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ACCOUNTING UNITS 3 AND 4

Accounting Units 3 and 4 practice


exam 2015 and suggested solutions
Simon Phelan
Rosehill Secondary College

The following VCE Accounting Units 3 and 4 practice exam conforms to the
examination specifications provided by the Victorian Curriculum Assessment
Authority (VCAA) on its website. The examination covers Units 3 and 4 and
consists of seven questions. The total marks for the exam are 100. An
answer book and suggested solutions follow the question book.
The practice exam and solutions are based on the authors interpretation of
the VCE Accounting Study Design (20132016).
Please note that the following questions and solutions have no official
status.
Teachers should refer to the VCAA website http://www.vcaa.vic.edu.au for
further information.

Disclaimer: This resource has been written by the author (Simon Phelan) for use with students of VCE
Accounting. This does not imply that it has been endorsed by the Victorian Curriculum and Assessment Authority
(VCAA). While every care is taken, we accept no responsibility for the accuracy of information or advice
contained in Compak. Teachers are advised to preview and evaluate all Compak classroom resources before
using or distributing them to students.

VCTA

Published September 2015

page 1

ACCOUNTING UNITS 3 AND 4

ACCOUNTING UNITS 3 AND 4


Practice written examination 2015

Reading time: 15 minutes


Writing time: 2 hours

QUESTION BOOK
Structure of book
Number of questions

Number of questions to
be answered

Number of marks

100

Students are permitted to bring into the examination room: pens, pencils, highlighters, erasers,
sharpeners, rulers and one scientific calculator.
Students are NOT permitted to bring into the examination room: blank sheets of paper and/or
white-out liquid/tape.
Materials supplied
Question book
Answer book
Instructions
Write your name and your teachers name in the spaces provided on the front page of the answer
book.
Answer all questions in the answer book.
All written responses must be in English.

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

NOTE: This practice examination has no official status and represents an indication only of the
types of questions that VCAA examiners might set.

VCTA

Published September 2015

page 2

ACCOUNTING UNITS 3 AND 4

Question 1 (20 marks)


Andrew Roberts commenced operating his own small business Roberts Rafts & Camping in April
2015. He decided to record all business transactions and prepare financial reports himself. At the end
of April 2015 he submitted his financial records and reports to Eleanor Hodgins, an accountant at
Hodgins & Associates.
Upon reviewing the reports the accountant noted an error in the Income Statement:
The reporting of the payment of your personal house insurance as an expense of the business is an
error and should be rectified.
a. With reference to an accounting principle, explain why the accountant is correct.
1 + 2 = 3 marks
The accountant also noted that the following documents had yet to be recorded:

Roberts Rafts & Camping


65 Tidal Crescent
Riverview
Invoice: A09

Date: 29/04/15

Charge: Dingley Aquatic Club


Item
Deluxe 2-man Tents
Kennison Kayak
Invoice Total

Qty
1
1

Unit Price
$200
$1 000

GST
$20
$100

Total
$220
$1 100
$1 320

Terms: 2/14, n30

Roberts Rafts & Camping

Roberts Rafts & Camping

Date

28 April 2015

Date

30 April 2015

From

Heidi Watt

From

Vicki Marcuzzi

For

2 Sleeping bags

For

Payment of account

Amount

$440 (including GST)

Amount

Rec. No.

11

$190 after $10 discount


allowed

Rec. No.

12

VCTA

Published September 2015

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ACCOUNTING UNITS 3 AND 4

KENJI KAYAKS
Keilor Village
Invoice:

P831

Charge to:

Roberts Rafts & Camping

Date:

27/04/2015

65 Tidal Crescent
Riverview

Quantity
5

Unit

Total

Item

Price

Price

Kenji Kayaks

1 500

7 500

GST (10%)

750
8 250

Invoice total
Terms:

