Answers

ACCA Certified Accounting Technician Examination, Paper T3 (UK) June 2010 Answers
Maintaining Financial Records (UK Stream) and Marking Scheme

Section A
Question No Solution Question No Solution
1 C 11 A
2 A 12 A
3 C 13 C
4 B 14 C
5 B 15 C
6 B 16 C
7 B 17 A
8 D 18 B
9 D 19 B
10 D 20 D

Workings

3 £ £
Debit entries Invoices paid 4,853
Invoice unpaid 150 5,003
––––––
Credit entries rent received 822
––––––––
Closing balance 4,181 debit
––––––––
––––––––

5 Depreciation charge £23,200

add: Loss on disposal £300 W1
––––––––
£23,500
––––––––
––––––––
W1 Cost £15,000
Acc Depn £9,100
–––––––
NBV £5,900
Proceeds £5,600, thus loss £300

6 COST £
At 1 June 2009 189,751
add: New machine 27,500
––––––––
217,251
less: Cost of disposal 15,000
––––––––
At 31 May 2010 202,251
––––––––
––––––––

9 Balance per statement £2,564 credit

Bank charges £470 credit
––––––––
Corrected balance £3,034 credit
––––––––
––––––––

11 Reduction in allowance £127 = credit to profit and loss account

Write-off £178 = charge to profit and loss account
––––––
Net charge £51
––––––
––––––

13
12 Total balances £38,286
less: write-off £178
closing allowance £1,157 £1,335
––––––– ––––––––
Reported balance £36,951
––––––––
––––––––

13 Current liability is payments due in next 12 months 12 x £558 = £6,696

Balance is long-term liability

16 Opening balance £138,736

Profit for year £79,909
–––––––––
£218,645
Drawings £(32,273)
–––––––––
Closing balance £186,372
–––––––––
–––––––––

18 Profit £144,890
less: Interest on capital £21,220 (£11,450 + £9,770)
–––––––––
£123,670
add: Interest on drawings £5,600 (£35,000 x 8% x 2)
–––––––––
Available for share £129,270
–––––––––
–––––––––
Paulo’s share (2/5) £51,708

19 Lodged to bank £378,942

add: Drawings £26,500
–––––––––
£405,442
less: Capital introduced £40,000
–––––––––
Received from customers £365,442
–––––––––
–––––––––

20 Purchases £69,000
Reduction in stock £3,000
–––––––––
Cost of sales £72,000
–––––––––
–––––––––
25% margin obtained, thus cost of sales is 75% of sales
Thus sales = £72,000 x 100/75 = £96,000

14
Section B
Marks
1 (a) (i) A balance sheet reports the financial position of an entity at a particular date. It is intended to assist
users in assessing the liquidity and solvency of the entity by reporting assets, liabilities and capital.
(ii) A profit and loss account reports the income earned and expenses incurred by an entity throughout an
accounting period, and therefore allows users to assess the profitability of the entity.
1 mark for each valid point, for example:
Balance sheet
– at particular date
– reports assets, liabilities and capital
– assessing liquidity/solvency
Profit and loss account
– throughout accounting period
– reports income and expenses
– assesses profitability
to a maximum of 4

(b) In the year in which the error is made, expenses will be understated and profit will be overstated. The value
of the misstatement will be the difference between the total amount of the expenditure, and the value of the
depreciation which has been charged. The value of fixed assets and capital at the year end will be
overstated by the same amount as profit for the year.
In the following year, expenses will be overstated and profit will be understated by the value of the depreciation
charged. The value of fixed assets and capital at the end of that year will now be overstated by the difference
between the cost of the repairs and the total amount charged as depreciation in the two years.
1 mark for each valid point, for example:
year in which error is made: following year:
expenses understated expenses overstated
profit overstated profit understated
fixed assets overstated fixed assets overstated
capital overstated capital overstated
quantifying the error quantifying the error
to a maximum of 4

(c) Errors which will be detected by extracting a trial balance include:

transposing digits when making the debit entry or the credit entry for a transaction;
making two debit entries or two credit entries when posting a transaction;
omitting either the debit entry or the credit entry for a transaction.
Errors which will NOT be revealed by extracting a trial balance include:
making an entry on the correct side of the wrong ledger account;
making an error when entering a transaction in the daybook;
completely omitting an entry;
duplicating an entry;
putting both entries on the wrong side of both of the ledger accounts;
making two errors which cancel one another out.
For each error that will be detected, 1 mark to a maximum of 2
For each error that will not be detected, 1 mark to a maximum of 2 4
––

(d) A debit entry represents:

(i) an increase in an expense; 1
(ii) a decrease in a liability; 1
(iii) an increase in an asset. 1 3
–– –––
15
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15
 Marks
2 (a) (i) Trade debtors control account
£ £
Balance (as given) 126,528 (iii) Discount 15
(v) Undercast 99 (iv) Contra 780
(vii) Payment error 9 (vi) Credit notes 1,056
Corrected balance 124,785
–––––––– ––––––––
126,636 126,636
––––––––
–––––––– ––––––––
––––––––
Mark allocation:
Balance as given/corrected balance 1/2 each 1
Correcting entries 1 mark each 5 6
––
(ii) £
Total as given 125,092 1/
2
(i) Balance omitted 79 1
(ii) Debit balance 400 1
(iii) Discount (15) 1
(iv) Contra (780) 1
(vii) Payment 9 1
––––––––
Agreed balance 124,785 1/ 6
––––––––
–––––––– ––2

(b) Debit Sales returns* £239

Credit Trade debtors £239
Credit note ref CN251 not recorded in March 2010
* A debit entry in the sales account was also acceptable.
Mark allocation:
Debit account 1
Credit account 1
Narrative 1
Layout of entry 1
––
to a maximum of 3
–––
15
–––

3 (a) £ £
Sales 348,955 1/
2
Cost of sales
Opening stock 18,650 1/
2
Purchases 194,894 1/
2
Carriage inwards 1,389 1
––––––––
214,933
Closing stock 17,240 1/
–––––––– ––2
197,693
––––––––
Gross profit 151,262 3
––––––––
––––––––

(b) £ £
Gross profit 151,262
Wages 53,928 1/
2
Carriage outwards 2,648 1/
2
Office expenses (W1) 24,338 2
Vehicle and travel expenses (W2) 26,205 1
Depreciation: motor vehicles (W3) 8,320 2
equipment (W4) 12,590 1
–––––––– ––
128,029
––––––––
Net profit 23,233
––––––––
––––––––
7

16
 Marks
W1 Rent prepaid
£6,300 for 3 months = £2,100 per month
2 months prepaid = £4,200 1
Thus, office expenses = £28,538 – £4,200 = £24,338 1
W2 Vehicle and Travel expenses
per TB £24,855
accrued £1,350
––––––––
£26,205 1
W3 Depreciation on motor vehicles
Cost £65,000
Accumulated depreciation b/f £23,400
––––––––
Depreciation charged on £41,600 1
at 20% = £8,320 1
W4 Depreciation on Equipment
Cost £125,900 x 10% = £12,590 1

(c) Fixed assets

£ £ £
Motor vehicles
Cost 65,000
less accumulated depreciation:
per TB 23,400
charge for year 8,320 31,720 33,280 1
––––––– ––––––––
Equipment
Cost 125,900
less accumulated depreciation:
per TB 45,800
charge for year 12,590 58,390 67,510 1
––––––– –––––––– ––––––––
100,790
––––––––
––––––––

(d) Current assets £

Stock 17,240 1/
2
Trade debtors 34,580 1/
2
Prepaid rent 4,200 1/
2
Cash and bank 5,890 1/
––––––– ––2
61,910 2
–––––––
–––––––

(e) Current liabilities £

Trade creditors 17,642 1/
2
Accrued expenses 1,350 1/
––––––– ––2
18,992 1
–––––––
––––––– ––
15
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17
 Marks
4 (a) Cost
All costs incurred to bring stock to its present location and condition.
This could be stated as all costs incurred to date, but excluding any costs which will be incurred
in the future.
1 mark per valid point, for example
costs to date
present location and condition
exclude costs not yet incurred to a maximum of 2
Net Realisable Value
Expected sales proceeds, less costs which have yet to be incurred before sale.
1 mark per valid point, for example
sales proceeds
less costs to be incurred to a maximum of 2 4
––

(b) Cost purchase £125,000 1/

2
materials to date £12,800 1/
2
sub-contractors to date £6,850 1/
2
–––––––––
thus £144,650 1/ 2
–––––––––
––––––––– ––2
NRV selling price £185,000 1/
2
less advertising £2,590 1/
2
to complete £17,500 1/
2
––––––––
£20,090
–––––––––
£164,910 1/ 2
–––––––––
––––––––– ––2
Stock £144,650 1
–––
5

(c) Value of purchases in period:

200 units at £12·20 per unit = £2,440·00
100 units at £12·23 per unit = £1,223·00
120 units at £12·27 per unit = £1,472·40 £5,135·40 1
Opening stock:
83 units £1,016·29
Thus 503 units (200 + 100 + 120 + 83) 1
Value £6,151·69 (£5,135·40 + £1,016·29) 1
= £12·23 per unit 1
Closing stock is 165 units (503 – 127 – 211) 1
Thus value is 165 x £12·23 = £2,017·95 1 6
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15
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18