Assessment task: Baa Humbug

Assessment task: Baa Humbug This is the assessment task for the assignment Component of National 5 Accountin" rel="nofollow">ing Course assessment. It must be read in" rel="nofollow">in conjunction with the general assessment in" rel="nofollow">information for this Component of Course assessment. This edition: February 2016 (version 1.0) The in" rel="nofollow">information in" rel="nofollow">in this publication may be reproduced to support SQA qualifications. This publication must not be reproduced for commercial or trade purposes. This material is for use by assessors. © Scottish Qualifications Authority 2016 Valid for session 2015/16 only This assessment is given to centres in" rel="nofollow">in strictest confidence. You must keep it in" rel="nofollow">in a secure place until it is used. National 5 Accountin" rel="nofollow">ing assignment: assessment task (Baa Humbug) Introduction This is the assessment task for National 5 Accountin" rel="nofollow">ing assignment. This assignment is worth 50 marks out of the total of 150 marks for the Course assessment. The Course will be graded A–D. Marks for all Course Components are added up to give a total Course assessment mark which is then used as the basis for gradin" rel="nofollow">ing decisions. This is one of two Components of Course assessment. The other Component is a question paper. This document gives Markin" rel="nofollow">ing Instructions for assessors for the assignment Component of this Course and in" rel="nofollow">instructions for candidates. It must be read in" rel="nofollow">in conjunction with the general assessment in" rel="nofollow">information for this Component of Course assessment. The assessment in" rel="nofollow">instructions for candidates are provided in" rel="nofollow">in Appendix 1 and must be detached and given to the candidate. The assessment task will be set and externally marked by SQA and conducted in" rel="nofollow">in centres under the conditions specified by SQA. Equality and in" rel="nofollow">inclusion This Course assessment has been designed to ensure that there are no unnecessary barriers to assessment. Assessments have been designed to promote equal opportunities while main" rel="nofollow">intain" rel="nofollow">inin" rel="nofollow">ing the in" rel="nofollow">integrity of the qualification. For guidance on assessment arrangements for disabled candidates and/or those with additional support needs, please follow the lin" rel="nofollow">ink to the assessment arrangements web page: www.sqa.org.uk/sqa/14977.html Guidance on in" rel="nofollow">inclusive approaches to delivery and assessment in" rel="nofollow">in this Course is provided in" rel="nofollow">in the Course Support Notes. National 5 Accountin" rel="nofollow">ing assignment: assessment task (Baa Humbug) 1 Accountin" rel="nofollow">ing Assignment This edition: February 2016 (version 1.0) The in" rel="nofollow">information in" rel="nofollow">in this publication may be reproduced to support SQA qualifications. This publication must not be reproduced for commercial or trade purposes. This material is for use by assessors. © Scottish Qualifications Authority 2016 National 5 Accountin" rel="nofollow">ing assignment: assessment task (Baa Humbug) 2 Instructions for candidates This assessment applies to the assignment for National 5 Accountin" rel="nofollow">ing. This assignment is worth 50 marks out of the total of 150 marks for the Course assessment. The Course will be graded A–D. The assignment assesses the followin" rel="nofollow">ing skills, knowledge and understandin" rel="nofollow">ing: ? makin" rel="nofollow">ing appropriate use of spreadsheets to complete the assignment ? enterin" rel="nofollow">ing data with accuracy ? selectin" rel="nofollow">ing and usin" rel="nofollow">ing appropriate formulae, formattin" rel="nofollow">ing and prin" rel="nofollow">intin" rel="nofollow">ing functions to present in" rel="nofollow">information ? accurately completin" rel="nofollow">ing all accountin" rel="nofollow">ing work related to the context of the assignment Your assessor will let you know how the assessment will be carried out and any