QCF Specimen Question Papers

Please note that ABE will not be able to accept any queries about the individual questions in the papers. The specimen question papers are provided for information purposes only; they are intended to give candidates an indication of the types of paper that will be used to assess the QCF units and to provide a flavour of the sort of questions that might be asked. There may be minor differences between the style of the specimen question paper and that of the actual examination paper. It is essential that you look at the specimen question paper for each unit that you are taking. This is because there are various types of question paper under QCF.

Key points for all QCF question papers: All the Learning Outcomes will be assessedunder NQF only a selection of Learning Outcomes was assessed. Make sure that you read and understand the instructionsthe paper may be divided into sections; in some sections all questions will be compulsory; in others you will be offered a choice between questions. Allocate your time carefullyyou may be required to answer more questions than you would have answered under NQF. Make sure that you take account of the number of marks available for each question when deciding how to allocate your time.

Level 5 Diploma Financial Accounting QCF Specimen Question Paper

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Time allowed: 3 hours. The number of questions you have to answer is marked clearly at the top of each section. Read the instructions at the top of each section carefully. Do not answer more questions than instructed. If you are offered a choice between two questions in a section you must NOT answer both questions. The number of marks per question may vary. Marks for subdivisions of questions and the total marks for each question are shown in brackets after the question. No books, dictionaries, notes or any other written materials are allowed in this examination. Calculators, including scientific calculators, are allowed providing they are not programmable and cannot store or recall information. Electronic dictionaries and personal organisers are NOT allowed. Candidates who break ABE regulations, or commit any misconduct, will be disqualified from the examinations. Question papers must not be removed from the Examination Hall.

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ABE 2011

SECTION A
You must answer ALL FOUR questions in Section A. The questions in this section do not carry equal marks. This section carries a total of 65 marks.

Q1

The trial balance for Hunter enterprise as at 31 December 2010 is as follows: 000 Revenue Purchases Inventory 1 January 2010 Salaries and wages Expenses (including loan interest) Land at valuation Property at valuation Property accumulated depreciation as at 1 January 2010 Plant and equipment at cost Plant and equipment accumulated depreciation as at 1 January 2010 Furniture and fittings at cost Furniture and fittings accumulated depreciation as at 1 January 2010 Trade receivables Trade payables Bank Ordinary issued 1 shares Dividends paid Revaluation reserve as at 1 January 2010 Retained earnings as at 1 January 2010 6% loan redeemable 2120 11,360 1,130 2,110 955 2,350 6,220 2,790 980 590 540 230 1,540 1,980 1,140 4,000 750 780 29 1,500 29,104 000 17,234

29,104 (Note that figures in the above table are in 000s thousands) The following notes are applicable: (i) (ii) (iii)

Inventory as at 31 December 2010 was valued at 560,000. Tax charge for the year ended 31 December 2010 is estimated at 1,110,000. Adjustments for accruals and prepayments of expenses are required for the year ended 31 December 2010 as follows: Accruals Prepayments Expenses 60,000 76,000 Depreciation is to be calculated for the year ended 31 December 2010 as follows: Property 2% per annum on valuation; Plant and equipment 12% per annum straight line on cost; Furniture and fittings 15% per annum reducing balance.

(iv)

Required: Prepare the Statement of Comprehensive Income for the year ended 31 December 2010 and the Statement of Financial Position as at that date for Hunter enterprise in accordance with International Accounting Standards (IASs). (25 marks)

Q2

Businesses can use several financial instruments to finance their activities. Six of these are overdraft, long-term loans, hire purchase agreements, leasing agreements, debenture stock, and equity capital. Choose two of the above financial instruments and discuss the advantages and disadvantages to a business of using each of them to finance their activities. (12 marks)

Q3

The following information is available in respect of Palma enterprise. Statement of comprehensive income for the year ended 31 December 2010: m Gross profit Depreciation property, plant and equipment Interest receivable (25) Interest payable 42 Net profit before tax Tax Net profit after tax Dividends paid Retained earnings (Note that figures in the above table are in millions) m 204 17 221 429 (180) 249 (89) 160 m 650