2/14, n30

Roberts Rafts & Camping

Date: 24/04/15

Memo: 01
Withdrew 1 Kidz Sleeping bag for nephews birthday

Value $50

Signed: Andrew Roberts


b. Record the information from the documents into the appropriate journals.
Note: A narration is required in the General Journal.
Stock is sold at a mark-up of 100%.
You are not required to total the journals.
6 + 1 = 7 marks
c. With reference to a qualitative characteristic, explain the role of documents in the accounting
system.
1 + 2 = 3 marks
On 12 May 2015, the accountant sent an account for $330 (including GST), which Andrew promptly
paid (Cheque A24).
d. Record this transaction in the appropriate journal.
1 mark
e. With reference to appropriate accounting elements, explain how this transaction would affect the
financial reports that will be prepared on 31 May 2015.
6 marks

VCTA

Published September 2015

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ACCOUNTING UNITS 3 AND 4

Question 2 (27 marks)


Bella Beeman owns and operates Bellas Baths, selling bathtubs and bathroom accessories. The
following information was provided at 31 March 2015.
Sales Journal
Date
2015
Mar. 31

Debtor

Inv.
No.

Cost of
Sales

Totals

Sales

9 860

Debtors
Control

GST

19 720

1 972

21 692

Purchases Journal
Date
2015
Mar. 31

Stock
Control

Inv.
No.

Creditor
Totals

GST

7 700

Creditors
Control

770

8 470

Cash Receipts Journal


Date
2015
Mar. 31

Details

Rec.
No.

Totals

Bank

Disc.
Exp.

52 505

Debtors
Control

360

Cost of
Sales

Sales

Sundries

5 800

11 600

21 745

18 360

GST
1 160

Note: Sundries includes a refund of $1 720 from the ATO on 4 March 2015, a capital contribution of
$20 000 on 11 March 2015 and $25 Interest Revenue on 31 March 2015.
Cash Payments Journal
Date
2015
Mar. 31

Details

Chq
No.

Totals

Bank

Disc.
Rev.

Creditors
Control

Stock
Control

350

7 200

9 600

Wages
2 700

Sundries

GST

25 450

Note: Sundries includes the following payments:


Drawings $2 600
Interest $150
Cartage Out $800
Equipment $18 000
Rent $900

Loan repayment $500


Customs Duty $700
Advertising $1 300
Equipment servicing $500

The following additional information was also available:


DepreciationEquipment $350
Accrued Customs Duty $180
Bad Debts $660

Stock Gain $560


Sales Returns $300

a. Calculate the amounts that are missing from the Cash Payments Journal.
1 + 1 = 2 marks
b. Prepare an extract of the Cash Flow Statement for the month ended 31 March 2015 to show
Net Cash Flows from Operations.
6 marks

VCTA

Published September 2015

page 5

ACCOUNTING UNITS 3 AND 4

c. Prepare an extract of the Income Statement for the month ended 31 March 2015 to show all items
up to and including Other Revenue.
6 marks
d. Using the information above, post the relevant information to the GST Clearing General Ledger
account and complete the account.
8 marks
e. Explain what is meant by Adjusted Gross Profit, and with reference to two specific examples from
the reports above, explain how Adjusted Gross Profit can differ from Net Cash Flow from
Operations.
5 marks

Question 3 (10 marks)


Darcy Daher owns and operates Music World, a small business selling musical instruments and sheet
music. The business has undergone some changes in recent months and Darcy provided you with the
following information at 30 June 2015.

a. Explain what is meant by stability and how the trend in the graph has impacted on the stability of
the business.
4 marks
b. Explain one possible cause of the change shown in the Debt Ratio.
2 marks
c. Explain the likely negative impacts of the change in the Debt Ratio on the liquidity and profitability
of the business in future reporting periods.
4 marks

VCTA

Published September 2015

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ACCOUNTING UNITS 3 AND 4

Question 4 (11 marks)


Tiana Kropman owns and operates Painted Lady, a small business selling make-up and perfumes.
During June 2015 the following incomplete Stock Card was provided.
Stock Item:

Supplier:

Chunnel No.6
IN

Date

Details

June 1
12
15

Qty

Unit
Cost

Nix Factor
OUT

Value
$

Qty

Unit
Cost

BALANCE
Value
$

Balance
Recs J47J61
Inv. C214

15
50

110

105

1 575

5 500
10

105

Qty

Unit
Cost

Value
$

25

105

2 625

10

105

1 050

10

105

50

110

6 550

21

Inv. D97

110

1 600

45

110

4 950

26

Recs J89J96

110

880

37

110

4 070

27

CN H08

44

110

4 840

29

CN NF11

10

110

1 100

34

110

3 740

30

Memo 9

110

220

32

110

3 520

32

20

640

32

110

3 520

110

770

30

Note: The business uses the First In First Out (FIFO) cost assignment method and sells stock at a
mark-up of 100%
The transaction on 21 June was a sale to C. Jenkins.
a. Identify the document that would be used and the transaction that occurred for the last entry in the
Stock Card.
1 + 1 = 2 marks
b. Identify the accounting principle that required the entry in part a. above.
1 mark
c. Record the transactions on 27 June and 29 June 2015 in the General Journal.
Narrations are not required.
4 + 2 = 6 marks
d. Explain why the number of units was different between the transactions on 27 June and 29 June
2015.
2 marks

VCTA

Published September 2015

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ACCOUNTING UNITS 3 AND 4

Question 5 (10 marks)


On 31 December 2014, the following extract of the Balance Sheet for A1 Furniture was available.
A1 FURNITURE
Balance Sheet (extract) as at 31 December 2014
$

Owners Equity
Capital

87 450

+ Net Profit

32 920

- Drawings

(27 840)
92 530

92 530

During the quarter ended 31 March 2015 the following transactions occurred:
On 4 January 2015, the owner transferred ownership of his personal vehicle to the business.
The Vehicle had been bought for $42 000 in 2012 and now had an agreed value of $30 000.
The owner still owed $12 000 to King Motors for the purchase of the Vehicle and the business
took over this creditor.
On 5 March 2015, the owner transferred $15 000 cash to the business to fund the purchase of
additional equipment.
Cash Drawings were $8 000 per month except February when the owner withdrew $9 500.
Drawings of stock valued at $2 500 occurred on 13 March 2015.
During the quarter ended 31 March 2015 cash and credit sales totalled $110 700, Sales
Returns were $5 600, Cost of Sales were $52 550, Stock Loss was $2 000 and Expenses
totalled $24 930.
Show how the Drawings and Capital General Ledger accounts would appear after all of the
information above had been posted.
Note: You are required to complete each account.

VCTA

Published September 2015

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ACCOUNTING UNITS 3 AND 4

Question 6 (10 marks)


The following information for Sirps Suits was provided:
Account balances at 1 January 2015 were: Stock Control $56 700 and Creditors Control
$43 850.
Stock is sold at a mark-up of 50%.
Sales for the year ended 31 December 2015 are expected to be $360 000 plus GST with 40%
of sales being on a cash basis.
Sales Returns for the year ended 31 December 2015 are expected to be 1% of credit sales. All
stock returned by customers is returned to the supplier for a full credit.
Based on past information, the owner expects to withdraw stock to the value of $5 000, use
stock valued at $2 000 for advertising purposes and write down some stock by $7 000.
No stock losses or gains are expected.
All stock is purchased on credit and the owner hopes to purchase stock worth $252 000 plus
GST.
The owner hopes to receive discounts valued at $5 000 and repay Creditors $270 000
Reconstruct the Stock Control and Creditors Control General Ledger accounts to find the expected
closing balances of each account at 31 December 2015.

Question 7 (12 marks)


On 1 July 2015, Adams Antiques had the following item in its Balance Sheet.
$

Non-current Assets
Vehicle

44 000

Accumulated Depreciation

(28 908)

15 092

The Vehicle was purchased on 1 July 2012 and is depreciated at a rate of 30% per annum using the
reducing-balance method.
On 30 April 2016, the business decided to trade in the Vehicle on a new Vehicle. The business
purchased the new Vehicle from Ajax Motors for $50 000 plus GST (Invoice B84). The business also
paid $1 000 plus GST to insure the Vehicle (Cheque T66) and $1 500 plus GST to modify the Vehicle
for use (Cheque T67).
The Vehicle was traded in for $10 000.
Record the information above in the appropriate journals at 30 April 2016.