required conditions. Baa Humbug National 5 Accountin" rel="nofollow">ing assignment: assessment task (Baa Humbug) 3 Assignment task You are an experienced Accounts Assistant workin" rel="nofollow">ing for Ness Ltd, a small firm of chartered accountants based in" rel="nofollow">in Inverness. You report to the Senior Fin" rel="nofollow">inancial Accountant, Martin" rel="nofollow">in MacDonald. You have been assigned a number of tasks to complete for one of your clients, Baa Humbug, owned by Soha Masood. Baa Humbug is a manufacturer of boiled sweets with a Scottish twist. Complete each task in" rel="nofollow">in the order shown usin" rel="nofollow">ing the spreadsheet file Humbug. Ensure your name appears on all work prin" rel="nofollow">inted and any formulae shown are fully visible. National 5 Accountin" rel="nofollow">ing assignment: assessment task (Baa Humbug) 4 Task Prin" rel="nofollow">intouts Marks available Completed (P) 1 Trial Balance ? Value view 7 2a Income Statement ? Value view ? Formula view 11 2 2b Statement of Fin" rel="nofollow">inancial Position ? Value view ? Formula view 13 2 3 Ratio Calculations ? Value view ? Formula view 5 4 4 Ratio Report ? Value view 6 Total marks 50 National 5 Accountin" rel="nofollow">ing assignment: assessment task (Baa Humbug) 5 Ratio formulae — new termin" rel="nofollow">inology Ratio Formula Profitability ratios: Return on equity employed Profit for the year x 100 = % Openin" rel="nofollow">ing equity Gross profit ratio Gross profit x 100 = % Sales revenue Profit for the year ratio Profit for the year x 100 = % Sales revenue Liquidity ratios: Current ratio Current assets : current liabilities Answer should be expressed as a ratio, eg 2·35:1 Acid test ratio Current assets — closin" rel="nofollow">ing in" rel="nofollow">inventory : current liabilities Answer should be expressed as a ratio, eg 1·27:1 Efficiency ratios: Rate of in" rel="nofollow">inventory turnover Cost of sales = times Average in" rel="nofollow">inventory Expenses ratio Expenses x 100 = % Sales revenue Trade payables period Average trade payables x 365 = days Credit purchases NB — Where only one figure is given for trade payables, this will be taken as the average. Trade receivables period Average trade receivables x 365 = days Credit sales NB — Where only one figure is given for trade receivables, this will be taken as the average. Non-current asset turnover Sales revenue Non-current assets at net book value Answers should be expressed as a ratio, eg 0·75:1 National 5 Accountin" rel="nofollow">ing assignment: assessment task (Baa Humbug) 6 Ratio formulae — old termin" rel="nofollow">inology Ratio Formula Profitability ratios: Return on capital employed Net profit x 100 = % Openin" rel="nofollow">ing capital Gross profit ratio Gross profit x 100 = % Sales revenue Net profit ratio Net profit x 100 = % Sales revenue Liquidity ratios: Current ratio Current assets : current liabilities Answer should be expressed as a ratio, eg 2·35:1 Acid test ratio Current assets — closin" rel="nofollow">ing stock : current liabilities Answer should be expressed as a ratio, eg 1·27:1 Efficiency ratios: Rate of stock turnover Cost of goods sold = times Average stock Expenses ratio Expenses x 100 = % Sales revenue Creditors’ payment period Average creditors x 365 = days Credit purchases NB — Where only one figure is given for creditors, this will be taken as the average. Debtors’ collection period Average debtors x 365 = days Credit sales NB — Where only one figure is given for debtors, this will be taken as the average. Fixed asset turnover Sales revenue Fixed assets at net book value Answers should be expressed as a ratio, eg 0·75:1 National 5 Accountin" rel="nofollow">ing assignment: assessment task (Baa Humbug) 7 Task 1 The worksheet Trial Balance contain" rel="nofollow">ins a partially completed trial balance for Baa Humbug as at 28 February Year 3. Some items have been missed out from the trial balance. (a) Usin" rel="nofollow">ing correct accountin" rel="nofollow">ing termin" rel="nofollow">inology, enter the followin" rel="nofollow">ing items on the correct side of the trial balance. (b) Calculate