vce accounting – examination specifications

S A M P L E

ACCOUNTINGWritten examination

Day Date Reading time: *.** to *.** (15 minutes) Writing time: *.** to *.** (2 hours)

QUESTION BOOK

Structure of bookNumber of questions

Number of questions to be answered

Number of marks

11 11 100

• Studentsarepermittedtobringintotheexaminationroom:pens,pencils,highlighters,erasers,sharpeners,rulersandonescientificcalculator.

• StudentsareNOTpermittedtobringintotheexaminationroom:blanksheetsofpaperand/orcorrectionfluid/tape.

Materials supplied• Questionbookof14pages• Answerbookof19pages

Instructions• Writeyourstudent numberinthespaceprovidedonthefrontcoveroftheanswerbook.• Answerallquestionsintheanswerbook.• AllwrittenresponsesmustbeinEnglish.

At the end of the examination• Youmaykeepthisquestionbook.

Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.

©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2019

Version2–May2021

Victorian Certificate of Education Year

ACCOUNTINGQB(SAMPLE) 2 Version2–May2021

Question 1–continued

Question 1 (17marks)Harryoperateshisstore,FairtoYou,inNorthside.Thebusinessspecialisesinsellingjewelleryproducedoverseasbybusinessesthatpayfairwages.FairtoYouusestheFirstIn,FirstOut(FIFO)inventorycostassignmentmethod.Harryhasonlyasmallnumberofsuppliersandoperatesanindividualaccountforeachsupplier.Harryhasprovidedthefollowingsourcedocuments.

Rosie’s Jewellery18 Bracelet St

Melbourne Vic 3000

Invoice:RR99Date:1Dec.2019Credit terms:2/7,n/30

Charge to: FairtoYou

Product details Qty Unit price ($)

Total ($)

Bracelets–blue 100 4 400

Bracelets–orange 100 4 400

Subtotal 800

GST 80

Total 880

Finn’s Couriers Tax InvoiceDate: 1 Dec.2019Receipt: 118

Sale to: FairtoYou

Details $

Deliveryof200bracelets 200

GST 20

Total 220

InstructionsAnswerallquestionsintheanswerbookprovided.

Version2–May2021 3 ACCOUNTINGQB(SAMPLE)

TURN OVER

Thesellingpriceofeachbraceletis$16(plusGST).EachbraceletpurchasedcomesinagiftboxthatcostsRosie’sJewellery$2(plusGST)perbox.FairtoYouisofferingallcustomerstheopportunitytohavetheirnameengravedontheirbraceletfor$4(plusGST)perbracelet.

a. Calculate thecostpriceofonebluebracelet. 1mark

b. RecordthesourcedocumentsprovidedintheGeneralJournalofFairtoYou. Narrationsarenotrequired. 4marks

c. RecordthepurchaseofthebluebraceletsintheInventoryCard. 1mark

d. Harryhadbeenconvincedbythesuppliertotrytheorangebraceletswiththeshipmentof 1December,buttheyhavenotbeenasuccess.On31December2019,thesellingpriceoftheorangebraceletsisreducedto$5each(plusGST)becauseFairtoYouhasnotsoldanyoftheorangebracelets.Thebusinesswillincludefreeengravingoneachorangebracelet,whichnormallycoststhebusiness$2perbracelet.

Recordthejournalentryrequiredfortheorangebraceletson31December2019intheGeneralJournalofFairtoYou(Memo18).

Anarrationisrequired. 3marks

e. DuringDecember,HarrytrialledusingtheIdentifiedCostinventorycostassignmentmethodinadditiontotheFIFOinventorycostassignmentmethod.Thefollowinggraphswerepreparedattheendofthemonth.

$72000$100000

$71000$100000

Identified Cost,December 2019

FIFO,December 2019 Key

SalesCost of Sales

Explainhowthegraphsabovecanshowdifferentresultswhileusingthesametransactions. 4marks

f. Harryhasbeenapproachedbyanewsupplierwhohasofferedtosellhimsimilarjewelleryataround75%ofhiscurrentcostpriceandwhohasalsoofferedhim60-daypaymentterms.AsFairtoYouhasbeenhavingsignificantcashflowissuesrecently,whichhasmadeitdifficulttopayemployeesontime,Harryisconsideringusingthenewsupplierforsomeofhisinventorypurchases.Asthemajorityofthisbusinessinventorywillstillcomefrombusinessespayingfairwages,hedoesnotbelievethatheneedstohighlightthechangeininventorytohiscustomers.