END OF QUESTION BOOK

VCTA

Published September 2015

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ACCOUNTING UNITS 3 AND 4

Name: ______________________________

Teacher: ______________________________

ACCOUNTING UNITS 3 AND 4


Practice written examination 2015

Reading time: 15 minutes


Writing time: 2 hours

ANSWER BOOK

Instructions
A question book is provided with this answer book.
Answer all questions in the spaces provided in this book.
Write your name and your teachers name in the spaces provided above on this page.
Refer to Instructions on the front cover of the question book.

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

VCTA

Published September 2015

page 10

ACCOUNTING UNITS 3 AND 4

Question 1 (20 marks)


a.

1 + 2 = 3 marks

Accounting principle
Explanation

6 + 1 = 7 marks

b.
Sales Journal
Date
2015
Apr. 30

Debtor

Inv.
No.

Totals to date

Cost of
Sales

Sales

4 500

GST

9 000

Debtors
Control

900

9 900

Cash Receipts Journal


Date
2015
Apr. 30

Details

Totals to date

Rec.
No.

Bank

35 080

Disc.
Exp.

Debtors
Control

200

Cost of
Sales

Sales

Sundries

1 400

2 800

25 000

7 200

Purchases Journal
Date
2015
Apr. 30

VCTA

Creditor

Totals to date

Inv.
No.

Stock
Control
5 600

Published September 2015

GST

560

Creditors
Control
6 160

page 11

GST

280

ACCOUNTING UNITS 3 AND 4

Cash Payments Journal


Date
2015
Apr. 30

Details

Chq
No.

Totals to date

Bank

31 050

Disc.
Rev.

Creditors
Control

Stock
Control

250

4 500

2 000

Wages

1 100

Sundries

21 500

GST

2 200

General Journal
Date
2015

Details

General Ledger
Debit
$

Credit
$

c.

Subsidiary Ledger
Debit
$

Credit
$

1 + 2 = 3 marks

Qualitative characteristic
Explanation

d.

1 mark

Cash Payments Journal


Date
2015

VCTA

Details

Chq
No.

Bank

Disc.
Rev.

Creditors
Control

Published September 2015

Stock
Control

Wages

Sundries

page 12

GST

ACCOUNTING UNITS 3 AND 4

e.

6 marks

Explanation

VCTA

Published September 2015

page 13

ACCOUNTING UNITS 3 AND 4

Question 2 (27 marks)


a.

1 + 1 = 2 marks

Cash Payments Journal


Date
2015
Mar. 31

Details

Chq
No.

Bank

Totals to date

Disc.
Rev.

Creditors
Control

Stock
Control

350

7 200

9 600

Wages

Sundries

2 700

25 450

b.

6 marks
BELLAS BATHS
Cash Flow Statement (extract) for the month ending 31 March 2015
$

Cash Flow from Operating Activities

NET CASH FLOW FROM OPERATIONS

VCTA

Published September 2015

page 14

GST

ACCOUNTING UNITS 3 AND 4

c.

6 marks
BELLAS BATHS
Income Statement (extract) for the month ending 31 March 2015
$

Revenue

VCTA

Published September 2015

page 15

ACCOUNTING UNITS 3 AND 4

d.

8 marks
GST Clearing

Date
2015

Cross-reference

Amount

Date
2015

e.

Cross-reference

Amount

5 marks

Explanation

VCTA

Published September 2015

page 16

ACCOUNTING UNITS 3 AND 4

Question 3 (10 marks)


a.

4 marks

Explanation

VCTA

Published September 2015

page 17

ACCOUNTING UNITS 3 AND 4

b.

2 marks

Explanation

c.

