns // – many trade unions offer individual financial advice to their members // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
(iii) Apart from pay, explain two possible reasons why Tom’s employees could be in dispute with him. (6)
Any 2: (2 × 3) – working conditions - employees may demand a safer workplace, improved safety procedures,
canteen facilities, reduced working hours, overtime, etc. // – incorrect wage rates being paid, e.g. not being paid the minimum wage // – conditions of employment - when these already agreed conditions are not met, e.g. holidays,
working hours, lunch breaks, etc. // – dismissal of workers - employees may band together in solidarity if they feel colleague(s)
have been unfairly dismissed by the employer / management // – threatened redundancy - when employees are being let go due to less / no work, disputes
can arise over the selection process chosen, timing and/or scale of redundancies proposed // – unequal treatment / discrimination - when an employee or group of employees are treated
unfairly because of their race, gender, religion, etc. / employees feel that the management favours one employee over another //
– unfair treatment in the workplace, e.g. bullying and harassment, discrimination // – statutory conditions of employment not being met, e.g. minimum holiday time, maternity /
paternity leave, regular breaks, etc. // – demarcation disputes - arise over ‘who does what’ in the workplace / when management asks
employees to do the work of other employees, thus endangering those employees’ jobs // – promotion procedures - when an employee feels that he/she has been passed over for
promotion unfairly // – slowness of management - disputes may arise when workers feel that employer / management
is too slow in dealing with a particular grievance // – trade union recognition - when the employer / management refuses to recognise and negotiate
with a trade union on behalf of its members // etc.
Allow maximum of 2 marks for reason identified without sufficient explanation. Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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6. People at Work Question (cont’d.)
(B) (cont’d.)
(iv) Explain one course of industrial action, other than official strike action, which a group of employees could take to resolve their dispute. (3)
Named (1) Explanation (2)
Any 1: – work-to-rule // - refusing to undertake any work outside the precise terms
of their employment contracts // – go slow // - carrying out the minimum amount of work as slowly
as possible without jeopardising their pay // – token stoppage // - stopping work for a short period of time to demonstrate
strength of feelings and the impact of a longer strike // – overtime ban // - refusing to do any overtime requested by the
management of the company // – sit-in // - employees refuse to leave their place of work // – unofficial strike // - employees go on strike without union approval and
without having gone through the proper procedures // – all-out strike // - trade union has applied to and received permission
from the ICTU for an all-out strike - no member of any trade union in the ICTU may pass the picket //
– lightning / wildcat - employees go on strike suddenly and without notice of strike // etc. their intention to do so - always an unofficial strike // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers and supporting material.
(v) Explain what is meant by the term ‘good industrial relations’. (3) (3)
– a good relationship (1) between employer / management and employees (1) in a particular workplace (1) // etc.
Accept student’s own wording if equivalent meaning conveyed. Figures in brackets show the breakdown of marks if the answer is incomplete. Underlined phrases or equivalent must be included to receive the partial marks shown. Accept other appropriate material.
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Pre-Junior Certificate Examination, 2018
Business Studies
Higher Level – Paper II Marking Scheme (160 marks)
All questions carry 40 marks. Answer any FOUR questions.
1. Books of First Entry, Ledger and Trial Balance Question (40)
Answer all parts of this question:
HOP Ltd, an events management business, had both credit and cash transactions during the month of January 2018.
(A) Record the following credit transactions in the Purchases and Purchases Returns Books of HOP Ltd for the month of January 2018.
Post relevant figures from the books to the ledger accounts.
05/01/2018 Purchased goods on credit from SKIP Ltd Invoice No. 91 €44,000 + VAT 23%
11/01/2018 Purchased goods on credit from JUMP Ltd Invoice No. 46 €38,000 + VAT 23%
20/01/2018 Returned goods to SKIP Ltd Credit Note No. 27 €12,000 + VAT 23% (14)
(B) Record the following bank transactions for the month of January 2018 in the Analysed Cash Book of HOP Ltd.
Post relevant figures to the ledger accounts.
Note: Analyse the bank transactions using the following money column headings:
Debit (Receipts) Side: Bank Sales VAT Share Capital
Credit (Payments) Side: Bank Purchases VAT Creditors Wages
03/01/2018 Shareholder invested €80,000 and this was lodged Receipt No. 18 06/01/2018 Paid wages Cheque No. 40 €12,400 18/01/2018 Paid JUMP Ltd Cheque No. 41 €30,000 22/01/2018 Purchases for resale Cheque No. 42 €26,000 + VAT 23% 28/01/2018 Sales lodged €40,590 (€33,000 + VAT €7,590) (16)
(D) Balance the accounts on 31 January 2018 and extract a Trial Balance as at that date. (10)
examsDEB
Name/version:
Printed: Whom:
Checked:
To: Ret’d:
Updated: Whom:
Name/version:
Complete (y/n): Whom: 2005 Print Stamp.doc
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1. Books of First Entry, Ledger and Trial Balance Question (cont’d.)
