MyStudyBro - Revision Exercise Tool

This Revision Handout includes the Questions and Answers of a total of 2 exercises!

Chapters:
ICT - Unit 1 (Pearson Edexcel)
Page 1 (WAC01 or WAC11) 2018 Summer
Correction of Errors

Page 6 (WAC01 or WAC11) 2018 Summer - Answer

Also Includes:
Correction of Errors

Page 13 (WAC01 or WAC11) 2017 Winter

Job Costing

Page 14 (WAC01 or WAC11) 2017 Winter - Answer

Also Includes:
Job Costing
 Summer 2018 www.mystudybro.com Accounting Unit 1
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2 Roshan’s bookkeeper extracted the following trial balance on 30 April 2018.

Dr Cr
£ £
Capital 60 000
Drawings 11 900
Revenue 205 000
Purchases 125 000
Returns inwards 800
Inventory – 1 May 2017 31 000
Non-current assets (cost) 64 000
Provision for depreciation
– non-current assets 36 000
Discount allowed 1 680
Discount received 3 100
Trade receivables 19 000
Trade payables 15 650
Allowance for doubtful debts 400
Wages 27 000
Rent and rates 8 500
Electricity and gas 4 600
General expenses 23 500
Cash in hand 3 170
Suspense 42 300

341 300 341 300

Roshan was aware that the bookkeeper had made some errors in drafting the trial
balance.
Required
(a) Complete the trial balance in your question paper, correcting all errors.
(8)

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After the correction of the trial balance, the bookkeeper completed the financial
statements, which showed a profit for the year of £30 700. Roshan then identified
that there had been some errors in the year-end adjustments.
(1) The inventory at 30 April 2018 was recorded in the financial statements as
£35 500. There was an error in the inventory count, which should have shown the
total as £32 700
(2) No adjustment had been made for discount receivable owing.
£3 100 had been recorded in the financial statements when this should
have been £3 450
(3) No adjustments had been made for general expenses prepaid £1 200 and owing
£550
(4) Annual depreciation on non-current assets had been charged at the rate of 25%
on cost, when this should have been 15% on cost.
(5) No adjustment had been made to the allowance for doubtful debts, which should
have been maintained at 4%.
(6) A provision should have been made for an injury claim from one of Roshan’s
employees. The injury claim would be for 7 weeks’ loss of earnings at £180 per
week plus a total loss of bonus of £120. No entry had been made in the financial
statements.
Required
(b) Complete the table in the question paper, to calculate the revised profit/loss after
the corrections of (1) to (6).
(14)

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The following information related to three of Roshan’s ledger accounts.

Balance Payments by Balance Transfer to statement of

1 May 2017 cheque 1 May 2018 profit or loss and other
comprehensive income

£ £ £ £

Allowance for To be
400 Nil To be calculated
doubtful debts calculated

Wages 650 Cr 27 650 175 Cr To be calculated

Electricity and
250 Dr 4 350 360 Cr To be calculated
gas

Required
(c) Prepare the following ledger accounts for the year ended 30 April 2018, showing
the balance brought down at 1 May 2018:
• Allowance for Doubtful Debts Account
• Wages Account
• Electricity and Gas Account.
(9)
(d) Explain the difference between:
(i) the accounting concepts of accruals and money measurement
(4)
(ii) bad debts and allowance for doubtful debts
(4)
(iii) social accounting and ethical accounting.
(4)
Roshan is considering computerising his accounts using information and
communication technology (ICT). He believes that this will eliminate the errors in his
financial statements.
(e) Evaluate the proposal that information and communication technology (ICT)
will eliminate the errors made by his bookkeeper in recording transactions and
preparing the trial balance and the financial statements.
(12)

(Total for Question 2 = 55 marks)

TOTAL FOR SECTION A = 110 MARKS

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Source material for Question 2 is on pages 5 to 7 of the source booklet.

2 (a) Complete the trial balance, correcting all errors.
(8)
Roshan
Trial balance at 30 April 2018

Dr Cr

£ £

Capital

Drawings

Revenue

Purchases

Returns inwards

Inventory – 1 May 2017

Non-current assets (cost)

Provision for depreciation – non-current assets

Discount allowed

Discount received

Trade receivables

Trade payables

Allowance for doubtful debts

Wages

Rent and rates

Electricity and gas

General expenses

Cash in hand

Suspense

*P51624A01136*
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(b) Complete the table, to calculate the revised profit/loss after the corrections of
(1) to (6).
(14)
Corrected profit/(loss) for the year ended 30 April 2018