4 marks

Explanation

VCTA

Published September 2015

page 18

ACCOUNTING UNITS 3 AND 4

Question 4 (11 marks)


1 + 1 = 2 marks

a.
Document
Transaction

1 mark

b.
Accounting principle

4 + 2 = 6 marks

c.
General Journal
Date
2015

VCTA

Details

General Ledger
Debit
$

Published September 2015

Credit
$

Subsidiary Ledger
Debit
$

Credit
$

page 19

ACCOUNTING UNITS 3 AND 4

2 marks

d.
Explanation

Question 5 (10 marks)


Drawings
Date
2015

Cross-reference

Amount

Date
2015

Cross-reference

Amount

Date
2015

Cross-reference

Amount

Capital
Date
2015

Cross-reference

Amount

Jan. 1

VCTA

Published September 2015

Balance

92 530

page 20

ACCOUNTING UNITS 3 AND 4

Question 6 (10 marks)


Stock Control
Date
2015
Jan. 1

Cross-reference

Balance

Amount

Date
2015

Cross-reference

Amount

Cross-reference

Amount

56 700

Creditors Control
Date
2015

Cross-reference

Amount

Date
2015
Jan. 1

VCTA

Published September 2015

Balance

43 850

page 21

ACCOUNTING UNITS 3 AND 4

Question 7 (12 marks)


General Journal
Date
2015

Details

General Ledger
Debit
$

Credit
$

Subsidiary Ledger
Debit
$

Credit
$

Cash Payments Journal


Date
2015

Details

Chq
No.

Bank

Disc.
Rev.

Creditors
Control

Stock
Control

Wages

Sundries

END OF ANSWER BOOK

VCTA

Published September 2015

page 22

GST

ACCOUNTING UNITS 3 AND 4

Solutions to Accounting Units 3 and 4 practice exam 2015


Question 1 (20 marks)
a.

1 + 2 = 3 marks

Accounting principle Entity (1)


Explanation The owner and the business are separate legal entities and therefore the records of the
two entities should be kept separate (1). In light of this, the owner is able to make better business decisions
as he will base decisions on information relevant to the business only. (1)

6 + 1 = 7 marks

b.
Sales Journal
Date
2015

Debtor

Inv.
No.

Apr. 30

Totals to date

Apr. 29

Dingley Aquatic Club

Cost of
Sales

Sales

GST

Debtors
Control

4 500

9 000

900

9 900

600

1 200

120

1 320

Cash Receipts Journal


Date
2015

Details

Rec.
No.

Bank

Apr. 30

Totals to date

35 080

Apr. 28

Sales

11

440

Apr. 30

Vicki Marcuzzi

12

190

Disc.
Exp.

Debtors
Control

200

Cost of
Sales

Sales

Sundries

1 400

2 800

25 000

200

400

7 200

10

Creditor

Apr. 30

Totals to date

Apr. 27

Kenji Kayaks

VCTA

Inv.
No.

200

P831

Stock
Control

GST

Creditors
Control

5 600

560

6 160

7 500

750

8 250

Published September 2015

280
40

Purchases Journal
Date
2015

GST

page 23

ACCOUNTING UNITS 3 AND 4

General Journal
Date
2015

Apr. 24

Details

General Ledger
Debit
$

Drawings

Subsidiary Ledger

Credit
$

Debit
$

Credit
$

50
Stock Control

50

Withdrew 1 Kidz sleeping bag


Memo 01
1 mark for each full entry in each special journal (4 marks)
1 mark for each line of the General Journal (2 marks)
1 mark for narrationmust include number and name of unit and document number
c.

1 + 2 = 3 marks

Qualitative characteristic Reliability (1)


Explanation Documents provide evidence that a transaction has occurred (1), which means that
the information contained in the records and reports can be relied upon for its accuracy. (1)

d.

1 mark

Cash Payments Journal


Date
2015
May 12

VCTA

Details
Accounting
Fees

Chq
No.
A24

Bank

Disc.
Rev.