(A) Record credit transactions in the Purchases and Purchases Return Books of HOP Ltd for the month of January 2018. Post relevant figures from the books to the ledger accounts. (14)
(B) Record bank transactions for the month of January 2018 in the Analysed Cash Book of HOP Ltd. Post relevant figures to the ledger accounts. (16)
Purchases Day Book (page 1) Purchases Returns Day Book (page 1) Date Details Inv. F Net VAT Total Date Details Crd. F Net VAT Total2018 2018
5/1 SKIP Ltd 91 CL1 44,000 (½) 10,120 (½) 54,120 (½) 20/1 SKIP Ltd 27 CL1 12,000 (½) 2,760 (½) 14,760 (½)11/1 JUMP Ltd 46 CL2 38,000 (½) 8,740 (½) 46,740 (½) (1)
(1) 82,000 18,860 100,860 12,000 2,760 14,760
Dr Analysed Cash Book of HOP Ltd for January 2018 (page 1) CrDate Details Rec. F Bank Sales VAT Capital Date Details Chq F Bank Purch. VAT Cdrs. Wages2018 2018
3/1 Share Capital 18 GL1 80,000 (½) 80,000 6/1 Wages 40 GL6 12,400 (½) 12,40028/1 Sales GL4 40,590 (½) 33,000 7,590 ↑(½) 18/1 JUMP Ltd 41 CL2 30,000 (½) 30,000 ↑(½)
↑(½) ↑(½) 22/1 Purchases 42 GL2 31,980 (½) 26,000 5,980 ↑(½) 31/1 Balance c/d 46,210 (1) ↑(½) ↑(½) 120,590 33,000 7,590 80,000 120,590 26,000 5,980 30,000 12,400
1/2 Balance b/d 46,210 (1) (1)
GL1 Share Capital a/c
3/1 Bank ACB 80,000 (1)
GL2 Purchases a/c 31/1 Total Cred. PB1 82,000 (1) 31/1 Balance c/d 108,000(–)22/1 Bank ACB 26,000 (1)
108,000 108,0001/2 Balance b/d 108,000
GL3 Purchases Returns a/c
31/1 Total Cred. PRB1 12,000 (1)
GL4 Sales a/c
28/1 Bank ACB 33,000 (1)
GL5 VAT a/c 31/1 Cr. Purch. PB1 18,860 (1) 31/1 Purch. Ret. PRB1 2,760 (1)31/1 Ca. Purch. ACB 5,980 (1) 31/1 Ca. Sales ACB 7,590 (1)
31/1 Balance c/d 14,490 (1) 24,840 24,840
1/2 Balance b/d 14,490
Accept student’s own figure if consistent with previous work. GL6 Wages a/c
6/1 Bank ACB 12,400 (1)
Presentation Dates (2) No year included - award no marks. Folios (1)
CL1 SKIP Ltd a/c 20/1 Pur. Ret. PRB1 14,760 (1) 5/1 Purchases PB1 54,120 (1)31/1 Balance c/d 39,360 (1)
54,120 54,1201/2 Balance b/d 39,360
Accept student’s own figure if consistent with previous work. CL2 JUMP Ltd a/c 18/1 Bank ACB 30,000 (1) 11/1 Purchases PB1 46,740 (1)31/1 Balance c/d 16,740 (1)
46,740 46,7401/2 Balance b/d 16,740
Accept student’s own figure if consistent with previous work.
(C) Balance the accounts on 31 January 2018 and extract a Trial Balance as at that date. (10)
Trial Balance of HOP Ltd as on 31 January 2018 Date Details F Dr Cr2018
31/1 Bank ACB 46,210 (½)
Share Capital GL1 80,000 (½)Purchases GL2 108,000 (½)Purchases Returns GL3 12,000 (½)Sales GL4 33,000 (½)VAT GL5 14,490 (½)Wages GL6 12,400 (½)SKIP Ltd CL1 39,360 (½)JUMP Ltd CL2 16,740 (½)
181,100 181,100
Accept student’s own figure if consistent with previous work.
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2. Purchasing, Business Documents and Bookkeeping Question (40)
Answer all parts of this question:
(A) Adam Smyth is the Purchasing Manager of SOFA SUPERSTORE Ltd, a large furniture retailer.