AnalysetheethicalconsiderationsofHarry’sdecisionnottoinformhiscustomersofthechangeininventory. 4marks


Question 2 (18marks)Pip’sPlumbingisaplumbingsuppliesstorethathasrecentlysetupanonlinestore.Inordertopreparefortheincreaseindeliveries,thebusinessdecidedtodisposeofitsolddeliveryvanandpurchaseanewone.Thebusinesshadpurchaseditsolddeliveryvanon1September2016for$20000(plusGST).ThenewdeliveryvanwaspurchasedfromSmoothCarson31December2019for$46200(plusGST).Thepurchasepriceincludeddeliveryof$1000(plusGST)and12months’insuranceof$1200(plusGST).SmoothCarsagreedtoatrade-inof$8000fortheolddeliveryvan,withthebalancebeingpaidfromaloanreceivedfromTNSBank.Pip’sPlumbingpreparesitsaccountingreportsannuallyon31Decemberanddepreciatesitsassetsat20%perannumusingthereducingbalancemethod.

a. PreparetheGeneralJournalentriesrequiredon31December2019. Narrationsarenotrequired. 10marks

b. ExplaintheeffectontheaccountingequationifPip’sPlumbinghadnotdepreciatedtheolddeliveryvanfortheyearended31December2019. 3marks

c. ExplainwhyPip’sPlumbingwouldreportalossonthedisposalofthedeliveryvan. 2marks

d. Referringtoaqualitativecharacteristic,explainwhyPip’sPlumbingdepreciatesthedeliveryvan. 3marks


Question 3–continuedTURN OVER

Question 3 (15marks)AQSportzsellsawiderangeofequipmentforwatersports.Inventoryissoldforbothcashandcredit.ThefollowinginformationrelatestoAccountsReceivableforApril2019:• TheAccountsReceivablebalanceasat1April2019was$7800.• TheAccountsReceivablebalanceasat30April2019was$9500.• TheReceiptsfromAccountsReceivablewere$13400.• TheDiscountExpensewas$200.• TheDiscountRevenuewas$140.• TheAllowanceforDoubtfulDebtshadabalanceof$1400on1April2019.• $1200(plusGST)waswrittenoffasBadDebtsinApril.• TheAllowanceforDoubtfulDebtsis5%ofnetcreditsales.

a. Usingtheinformationabove,reconstructtheAccountsReceivableledgeraccountanddeterminetheCreditSalesforApril2019. 6marks

b. RecordtheGeneralJournalentryrequiredtopreparetheAllowanceforDoubtfulDebtsforMay2019(Memo67).

Anarrationisnotrequired. 3marks

c. ThefollowinggraphshowstheAccountsReceivableTurnover(indays)forAQSportzoverthesix-monthperiodfromDecember2018toMay2019.

Accounts Receivable Turnover (in days)

60

50

40

30

20

10

0December January February March April May

days

DescribethetrendintheAccountsReceivableTurnoverforAQSportzoverthesix-monthperiodfromDecember2018toMay2019. 2marks


d. AQSportzisconsideringthefollowingstrategiestoimproveitsAccountsReceivableTurnover:• Strategy 1–Sendingregularautomatedpaymentreminderstocustomers Theaccountingsoftwarethebusinesscurrentlyusesallowsittopayafeetohave

automatedreminderssentouttocustomersregularly.Thiswouldcost$240peryearandispredictedtoleadtoanimprovementof10dayspermonthintheAccountsReceivableTurnover.

• Strategy 2–Implementingasystemofcreditchecksforallnewcustomerswhowantcredit

Thisislikelytoincreaseofficeexpensesby$1200peryearanditislikelytodecreaseBadDebtsby25%,whileimprovingtheAccountsReceivableTurnoverby10%.

WhichstrategyshouldAQSportzadopt?Justifyyouranswer. 4marks


TURN OVER

Question 4 (9marks)Walter’sWheelssellsbicycleparts.AtthebeginningofMay2019,itdecidedtosellbicyclepartsoncreditaswellasforcash.Accountsreceivableareexpectedtopaywithin30days.AnticipatedcreditsalesinMaywere$100000,buttheactualcreditsaleswereonly60%ofthatamount.ThistrendcontinuedforthemonthsofJuneandJuly,asshowninthegraphbelow.

Inventory TurnoverAccounts ReceivableTurnoverAccounts Payable Turnover

KeyTurnover ratios (in days)

80

70

60

50

40days

30

20

10

0May June July

a. Statethetrendineachofthethreefinancialindicatorsshowninthegraph. 3marks

b. ExplainhowperformanceincollectingoutstandingdebtsandinInventoryTurnovermayhaveanimpactonprofitabilityandliquidity. 4marks

c. ExplainhowthetrendinAccountsPayableTurnovermaybelinkedtothetrendintheothertwofinancialindicators. 2marks


Question 5 (5marks)FlexFurnituresellsdeskstoschools.NorthwestHighSchoolplacedanorderfor150desksat$60each(plusGST).Thedesksweresoldata50%mark-up.ThefollowingtransactionstookplaceinNovember2019:• 21November–NorthwestHighSchoolpaidadepositof$825(EFT86).• 24November–100desksweredeliveredtoNorthwestHighSchool(InvoiceFF6).

