NVQ/SVQ Level 3 in Accounting



Model answers

|NVQ/SVQ in Accounting |Diploma pathway |

|Level 3 |Advanced certificate |

|Maintaining Financial Records |Financial Accounting (FRA) |

|and Preparing Accounts (FRA) |2003 Standards |

|2003 Standards | |

June 2008

Task 1.1

(a) Purchases ledger control account

| |£ | |£ |

|Bank/payments |33,900 |Balance b/f |5,100 |

|Balance c/f |6,800 |Purchases |35,600 |

| |40,700 | |40,700 |

(b) Sales ledger control account

| |£ | |£ |

|Balance b/f |18,690 |Bank/receipts | 135,290 |

|Sales |141,000 |Balance c/f |24,400 |

| |159,690 | |159,690 |

Task 1.2

(a)

| | |£ |£ |

|Balance as at 31 March 2007 | | 6,350 | |

|Balance as at 31 March 2008 | |(3,240) | |

|Difference = bank payments | | |3,110 |

(b) Bank account

| |£ | |£ |

|Receipts from debtors |135,290 |Balance b/f |5,140 |

| | |Loan payments |3,110 |

| | |Payments to creditors |33,900 |

| | |Wages |42,500 |

| | |Administration expenses |5,200 |

| | |Rent |8,000 |

| | |Drawings - Adil |18,000 |

| | |Drawings - Jan |20,000 |

|Balance c/f |560 | | |

| |135,850 | |135,850 |

Task 1.3

(a)

| | |£ |£ |

|Furniture and equipment at cost | |20,000 | |

|Furniture and equipment accumulated depreciation | |(7,200) | |

|Net book value | |12,800 | |

|Depreciation at 20% | | |2,560 |

(b)

| | |£ |£ |

|Accumulated depreciation b/f | |7,200 | |

|Depreciation for the year | |2,560 | |

|Accumulated depreciation as at 31 March 2008 | | |9,760 |

Task 1.4

| | |£ |£ |

|Administration expenses - bank | |5,200 | |

|Accrued interest expense | |1,200 | |

|Accrued accountancy fees | |580 | |

|Adjusted administration expenses | | |6,980 |

Task 1.5

(a)

Wages

| |£ | |£ |

|Bank |42,500 |Wages for the year (P&L) | 44,500 |

|Drawings - Jan | 2,000 | | |

| |44,500 | |44,500 |

(b)

Current accounts

| |Adil £ |Jan £ | |Adil £ |Jan £ |

|Drawings (bank) | 18,000 |20,000 |Balance b/f |4,200 |2,600 |

| | | |Wages | |2,000 |

| | | |Balance c/f |13,800 |15,400 |

| |18,000 |20,000 | |18,000 |20,000 |

Task 1.6

Bookends

Trial balance as at 31 March 2008

| |Dr £ |Cr £ |

|Accrual - accountancy fee | | 580 |

|Accrual - interest | | 1,200 |

|Administration expenses (1.4) | 6,980 | |

|Bank | | 560 |

|Capital account - Adil | | 6,000 |

|Capital account - Jan | | 6,000 |

|Current account – Adil | 13,800 | |

|Current account – Jan | 15,400 | |

|Furniture and equipment - cost | 20,000 | |

|Furniture and equipment - accumulated depreciation (1.3b) | | 9,760 |

|Depreciation expense (1.3a) | 2,560 | |

|Loan | | 3,240 |

|Purchases | 35,600 | |

|Purchases ledger control account | | 6,800 |

|Rent | 8,000 | |

|Sales | | 141,000 |

|Sales ledger control account | 24,400 | |

|Stock - closing - balance sheet | 1,800 | |

|Stock - closing - profit and loss account | | 1,800 |

|Stock - opening | 3,900 | |

|Wages (1.5a) | 44,500 | |

|Total |176,940 | 176,940 |

Task 1.7

(a) Goodwill is the difference between the value of a business as a whole and the aggregate fair values of its separate assets and liabilities.

(b) It is important to account for goodwill so that existing partners are fairly rewarded for their contribution to the value of the business as at the date of the change in the partnership.