Draft profit for the year 30 700

Increase Decrease

£ £

(1) The inventory at 30 April 2018 was

recorded in the financial statements
as £35 500. There was an error in the
inventory count, which should have
shown the total as £32 700
(2) No adjustment had been made for
discount receivable owing. £3 100
had been recorded in the financial
statements when this should have
been £3 450
(3) No adjustments had been made
for general expenses prepaid
£1 200 and owing £550
(4) Annual depreciation on non-current
assets had been charged at the rate
of 25% on cost, when this should
have been 15% on cost.
(5) No adjustment had been made to
the allowance for doubtful debts,
which should have been maintained
at 4%.
(6) A provision should have been
made for an injury claim from one
of Roshan’s employees. The injury
claim would be for 7 weeks’ loss of
earnings at £180 per week plus a
total loss of bonus £120. No entry
had been made in the financial
statements.
Total

Revised profit/(loss) for the year

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Question Answer Mark

Number
2 (a) AO1 (5), AO2 (3)
AO1: Five marks for correcting trial
balance.
AO2: Three marks for matching trial
balance totals.

(8)

Roshan
Trial balance at 30 April 2018
Dr Cr
£ £
Capital 60 000
Drawings 11 900
Revenue 205 000
Purchases 125 000
Returns inwards 800 (1)AO1
Inventory -1 May 2017 31 000
Non-current assets (cost) 64 000
Provision for depreciation
– non-current assets 36 000
Discount allowed 1 680 (1)AO1
Discount received 3 100 (1)AO1
Trade receivables 19 000 (1)AO1
Trade payables 15 650
Allowance for doubtful debts 400 (1)AO1
Wages 27 000
Rent and rates 8 500
Electricity and gas 4 600
General expenses 23 500
Cash in hand 3 170 (1)AO2
Suspense - -___
320 150 320 150 (2/1of)AO2
The
same

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Question Answer Mark

Number
2 (b) AO2 (12), AO3 (2)
AO2: Twelve marks for adjusting profit.
AO3: Two marks for calculating depreciation.

(14)

Corrected profit/(loss) for the year ended 30 April 2018

£
Draft profit for the year 30 700
Increase Decrease
£ £
(1) The inventory at 30 April 2018 2 800
was recorded in the financial (1) AO2
statements as £35 500. There correct
was an error in the inventory number
count which should have been (1) AO2
£32 700. correct
treatment
(2) No adjustment had been made 350
for discount receivable owing. (1) AO2
£3 100 had been recorded in correct
the financial statements when number
this should have been £3 450. (1) AO2
correct
treatment
(3) No adjustment had been made 1 200 550
for general expenses prepaid £1 (1)AO2 (1) AO2
200 and owing £550.

(4) Annual depreciation on non- 6 400

current assets had been (1) AO3
charged at the rate of 25% on correct
cost, when this should have number
been 15%. (1) AO2
correct
treatment
(5) No adjustment had been made 360
to the allowance for doubtful (1) AO2
debts which should have been correct
maintained at 4%. number
(1) AO2
correct
treatment

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(6) A provision was to be made for 1 380

an injury claim from one of (1) AO3
Roshan’s employees. The injury correct
claim would be for 7 weeks loss number
of earnings at £180 per week (1) AO2
plus a total loss of bonus £120. correct
treatment
Total 7 950 (5 090) 2 860

Revised profit/(loss) for the 33 560

year (2/1of)
AO2

Question Answer Mark

Number
2 (c) AO1 (6), AO3 (3)
AO1: Six marks for transferring entries to
the accounts correctly and balancing off
accounts.
AO3: Three marks for deriving bank or
income statement figures.
(9)

Allowance for Doubtful Debts Account

£ £
2017
1 May Balance b/d 400 (1)
AO1
2018 2018
30 Balance c/d 760 30 Income 360 (1of)
April April statement AO3
760 760
1 May Balance b/d 760 (1of)
AO1

Wages Account
£ £
2017/18 Bank/cheque 27 650 2017
(1) AO3
2018 1 May Balance b/d 650
30 April Balance c/d 175 2018
____ 30 Income 27 175
April statement (1) AO1
27 825 27 825
1 May Balance b/d 175 (1)
AO1

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Electricity and Gas Account

£ £
2017
1 May Balance b/d 250
2017/18 Bank/cheque 4 350 (1)
AO1
2018 2018
30 April Balance c/d 360 30 Income 4 960 (1)
April statement AO3
4 960 4 960
1 May Balance b/d 360 (1)
AO1

Question Answer Mark

Number
2 (d)(i) AO1 (4)
AO1: Four marks for explaining the
distinction.

