Mark Scheme

September 2020

Pearson LCCI Certificate in Accounting

Level 3 (ASE20104)
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Publication Code: 65365_MS

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© Pearson Education Ltd 2020
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 September 2020
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 September 2020
Question Answer (AO2) 18
number Mark
1 Award marks for correct figures with labels as indicated.

Hull88 plc
Statement of financial position at 31 May 2020

$
Assets
Non-current assets
Property plant and equipment 368 550 (1)
Current assets
Inventory 51 700 (1)
Trade and other receivables 32 060 (1)
Cash and cash equivalents 500 (1)
84 260
Total assets 452 810 (1of)

Equity and liabilities

Equity
Share capital - ordinary shares of $1 each 168 000 (1)
Share premium 81 200 (1)
General reserve 35 000 (1)
Retained earnings ($99 370 (1) - $25 000) (1)) 74 370 (2)
Total equity 358 570 (1of)
Non-current liabilities
12% bank loan (2022) 47 000 (1)
Current liabilities
Trade and other payables 27 450 (1)
Bank overdraft 9 630 (1)
Tax payable 10 160 (1)
47 240 (1of)
Total liabilities 94 240 (1of)
Total equity and liabilities 452 810 (1of)

(18)

(Total for Question 1 = 18 marks)

ASE20104
5 September 2020
Question Answer AO2 (14) Mark
Number

2(a) Award marks for correct figures against correct labels as indicated

Patrick and Rose Adjustments Statement of profit or loss Statement of financial position
Extended trial balance at 31 July 2020
Debit Credit Debit Credit Debit Credit
$ $ $ $ $ $

Bank overdraft 4 250 (1)

Capital — Patrick 24 000 10 000 146 000(1)

Capital — Rose 12 000 5 000 93 000 (1)

Closing inventory — statement of financial position 600 ** 31 600

Closing inventory — statement of profit or loss 600 ** 31 600 ** (1 for both)

General expenses 108 290(1)

Non-current assets — carrying value 36 000 224 000(1)

Opening inventory 29 750 (1)

Purchases 168 250(1)

Revenue 313 400(1)

Trade payables 860 27 080 (1)

Trade receivables 860 38 440 (1)

Goodwill 15 000 15 000 (1)

38 710 38 710
Profit/loss for the year (1of) (1of) (14)

TOTAL 52 460 52 460 345 000 345 000 309 040 309 040
Question Answer (AO1) 6 Mark
2(b) Award one mark for each correct row.

Account
Debit Credit Capital Current Loan

Interest on capital  

Interest on  
drawings
Partner’s loan  

Partners’ salaries  

Profit on  
realisation
Share of loss  

(6)

(Total for Question 2 = 20 marks)

Question Answer (AO2) 2 Mark
3(a)(i) Award marks as indicated.

$8 010 (2/1of)) W

W $7360 (1) + $650 (1) (2)

Additional guidance
Correct answer only scores 2 marks.
No specific format required.

Question Answer (AO2) 1 Mark

3(a)(ii) Award mark as indicated.

$17 300 (1) (1)

Additional guidance
Correct answer only scores 1 mark.
No specific format required.

Question Answer (AO2) 2 Mark

3(a)(iii) Award marks as indicated.

152 000 (2) W

W (2)
76 000 (1) x 2 = 152 000 (1of)
Additional guidance
Correct answer only scores 2 mark.
No specific format required.

Question Answer (AO2) 2 Mark

3(a)(iv) Award marks as indicated.

$72 200 (2/1of)) W

W $19 000 (1) + $53 200 (1) (2)

Additional guidance
Correct answer only scores 2 marks.
No specific format required.

ASE20104
8 September 2020
Question Answer AO2 (9) Mark
Number
3(b) Award marks for correct figures with labels as indicated.

Asseem Ltd
Statement of cash flows for the year ended 30 June 2020
$ $
Net cash from operating activities 51 820

Investing activities
Purchase of plant and equipment (17 300)
(1of)
Disposal proceeds of equipment 8 010
(1of)
Net cash used in investing activities (9 290)
(1of)
Financing activities
Bank loan received 30 000
(1)
Equity dividends paid (72 200)
(1of)
Net cash used in financing activities (42 200)
(1of)
Net increase in cash and cash equivalents 330
(1of)
Cash and cash equivalents at the start of the year 3 680
(1)
Cash and cash equivalents at the end of the year 4 010
(1of)
(9)

Question Answer (AO3) 2 Mark

3(c) Award 1 mark for identification and 1 mark for linked justification.

