Mark Scheme

June 2018

Pearson LCCI Level 3

Certificate in Accounting (VRQ)
(ASE20104)
LCCI Qualifications

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Publication code: 57529_MS
© Pearson Education Ltd 2018

ASE20104
2 June 2018
General Marking Guidance

 All candidates must receive the same treatment. Examiners must

mark the first candidate in exactly the same way as they mark the last.

 Mark schemes should be applied positively. Candidates must be

rewarded for what they have shown they can do rather than penalised
for omissions.

 Examiners should mark according to the mark scheme not according to

their perception of where the grade boundaries may lie.

 There is no ceiling on achievement. All marks on the mark scheme

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 the
answer matches the mark scheme. Examiners should also be prepared
to award zero marks if the candidate’s response is not worthy of credit
according to the mark scheme.

 Where some judgement is required, mark schemes will provide the

principles by which marks will be awarded and exemplification may be
limited.

 When examiners are in doubt regarding the application of the mark

scheme to a candidate’s response, the team leader must be consulted.

 Crossed out work should be marked UNLESS the candidate has

replaced it with an alternative response.

 Where marks are awarded for own figure answers, these marks can only be
awarded if evidence of how the candidate arrived at their values has been
provided (their workings).

 If candidate's fail to provide their workings when instructed in the paper, it

may not be possible to achieve all marks associated with the question, even
if the final answer is correct.

 For calculation questions full marks can be awarded where correct answer is
seen with no workings shown, unless question states that candidate must
provide workings.

ASE20104
3 June 2018
Abbreviation

of Own Figure rule

Accuracy marks can be awarded where the candidates’ answer does not
match the mark scheme, though is accurate based on their valid method.

cao Correct Answer Only rule

Accuracy marks will only be awarded if the candidates’ answer is
correct, and in line with the mark scheme.

ASE20104
4 June 2018
Question Answer AO1 (2) Mark
Number
1(a) Award marks as indicated.

Description Term
A resource controlled by the entity Asset
as a result of past events, from (1)
which future economic benefits are
expected to flow to the entity.

A present obligation of the entity Liability

arising from past events, the (1)
settlement of which is expected to
result in an outflow from the
entity of resources embodying
economic benefits.

(2)

ASE20104
5 June 2018
Question Answer AO2 (19) Mark
Number
1(b) Award marks for correct figures with understandable labels
as indicated.
M Ltd
Statement of financial Position at 31 March 2018
$
Assets
Non-current assets
Property, plant and equipment Note 1 1 117 032 (5)
Current assets
Inventories 66 730 (1)
Trade and other receivables 132 985 (1)
Cash and cash equivalents 25 725 (1)
225 440 (1of)
Total assets 1 342 472
Equity and liabilities
Equity
Share capital (ordinary shares of $1 600 000
(1)
each)
Share premium 100 000 (1)
Revaluation reserve 75 000 (1)
General reserve 70 000 (1)
Retained earnings 169 892 (1)
Total equity 1 014 892 (1of)
Non-current liabilities
10% Bank loan 200 000 (1)
Current liabilities
Trade and other payables 127 580 (1)
Total liabilities 327 580 (1of)
Total equity and liabilities 1 342 472 (1of)

Note1 Cost $ Accumulated Carrying Value $

Depreciation $
Land and 975 000 150 000 825 000
buildings (1) (1)

Machinery 750 000 457 968 292 032

(1) (1)

1 725 000 607 968 1 117 032

(1of)

(19)
Additional guidance
Total equity and liabilities 1of mark must be equal to total assets.

Total for Question 1 = 21 marks

ASE20104
6 June 2018
Question Answer AO1 (1) Mark
Number
2(a)(i) Award 1 mark for each difference up to maximum
of 1 mark.

Debentures are liabilities whereas ordinary shares are

equity (1).

Fixed interest is paid on debentures whereas dividend

paid is flexible on ordinary shares (1).

Accept any other appropriate responses. (1)

Question Answer AO1 (1) Mark

Number
2(a)(ii) Award 1 mark for each difference up to maximum
of 1 mark.

An overdraft is a current liability whereas a bank loan

is usually a non-current liability (1).

An overdraft is repayable on demand whereas a bank

loan is paid after a fixed date (1).

Accept any other appropriate responses. (1)

Question Answer AO2 (3) Mark

Number
2(b)(i) Award marks as indicated.

=$(23 600(1)/100 000(1)) x 100 =23.60%(1of)

(3)
Additional guidance
Correct answer only scores 3 marks.
No specific layout required.

Question Answer AO2 (1) Mark

Number
2(b)(ii) Award marks as indicated.

$30 000 (1)

(1)
Additional guidance
Correct answer only scores 1 mark.
No specific layout required.