(4)

Accruals Money measurement

Matches income to expenditure for a Recognises that some assets cannot
period be measured in monetary terms in
financial statements
Applies to all expenses and incomes Some assets to the business such as
peoples skill cannot be recorded on
the SOFP
Ensures not overstating profits All assets liabilities which can be
measured in monetary terms should
be included

Marks awarded only if two points are distinguished, one from each concept (1)
AO1 x 4

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Question Answer Mark

Number
2 (d)(ii) AO1 (4)
AO1: Four marks for explaining the
distinction.

(4)

Bad debts Allowance for doubtful debts

Actual bad debts from the last period Estimate of possible debts in the next
period
Actual figure Estimate only

Expense of the period entered in the Application of prudence concept to

income statement value trade receivables accurately

These have occurred in the current This is for a debt which might occur in
period a future period

Two marks awarded for first category and two marks for second category (1)
AO1 x 4

Question Answer Mark

Number
2 (d)(iii) AO1 (4)
AO1: Four marks for explaining the
distinction.

(4)

Social accounting Ethical accounting

Business should consider their actions Businesses should report with honesty
in a social context not just profit
Considers impact on workers, Not misleading by issuing incorrect
community, environment etc statements or financial statements
Long term benefit for business and Not withholding relevant information
society

Marks awarded only if two points are distinguished, one from each concept (1)
AO1 x 4

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Question Indicative Content Mark

Number
2 (e) AO1 (1), AO2 (1), AO3 (5), AO4 (5)

Positive points for the proposal

Errors may be reduced because the software

package will complete the double entry so the
correct corresponding account will receive the entry.
The software package will produce financial reports/
statements on as regular a basis as is required.
Therefore the construction and base data used will
be correctly applied.
The computer will ensure no arithmetical/calculation
errors.

Negative points for the proposal

Although the double entry will be completed with

the debit and credit the computer can only apply the
figures supplied by the inputter. An error in
inputting from the source documents will not be
detected by the computer.
Regular financial reports/ statements will require
period end financial adjustments. If these are not
accurately applied the outcome will be inaccurate.
If poorly programmed errors may occur.
Repetitive input can lead to errors.
Lack of training can lead to input errors.
Some of the errors which do not affect the trial
balance will still not be detected if using ICT e.g.
error of omission or error of original entry.

Decision
Candidates may conclude that errors will be reduced
but there is no guarantee of elimination of errors.
Candidates should support that decision with an
appropriate rationale.

NOT
General advantages and disadvantages of using ICT.
ALL errors not revealed by the trial balance will still
not be detected.

(12)

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Level Mark Descriptor

0 A completely incorrect response.

Level 1 1-3 Isolated elements of knowledge and understanding recall

based.
Weak or no relevant application to the scenario set.
Generic assertions may be present.
Level 2 4-6 Elements of knowledge and understanding, which are
applied to the scenario.
Chains of reasoning are present, but may be incomplete
or invalid.
A generic or superficial assessment is present.
Level 3 7-9 Accurate and thorough understanding, supported
throughout by relevant application to the scenario.
Some analytical perspectives are present, with
developed chains of reasoning, showing causes and/or
effects.
An attempt at an assessment is presented, using
financial and non-financial information, in an appropriate
format and communicates reasoned explanations.
Level 4 10 - 12 Accurate and thorough knowledge and understanding,
supported throughout by relevant and effective
application to the scenario.
A coherent and logical chain of reasoning, showing
causes and effects.
Assessment is balanced, wide ranging and well
contextualised using financial and non-financial
information and makes informed recommendations and
decisions.

Question Answer Mark

Number
3 (a) AO1 (4)
AO1: Four marks for identifying possible
reasons for the fall.

Sales will probably be falling

If sales for cash, smaller cash inflow
If for sales on credit, fewer trade receivables to
convert into cash
Inventory may rise unless purchases are
restrained
May require bank overdraft to pay expenses
Difficulty in paying trade payables

MAX 4 x (1) AO1 (4)

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5 Falgu commenced business as a builder on 1 December 2015. The following

information is available for the year ended 30 November 2016:
• raw materials costing £80 000 were purchased and used
• Falgu marks up all raw materials by 15%
• Falgu worked 50 hours per week for 50 weeks of the year
• 80% of the hours worked by Falgu were charged to customers
• overhead costs were:
Rent of premises £1 000 per month
General expenses £13 500 per year
Motor vehicle running costs £8 500 per year
• Falgu charged a rate to customers of £25 per hour to cover his labour
and overheads.

