Mark scheme

June 2003

GCE

Accounting

Unit ACC1

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Mark Scheme – June 2003 Advanced Subsidiary – Accounting Unit 1

June 2003 ACC1

MARK SCHEME

INSTRUCTIONS TO EXAMINERS

You should remember that your marking standards should reflect the levels of performance of
candidates, mainly 17 years old, writing under examination conditions.

Positive Marking
You should be positive in your marking, giving credit for what is there rather than being too
conscious of what is not. Do not deduct marks for irrelevant or incorrect answers as candidates
penalise themselves in terms of the time they have spent.

Mark Range
You should use the whole mark range available in the mark scheme. Where the candidate’s response
to a question is such that the mark scheme permits full marks to be awarded, full marks must be
given. A perfect answer is not required. Conversely, if the candidate’s answer does not deserve credit,
then no marks should be given.

Alternative Answers / Layout

The answers given in the mark scheme are not exhaustive and other answers may be valid. If this
occurs, examiners should refer to their Team Leader for guidance. Similarly, candidates may set out
their accounts in either a vertical or horizontal format. Both methods are acceptable.

Own Figure Rule

In cases where candidates are required to make calculations, arithmetic errors can be made so that the
final or intermediate stages are incorrect. To avoid a candidate being penalised repeatedly for an
initial error, candidates can be awarded marks where they have used the correct method with their
own (incorrect) figures. Examiners are asked to annotate a script with OF where marks have been
allocated on this basis. Similarly, OF marks can be awarded where candidates make correct
conclusions or inferences from their incorrect calculations.

Quality of Written Communication

Once the whole script has been marked the work of the candidate should be assessed for the Quality
of Written Communication, using the criteria at the end of the mark scheme. The mark should be
shown separately on the candidate’s script.

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Accounting Unit 1- Advanced Subsidiary Mark Scheme- June 2003

1 Total for this question: 12 marks

The trial balance of HG Patel, as at 30 April 2003, has been partially completed. The
following balances have now to be included:
£
Purchases 38 900
Sales 98 000
Returns outwards 3 698
Carriage inwards 367
Carriage outwards 450
Discount received 2 135
Drawings 6 900

REQUIRED

(a) Complete the trial balance. 7 marks

(b) Total the trial balance and enter any difference in the suspense account. 1 mark

a) + b) = 8 as shown in the TB

H G Patel: Trial Balance as at 30 April 2003

Account Debit Credit

£ £
Wages 23 890
Administration Costs 6 000
Capital 60 000
Premises 65 000
Motor Vehicles 5 000
Motor Expenses 1 650
Purchases 38 900 *
Sales 98 000 *
Returns Outwards 3 698 *
Carriage Inwards 367 *
Carriage Outwards 450 *
Discount received 2 135 *
Drawings 6 900 *
Suspense 15 676 *o/f
TOTAL 163 833 163 833

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Mark Scheme – June 2003 Advanced Subsidiary – Accounting Unit 1

(c) There are many reasons for the error(s) giving rise to the suspense account.

From the following list of bookkeeping errors, tick the Yes or No box to indicate whether or not the
error could be responsible for the difference in the trial balance. 4 marks

An example has been given.

Error Yes No

A balance has been entered in the wrong

column of the trial balance. Ö

An error of principle has occurred. Ö*

The sales account has been totalled
incorrectly. Ö *
An invoice has been completely omitted
from the books. Ö *
A cheque has been debited in the cash
book as £150 but credited in the
customer's account as £105. Ö *

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Accounting Unit 1- Advanced Subsidiary Mark Scheme- June 2003

2 Total for this question: 9 marks

The sales day book of Brown’s Paints shows the following totals which have to be entered
into the general ledger.

Goods £53 800

VAT £9 415
Total £63 215

REQUIRED

(a) Complete the following table to show the amount to be entered in each account and whether the
entry is a debit or credit. 6 marks

Account Amount Debit or Credit

Sales £53 800* CR*
VAT £9 415* CR*
Debtors’ control £63 215 * DR*

(b) Complete the following table with the name of the subsidiary book which is the source of each of
the following items in a debtors’ control account. 3 marks

An example has been given.