(i) State two reasons why businesses buy goods and services on credit. Answer on the sheet supplied with this paper. (4)
Any 2: (2 × 2) – to enable businesses to avail of larger bulk discounts by purchasing larger quantities of
raw materials and stock // – by ordering raw materials and stock in larger quantities, businesses may be able to pass on
(larger) discounts they receive to their customers // – lower cost prices for raw materials and stock may lead to increased sales / profits / margins // – in order not to tie up limited resources / working capital in the purchase of raw materials
and stock (which may be slow-moving) // – may allow businesses to offer goods on credit to their customers where they may not have
been able to if they had to pay for raw materials and stock as they receive them // – businesses may use the money owed to creditors as a source of finance within the business
until they have to be paid (and there is no requirement to pay interest or to give security) // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
(ii) Adam believes that he is an effective purchasing manager. What does ‘effective purchasing’ involve? Answer on the sheet supplied with this paper. (5) (5)
– involves carrying out research and getting quotations (1) from several suppliers (1) to ensure the business obtains:
- the best quality of goods and services (1) - at the correct price (1) - when they are needed (1)
Figures in brackets show the breakdown of marks if the answer is incomplete. Underlined phrases or equivalent must be included to receive the partial marks shown. Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
(iii) What procedures, other than checking the name and address of the seller, should SOFA SUPERSTORE Ltd use when processing incoming quotations? (4)
Any 2: (2 × 2) – check that the goods listed on the quotation correspond to the goods about which they enquired // – compare the prices of the goods listed against other quotations // – check that the correct / appropriate discounts and terms of sale are included in the quotation // – check the length of time for which the quotation is valid // – check that all calculations are accurate // – file the quotation received appropriately // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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2. Purchasing, Business Documents and Bookkeeping Question (cont’d.)
(A) (cont’d.)
(iv) Explain two methods that a new supplier could use to check the credit worthiness of SOFA SUPERSTORE Ltd. (4)
Any 2: (2 × 2) – ask for a bank reference to check if the customer has always been in good standing with the bank // – ask for a trade reference from some other business which sold this customer goods on credit,
which will state that payment was made in full // – check their own records in relation to the promptness of previous payments // – use a credit / status enquiry agency to carry out a credit check on the customer // – consult Stubb’s Gazette to see if any judgments have been registered against the customer // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
(B) On 8 January 2018, SOFA SUPERSTORE Ltd, Boyne Retail Park, Drogheda, Co. Louth sent an Order No. 74 to COMFY SEATS Ltd, Spy Hill, Cobh, Co. Cork for the following goods:
8 Comfy 3-seater Recliner Sofas @ €600 each excluding VAT 12 Comfy Fabric Armchairs @ €220 each excluding VAT
Trade discount was 30% and VAT was 23%. All goods were in stock and were delivered to SOFA SUPERSTORE Ltd.
COMFY SEATS Ltd sent Adam Smyth an Invoice No. 29 dated 15 January 2018.
(i) Complete the Invoice No. 29 on the sheet supplied with this paper. (9)
COMFY SEATS Ltd, Spy Hill, Cobh, Co. Cork INVOICE No. 29Telephone: 022-481 4001 VAT Reg. IE 5482137T
To: SOFA SUPERSTORE Ltd, Date: 15/01/14 (1)
Boyne Retail Park,
Drogheda,
Co. Louth. Your Order No.: 74QUANTITY DESCRIPTION PRICE EACH
€ TOTAL (EX. VAT)
€ 8 Comfy 3-Seater Recliner Sofas 600⋅00 4,800⋅00
12 Comfy Fabric Armchairs 220⋅00 2,640⋅00
(1) (1) (1) (1)
Total (excluding VAT) 7,440⋅00
Trade Discount 2,232⋅00 (1)
Subtotal 5,208⋅00
VAT 1,197⋅84 (1)
E & OE Total (including VAT) 6,405⋅84 (1)
Allow full marks for student’s own figure if consistent with previous work, i.e. correct trade discount or VAT for incorrect figure worked out correctly.
Accept correct figure only.
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2. Purchasing, Business Documents and Bookkeeping Question (cont’d.)
(B) (cont’d.)
SOFA SUPERSTORE Ltd paid for the goods, by cheque, on 20 January 2018. It was decided to make the cheque as safe as possible as it was being sent by post.