Creditors
Control

330

Published September 2015

Stock
Control

Wages

Sundries

300

page 24

GST

30

ACCOUNTING UNITS 3 AND 4

6 marks

e.

Explanation The payment of the accounting fees is an expense for the business. It is an outflow of
economic benefit in the form of a decrease in Assets (Bank) and a decrease in Owners Equity, that is,
not Drawings by the owner. As Bank has decreased it will be reported as an Operating Activity outflow
as it is an outflow of cash resulting from the day-to-day activities of the business.
The payment of the accounting fees will therefore decrease profit in the Income Statement and decrease
the Net Cash Flow from Operations in the Cash Flow Statement.
The payment of the accounting fees will also reduce the amount of cash in the Bank, thus decreasing the
Assets of the business in the Balance Sheet. As the profit in the Income Statement has also decreased,
the amount in the Owners Equity section of the Balance Sheet will also decrease.
The payment of the accounting fees also involved a payment for GST. In addition, the payment will reduce
the amount in the Bank and is also an Operating Activity outflow. The GST Liability will also decrease as
The debt to the ATO is also reduced, thus decreasing Liabilities. As GST is not a revenue item, it will have
no impact on the profit of the business.

Mark globally. Assess students responses in terms of their understanding of the concepts involved
and their reference to accounting elements and the accounting reports.

VCTA

Published September 2015

page 25

ACCOUNTING UNITS 3 AND 4

Question 2 (27 marks)


a.

1 + 1 = 2 marks

Cash Payments Journal


Date
2015
Mar. 31

Details

Totals to date

Chq
No.

Bank

47 780

Disc.
Rev.

Creditors
Control

Stock
Control

Wages

350

7 200

9 600

Sundries

2 700

25 450

1 mark for each amount correctmark consequentially


b.

6 marks
BELLAS BATHS
Cash Flow Statement (extract) for the month ending 31 March 2015
$

Cash Flow from Operating Activities


Cash Sales

11 600

Receipts from Debtors

18 000

GST Collected

1 160

GST Refund

1 720

Interest Revenue

25

Payments to Creditors

(6 850)

Purchases of Stock

(9 600)

Wages

(2 700)

GST Paid

(3 180)

Interest

(150)

Cartage Out

(800)

Rent

(900)

Customs Duty

(700)

Advertising

32 505

(1 300)

Equipment Servicing

(500)

NET CASH FLOW FROM OPERATIONS

(26 680)
5 825

1 mark for Sales, Receipts from Debtors and Interest Revenue


1 mark for all three GST entries (GST Paid is consequential)
1 mark for every three cash outflows (3 marks)
1 mark for finishing section of report

VCTA

Published September 2015

page 26

GST

3 180

ACCOUNTING UNITS 3 AND 4

6 marks

c.
BELLAS BATHS
Income Statement (extract) for the month ending 31 March 2015
$

Revenue
Cash Sales

11 600

Credit Sales

19 720

Less Sales Returns

(300)

31 020

Less Cost of Goods Sold


Cost of Sales

15 510

Customs Duty

880

Gross Profit

16 390
14 630

Add Stock Gain

560

Adjusted Gross Profit

15 190

Add Other Revenue


Interest Revenue

25

Discount Revenue

350

375
15 565

1 mark for Cash Sales and Credit Sales


1 mark for Sales Returns
1 mark for Cost of Sales
1 mark for Customs Duty
1 mark for Stock Gain
1 mark for Other Revenue items

VCTA

Published September 2015

page 27

ACCOUNTING UNITS 3 AND 4

d.

8 marks
GST Clearing

Date
2014
Mar. 1

Cross-reference

Balance
Creditors Control
Bank
Debtors Control

Amount

1 720

Date
2014
Mar. 31

770
3 180
30

Cross-reference

Bank

1 720

Debtors Control

1 972

Bank

1 160

Balance

5 700
Apr. 1

Balance

Amount

848
5 700

848

1 mark for each entry


1 mark for balancing entry
e.