Item Subsidiary book

Total credit sales Sales day book
Payment received from customers Cash book *
Discount allowed Cash book *
Contras (transfers) to the purchase ledger Journal *

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Mark Scheme – June 2003 Advanced Subsidiary – Accounting Unit 1

3 Total for this question: 9 marks

Highfield Products is seeking to attract new customers and has decided to offer trade and cash
discounts.

REQUIRED

(a) Explain the circumstances under which they would give each of these discounts.

(i) Trade discounts

Given, if prearranged to:
Businesses in the same trade* but not to the general public *
For buying in bulk *
Given as a discount off list price * to retailers by wholesalers*

1 mark for bare statement + 1 for development = 2 marks

(ii) Cash discounts

Given if prearranged * or shown on the invoice * for prompt payment *

1 mark for bare statement + 1 for development = 2 marks

They supply goods to a customer on the following terms:

Selling price £500

Trade discount 20%
Cash discount 5%
VAT 17.5%

(b) Calculate the total of the invoice for these goods. 5 marks

Invoice total: £466.50 (5 c/f)

Workings
500 – 20% * (100) = 400 * o/f x .95 * = 380 VAT= 66.50* o/f
Total is 400 + 66.50 = £466.50* o/f

or

500
(100) (1)
400 (1) o/f
400
- (20) (1) o/f
66.50 (1) o/f
466.50 (1) o/f

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Accounting Unit 1- Advanced Subsidiary Mark Scheme- June 2003

4 Total for this question: 13 marks

James White uses several methods to verify his records.

REQUIRED

Write a report to Bill Bennett explaining one benefit of each of the following methods. Give an
example of one error which will be revealed in each case.

REPORT

To:…………………………………………………………………………………………………………
From:……………………………………………………………………………………………………...
Date:………………………………………………………………………………………………………
Subject:……………………………………………………………………………………………………

Report headings 1 mark

(a) Bank reconciliation statement

Benefit
It will show that the bank entries * in the cash book* are correct*
It will show any entries that are in the BS* not in the cash book* so that these can be
completed*
It will reveal errors* by the business* or the bank *
It will help before* the trial balance is prepared* as it will identify errors * max 3 marks

Example Any suitable example* 1 mark

(b) Sales ledger control account

Benefit
It will check the arithmetical* accuracy * of the ledger *
It will give a quick* total* of the debtors *
It will help before* the trial balance is prepared * as it will identify errors *
It can be used to check* on the abilities* of staff * max 3 marks

Example Any suitable example* 1 mark

(c) Trial Balance

Benefit
It will check the arithmetic* accuracy * of the ledgers *
It will show the debit* and credit * entries are equal *
It will provide useful* information for preparing* the final accounts * max 3 marks

Example Any suitable example* 1 mark

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Mark Scheme – June 2003 Advanced Subsidiary – Accounting Unit 1

5 Total for this question: 12 marks

REQUIRED

From the following figures complete the balance sheet for A to Z Engineering Supplies as at 31 March
2003. Clearly show the fixed and current assets and long-term and current liabilities. To complete the
balance sheet calculate the proprietor’s capital.

£
Net profit for the year 23 460
Stock at 31 March 2003 14 905
Debtors 6 500
Creditors 4 590
Premises 50 000
Motor vehicles 14 560
Bank overdraft 3 400
Petty cash 56
Drawings 13 000
Mortgage on premises 25 000

A to Z Engineering Supplies
Balance Sheet as at 31 March 2003 *

£ £ £
Fixed assets
Premises *50 000
Motor vehicles *14 560
64 560

Current assets
Stock *14 905
Debtors *6 500
Petty cash *56
21 461

Current liabilities
Creditors *4 590
Overdraft *3 400 (7 990) 13 471
78 031

Long-term liabilities *(25 000)

53 031

Capital o/f*42 571

Add net profit *23 460
Less drawings *(13 000)
53 031

No mark for item in the wrong sub section. 12 marks

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Accounting Unit 1- Advanced Subsidiary Mark Scheme- June 2003

6 Total for this question: 17 marks

Barbara Smith has purchased a new computer system for her business, from JPC
Computer Supplies Ltd. The computer was purchased on 1 February 2003 at a
cost of £4000 plus £665 VAT. She made full payment on 4 March 2003 and was
allowed £200 trade discount.