(ii) Complete the Cheque No. 627 and counterfoil signed by Adam Smyth on the sheet supplied with this paper. (8)
Date: 20/01/2018 (½) Bank of Ireland DROGHEDA, CO. LOUTH
90-42-61 To: Comfy Seats Ltd (½) Date: 20/01/2018 (1)
For: Sofas & Armchairs (½)
Balance 15,200 00 Pay: Comfy Seats Ltd (1) euro euro euroLodged – Six thousand four hundred and € 6,405⋅84 (1)
Total 15,200 00 five euro and 84 cent only (1) SOFA SUPERSTORE LtdThis Cheque 6,405 84
Bal. Forward 8,794 16 (½) (1)
000627 000627 90-42-61 30302004
(iii) Record the cheque issued in the Analysed Cash Book of SOFA SUPERSTORE Ltd on the sheet supplied with this paper. (6)
Analysed Cash Book of SOFA SUPERSTORE Ltd Date Details Cheque
No.F Bank
€ Creditor
€20/01/18 (1) COMFY SEATS Ltd (1) 627 (1) CL (1) 6,405⋅84 (1) 6,405⋅84 (1)
Allow full marks for student’s own figure if transferred correctly from either part (i) or part (ii).
Adam Smyth (1)
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3. Forms of Business Ownership Question (40)
Answer all parts of this question:
(A) Compare Sole Traders and Private Limited Companies as forms of business ownership under each of the following headings:
Ownership Liability Control Profits (12)
Comparisons (4 × 3)
Ownership
– sole trader has one owner whereas a private limited company can have between 1 and 99 / 149 (Companies Act, 2014) shareholders
Liability
Any 1: – a sole trader has unlimited liability whereas a private limited company has
limited liability // – a sole trader can lose personal assets (in the event of a default on debt) whereas the
losses of shareholders of a private limited company are limited to the amount they have invested in the company // etc.
Control
– a sole trader has complete control (makes all decisions) whereas in a private limited company control is shared between shareholders - those with more shares have a greater say // etc.
Profits
– a sole trader keeps all the profits after tax (and incurs all the losses) whereas in a private limited company profits are distributed between the shareholders (as dividends) according to the size of their shareholding // etc.
Allow 2 marks for correct statement under each heading for either Sole Trader or Private Limited Company but without comparison.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material.
(B) On 1 January 2018, Brian Clark, 12 Ardmore Heights, Birr, Co. Offaly and Simon McGettrick, Corbally, Abbeyleix, Co. Laois formed a Private Limited Company called SCHOOLKIT Ltd. They prepared a Memorandum of Association and sent it with all the necessary documents to the Companies Registration Office.
The Objects of SCHOOLKIT Ltd are to provide school uniforms for primary and second-level students. The Authorised Share Capital of SCHOOLKIT Ltd is 350,000 €1 ordinary shares.
On the 14 January 2018, Brian Clark purchased 60,000 ordinary shares and Simon McGettrick purchased 75,000 ordinary shares. The money received from the issue of shares was lodged to the company’s bank account.
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3. Forms of Business Ownership Question (cont’d.)
(B) (cont’d.)
(i) Name two documents, other than the Memorandum of Association, that SCHOOLKIT Ltd would send to the Companies Registration Office when forming the company. Answer on the sheet supplied with this paper. (4)
Any 2: (2 × 2) – Articles of Association // – Form A1 / application to incorporate a company // – Declaration of Compliance (with Companies Act) // – Statement of Nominal / Authorised Share Capital // – list of directors // – statement of consent to become a director
(ii) Complete the Memorandum of Association on the sheet supplied with this paper. (9)
MEMORANDUM OF ASSOCIATION
1. The Name of the Company is SCHOOLKIT Ltd (1)
2. The Objects for which the Company is established are:
to produce school uniforms for primary and second-level students (1)
3. The Liability of the members is limited (1)
4. The Share Capital of the Company is €350,000 (½) divided into
350,000 €1 ordinary shares (½)
We the several persons whose names, addresses and descriptions are subscribed wish to be formed into a Companyin pursuance of the Memorandum of Association and we agree to take the number of shares in the Capital of theCompany set opposite our respective names.
Name, Address of each Subscriber Number of Shares taken by each Subscriber
Brian Clark
12 Ardmore Heights 60,000 (1)
Birr
Co. Offaly
Simon McGettrick
Corbally 75,000 (1)
Abbeyleix
Co. Laois
Dated: 01/01/2018 (1)
(iii) Name the document issued by the Companies Registration Office to SCHOOLKIT Ltd before the company can commence trading. Answer on the sheet supplied with this paper. (2) (2)
– Certificate of Incorporation
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(1)
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3. Forms of Business Ownership Question (cont’d.)
(B) (cont’d.)