ASE20104
7 June 2018
Question Answer AO2 (8) Mark
Number
2(b)(iii) Award marks as indicated.

Year Net cash Discount Present

flows factor at value
$ 10% $
0 (175 000) 1.000 (175 000) (1)

1 65 000 0.909 59 085 (1)

2 65 000 0.826 53 690 (1)

3 55 000 0.751 41 305 (1)

4 48 000 0.683 32 784 (1)

5 60 000 0.621 37 260 (1of)

(1)

Net present value 49 124 (1of)

(8)
Additional guidance
Correct answer only scores 8 marks.

Question Answer AO2 (1) Mark

Number
2(b)(iv) Award marks as indicated.

2.82 years (1)

Or
2 years and 10 months (1) (1)
Additional guidance
Correct answer only scores 1 mark based on 2(b)(iii)

Question Answer AO1 (1) Mark

Number
2(c) Award 1 mark as indicated.

Fixed costs/overheads are not included for inventory

valuation under marginal costing (1).
(1)

ASE20104
8 June 2018
Question Answer AO1 (2) AO3 (2) Mark
Number
2(d) Award 1 mark for each point identified up to
maximum of 2 marks and 1 mark for linked
justification up to maximum of 2 marks.

It helps to calculate the break-even point (1) which

helps to fix the short-term selling price (1).

It facilitates short-term decision making (1) for

example to accept one-off orders / to make or buy
(1).

The fixed cost is irrelevant as it treated as a period

cost (1) and it helps to control the costs of production
(1).
(4)

Total for Question 2 = 20 marks

ASE20104
9 June 2018
Question Answer AO2 (7) Mark
Number
3(a) Award 1 mark for correct figure with understandable labels as
indicated.

Nehani
Cash budget for each of the three months ending 31 August
2018

June July August

2018 2018 2018
$ $ $
Receipts
Trade receivables (credit 28 450 33 600 53 200 (1 for
sales) row)
Cash sales 13 680 21 660 25 080 (1 for
row)
Total receipts 42 130 55 260 78 280
Payments
Trade payables (credit 34 700 24 000 45 000 (1 for
purchases) row)
Cash purchases 6 000 11 250 10 250 (1 for
row)
Operating expenses 10 000 11 000 12 100 (1 for
row)
Total payments 50 700 46 250 67 350
Net inflow /(outflow) (8 570) 9 010 10 930
Opening balance (12 750) (21 320) (12 310)
(1)
Closing balance (21 320) (12 310) (1 380) (1 of
for
row)
(7)

Question Answer AO2 (3) Mark

Number
3(b)(i) Award marks as indicated.

June 2018 = 450 (units) (1)

July 2018 = 800 (units) (1)
August 2018 = 650 (units) (1) (3)

Question Answer AO2 (1) Mark

Number
3(b)(ii) Award marks as indicated.

$16 250 (1of) (1)

Additional guidance
Only award of mark if based on the answer to b(i) for August.

ASE20104
10 June 2018
Question Answer AO2 (3) Mark
Number
3(c)(i) Award marks for correct figures with
understandable labels as indicated.

Nehani
Budgeted statement of profit or loss for
the period ending 31 August 2018
$ $
Revenue 208 820
(1)
Cost of sales
Opening inventory 11 250

Purchases 137 500

148 750
Closing inventory (16 250) (132 500)
(1of)
Gross profit 76 320
(1of)
(3)

Question Answer AO3 (2) Mark

Number
3(c)(ii) Award 1 mark for identification of a point and 1
marks for each linked justification.

Increase selling price without reducing sales volume (1)

which will increase overall revenue without a
corresponding increase in purchase price (1)

Accept any other appropriate responses. (2)

ASE20104
11 June 2018
Question Answer AO3 (4) AO5 (1) Mark
Number
3(d) Award 1 mark for each point of discussion for
sole trader and partnership up to a maximum of
4 marks.
Award 1 mark for supported decision.

 Nehani has full control of her business but when

she forms a partnership, decisions are taken
collectively (1).

 Nehani presently retains all profit for herself

whereas if she forms a partnership she may
have to share the profits with her other partners
(1).

 Nehani may not have access to sufficient

sources of finance to develop her business
whereas if she forms a partnership the new
partner may bring in additional finance (1).

 Nehani may not have the technical skills and

expertise to develop her business whereas if she
forms a partnership the new partner may bring
in the necessary skills/knowledge (1).

Any supported decision (1)

Accept any other appropriate responses. (5)

Total for Question 3 = 21 marks

ASE20104
12 June 2018
Question Answer AO2 (3) Mark
Number
4(a)(i) Award marks as indicated.