5 marks

Explanation Adjusted Gross Profit is the profit earned by a business derived from the buying and selling
of Stockthe day-to-day activities of the business. For this business it is the profit made from buying and
selling baths and bathroom accessories. On the other hand, Net Cash Flow from Operations is the
difference between the cash inflows and cash outflows from the day-to-day activities of the business, that
is, the cash flow derived from the buying and selling of baths and bathroom accessories.
The figures differ because not all revenue items are cash receipts and not all of the expenses are cash
outflows. At the same time, not all cash outflows are expenses and not all inflows are revenue. GST is an
example. GST is both an inflow and an outflow but these flows are not related to profit and so have no
effect on cash. At the same time, Credit Sales increase revenue but do not affect cash inflows by the same
amount, as Receipts from Debtors may be different due to discounts, bad debts or debtors just paying in a
future reporting period.

Mark globally. Assess students responses in terms of their understanding of the concepts involved
and their reference to the specific requirements of the reports and the question.

VCTA

Published September 2015

page 28

ACCOUNTING UNITS 3 AND 4

Question 3 (10 marks)


a.

4 marks

Explanation Stability refers to the level of risk associated with a business as measured by the percentage
of the assets of a business financed by Liabilities. (1) If the Debt Ratio increases (as it has done in the
graph shown), the level of risk increases as more of the assets are financed by Liabilities. (1) It assesses
the ability of the business to meet its long-term financial obligations. (1) As the ratio has increased from
40% at its lowest level to 67% as it currently stands, the ability of the business to repay its long-term
financial commitments has deteriorated. (1)

b.

2 marks

Explanation The Debt Ratio shows the percentage of assets financed by Liabilities. The trend is due to
either a decrease in Assets or an increase in Liabilities, or both. (1) A possible cause is additional
expenditure on expenses, which has resulted in the move from a debit bank balance to an overdraft. (1)
Alternatively, the business has taken out a Loan as it plans to use this money to finance the purchase of
a Non-current Asset in the future.

VCTA

Published September 2015

page 29

ACCOUNTING UNITS 3 AND 4

4 marks

c.

Explanation If the Debt Ratio increases from 40% to 67%, this means there is an increased level of debt
for the business. This increase will require the business to repay a greater amount of debt in the future. (1)
If the increase in Debt Ratio was due to an increased Loan, then the business will be required to make
regular repayments, tying up future cash flows for a number of reporting periods. This will affect
Liquidity in a negative way. (1) The increased Debt Ratio may also impact negatively on profitability. If the
business has increased its Debt Ratio through an increase in Loan and/or Overdraft, then the business
will be required to repay the debts with interest. (1) The interest payments are an expense that will
decrease the profit of the business, which could worsen the profitability of the business. (1)

VCTA

Published September 2015

page 30

ACCOUNTING UNITS 3 AND 4

Question 4 (11 marks)


1 + 1 = 2 marks

a.
Document Memo
Transaction Stock writedown

1 mark

b.
Accounting principle Conservatism

4 + 2 = 6 marks

c.
General Journal
Date
2015

June 27

Details

General Ledger
Debit
$

Sales Returns

1 540

GST Clearing

154
Debtors Control

Subsidiary Ledger

Credit
$

Debit
$

1 694

DrC. Jenkins
Stock Control

1 694
770

Cost of Sales
June 29

Credit
$

Creditors Control

770
1 210

CrNix Factor

1 210
Stock Control

1 100

GST Clearing

110

27 June:
1 mark for Sales Returns/GST Clearing
1 mark for Debtors Control/DrC. Jenkins
1 mark for Stock Control
1 mark for Cost of Sales
29 June:
1 mark for Creditors Control/CrNix Factor
1 mark for Stock Control/GST Clearing

VCTA

Published September 2015

page 31

ACCOUNTING UNITS 3 AND 4

d.