(iv) Record the issue of ordinary shares on 14 January 2018 in the Ordinary Share Capital and Bank Accounts of SCHOOLKIT Ltd on the sheet supplied with this paper. (4)
Dr Ordinary Share Capital a/c (page 1) CrDate Details F € Date Details F €
14/01/18 (½) Bank (½) CB(½) 135,000 (½)
Dr Bank a/c (page 2) CrDate Details F € Date Details F €
14/01/18 (½) Ord. Share Cap. (½) GL (½) 135,000 (½)
(C) (i) State two reasons why state-owned businesses exist in Ireland. (4)
Any 2: (2 × 2) – to provide essential services to all parts of the country and not just profitable areas,
e.g. public transport in rural areas // – some types of industry cost too much money for private individuals to set up // – to keep control of and develop certain natural resources, e.g. Bord na Móna, ESB // – to promote Ireland abroad, e.g. Fáilte Éireann // – to promote Irish business at home, e.g. Enterprise Ireland, and abroad, e.g. IDA Ireland // – to provide training for people unemployed, e.g. SOLAS, Intreo // – for security reasons, e.g. Garda Síochána, Army // – to provide employment for a large number of people / to rescue firms which employ large
numbers of people in danger of closing down // – to provide revenue to the government when profitable // – due to strategic economic or social importance, the government could not allow company
to go bust, e.g. Allied Irish Bank, Permanent TSB, Anglo Irish Bank // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
(ii) What term is given to the selling off of a state-owned business? (2) (3)
– privatisation
Give an example.
Any 1: (1) – Aer Lingus // – Telecom Éireann / Eircom // – Irish Sugar / Greencore // – TSB / Trustee Savings Bank // – ACC / Agricultural Credit Corporation // – ICC / Industrial Credit Corporation // etc.
Accept other appropriate answers.
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3. Forms of Business Ownership Question (cont’d.)
(C) (cont’d.)
(iii) Outline one reason for selling off a state-owned business. (2)
Any 1: (2) – benefit to the government and the country as the sale brings in revenue // – new company can raise finance from other sources, e.g. issue of shares / allows the company
to expand and compete with foreign companies operating in Ireland // – government will not have to invest further capital in the business / no further drain on the
exchequer to support the business // – new company may be better able to grow / develop and compete if it is not state-owned // – top management can be attracted by new company // – good publicity for the new company // etc.
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate answers.
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4. Final Accounts and Balance Sheet Question (40)
Answer all parts of this question:
The following Trial Balance was extracted from the books of JMB Ltd, a furniture company, on 31 December 2017. The Authorised Share Capital is 400,000 €1 ordinary shares.
TRIAL BALANCE of JMB Ltd as at 31 December 2017
Dr €
Cr €
Purchases and Sales 255,000 410,000
Opening Stock 01/01/2017 27,000
Carriage Inwards 4,500
Rent Receivable 9,000
Wages 73,000
Bad Debts 6,200
Insurance 12,700
Dividends Paid 20,000
Reserves (Profit and Loss Balance) 16,000
Motor Vehicles 190,000
Equipment 76,000
Cash 1,600
Bank Overdraft 7,500
Debtors and Creditors 41,000 14,500
25-Year Loan 40,000
Issued Share Capital 210,000
707,000 707,000
(A) You are required to prepare the Trading, Profit and Loss Appropriation Account of JMB Ltd for the year ending 31 December 2017 and a Balance Sheet as on that date.
You are given the following information as at 31 December 2017.
(i) Closing Stock €32,700
(ii) Rent Receivable prepaid €1,500
(iii) Wages due €3,000
(iv) Insurance prepaid €4,100
(v) Depreciation: Motor Vehicles 15% Equipment 12½% (35)
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4. Final Accounts and Balance Sheet Question (cont’d.)
(A) (cont’d.)
Trading (1), Profit and Loss Appropriation Account (1)of JMB Ltd (1) for the year ended 31/12/2017 (1)
€ € € Sales 410,000 (½) Less Cost of Sales
Opening Stock 27,000 (½) Purchases 255,000 (½) Carriage Inwards 4,500 (½) 286,500 Less Closing Stock (32,700)(½)
Cost of Goods Sold (253,800) Gross Profit (1) 156,200 (1) Add Gains
Rent Receivable 9,000 (½) – Rent Receivable prepaid (1,500)(½) 7,500 (½) 163,700
Less Expenses Wages 73,000 (½) + Wages due 3,000 (½) 76,000 (½) Bad Debts 6,200 (½) Insurance 12,700 (½) – Insurance prepaid (4,100)(½) 8,600 (½) Depreciation: Motor Vehicles 28,500 (½) Equipment 9,500 (½) 38,000 (½)
Total Expenses (128,800) Net Profit (1) 34,900 (1)
Less Appropriations
Dividends paid (20,000)(1) Retained Profit 14,900 Reserves / Profit & Loss balance 01/01/2017 16,000 (1) Reserves / Profit & Loss balance 31/12/2017 30,900 (1)
Accept student’s own figure if consistent with previous work. Accept alternative layout for Appropriation Account if not included within the Trading and Profit and Loss Account.