PreparetheGeneralJournalentriesrequiredtorecordthesetransactions.Narrationsarenotrequired.


TURN OVER

Question 6 (6marks)SwimUpsellsswimwearandaccessoriesinAustraliaandoverseas.Thebusinessplanstocarryoutananalysisofreportspreparedrecently.Thebusinessdisclosesthefollowing:• ThebusinessreportsonceayearinJune.• TheFIFOinventorycostassignmentmethodisusedtodetermineinventoryonhand;thebusinessis

awarethatusingtheIdentifiedCostinventorycostassignmentmethodwouldresultinadifferentamount.• Itisarelativelysmallbusiness.• Thebusinesshasrecentlycommencedsellinginventoryoncredit.Itdoesnotofferdiscounts,believingit

isenoughtosimplyoffergoodservice.• Anumberofnon-currentassetsarenew.Thebusinessusesthereducingbalancemethodofdepreciation.• Thebusinesshasrecentlymovedtoanewlocation.• TheAustraliandollarhasfluctuatedinvaluerecently.

DiscussthedifficultiesSwimUpmayexperiencewhenmeasuringitsperformanceagainstpastperformanceandbudgets,andagainstotherbusinessesinthesameindustry.


Question 7 (4marks)ABalanceSheetforabusinessisshownbelow.

Balance Sheet as at 31 May 2019

Assets

Bank 3100

AccountsReceivable 18 000

Inventory 24000

Machinery 60000

Total Assets 105100

Liabilities

Loan 45000

Owner’s Equity

Capital 60100

Total Equities 105100

Additional information• Theremaybedifficultyincollectingsomedebts.• Inventoryisanestimatebasedoncurrentmarketvalues.• Themachineryistwoyearsold.• Theloanwastakenoutseveralyearsago.

ApplythequalitativecharacteristicoffaithfulrepresentationtotheBalanceSheetandjustifyhowtwoitemsinthereportmayfailtoreachthisstandard.


TURN OVER

Question 8 (7marks)TMUTradersisunsureofthestateofliquidityofitsbusiness.TheoperatingsectionoftheBudgetedCashFlowStatementforthemonthending31May2019needstobeprepared.However,itdoesnothaveaccesstocashrecordsandcanonlyprovidethefollowingdetails:• Inventoryissoldforbothcashandcredit.TotalsalesforMay2019areexpectedtobe$60000(plus

GST),ofwhich60%areexpectedtobecash.40%ofcreditsalesarepaidinthesamemonthasthesaleandtheremainderispaidinthefollowingmonth.AttheendofApril,AccountsReceivablehadabalanceof$15000.

• DrawingsforMayareanticipatedtobe$9000,ofwhich$3000willbeforcash.• AninsurancepolicyisdueinMayfor$1200(plusGST)cash.• Otherexpensesareestimatedtobe$16200(plusGST),includingdepreciationof$3400.• Aloanfor$4200wastakenoutinFebruary2019.Itistoberepaidinequalinstalmentsoversixmonths

commencingMarch2019.Theinterestof$210isdueinAugust.• AccountsPayableisanticipatedtoincreaseby$2000from30Aprilto31Mayaftercreditpurchasesof

$30000(plusGST).CostofSalesis50%ofsales.• On30ApriltheGSTbalancewas$6100.ThiswillbesettledinMay.

PreparetheoperatingsectionoftheBudgetedCashFlowStatementforthemonthending31May2019.


Question 9 (7marks)AbusinessprovidesanextractofitsGSTClearingledgeraccount.Notethatnonon-currentassetswerepurchasedbythebusinessduringthistime.

GST Clearing (extract)

Date 2019

Cross-reference Amount Date 2019

Cross-reference Amount

Jan.2 Bank 5630 Jan.1 Balance 2300

3 AccountsPayable 200 5 AccountsReceivable 7650

a. DescribethetransactionsthathaveledtoeachoftheentriesintheextractoftheGSTClearingledgeraccount. 4marks

b. UsingthedataintheextractoftheGSTClearingledgeraccount,explainwhythisbusinessshouldbeconcernedaboutitsliquidityafterthestartofthemonthifthisistypicalofhowitconductsitsoperations. 3marks


TURN OVER

Question 10 (5marks)DapperDress-Upssellscostumesandaccessories.ThefollowinginformationhasbeenprovidedforJune2019:

• AccountsPayable $19000• AccountsReceivable $31000• AdvertisingExpense $30000• CostofSales $100000• DiscountExpense $320• DiscountRevenue $400• Inventory $110000• ProfitonSaleofEquipment $1200• Sales $200000• InventoryGain $500• Wages $50000

Usingtheinformationprovided,preparetheclosingentriesintheGeneralJournaltocloseallrevenueandexpenseaccountsandtoclosetheProfitandLossSummaryaccount.Narrationsarenotrequired.