and enter the figure for Equity (Capital) — there is no need to use a spreadsheet formula to calculate this figure. Prin" rel="nofollow">int one copy of the completed trial balance in" rel="nofollow">in value view. Money owed to Baa Humbug from the sale of goods on credit. £6,000 Cash withdrawn from the busin" rel="nofollow">iness bank account for Soha’s personal use. £4,620 Anticipated loss in" rel="nofollow">in value of the Factory Machin" rel="nofollow">inery up to 28 February Year 2. £800 A reduction in" rel="nofollow">in the cost of goods purchased from our suppliers for payin" rel="nofollow">ing within" rel="nofollow">in agreed credit terms. £750 Tax charged on the sale and purchase of goods (amount owed to the Government). £150 Cost of havin" rel="nofollow">ing our goods delivered from suppliers. £500 National 5 Accountin" rel="nofollow">ing assignment: assessment task (Baa Humbug) 8 Task 2a From the in" rel="nofollow">information in" rel="nofollow">in the updated trial balance and the notes below, prepare the Income Statement (Tradin" rel="nofollow">ing, Profit and Loss Account) of Baa Humbug for the year ended 28 February Year 3. You should use the worksheet Income Statement and use spreadsheet formulae to make lin" rel="nofollow">inks to the appropriate figures in" rel="nofollow">in the Trial Balance worksheet. Prin" rel="nofollow">int one copy of the completed Income Statement in" rel="nofollow">in value view and formula view. NOTES 1. Closin" rel="nofollow">ing in" rel="nofollow">inventory (Stock) — £2,750 2. Electricity owin" rel="nofollow">ing — £250 3. Office expenses prepaid — £470 4. Create a provision for bad debts — 5% of trade receivables (Debtors’) 5. Provide for depreciation for the year on the factory machin" rel="nofollow">inery — 10% on cost Task 2b Now prepare the Statement of Fin" rel="nofollow">inancial Position (Balance Sheet) of Baa Humbug as at 28 February Year 3. You should use the worksheet Statement of Fin" rel="nofollow">inancial Position and use spreadsheet formulae to make lin" rel="nofollow">inks to the appropriate figures in" rel="nofollow">in the Trial Balance and Income Statement worksheets. Prin" rel="nofollow">int one copy of the completed Statement of Fin" rel="nofollow">inancial Position in" rel="nofollow">in value view and formula view. National 5 Accountin" rel="nofollow">ing assignment: assessment task (Baa Humbug) 9 Task 3 Soha Masood would like you to analyse the performance of her busin" rel="nofollow">iness. She has provided the followin" rel="nofollow">ing accountin" rel="nofollow">ing ratio calculations for Year 2. Usin" rel="nofollow">ing the worksheet Ratios, calculate the same accountin" rel="nofollow">ing in" rel="nofollow">information for Year 3 (correct to two decimal places). Make appropriate lin" rel="nofollow">inks to the Trial Balance and/or data contain" rel="nofollow">ined in" rel="nofollow">in the Fin" rel="nofollow">inancial Statements prepared for Year 3. NOTE: 50% of goods were sold on credit. Prin" rel="nofollow">int one copy of the worksheet Ratios in" rel="nofollow">in value view and formula view. RATIO CALCULATIONS FOR YEAR 2 ? Profit for the Year Ratio — 18% ? Acid Test Ratio — 0·8:1 ? Trade Receivables (Debtors’) Collection Period — 32 days ? Average Inventory (Stock) — £3,650 ? Rate of Inventory (Stock) Turnover — 24 times Task 4 Martin" rel="nofollow">in, your lin" rel="nofollow">ine manager, would like you to prepare a short report for Baa Humbug to highlight the performance of the busin" rel="nofollow">iness between Years 2 and 3. Usin" rel="nofollow">ing the Report and your ratio calculations: (a) Comment on the performance of the busin" rel="nofollow">iness over the 2 years usin" rel="nofollow">ing the followin" rel="nofollow">ing ratios: (i) Profit for the Year Ratio (ii) Acid Test Ratio (iii) Trade Receivables (Debtors’) Collection Period. (b) Suggest one possible reason for the change in" rel="nofollow">in each of the ratios commented on in" rel="nofollow">in task 4 (a). Prin" rel="nofollow">int one copy of the completed report. National 5 Accountin" rel="nofollow">ing assignment: assessment task (Baa Humbug) 10