Profit and Loss Appropriation Accountof JMB Ltd for the year ended 31/12/2017 (1)
€ € Net Profit 34,900
Less Dividends paid (20,000)(1) 14,900 Add Opening Balance 16,000 (1)
Profit & Loss a/c balance 31/12/2017 30,900 (1)
Balance Sheet (1) of JMB Ltd (1) as at 31/12/2017 (1)
€ € € Fixed Assets Cost Dep. NBV
Motor Vehicles 190,000 (½) 28,500 (½)161,500 (½)Equipment 76,000 (½) 9,500 (½) 66,500 (½) 266,000 (½) 38,000 (½) 228,000
Current Assets Closing Stock 32,700 (½) Debtors 41,000 (½) Cash 1,600 (½) Insurance prepaid 4,100 (½) 79,400
Current Liabilities Bank Overdraft 7,500 (½) Creditors 14,500 (½) Rent Rec. prepaid 1,500 (½) Wages due 3,000 (½) (26,500)
Working Capital 52,900 Total Net Assets 280,900 (½) Financed by Share Capital Auth’d. Issued
€1 Ordinary Shares 400,000 (1) 210,000 (1) Add Reserves 30,900 (½) Shareholders’ Funds 240,900 Long-Term Liabilities
25-Year Loan 40,000 (½)Capital Employed 280,900 (½)
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4. Final Accounts and Balance Sheet Question (cont’d.)
(B) Explain the difference between ‘Carriage Inwards’ and ‘Carriage Outwards’. (5)
Carriage Inwards (3)
– transport costs incurred by a company (1) to transport purchases / raw materials (1) into the company (1)
Carriage Outwards (2)
– transport costs (and handling charges) incurred by a company (1) delivering finished goods sold to customers (1)
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material. Figures in brackets show the breakdown of marks if answer incomplete.
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Notes:
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5. Channels of Distribution and Business Insurance Question (40)
Answer all parts of this question:
(A) (i) Explain the term ‘Channels of Distribution’. (4)
Any 1: (4) – method of transferring (1) goods and services (1) from the manufacturer / producer (1)
to the consumer (1) // – the chains of businesses or intermediaries (2) through which a good or service (1)
passes until it reaches the end consumer (1) // etc.
Incomplete answer (list of appropriate intermediaries only): – can include manufacturer / producer, wholesaler, agent(s), retailer, internet (2)
Accept student’s own wording if equivalent meaning conveyed. Accept other appropriate material. Allow max. 2 marks for three or four examples of intermediaries only without explanation.
(ii) Illustrate, with suitable diagrams, two of these channels. (4) (iii) Identify one type of product distributed by each of these channels. (2)
Channels (2 × 2) Type of product distributed by each channel (2 × 1)
Any 2:
Channel Channel Channel Channel
Consumer
Manufacturer/ Producer
Consumer
Retailer
Manufacturer/ Producer
Consumer
Retailer
Wholesaler
Manufacturer/ Producer
Consumer
Retailer
Agent / Internet
Wholesaler
Manufacturer/ Producer
when manufacturer / producer wishes to keep prices low, e.g.– Ryanair flights // – Dell laptop // etc. used for goods bought online, e.g. – Ryanair flights // – software // – insurance // etc. used for goods that are hand-crafted, personalised or custom, e.g. – farmers’ markets // dress-maker // – original artworks // – handicrafts - quilts, hand-knits // etc. used for goods that are high quality or high cost, e.g. – fashion couture // – jewellery // etc.
used for goods which have a short shelf-life, e.g. – baked goods // – cut flowers // etc. used for less specialised goods where the retailer is large enough to deal directly with the manufacturer, e.g. – clothes / groceries in bigger retailers, e.g. Dunnes Stores, Tesco, Aldi // etc. used for goods which consumers like to touch, feel, or try on before purchasing, e.g. – high-end clothes //– health / beauty products // etc.
used for goods where the retailer is too small to deal directly with the manufacturer, e.g. – cereals // – tea / coffee // – stationery // etc. used for goods with a large market, where wholesaler can order in bulk, store and transport to retailers, e.g. – sweets / chocolate //– children’s toys // – clothing // etc. used for goods which are illegal to sell directly to consumers, e.g. – alcohol // – tobacco // – medicine // etc.
used for goods where consumers need a knowledgeable / personalised / local sales approach, e.g. – cars // – insurance // – Avon / Mary Kay cosmetics // etc. used for high-value goods where commission can be considerable for an agent, e.g. – cars // – insurance // – software // etc. used for goods which require follow-up service and support, or annual renewal, e.g. – cars // – insurance // – software // etc. used for goods which require regular delivery that is only cost-effective for a local agent, e.g. – milk // – newspapers – magazines // etc.
