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General Certificate of Education
Advanced Level Examination 1
June 2013
2
Accounting ACCN3 4
TOTAL
Unit 3 Further Aspects of Financial Accounting
Monday 03 June 2013 9.00 am to 11.00 am
For this paper you must have:
• a calculator
Time allowed
2 hours
Instructions
• Use black ink or black ball-point pen.
• Fill in the boxes at the top of this page.
• Answer all questions.
• You must answer the questions in the spaces provided. Do not write
outside the box around each page or on blank pages.
• All workings must be shown and clearly labelled; otherwise marks for
method may be lost.
• Do all rough work in this book. Cross through any work you do not want
to be marked.
Information
• The marks for questions are shown in brackets.
• The maximum mark for this paper is 90.
Four of these marks will be awarded for
− using good English
− organising information clearly
− using specialist vocabulary where appropriate.
*JUN15ACCN301* Sample ACCN3
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Answer all questions in the spaces provided.
Task 1 Total for this task: 22 marks
Jack, Henry and Len are in partnership sharing the profits and losses in the ratio 4:3:2
respectively. The partnership balance sheet at 30 April 2013 was as follows.
Jack, Henry and Len
Balance sheet at 30 April 2013
£ £ £
Non-current assets 216 000
Current assets
Inventory 22 944
Trade receivables 15 168
Cash and cash equivalents 3 274 41 386
Current liabilities
Trade payables 11 376
Net current assets 30 010
246 010
Capital accounts
Jack 102 000
Henry 84 000
Len 36 000 222 000
Current accounts
Jack 18 816
Henry 10 968
Len -5 774 24 010
246 010
On 1 May 2013 Len will retire from the partnership. Jack and Henry will continue in
partnership sharing profits and losses in the ratio 3:1 respectively. The partners have also
agreed that the following will take effect on that date.
(1) Non-current assets will be revalued at £235 000.
(2) Inventory will be valued at the net realisable value of £17 444.
(3) Goodwill will be valued at £27 000 and will not be maintained in the books of account.
(4) The combined balances on both Len’s capital account and current account will be
transferred to a loan account because the partnership has insufficient liquid funds
torepay the amount due to Len.
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1 (a) Prepare the partnership capital accounts for Jack, Henry and Len at 1 May 2013
after items (1) to (4) have been implemented.
[9 marks]
Dr Cr
Jack Henry Len Jack Henry Len
£ £ £ £ £ £
Workings
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Jack and Henry are intending to expand the business in the foreseeable future.
1 (b) Assess two sources of finance that could be used to fund the proposed expansion.
Recommend and justify the most appropriate finance method.
[13 marks]
(includes 2 marks for quality of written communication)
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Task 2 Total for this task: 15 marks
The directors of Giles plc are unsure about the correct accounting treatment of the following
situations in the financial statements for the year ended 31 May 2013.
(1) Giles plc is being sued for a breach of contract and the compensation for damages has
been estimated at £65 000. It is not known when the case will be concluded.
However, it is probable that legal proceedings will result in a loss for Giles plc.
(2) Damaged finished goods for resale have been included in the inventory valuation at an
original cost of £60 000. These goods will be sold with a profit margin of 20%.
However, before sale, the inventory will need to be modified at an additional cost of
£22 750.
(3) IT equipment with a carrying amount of £42 500 is now inadequate due to changes in
technology. This equipment has an estimated fair value of £30 000 and an estimated
value in use of £34 750.
2 (a) Identify the relevant international accounting standard to be applied to each of the
situations (1) to (3).
[3 marks]
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2 (b) Explain with reference to the relevant international accounting standard
how each of the situations (1) to (3) should be treated in the financial statements.
[12 marks]
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Task 3 Total for this task: 31 marks
Eve Huffer, a retailer, did not keep a full set of accounting records for her business. She has
provided the following information in order to complete her financial statements.
At 31 March 2012
£
Insurance prepaid 920
Inventory 11 990
Non-current assets at net book value 95 800
Trade payables 6 750
Trade receivables 19 670
Wages accrued 2 800
Bank account
Dr Cr
£ £
Receipts from sale of non-current assets 13 800 Balance b/d at 1 April 2012 2 438
Receipts from trade receivables 158 600 Insurance 3 700
Wages 35 000
General expenses 7 640
Rent 12 500
Drawings 17 500
Payments to trade payables 86 300
Balance c/d at 31 March 2013 7 322
172 400 172 400
Balance b/d at 1 April 2013 7 322
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*09* Sample
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Eve Huffer has partially completed her income statement for the year ended 31 March 2013
as shown below:
£ £
Revenue 153 400
Cost of sales
Opening inventory 11 990
Purchases ?
Goods for own use 3 000
Closing inventory 6 365 ?
Gross profit ?
Less expenses:
Insurance 3 520
Wages 34 720
General expenses 7 640
Loss on sale of non-current assets 600
Depreciation ?
Rent 10 000 ?
Profit (or loss) for the year ?
Additional information
(1) There were no cash sales or cash purchases during the year.
(2) All sales are calculated at cost plus 60% mark up.
(3) Depreciation on non-current assets was provided at 20% using the reducing balance
method. A full year’s depreciation is provided in the year of purchase and no
depreciation is provided in the year of disposal.
(4) The rent paid is for the 15 months ended 30 June 2013.
*10* Sample
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3 Prepare a balance sheet for Eve Huffer’s business at 31 March 2013.
[31 marks]
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The directors of Pearl plc have provided the following extract from the balance sheet at
30 April 2012.
Cost Depreciation NBV
£ £ £
Property plant and equipment
Land and buildings 187 500 56 250 131 250
Motor vehicles 112 500 49 200 63 300
Fixtures and fittings 50 000 13 500 36 500
350 000 118 950 231 050
The following is an extract from the company’s statement of accounting policies.
Non-current assets Policy
Land and buildings Straight-line method at 4% per annum
Motor vehicles Reducing balance method at 25% per
annum.
Fixtures and fittings Straight-line method at 15% per annum
A full year’s depreciation is charged in the year of purchase, but none is charged in the year
of disposal.
During the year ended 30 April 2013, the following transactions took place.
(1) Land and buildings were revalued at £260 000 on 1 May 2012.
(2) A motor vehicle was purchased during the year at a cost of £24 950.
(3) A motor vehicle with a net book value of £18 450 was sold during the year for
£15 500. It was originally purchased on 1 May 2010.
(4) Fixtures and fittings were purchased during the year at a cost of £5 200.
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4 Prepare a schedule of non-current assets at 30 April 2013 (a total column is not
required).
[22 marks]
(includes 2 marks for quality of presentation)
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