Total sales = $171 650 (3)

$165 050 (1) + $4 100 (1) + $2 500 (1)

OR

$165 050 (1) + ($2 600 + $1 500) (1) +

($42 500 - $40 000) (1)
(3)
Additional guidance
Correct answer only scores 3 marks.
No specific layout required.

Question Answer AO2 (2) Mark

Number
4(a)(ii) Award marks as indicated.

Total purchases = $88 600 (3)

$90 000 (1) + $1 500 (1) - $2 900 (1)

OR

$90 000 (1) + $1 500 (1) - ($37 900 - $35 000) (1)
(3)
Additional guidance
Correct answer only scores 3 marks.
No specific layout required.

ASE20104
13 June 2018
Question Answer AO2 (9) Mark
Number
4(b) Award marks for correct figures with understandable labels
as indicated.

Debbie
Statement of profit or loss for the year ended
31 December 2017
$ $
Revenue 171 650
Cost of sales
Opening inventory 50 390
Purchases 88 600
138 990
Closing inventory (36 000) (102 990)
(1of) (1of=60% of
revenue)
Gross profit 68 660
(1of=40% of
revenue)
Other income
Profit on disposal of 600
machinery (1)
69 260
Expenses
General expenses W1 32 000
(2/1)
Depreciation charge 11 080
Machinery W2 (2/1)

43 080
Profit for the year 26 180 (9)
(1of)
W1 General expenses =
$31 750 - $500 (1) + $750 (1) = $32 000

W2 Depreciation charge =
Machinery = $55 400 (1) x 20% (1) = $11 080

ASE20104
14 June 2018
Question Answer AO1 (2) Mark
Number
4(c) Award 1 mark for each correct answer up to a
maximum of 2 marks.

professional behaviour
professional/technical competence and due care
confidentiality
integrity
objectivity (2)

Question Answer AO1 (2) Mark

Number
4(d) Award 1 mark for a basic definition or 2 marks for
a complete definition.

The financial information must be truthful, complete (1)

free from errors and neutral (1).
(2)

Total for Question 4 = 19 marks

ASE20104
15 June 2018
Question Answer AO2 (8) Mark
Number
5(a) Award 1 mark for each correct figure against each correct label as
indicated.

D Ltd
Statement of changes in equity for the year ended
30 April 2018

Share Share Revaluation Retained Total

capital premium reserve earnings
$ $ $ $ $
Balance at 1 May 2017 150 000 37 500 60 000 132 000 379 500
(1) (1)
Issue of shares 50 000 12 500 62 500
(1) (1)
Dividends (18 500) (18 500)
(1)
Revaluation 50 000 (1) 50 000

Profit for the year 77 000 77 000

(1)
Balance at 30 April 200 000 50 000 110 000 190 500 550 500
2018 (1of)

(8)

Question Answer AO2 (3) Mark

Number
5(b) Award marks as indicated with understandable labels.

D Ltd
Statement of financial position at 30 April 2018

$ $ $
Current assets

Inventory 77 500

Trade and other receivables 26 500

Allowance for doubtful debts (2 500)
24 000
(1)
Cash and cash equivalents 1 000
(1)
102 500
(1of)

(3)

ASE20104
16 June 2018
Question Answer AO2 (1) Mark
Number
5 (c)(i) Award 1 mark as indicated.

Current ratio = 3.11:1 (1of) (1)

Additional guidance
Only award of if answer based on 5(b).

Question Answer AO2 (1) Mark

Number
5 (c)(ii) Award 1 mark as indicated.

Quick (acid test) ratio = 0.76:1 (1of) (1)

Additional guidance
Only award of if answer based on 5(b).

Question Answer AO4 (4) AO5 (1) Mark

Number
5 (d) Award 1 mark for an analysis of ratios up to a
maximum of 4 marks
Award 1 mark for evaluation.
Evaluation mark can only be awarded if at least
two ratios are analysed.

Profitability

Gross profit margin of D Ltd is worse than the industry

average, which indicates lower selling price in
comparison to the purchase price/cost of sales (1)

Profit for the year as a percentage of revenue of D Ltd

indicates that D Ltd has better management over its
operating expenses than the industry average (1)

Efficiency

Trade receivables collection period for D Ltd indicates

that the company has got strict credit control
procedures in place compared to the industry average
(1)

The trade payables payment period for D Ltd indicates

that they are having issues paying their suppliers
compared to the industry average (1)

Evaluation

Any supported evaluation (1)

Accept any other appropriate responses. (5)

ASE20104
17 June 2018
Question Answer AO1 (1) Mark
Number
5(e) Award 1 mark for correct answer up to a
maximum of 1 mark.

Inventory turnover (1)

Asset turnover (1)
(1)

Total for Question 5 = 19 marks

TOTAL FOR PAPER= 100 MARKS

ASE20104
18 June 2018