Accept other appropriate answers. Allow the same types of products in different channels but accept each only once. No marks awarded for example if appropriate channel omitted or incorrect.
2018 JC Business Studies [HL] - Paper II
*Accept any appropriate channel within diagram.
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5. Channels of Distribution and Business Insurance Question (cont’d.)
(B) Ryan Roofers Ltd, Dunleer, Co. Louth is a roofing contractor that installs and repairs roofs for both domestic and commercial clients nationwide. Its assets include Premises, Equipment, Vehicles and Stock of roof tiles. The company has twenty-five employees. All takings are lodged, twice weekly, in a bank which is 15 kilometres away.
(i) Explain the importance of the company having adequate insurance. (3) (3)
– so that all possible (1) risks are insured (1) for the correct amount (1)
Figures in brackets show breakdown of marks if answer incomplete.
(ii) Name two types of insurance that the company is required to have by law. (2 × 2) (4)
– motor insurance – (Employer’s) PRSI / (Employer’s) Pay Related Social Insurance
(iii) Name three other types of insurance that RYAN ROOFERS Ltd should purchase. State one reason for each type of insurance you have chosen. (9)
Type of insurance (3 × 1) Reason for type of insurance (3 × 2)
Any 3: – public liability // – in case a customer makes a claim for injury due to
an accident on the company’s premises // – employer’s liability // – in case an employee is injured or killed at work
due to negligence // – product liability // – in case a customer is injured or killed using faulty
goods/services sold // – property/building insurance // – covers against damaged to the structure of a property
caused by fire, explosions, storms, flooding and/or earthquakes //
– fire insurance // – covers against loss or damage to specific property, stock, etc., resulting from fire //
– burglary/theft insurance // – in case stock, materials and/or equipment are stolen from the business //
– bad debts insurance // – in case debtors fail to pay // – goods/cash in transit // – in case goods or cash are stolen while being
transported // – fidelity insurance // – in the case employee(s) steal from the business // – consequential losses // – compensation for loss of profits if business had
to close down following a fire or flooding // – sprinkler leakage // – covers damage done to stocks caused by accidentally
switching on sprinkler system // – key person insurance // – insurance for the life of specific employees // – glass and signs // – covers breakage of glass or business signs at the
premises // – e-commerce insurance // – covers damage caused by computer hackers and
viruses // etc.
Accept other appropriate answers and supporting material.
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5. Channels of Distribution and Business Insurance Question (cont’d.)
(C) The directors of RYAN ROOFERS Ltd wish to review their insurance cover and have appointed Jim Stokes, Insurance Consultant, to advise them on their insurance cover. Jim has advised the company that when calculating its total insurance premium, it must take into account the basic premium, loadings and deductions. The basic premium was €18,000, loadings were 25% of basic and deductions were 15% of basic plus loadings.
(i) State three factors that insurance companies consider when calculating premiums. (6)
Any 3: (3 × 2) – value of item(s) insured // – level of risks insured against // – number of similar risks insured against // – number of people wishing to take out same type of insurance // – chance of a claim being made // – if the person / company seeking insurance has any previous claims // – expenses / costs associated with and profit margins of the insurance company // – number of claims being made // – the presence of adequate fire / burglar alarms // – length of time that insurance is for // etc.
Accept other appropriate answers.
(ii) List one example of a loading and one example of a deduction that RYAN ROOFERS Ltd might have to take into account when calculating its total premium. (4)
Loading
Any 1: (2) – comprehensive motor insurance // – location of business / high crime rate in location // – if the person / company has previous claims on its existing policy // – type of work that the company engages in, e.g. roofing contractors / working at height /
working on top of buildings is more hazardous // – age profile of / young drivers of company vehicles // – risk of floods / fires in building / premises // etc.
Accept other appropriate answers.
Deduction
Any 1: (2) – smoke / fire alarms installed in premises // – sprinkler system installed in premises // – security system installed in premises / security company to check premises when
alarm activates // – if the person / company seeking insurance has no previous claims / no-claims bonus // – health and safety training // – if the area has a reliable Neighbourhood Watch / no history of crime in the area // – if goods have a minimal risk when being transported from one place to another // – reliable consumer history / type of consumer // etc.
Accept other appropriate answers.
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5. Channels of Distribution and Business Insurance Question (cont’d.)
(C) (cont’d.)
