Assessment task: Baa Humbug

Assessment task: Baa Humbug This is the assessment task for the assignment Component of National 5 Accounting Course assessment. It must be read in conjunction with the general assessment information for this Component of Course assessment. This edition: February 2016 (version 1.0) The information 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 strictest confidence. You must keep it in a secure place until it is used. National 5 Accounting assignment: assessment task (Baa Humbug) Introduction This is the assessment task for National 5 Accounting 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 grading decisions. This is one of two Components of Course assessment. The other Component is a question paper. This document gives Marking Instructions for assessors for the assignment Component of this Course and instructions for candidates. It must be read in conjunction with the general assessment information for this Component of Course assessment. The assessment instructions for candidates are provided 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 centres under the conditions specified by SQA. Equality and 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 maintaining the integrity of the qualification. For guidance on assessment arrangements for disabled candidates and/or those with additional support needs, please follow the link to the assessment arrangements web page: www.sqa.org.uk/sqa/14977.html Guidance on inclusive approaches to delivery and assessment in this Course is provided in the Course Support Notes. National 5 Accounting assignment: assessment task (Baa Humbug) 1 Accounting Assignment This edition: February 2016 (version 1.0) The information 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 Accounting assignment: assessment task (Baa Humbug) 2 Instructions for candidates This assessment applies to the assignment for National 5 Accounting. 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 following skills, knowledge and understanding: ? making appropriate use of spreadsheets to complete the assignment ? entering data with accuracy ? selecting and using appropriate formulae, formatting and printing functions to present information ? accurately completing all accounting 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 Accounting assignment: assessment task (Baa Humbug) 3 Assignment task You are an experienced Accounts Assistant working for Ness Ltd, a small firm of chartered accountants based in Inverness. You report to the Senior Financial Accountant, Martin 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 the order shown using the spreadsheet file Humbug. Ensure your name appears on all work printed and any formulae shown are fully visible. National 5 Accounting assignment: assessment task (Baa Humbug) 4 Task Printouts Marks available Completed (P) 1 Trial Balance ? Value view 7 2a Income Statement ? Value view ? Formula view 11 2 2b Statement of Financial 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 Accounting assignment: assessment task (Baa Humbug) 5 Ratio formulae — new terminology Ratio Formula Profitability ratios: Return on equity employed Profit for the year x 100 = % Opening 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 — closing inventory : current liabilities Answer should be expressed as a ratio, eg 1·27:1 Efficiency ratios: Rate of inventory turnover Cost of sales = times Average 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 Accounting assignment: assessment task (Baa Humbug) 6 Ratio formulae — old terminology Ratio Formula Profitability ratios: Return on capital employed Net profit x 100 = % Opening 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 — closing 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 Accounting assignment: assessment task (Baa Humbug) 7 Task 1 The worksheet Trial Balance contains 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) Using correct accounting terminology, enter the following 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. Print one copy of the completed trial balance in value view. Money owed to Baa Humbug from the sale of goods on credit. £6,000 Cash withdrawn from the business bank account for Soha’s personal use. £4,620 Anticipated loss in value of the Factory Machinery up to 28 February Year 2. £800 A reduction in the cost of goods purchased from our suppliers for paying within agreed credit terms. £750 Tax charged on the sale and purchase of goods (amount owed to the Government). £150 Cost of having our goods delivered from suppliers. £500 National 5 Accounting assignment: assessment task (Baa Humbug) 8 Task 2a From the information in the updated trial balance and the notes below, prepare the Income Statement (Trading, 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 links to the appropriate figures in the Trial Balance worksheet. Print one copy of the completed Income Statement in value view and formula view. NOTES 1. Closing inventory (Stock) — £2,750 2. Electricity owing — £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 machinery — 10% on cost Task 2b Now prepare the Statement of Financial Position (Balance Sheet) of Baa Humbug as at 28 February Year 3. You should use the worksheet Statement of Financial Position and use spreadsheet formulae to make links to the appropriate figures in the Trial Balance and Income Statement worksheets. Print one copy of the completed Statement of Financial Position in value view and formula view. National 5 Accounting assignment: assessment task (Baa Humbug) 9 Task 3 Soha Masood would like you to analyse the performance of her business. She has provided the following accounting ratio calculations for Year 2. Using the worksheet Ratios, calculate the same accounting information for Year 3 (correct to two decimal places). Make appropriate links to the Trial Balance and/or data contained in the Financial Statements prepared for Year 3. NOTE: 50% of goods were sold on credit. Print one copy of the worksheet Ratios 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, your line manager, would like you to prepare a short report for Baa Humbug to highlight the performance of the business between Years 2 and 3. Using the Report and your ratio calculations: (a) Comment on the performance of the business over the 2 years using the following 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 each of the ratios commented on in task 4 (a). Print one copy of the completed report. National 5 Accounting assignment: assessment task (Baa Humbug) 10