REQUIRED

(a) Make the necessary entries for these transactions. (Journal narratives are not required. Do not
balance any accounts.)

JOURNAL DR CR
Computers 3800*
VAT 665 *
J P C Computer Supplies Ltd 4465 *o/f
* 1 mark for 3 correct account names

Workings 4000* - 200*

PURCHASE LEDGER

DR JPC Computer Supplies Ltd CR

Date 2003 Details £ Date 2003 Details £
Mar 4 Bank 4465 *o/f Feb 1 Journal 4465 * o/f

GENERAL LEDGER

DR VAT Account CR
Date 2003 Details £ Date 2003 Details £
Feb 1 Journal 665 * o/f

DR Computer Account CR
Date 2003 Details £ Date 2003 Details £
Feb 1 Journal 3800 * o/f

o/f if agreeing with the journal entry

8 marks

(b) Why will this contribute to greater speed and accuracy in the bookkeeping process?

Speed
When the entry is typed in it automatically * enters the amount * in every account *
The totals are done automatically *
Accounts can be reproduced by printing *
The trial balance, final accounts etc are prepared by the program *
Error correction is speedier* max 5 marks

Accuracy
Only one entry is made * and so there are less copying errors *
The automatic totalling * is accurate *
The entries can be batch controlled * max 4 marks

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Mark Scheme – June 2003 Advanced Subsidiary – Accounting Unit 1

7 Total for this question: 4 marks

REQUIRED

Define each of the following terms.

(a) Petty cash voucher

It is used as a form for reclaiming money spent * from the petty cashier *
It must be accompanied by a receipt * showing the VAT applicable* 1 mark

(b) Bank charges

A charge imposed by the business’s bank * for services provided* 1 mark

(c) Gross profit

Profit earned from Sales – Cost of sales * before the overheads * 1 mark

(d) Net profit

The final profit earned by the business * after all expenses have been paid * 1 mark

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Accounting Unit 1- Advanced Subsidiary Mark Scheme- June 2003

QUALITY OF WRITTEN COMMUNICATION

After the candidate’s script has been marked, the work should be assessed for the Quality of Written
Communication, using the following criteria.

Marks

0 Accounts and financial statements are unclear and poorly presented.

There is little or no attempt to show workings or calculations.
Descriptions and explanations lack clarity and structure.
There is very limited use of specialist vocabulary.
Answers may be legible but only with difficulty.
Errors in spelling, punctuation and grammar are such that meaning is unclear.

1-2 There is some attempt to present accounts and financial statements in an appropriate format.
Workings are missing or are not clearly linked to the answers.
Descriptions and explanations are understandable but they lack a logical structure.
There is some use of specialist vocabulary but this is not always applied appropriately.
In most cases answers are legible, but errors in spelling, punctuation and grammar are such
that meaning may be unclear.

3 Accounts and financial statements are generally well presented but there are a few errors.
Workings are shown and there is some attempt to link them to the relevant account(s).
Descriptions and explanations are usually clearly expressed but there are some weaknesses
in the logical structure. There is a good range of specialist vocabulary which is used with
facility.
Answers are legible. Spelling is generally accurate and the standard conventions of
punctuation and grammar are usually followed.

4 Accounts and financial statements are well organised and clearly presented.
Workings are clearly shown and easy to follow. Descriptions and explanations are clearly
expressed.
Arguments are logically structured. There is wide use of specialist vocabulary which is
used relevantly and precisely.
Answers are clearly written and legible. Spelling is accurate and the standard conventions
of punctuation and grammar are followed so that meaning is clear.

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