Required
(a) Explain the difference between mark-up and margin.
(2)
(b) State whether the following costs would be fixed, semi-fixed, semi-variable or
variable, giving your reason for each:
(i) raw materials
(2)
(ii) rent of premises
(2)
(iii) telephone costs (included in general expenses).
(2)
(c) Calculate Falgu’s profit or loss for the year ended 30 November 2016.
(8)
Falgu has decided to charge a rate to customers in the future that will provide him
with a profit for the year of £40 000.
(d) Calculate the hourly rate that Falgu would need to charge to customers.
(4)
(e) Prepare a quotation for a customer where:
Raw materials purchase price £1 100
Falgu’s hours worked 35 hours
(4)
Falgu is considering the use of information and communications technology (ICT) to
operate his business.
(f ) Evaluate the use of information and communications technology (ICT) to operate
Falgu’s business.
(6)

(Total for Question 5 = 30 marks)

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Question Answer Mark

Number
5(a) AO1 (2)
A01: Two marks for identifying the correct narrative.

Mark-up is the percentage profit added to cost price (1) AO1

OR

Gross profit divided by cost of sales (1) AO1

Margin is the percentage of profit contained within the revenue

(1) AO1

OR

Gross profit divided by revenue (1) AO1

(2)

Question Answer Mark

Number
5(b) AO1 (3), AO2 (3)
A01: Three marks for and stating each costs features.
AO2: Three marks for identifying the correct type of cost.

(i) Raw materials are a variable cost. (1) AO1 The cost
varies directly with production increase or decrease. (1) AO2
(2)

(ii) Rent is a fixed cost. (1) AO1 This cost will remain fixed
over varying range of production during the accounting period.
(1) AO2
(2)

(iii) Telephone costs are a semi-variable. (1) AO1 The cost

has a fixed element, the network contract, plus a variable cost
for each call. (1) AO2
(2)
(6)

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Question Answer Mark

Number
5(c) AO1 (3), AO2 (5)
A01: Three marks for inclusion of expenses.
A02: Five marks for calculating the correct value and
insert in statement.

Profit for the year ended 30 November 2016

£ £
Income
Raw material sales 92 000 (1) AO2
Own labour 50 000 (2) AO2
142 000
Expenditure
Raw material costs 80 000 (1) AO2
Rent of builders premises 12 000 (1) AO1
General expenses 13 500 (1) AO1
Motor vehicle running costs 8 500 (1) AO1

(114 000)
Profit for the year 28 000 (1of) AO2

Workings:
Own labour (50 x 50) x 80% = 2 000 (1) AO2 x 25 = 50 000 (1) AO2
Raw materials shown as £12 000 income (92 000 – 80 000) = 2 marks (8)

Question Answer Mark

Number
5(d) AO2 (1), AO3 (3)
A02: One mark for using the current labour rate.
A03: Three marks for calculating the revised rate.

Existing profit for the year £28 000

Required profit £40 000
Increase required £12 000 (1of) AO3 Divided by
2 000 hours (1) AO2 = £6 per hour extra(1) AO3

The rate would need to be £25 per hour + £6 per hour = £31
per hour (1of) AO3 (4)

Question Answer Mark

Number
5(e) AO2 (3), AO3 (1)
A02: Three marks for using the number of labour
hours.
A03: One mark for calculating the quotation.

Job Quotation
£
Raw material 1 100 x 115% 1 265 (1) AO2
Labour 35 (1) AO2x £31 (1of) AO3 1 085
Total price 2 350 (1of) AO2
(4)

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Question Indicative content Mark

Number
5(f) AO2 (1), AO3 (2), AO4 (3)

Potential positive arguments for

• Speed, accuracy, reduction in errors are all benefits that
Falgu would receive
• Security would be improved as passwords would be
required
• Large storage capacity on disk reducing the storage of
paper hard copies.

Potential negative points

• Capital cost of purchase of the hardware and software
• Risk of viruses, hacking of data
• Training of staff for constant upgrades in software.

Decision
Candidates may conclude that it is wise or unwise to
purchase ICT. The decision should be supported by
reasoned arguments. (6)

Level Mark Descriptor

0 A completely incorrect response.
Level 1 1-2 Isolated elements of knowledge and understanding which are
recall based.
Generic assertions may be present.
Weak or no relevant application to the scenario set.
Level 2 3-4 Elements of knowledge and understanding, which are applied
to the scenario.
Some analysis is present, with developed chains of
reasoning, showing causes and/or effects applied to the
scenario, although these may be incomplete or invalid.
An attempt at an evaluation is presented, using financial and
perhaps non-financial information, with a decision.
Level 3 5-6 Accurate and thorough knowledge and understanding.
Application to the scenario is relevant and effective.
A coherent and logical chain of reasoning, showing causes
and effects is present.
Evaluation is balanced and wide ranging, using financial and
perhaps non-financial information and an appropriate
decision is made.

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