2 marks

Explanation When the original stock was returned by the customer on 27 June the owner would have
been concerned about the large number of returned items. (1) The owner would most likely have checked
additional items of stock to see if other units were faulty. The information in the Stock Card suggests
three other units were found to be defective. (1)

Question 5 (10 marks)


Drawings
Date
2015

Cross-reference

Amount

Jan. 31

Bank

8 000

Feb. 28

Bank

9 500

Mar. 31

Bank

8 000

Stock Control

2 500

Date
2015
Mar. 31

Cross-reference

Capital

28 000

Amount

28 000

28 000

1 mark for both $8 000 Bank entries in the Drawings account


1 mark for $9 500 Bank entry in the Drawings account
1 mark for Stock Control entry in the Drawings account
1 mark for transferring balance of Drawings account to Capital
Capital
Date
2015

Cross-reference

Amount

Date
2015

Cross-reference

Amount

Jan. 31

Sundry CreditorKing
Motors

12 000

Jan. 1

Balance

92 530

Mar. 31

Drawings

28 000

Jan. 31

Vehicle

30 000

Mar. 31

Profit & Loss Summary

25 620

Bank

15 000

Balance

123 150
163 150

163 150
Apr. 1

Balance

123 150

1 mark for each entry in the Capital accountclosing balance and balance carried forward count as
1 entry

VCTA

Published September 2015

page 32

ACCOUNTING UNITS 3 AND 4

Question 6 (10 marks)


Stock Control
Date
2015
Jan. 1
Dec. 31

Cross-reference

Balance
Creditors Control
Cost of Sales

Amount

56 700

Date
2015
Dec. 31

252 000
1 440

Cross-reference

Cost of Sales

Amount

240 000

Creditors Control

1 440

Drawings

5 000

Advertising

2 000

Stock Writedown

7 000

Balance
310 140

54 700
310 140

1 mark in total for Drawings/Advertising/Stock Writedown entries


1 mark each for remaining entries, including balance (5 marks)
Creditors Control
Date
2015
Dec. 31

Cross-reference

Bank

Amount

Date
2015

270 000

Jan. 1

Discount Revenue

5 000

Dec. 31

Stock Control

1 440

GST Clearing

144

Balance

Cross-reference

Balance

Amount

43 850

Stock Control

252 000

GST Clearing

25 200

44 466
321 050

321 050

1 mark for both entries on the credit side of account


1 mark for Bank/Discount Revenue
1 mark for Stock Control/GST Clearing on the debit side of account
1 mark for Balance

VCTA

Published September 2015

page 33

ACCOUNTING UNITS 3 AND 4

Question 7 (12 marks)


General Journal
Date
2015

Apr. 30

Details

General Ledger
Debit
$

DepreciationVehicle

Credit
$

Subsidiary Ledger
Debit
$

Credit
$

3 773

Accumulated Depreciation
Vehicle
Disposal of Vehicle

3 773
44 000

Vehicle
Accumulated Depreciation
Vehicle

44 000
32 681

Disposal of Vehicle
Vehicle

32 681
50 000

GST Clearing

5 000

Sundry CreditorAjax Motors


Sundry CreditorAjax Motors

55 000
10 000

Disposal of Vehicle

10 000

Loss on Disposal of Vehicle

1 319

Disposal of Vehicle

1 319

Cash Payments Journal


Date
2015

Details

Chq
No.

Bank

Disc.
Rev.

Creditors
Control

Stock
Control

Wages

Sundries

GST

Apr. 30

Prepaid
Insurance

T66

1 100

1 000

100

Apr. 30

Vehicle

T67

1 650

1 500

150

1 mark for Depreciation


1 mark for Accumulated Depreciation
1 mark for Disposal of Vehicle
1 mark for Vehicle
1 mark for Accumulated Depreciation/Disposal of Vehicle (amount is consequential)
1 mark for Vehicle/GST Clearing
1 mark for Sundry Creditor
1 mark for Sundry Creditor/Disposal of Vehicle
1 mark for Loss on Disposal of Vehicle
1 mark for Disposal of Vehicle
1 mark for each entry in CPJ (2 marks)

VCTA

Published September 2015

page 34