A rights issue is treated as a financing activity (1) as it represents an inflow

of cash/funds (1).

Accept any other appropriate responses. (2)

ASE20104
9 September 2020
Question Answer (AO1) 4 Mark
3(d) Award marks as indicated.

Stakeholder Interest

1
Shareholder/potential
investor/owner (1) To check sufficient cash to pay dividends (1)

2 Supplier (1) To check sufficient cash for payment of goods (1)

(4)
Accept any other appropriate responses.

(Total for Question 3 = 22 marks)

ASE20104
10 September 2020
Question Answer (AO1) 1 Mark
4(a) Award mark as indicated.

Consistency (1)
(1)

Question Answer (AO2) 8 Mark

4(b)(i) Award marks as indicated.

$65 568 (8)

Year Net cash flow Discount factor Present value

at 12%

0 (154 000) 1.000 (154 000) (1)

1 84 000 (1) 0.893 75 012
(1of)
2 84 000 (1) 0.797 66 948
(1of)
3 109 000 (1) 0.712 77 608
(1of)
Net present value 65 568
(1of)
(8)

Additional guidance
Correct answer only scores 8 marks.
No specific format required.

Question Answer (AO2) 3 Mark

4(b)(ii) Award marks as indicated.

1 year and 10 months (3) W

W
Year Net cash flow Remaining
0 (154 000) (154 000)
1 84 000 (70 000)
2 84 000

(70 000 ÷ 84 000) (1of) x 12 = 1 year (1of) and 10 months (1of) (3)

Additional guidance
Correct answer only scores 3 marks.
No specific format required.

ASE20104
11 September 2020
Question Answer (AO4) 4 (AO5) 1 Mark
4(c) Award up to 2 marks, (1 mark for identification + 1 mark for
development), for each valid point.
Award 1 mark for supported conclusion.

Sample answer
The purchase price of machine C is $100 000 more than machine B (1)
which will have an adverse impact on cash flow (1).

Machine C has a residual value of $100 000 after three years (1) which
will enable the business to trade the machine in to purchase a new
machine (1)

Machine B would be a better option as it requires less initial investment

and is less risky. (1)

Accept any other appropriate responses. (5)

Question Answer (AO1) 1 Mark

4(d)(i) Award mark as indicated.

No (1)
(1)

Question Answer (AO3) 2 Mark

4(d)(ii) Award 1 mark for identification of correct principle and 1 mark
for linked justification.

Objectivity (1) as decision should not be made with bias (1).

Accept any other appropriate responses.

(2)

(Total for Question 4 = 20 marks)

ASE20104
12 September 2020
Question Answer (AO2) 5 Mark

5(a) Award marks as indicated for each row.

Elan
Inventory budget for the three-month period ending 30 April 2021

February March April

$ $ $

Opening balance 23 000 21 000 19 800

(1of)

Purchases 16 000 18 000 20 000

(1)

39 000 39 000 39 800

(1of)

Cost of sales (18 000) (19 200) (18 800)

(1)

Closing balance 21 000 19 800 21 000

(1of)
(5)

ASE20104
13 September 2020
Question Answer (AO2) 10 Mark
Number
5(b) Award marks for correct figures with labels as indicated.

Elan
Budgeted statement of profit or loss for the three-month period
ending 30 April 2021

$ $
Revenue 70 000
(1of)
Cost of sales
Opening inventory 23 000
(1)
Purchases 54 000
(1)
77 000
Closing inventory (21 000) (56 000)
(1of) (1of)
Gross profit 14 000
(1of)
Expenses:
General expenses 3 000
(1)
Commission paid 700 3 700
(1of)
(Budgeted) profit for the period 10 300
(2/1of)

(10)

ASE20104
14 September 2020
Question Answer (AO3) 4 (AO5) 1 Mark
number
5(c) Award up to 2 marks, (1 mark for identification + 1 mark for
development), for each valid point.
Award 1 mark for supported conclusion.

Sample answer

The trade discount offered will lower the cost of sales (1) which will
improve profitability (1).

The increased volume of inventory may result in additional storage

costs / the possibility of deterioration (1) which will worsen
profitability (1).

Elan should purchase 1000 units at a time as the increased profit

should exceed the potential costs involved (1)

Accept any other appropriate responses.

(5)

(Total for Question 5 = 20 marks)

TOTAL FOR PAPER = 100 MARKS

ASE20104
15 September 2020