Mark Scheme (Results) January 2013

Mark Scheme (Results)January 2013GCE Accounting (6001/01)

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General Marking Guidance All candidates must receive the same treatment. Examinersmust mark the first candidate in exactly the same way as theymark the last. Mark schemes should be applied positively. Candidates must berewarded for what they have shown they can do rather thanpenalised for omissions. Examiners should mark according to the mark scheme notaccording to their perception of where the grade boundaries maylie. There is no ceiling on achievement. All marks on the markscheme should be used appropriately. All the marks on the mark scheme are designed to be awarded.Examiners should always award full marks if deserved, i.e. if theanswer matches the mark scheme. Examiners should also beprepared to award zero marks if the candidate’s response is notworthy of credit according to the mark scheme. Where some judgement is required, mark schemes will providethe principles by which marks will be awarded andexemplification may be limited. When examiners are in doubt regarding the application of themark scheme to a candidate’s response, the team leader mustbe consulted. Crossed out work should be marked UNLESS the candidate hasreplaced it with an alternative response.

Question AnswerNumber1(a)(i)MarkJournalShop premisesGlobal PropertyBank6% Bank loan – Ascot bankDr 250 000QuestionNumber250 000 200 000 200 000Arrangement fee expenses/Bank chargesBankGlobal PropertyBankCr 4 250250 0004 250 250 000 MAX 6 x (6)AnswerMark1(a)(ii)Organic Farm ShopDepartmental Trading Account for the year ended 31 December 2012GreenBakeryThe CaféGrocery 190 00096 00081 000 RevenueLessOpening inventoryPlus PurchasesInternal transfers8 150126 000(5 700)128 450Closing inventory(9 450)Cost of sales119 000Wages32 000151 000Trading/Gross profit39 000190 000Note: Transfers must be stated before Trading/Gross profit for4 70060 500(4 300)60 900(3 600)57 30021 00078 30017 70096 000the marks.85040 25010 000 ( per entry)51 100(1 100)50 000 ( of)16 000 66 00015 000 of(if no aliens)81 000(8)

QuestionNumber1(a)(iii)AnswerStatement of Comprehensive Income for the year ended 31 December 2012 Trading profit: Greengrocery39 000Bakery17 700The Café15 00071 700 ofLess Expenses:Manager’s salary18 350 Electricity and gas9 820 General running expenses(2 750 – 250)2 500 Rent (8 100 1 800)9 900 Refurbishment – redecoration5 000 Depreciation – Equipment3 600 Fixtures and fittings2 000 Bad debt800 Increase in PDD160 Loan arrangement fee4 250 Loan interest1 000 57 380Profit for the year14 320Mark(16)

QuestionNumber1(a)(iv)AnswerMarkStatement of Financial Position at 31 December 2012CostAggregateCarry overDepreciation Non-current assetsShop premisesEquipmentFixtures and fittings250 00020 00020 000290 000Current assetsInventory(9 450 3 600 1 100)Trade receivables (32 000 – 800)31 200 Less PDD(1 560) ofOther receivablesEquity and Capital:Opening capitalProfit for the yearLess drawingsCurrent liabilitiesTrade payablesOther payables(1 000 1 800 )Bank overdraft (43 000 200 000 – 250 000 – 4 250)Non-current liabilities6% Bank loan (Repayable 30 November 2022)Note: Bank can be a current asset of but not 43 000.11 6004 00015 600250 000 8 400 of16 000 of274 40014 15029 640250 6014741600032032080046 8702 80011 250 44 040318 440 57 520 of ( of)60 920200 000318 440 (14)

Question AnswerNumber1(b)Valid answers may include:Points for Will have ownership control of premises without having toseek landlord’s permission for renovations Security of tenure guaranteed An investment for the long term future of the business asproperty tends to rise in price Savings in rentPoints against: Major capital outlay Converts a healthy cash balance into an overdraft The interest on the loan is greater than the rent Capital employed increases and return decreases Responsible for maintenance of the premises More depreciation More bank interest Burden of a bank loan per valid point x 4 points. MAX 2 points for and MAX two pointsagainst.Note: do NOT acceptMore non-current assetsIncreased profitMore payment for utilitiesMark(8)

Question AnswerNumber2(a)Accrued income . A debit balance on the Rent ReceivableAccount means that Arpen is owed rent by a tenant who istherefore a debtor of the business. MAX 4 x Question AnswerNumber2(b) (i)Mark(4)Mark1 January14 May30 OctoberBalance b/dBankBank1 JanuaryBalance b/dSundry Expenses Account 60031 December Income Statement 1 550 500 Balance c/d4509002 0002 000450 of (if on debit)(4)QuestionNumber2(b)(ii)Answer1 January8 January1 April18 August31 DecemberQuestionNumber2(b)(iii)MarkBalance b/dBankBankBankBalance c/dPremises Repairs Account 25031 December450900 875340 2 8151 JanuaryIncome StatementBalance b/d 2 815 2 815340 of(if on credit)Answer1 January31 December(4)MarkRent Receivable Account Balance b/d3006 FebruaryIncome Statement1 600 26 JuneBalance c/d200 2 1001 JanuaryBank/cashBank/cashBalance b/d 1 200 9002 100200 of(if on credit)Question AnswerNumber2(c)(i) Prudence – losses should be charged as soon as they are identified.The depreciation on machinery will be high in the early years notevenly spread over the life of the asset.(ii) Consistency – when a method of depreciation is chosen for anon-current asset this should be consistently applied over the life ofthe asset to ensure that the accounts are not distorted.(4)Mark(4)