Question 11 (7marks)Toassistinorganisingthereportsforabusiness,theownerhaspreparedtheledgeraccounts.

Adjusted Trial Balance as at 30 June 2019

Account Debit Credit

AccountsPayable 2400

AccountsReceivable 5820

Advertising 3600

Bank 4500

Capital 18150

CostofSales 1640

GSTClearing 1630

Inventory 17300

LoanZYXBank 12000

PrepaidRent(3months) 600

Sales 3280

ShopFittings 10 000

Wages 3000

41 960 41 960

ThroughoutJuly,thefollowingtransactionsoccurred:• 5July CashsalesplusGST $3400• 25July CreditsalesplusGST $3700• 9July CashpurchasesofinventoryplusGST $5300• 10July CreditpurchasesofinventoryplusGST $7200

Additional information• 7July–ThebusinesspaidtheJunebalancewithinthetermsofferedandreceivedadiscountof

$92.• 15July–ThebusinessreceivedhalfoftheamountowingfromJunefromAccountsReceivable.• Thebusinessappliesa100%mark-uponcosttoinventory.

UsetheinformationabovetocompletethefollowingledgeraccountsforJuly:• Inventory• AccountsPayable• PrepaidRentExpense

END OF QUESTION BOOK

S A M P L E

Instructions

• Aquestionbookisprovidedwiththisanswerbook.• Answerallquestionsinthespacesprovidedinthisbook.• Writeyourstudent numberinthespaceprovidedaboveonthispage.• RefertoInstructionsonthefrontcoverofthequestionbook.

Students are NOT permitted to bring mobile phones and/or any other unauthorised electronic devices into the examination room.

©VICTORIANCURRICULUMANDASSESSMENTAUTHORITY2019

Version2–May2021

ACCOUNTINGWritten examination

Day Date Reading time: *.** to *.** (15 minutes) Writing time: *.** to *.** (2 hours)

ANSWER BOOK

SUPERVISOR TO ATTACH PROCESSING LABEL HEREVictorian Certificate of Education Year

STUDENT NUMBER

Letter

ACCOUNTINGAB(SAMPLE) 2 Version2–May2021

ThIS pAGE IS BlANK

Version2–May2021 3 ACCOUNTINGAB(SAMPLE)

TURN OVER

ThIS pAGE IS BlANK


Question 1 –continued

Question 1 (17marks)a. 1mark

Working space

Cost price of one blue bracelet $

b. 4marksFair to YouGeneral Journal

Date 2019

Details Debit Credit

c. 1markInventory Card

Item: Blue braceletSupplier: Rosie’s Jewellery

Cost Assignment Method: FIFO

Date 2019

Document IN OUT BAlANCE

Qty Cost Total Qty Cost Total Qty Cost Total

1Dec. Balance 204

45

8020


Question 1 –continuedTURN OVER

d. 3marks

Working space

Fair to YouGeneral Journal

Date 2019


e. 4marks

Explanation


f. 4marks

Analysis


TURN OVER

CONTINUES OVER pAGE



Question 2 (18marks)a. 10marks

Working space

pip’s plumbingGeneral Journal

Date 2019



TURN OVER

b. 3marks

Explanation

c. 2marks

Explanation

d. 3marks

Qualitative characteristic

Explanation




Accounts Receivable

Date 2019

Cross-reference Amount Date 2019

Cross-reference Amount

Credit Sales for April 2019 $

b. 3marks

Working space

AQ SportzGeneral Journal

Date 2019


c. 2marks

Description


TURN OVER

d. 4marks

Working space

Strategy

Justification




b. 4marks

Explanation


TURN OVER

c. 2marks

Explanation

Question 5 (5marks)Flex FurnitureGeneral Journal

Date 2019



Question 6 (6marks)

Discussion


TURN OVER

Question 7 (4marks)

Item 1

Item 2


Question 8 (7marks)

Working space

TMU TradersBudgeted Cash Flow Statement (extract) for the month ending 31 May 2019

$ $

Budgeted Cash Flows from Operating Activities


TURN OVER


1 January

2 January

3 January

5 January

b. 3marks

Explanation


Question 10 (5marks)Dapper Dress-UpsGeneral Journal

Date 2019



Question 11 (7marks)Inventory

Date 2019

Details Amount Date 2019

Details Amount

Accounts payable

Date 2019


Details Amount

prepaid Rent Expense

Date 2019


Details Amount

END OF ANSWER BOOK

vce accounting – examination specifications

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