Marking Scheme
[Pages:11]MATSEC Examinations Board
Marking Scheme
IM Accounting Special September Session 2020
Marking Scheme (Special September Session 2020): IM Accounting
Marking schemes published by the MATSEC Examination Board are not intended to be standalone documents. They are an essential resource for markers who are subsequently monitored through a verification process to ensure consistent and accurate application of the marking scheme. In the case of marking schemes that include model solutions or answers, it should be noted that these are not intended to be exhaustive. Variations and alternatives may also be acceptable. Examiners must consider all answers on their merits, and will have consulted with the MATSEC Examinations Board when in doubt.
Page 1 of 10
Marking Scheme (Special September Session 2020): IM Accounting
SECTION A Answer all FIVE questions in this section. Each question carries 4 marks.
Marks
1. a. b.
Depreciation is the part of the non-current asset consumed during the financial 2
year.
It is a cost that is estimated annually and included as an expense.
Depletion eg. use; rust, rot and decay.
0.5
Economic eg. outdated; too small for operations.
0.5
Physical eg. rust, rot and decay.
0.5
Time eg. legal life on contract.
0.5
4
2.
AT LEAST TWO FROM THE FOLLOWING:
Possibility to offer shares to the public
2
Number of shareholders
2
Name of company
4
3.
Explain the difference between time rate and piece rate methods of labour
remuneration, indicating the circumstances when each method of remuneration
would be preferable.
TIME RATE ? PER HOUR (1 MARK)
OUTPUT NOT MEASURABLE (1
MARK)
PIECE RATE ? PER UNIT (1 MARK)
MASS PRODUCTION (1 MARK)
4
4. a. b. c. d.
Fixed Cost is a period cost and does not change with the level of production. 1 Candidates are to provide an example. Variable cost is one that changes with the level of production. Candidates are to 1 provide an example. A direct cost is traceable to the unit being produced or to the service being 1 provided. Candidates are to provide an example. An indirect cost cannot be traced to the unit being produced. Candidates are to 1 provide an example.
4
5. a. b.
Contribution is SP ? VC per unit, referring to how much each unit is contributing 1
towards FC.
BE point is the level of output at which no profit or loss is made.
In other words, the level where contribution earned = Fixed costs.
1
TWO limitations of BE analysis:
Page 2 of 10
Marking Scheme (Special September Session 2020): IM Accounting
It is assumed that the SP per unit is constant at all levels of output.
1
It is assumed that the VC per unit is constant at all levels of output.
1
It is assumed that FC remain constant.
4
SECTION B
Answer question 6. This question carries 30 marks.
6. a.(i)
Statement of Profit and Loss
Sales Ret in
905,000 0.5
(8,200)
In. Cred Net sales
(3,200)
1 893,600
Op. Inv. Purchases Ret. Out Carr in
563,200 (11,400)
5,800
55,000
557,600
Clo. Inv. CoS Gr. Prof.
(21,000) 2
591,600
1 302,000
0.25
Bank OD Interest
630
2
Disp. Loss
900
0.5
Depr
Prem
9,000
0.5
Fix
17,000
1
MV
7,160
0.5
Wages
88,000
Insur.
12,800
0.5
Elect
34,900
0.5
W/H rent
0.5
Page 3 of 10
Marking Scheme (Special September Session 2020): IM Accounting
17,800
0.5
Bad Debt
9,800
0.25
Disc All
24,600
Disc Rec
(33,700)
0.25
Increase in prov BD
1,140
2
Carr out
12,400
0.25
Loan Int
5,000
0.5
MV exp
3,700
0.25
BD Rec
(1,160)
0.25
Profit
209,970 92,030
15
a.(ii) Statement of Financial Position
Non-Current Assets
38000
Premises
0 (67,000) 313,000
1
1
Fixt
85000 (51,000)
34,000
Mot Veh
45500 (34,760)
10,740
2
51050
0 (152,760) 357,740
Current Assets
Inventories
21,000
1
289
Tr. Rec
00
1
-
282
Prov
0
26,080
0.25
0.25
Prepaid Cash
4,400 530
52,010
Page 4 of 10
409,750
Marking Scheme (Special September Session 2020): IM Accounting
Capital
200,000
Profit Drawings
92,030
(23,110)
1
Current
268,920 1
Liabilities:
0.25
10000
0.5
Loan
0
0.5
Tr. Pay
17100
0.25
Accr.