Statements of financial position as at 31 December 2010 and 31 December 2009 are as follows: 31 December 2010 m 1788 99 75 213 387 2175 31 December 2009 m 1530 85 82 168 335 1865

ASSETS Non-current assets: Property, plant and equipment Current assets: Inventory Trade receivables Cash and bank TOTAL ASSETS EQUITY AND LIABILITIES Equity: Ordinary share capital Share premium Retained earnings

970 90 416 1476 460 99 140 239 2175

850 60 256 1166 450 84 165 249 1865

Non-current liabilities - debentures Current liabilities: Trade payables Tax TOTAL EQUITY AND LIABILITIES (Note that figures in the above table are in millions) Required:

Appraise the performance of Palma enterprise for the year ended 31 December 2010. Within your answer, show the calculation of four relevant ratios). (14 marks)

Q4

Choose two of the following International Accounting Standards (IASs) and explain, for each, the accounting requirements of the standard. Use examples to support your answer. IAS 2: IAS 12: IAS16: IAS 17: IAS 18: IAS 36: IAS 37: IAS 38: IAS 40: Inventories Income taxes Property, plant and equipment Leases Revenue Impairment of assets Provisions, contingent liabilities and contingent assets Intangible assets Investment property (14 marks)

END OF SECTION A MAXIMUM MARKS FOR SECTION A: 65

TURN OVER TO SECTION B

SECTION B
You must answer ONE question from Section B. DO NOT answer BOTH Q5 AND Q6. Both questions carry 20 marks. Section B is worth 20% of the total marks available for the paper. READ THE INFORMATION BELOW, THEN ANSWER EITHER Q5 OR Q6. On 1 January 2007, Chase enterprise acquired a 65% share in Thor enterprise. Thor has not issued any additional ordinary shares since the acquisition by Chase. The draft statements of financial position of Chase and Thor as at 31 December 2010 are as follows: Chase 000 ASSETS Non-current assets: Intangible assets Tangible assets Investment in Thor Current assets: Inventory Trade receivables Bank TOTAL ASSETS EQUITY AND LIABILITIES Equity: Ordinary shares 50p Ordinary shares 40p Share premium account Retained earnings Liabilities Non-current liabilities 6% debentures 5% debentures Current liabilities TOTAL EQUITY AND LIABILITIES Thor 000

270 4,230 2,450 6,950 540 345 80 965 7,915

345 2,380 2,725 360 130 50 540 3,265

4,200 1,800 695 6,695 1,600 1,000 15 2,615

800 420 7,915

500 150 3,265

(Note that figures in the above table are in 000s thousands) The following information is also available: (i) (ii) The fair value of all assets and liabilities at the acquisition date was equal to book value. The retained earnings of Thor at the acquisition date were 100,000. As at 31 December 2010, the fair value of the consolidated goodwill was reviewed and found to have a value of 5% less than its value at the acquisition date. This impairment in goodwill is to be treated in the consolidated accounts in accordance with IAS 36, Impairment of Assets.

EITHER: Q5 Prepare the consolidated statement of financial position for the Chase group as at 31 December 2010. (20 marks)

OR: Q6 (a) Explain why consolidated financial statements are prepared for users. Make reference to the draft statements of financial position of Chase and Thor above to support your answer. (10 marks) Explain the treatment of goodwill (both positive and negative) in the consolidated financial statements of a group. Make reference to relevant IFRSs in your answer. (10 marks) (Total 20 marks)

(b)

END OF SECTION B MAXIMUM MARKS FOR SECTION B: 20

SECTION C
You must answer ONE question from Section C. DO NOT answer BOTH Q7 AND Q8. Both questions carry 15 marks. Section C is worth 15% of the total marks available for the paper. EITHER: Q7 Explain any three of the twelve traditional accounting concepts. Use examples to support your answer. (15 marks)

OR: Q8 Describe the needs of any three of the main users of accounting information as identified within the international framework of the IASB. (15 marks) END OF SECTION C MAXIMUM MARKS FOR SECTION C: 15

END OF EXAMINATION PAPER TOTAL MAXIMUM MARKS: 100