(c)

|Account name |Dr |Cr |

|Goodwill |( | |

|Capital - Adil | |( |

|Capital - Jan | |( |

Section 2

Task 2.2

(a)

| | |£ |£ |

|Cost | | 1,700 | |

|Net book value | |(425) | |

|Accumulated depreciation | | |1,275 |

(b)

| | |£ |£ |

|Net book value | |425 | |

|Part-exchange allowance | |(300) | |

|Loss on disposal | | |125 |

(c)

| | |£ |£ |

|Cash paid | |1,000 | |

|Part exchange allowance given | |300 | |

|Cost of new equipment | | |1,300 |

(d)

| | |£ |£ |

|Cost of new equipment | |1,300 | |

|x 25% | | |325 |

Tasks 2.1 and 2.2 (e)

Nell Tan

Extract from extended trial balance as at 31 March 2008

| |Ledger balances | |Adjustments |

| |Dr £ |Cr £ | |Dr £ |Cr £ |

|Bank |6,555 | |2.2(c) | | 1,000 |

|Capital | |4,050 | | | |

|Cash |75 | | | | |

|Consumables |1,200 | | | | |

|Delivery expenses |2,000 | | | | |

|Depreciation expense |200 | |2.2(d) | 325 | |

|Drawings |13,200 | | | | |

|Equipment at cost |2,700 | |2.2(c)(a) | 1,300 |1,700 |

|Equipment accumulated depreciation | |1,875 |2.2(a),(d) | 1,275 |325 |

|General expenses |950 | |2.1 | 115 | |

|Opening stock |900 | | | | |

|Purchases |9,800 | | | | |

|Purchases ledger control account | |405 | | | |

|Rent |2,500 | |2.1 | | 500 |

|Sales | |35,000 | | | |

|Sales ledger control account |1,250 | | | | |

|Prepayments | | |2.1 | 500 | |

|Closing stock - balance sheet | | |2.1 | 750 | |

|Closing stock - profit and loss account | | |2.1 | | 750 |

|Interest received | | |2.1 | |115 |

|Disposals | | |2.2 (a)(b) |1,700 | 1,275 |

| | | | | |300 |

|Total |41,330 |41,330 | |5,965 |5,965 |

Task 2.3

Nell Tan

Profit and loss account for the year ended 31 March 2008

|Workings | |£ |£ |

| |Sales | |35,000 |

| |Opening stock |900 | |

| |Purchases |9,800 | |

| |Closing stock | (750) | |

| |Cost of goods sold | | (9,950) |

| |Gross profit | |25,050 |

| |Add: Interest received | |115 |

| |Less: Expenses | | |

| |Consumables |1,200 | |

| |Delivery expenses |2,000 | |

|200 + 325 |Depreciation expense |525 | |

|950 + 115 |General expenses |1,065 | |

|2,500 - 500 |Rent |2,000 | |

|1,700 - 1,275 - 300 |Loss on disposal | 125 | |

| | | |(6,915) |

| |Net profit | | 18,250 |

Task 2.4

Nell Tan

Balance sheet as at 31 March 2008

|Workings | |£ |£ |

| |Fixed assets | | |

|2,700 + 1,300 - 1,700 |Equipment |2,300 | |

|1,875 - 1,275 + 325 |Accumulated depreciation |(925) | |

| | | |1,375 |

| |Current assets | | |

| |Stock |1CF 750 | |

| |Debtors (sales ledger control) |1CF 1,250 | |

| |Prepayments | 500 | |

|6,555 - 1,000 |Bank |5,555 | |

| |Cash | 75 | |

| | |8,130 | |

| |Current liabilities | | |

| |Trade creditors (purchases ledger control account) | (405) | |

| |Net current assets | |7,725 |

| |Net assets | | 9,100 |

| |Financed by: | | |

| |Opening capital | |4,050 |

| |Net profit | |18,250 |

| |Drawings | | (13,200) |

| | | | 9,100 |

Task 2.5

(a) Capital expenditure is expenditure on the purchase, alteration or improvement of fixed assets. These are items which have a life of more than one year and are of significant value.

(b) Revenue expenditure is expenditure on the day to day running expenses of a business.

(c) It should be treated as capital expenditure because it will be of use to the business for more than one year and the cost is significant to Nell.

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