6830
Loan int
2500
Bank Capital
14400
140,830 409,750
10
b.
ACCRUAL CONCEPT:
Financial Statements are prepared on an accrual basis that is, taking into
consideration expenses incurred during the period even though not paid. These
shall be shown as liabilities in the balance sheet. Furthermore, the accrual
concept also requires consideration of expenses paid in advance, which shall be
shown as assets in the balance sheet.
5
OR
MATCHING CONCEPT: Adjustments are required for accruals and prepayments so the expenses incurred during the accounting period can be matched with the revenue generated during the same period. In this way, the difference would reflect a better measure of the profit generated from operations during the period.
Workings:
Disposal
MV Cost Acc. Dep NBV
18500 -14400
4100
Mot. Veh
Disp
64000 -18500 45500
Realized Loss
-3200 900
Depr 42000 Disp -14400
Rem 27600
Page 5 of 10
Marking Scheme (Special September Session 2020): IM Accounting
Deprec. Adjust
Premises Fixtures
Mot. Veh Wages W/H rent
(380000200000)X5% 85000 X 20% (45500-27600) X 40%
85900 19400
Insurance Electricity Bad Debts
15600 30800 9100
Loan int 100000X5%
Dep
IS
FPS
9000 58000 67000 17000 34000 51000
7160 2100 88000 -1600 17800
-2800 12800 4100 34900
700 9800
5000 -2500
27600 34760
Prepai d =
2500 Due
All for bad debts: One half balance Three large customers
Cl Prov
Op Prov
Increase
700
2120 2820 -1680 1140
2800
SECTION C
Answer any ONE question from this Section. Each question carries 25 marks.
7. a.
Sales Ledger Contro A/c
bal b/d
8,450 Bal B/d
530
Cr. Sales
84,000 Bank
62,400
Dis. Chq
1,200 Ret
8,200
BD Rec
840 Bad Debt
1,200
Disc.
2,200
Set off
630
Bal /d
19,330
94,490
94,490
12
Page 6 of 10
Marking Scheme (Special September Session 2020): IM Accounting
b.
Purchases Ledger Control A/c
Bank
79,000
Bal B/d
18,200
Ret
12,100
Purch
105,000
Disc
14,200
Set-off
630
Bal c/d
17,670
Bal c/d
400
123,600
123,600
10
c.
Alf. Borg A/c (Sales ledger)
Bal B/d
940 Set off
630
Bal c/d
310
940
940
Alf. Borg A/c (Purchases ledger)
Set off
630 Bal b/d
630
8. a.(i) Gross Profit Mark-up Gr. Pr./Cost of sales
Push 141/219X100
a.(ii) Net Profit Margin
Pull 425/525X100 Net Prof./Sales
Push (62+4)/360X100
Pull 105/950X100
a.(iii) ROCE
NPBIT/CRL
Push 66/254X100
Pull 105/325X100
a.(iv) Current ratio
CurrAss/Curr Liab
Push 60:26
Pull 112:87
a.(v) Acid Test (Quick) Ratio
Curr Ass - Inv.: Cur.Liab
Push (60-24):26
Pull (112-55):87
a.(vi) Inventory turnover
cos/Av. Inv Push 219/?(33 +24) Pull 525/?(60 + 55)
3
25
64.4%
1
81.0%
2
18.3%
1
11.1%
2
26.0%
3
32.3%
2
2.3:1
2
1.3:1
2
1.38:1
1
0.66:1
1
7.7 times
2
9.1 times
2
21
Page 7 of 10
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