Question AnswerNumber2(d)Capital expenditure –purchase or enhancement of non-currentassets. Revenue expenditure –day to day expenses which will be usedwithin an accounting year. MarkQuestion AnswerNumber2(e)Machine installation – Capital expenditure Annual machine insurance – Revenue expenditure epreciation charged (straight line) –Depreciation (reducing balance) –2010 (36 000-0) x 25%2011 (36 000 -9 000) x 25%AdjustmentIncrease in provisionDepreciation charge 201220102011 6 800 6 80013 600 9 000 6 750 15 750 2 150 7 463 ( of)(8)Working 2012 charge – (36 000 9 600- 15 750) x 25% 7 463Note: if adjustment 2 150 stated award 6 x without reviewing workings.QuestionNumber2(g)(i)AnswerMarkMachinery Account Balance b/d36 000 Balance c/dBank(of if 12 000 or less) 9 600 ( of)45 600Balance b/d45 600 of (if on debit) 45 60045 600(3)

QuestionNumber2(g)(ii)AnswerMarkMachinery – Provision for Depreciation account Balance b/dIncome StatementAdjustmentBalance c/d23 2132012 charge23 213Balance b/dNote: If Balance b/d stated as 15 750 award ( 13 600 2 150)If charge to income statement 9 613 award ( 2 150 7 463) 13 600 of2 150 of7 463 23 21323 213 of(if on credit)Question AnswerNumber2(h)Valid answers may include:Points for Greater depreciation will be charged in the early years whichreflects the situation with machinery Carry over value will be closer to market value resulting inmore accurate financial statement value. Evens out total cost of ownership when repair costs areadded to depreciation. Provides a more realistic book valuePoints against: Distorts profit calculation Not consistent with previous practice. Not appropriate if machine used equally from year to yearMark per valid point x 4 points. MAX 2 points for and MAX two pointsagainst.NOT Difficult to calculate Time consuming CostlyQuestion AnswerNumber3(a)(i)Realisation – Profit is regarded as having been earned when thegoods are passed to the customer and he incurs liability forthem. Breach- The sale or return has not realised the profit as thecustomer has not incurred liability for them. (8)Mark(3)(5)

QuestionNumber3(a)(ii)AnswerMarkAccrual (matching)-Net profit is the difference between incomeand expenditure rather than cash receipts and cashexpenditure. Revenues matched with expenses for a period. (3)Breach-Adjustments for general expenses. Question AnswerNumber3(a)(iii)Going concern-Unless it is known to the contrary, it is assumedthat the business will exist and operate for an indefinitely longperiod of time. Breach- Charging the full cost of non-current assets to a singleaccounting period. QuestionNumber3(b)Mark(3)AnswerMarkXevana – Statement of Comprehensive Income for the year ended 31 December 2012 Revenue(110 000 – 2 000)LessPurchasesLess Purchase returns103 500(2 300)101 200Carriage inwards1 200102 400Less Closing inventory (16 000 1 600)(17 600)Cost of salesGross profitPlus other income:Profit on sale of fixtures and fittingsRent receivable(1 000 1 000)Discount receivedLess expenses:Carriage outwards2 400Rent and rates4 000Wages6 000General expenses (4 550 470 – 750 ) 4 270Depreciation: Fixtures and fittings400Motor vehicles1 500Profit for the year 108 000 (84 800)23 2002002 0001 87027 270 ( of other than 20 000) (18 570)8 700 If discount received is deducted from purchases (103 500 – 1 870) 101 630 (14)

QuestionNumber3(c)AnswerMarkPurchases Ledger Control Account Purchase returns2 300 Balance b/dPayments to trade creditors93 030 PurchasesDiscount received1 870 Balance c/d6 300 103 500Balance b/d 103 500 103 5006300 ofIf purchases reduced by discount received (103 500 – 1 870) 101 630 QuestionNumber3(d)AnswerNon-current assetsMotor vehiclesFixtures and fittings(6)MarkStatement of financial position at 31 December 2012 CostAggregateCarry overDepreciation 9 0003 80012 800Current assetsInventoryTrade receivables (12 870 – 2 000 )Rent receivables owingGeneral expenses prepaidEquity and Capital:Opening capitalPlus Profit for the year1 5004001 90017 60010 8701 000750 of (other than 20 000) 30 22041 120 12 000 8 70020 700(4 800) 15 900DrawingsCurrent liabilitiesTrade payablesGeneral expenses accruedBank overdraft7 500 3 400 10 900 6 30047018 450 ( of) 25 22041 120(15)