(iii) Calculate the total premium for RYAN ROOFERS Ltd. Show your workings. (4)
Total Premium € – Basic Premium 18,000 – Loading (25% of €18,000) 4,500 (1) 22,500 – Less deductions (15% of €22,500) 3,375 (1) 19,125 (2)
Accept student’s own figure if consistent with previous work, i.e. correct percentage of incorrect figure worked out correctly.
Allow 1 mark for student’s own figure if consistent with previous work - full marks for correct answer only.
Full marks awarded for correct answer even if no workings or wrong workings are shown. Figures in brackets show breakdown of marks if answer incorrect.
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6. Cash Flow Forecast Question (40)
Answer all parts of this question:
(A) On the separate sheet supplied with this paper is a partially completed Cash Flow Forecast of HEATECH Ltd, a thermal insulation business.
You are required to complete this forecast for the months of March, April, May and June 2018, together with the total column.
The following information should be taken into account:
• Monthly Cash Sales are expected to increase by 15% beginning in April
• HEATECH Ltd will receive a loan of €160,000 in May
• Monthly Cash Purchases are expected to increase by 10% beginning in March
• Light and Heat, payable every two months, is expected to decrease by €400 in June
• Wages are expected to remain the same, except in June, when an additional €6,000 in overtime will be paid
• Transport costs are expected to remain the same every month
• HEATECH Ltd will take over ownership of the building on payment of €220,000 in May. The rent of buildings will cease after April. (28)
Jan. €
Feb.
€
Mar.
€
Apr.
€
May
€
June
€
Total forJan. – June
€
RECEIPTS
Cash Sales 95,000 95,000 95,000 109,250 109,250 109,250 612,750 (2)
Loan 160,000 160,000 (1)
A. TOTAL RECEIPTS 95,000 95,000 95,000 109,250 269,250 109,250 772,750
PAYMENTS
Cash Purchases 45,000 45,000 49,500 49,500 49,500 49,500 288,000 (2)
Light and Heat 1,850 1,850 1,450 5,150 (2)
Wages 18,000 18,000 18,000 18,000 18,000 24,000 114,000 (2)
Motor Vehicles 60,000 60,000 (1)
Transport Costs 3,500 3,500 3,500 3,500 3,500 3,500 21,000 (1)
Buildings 220,000 220,000 (1)
Rent of Buildings 1,500 1,500 1,500 1,500 6,000 (2)
B. TOTAL PAYMENTS 128,000 69,850 72,500 74,350 291,000 78,450 714,150
Net Cash (A – B) (33,000) 25,150 22,500 (1) 34,900 (1) (21,750)(1) 30,800 (1) 58,600 (1)
Opening Cash 15,500 (17,500) 7,650 30,150 (1) 65,050 (1) 43,300 (1) 15,500 (1)
Closing Cash (17,500) 7,650 30,150 (1) 65,050 (1) 43,300 (1) 74,100 (1) 74,100 (1)
Allow mark for student’s own figure if consistent with previous work. Allow mark for student’s own figure if consistent with ‘Closing Cash’ figure from previous month. Allow mark for correct and matching figure only.
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6. Cash Flow Forecast Question (cont’d.)
(B) Answer the following questions on the sheet supplied with this paper.
(i) State two reasons why a business would prepare a Cash Flow Forecast. (4)
Any 2: (2 × 2) – to find out if a business can live within its means / to show whether the business will have
difficulty paying its bills during a particular period // – to identify future cash shortages / liquidity problems / to show the months when the business
may be short of cash and allow the business to plan for these shortages // – to identify future cash surpluses / to show the months when the business has surplus cash
available to spend // – to project / plan for future expansion of the business // – needed when a business applies for loans from its bank // etc.
Accept other appropriate answers.
(ii) List two possible ways that a business could deal with a Net Cash deficit in a particular month. (4)
Any 2: (2 × 2) – spread out payments over a number of months // – move a payment to a different month / reduce planned payments / reduce planned expenditure // – move a receipt into the particular month in question // – use a bank overdraft for the particular month // – cut back on overall expenditure for that particular month // – reduce (waged) employee hours on a temporary basis // – check for bad debts and set aside time to collect where possible // etc.
Accept other appropriate answers. Do not accept ‘loan’ as it must be short-term source as it is for a particular month.
(iii) Explain the difference between a Cash Flow Forecast and an Analysed Cash Book. (2 × 2) (4)
Cash Flow Forecast
– used to show planned / forecasted / budgeted / expected (cash) receipts and payments over a period of time // etc.
Accept other appropriate material.
Analysed Cash Book
– used to record actual (cash) receipts and payments made by a business over a period of time // etc.
Accept other appropriate material.
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Notes:
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Notes:
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