Mark Scheme (Results)

October 2017
Pearson Edexcel IAL Accounting
(WAC11)
Paper 01 The Accounting System and
Costing
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October 2017
Publications Code WAC11_01_1710_MS
All the material in this publication is copyright
© Pearson Education Ltd 2017
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.
Question Answer Mark
Number
1 (a)(i) AO1 (1), AO2 (1), AO3 (3)
AO1: One mark for posting the correct capital
introduced.
A02: One mark for deriving the correct closing
balances.
AO3: Three marks for correctly calculating and
recording the goodwill adjustment.

(5)

(i)
Capital Accounts
Aaron Bitan Chaman Aaron Bitan Chaman
£ £ £ £ £ £
Goodwill 16 000 16 000 8 000 Balance b/d 50 000 75 000
(1) AO3 (1) AO3
Balance c/d 54 000 79 000 27 000 Assets 35 000
(1) AO1
Goodwill 20 000 20 000
(1)
AO3
70 000 95 000 35 000 70 000 95 000 35 000

Balance b/d 54 000 79 000 27 000

(1)of All 3
AO2

(5)
(ii)
AO1 (6), AO2 (14)
AO1: Six marks for transferring balances from the list of
balances to the financial statements without amendment.
A02: Fourteen marks for adjusting balances from the list of
balances and posting correctly in the financial statements.
Aaron, Bitan and Chaman
Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 July 2017

£ £
Revenue 377 500
Less
Opening inventory 36 500
Purchases 183 200
Carriage inwards 10 300 (1) AO1
230 000
Closing inventory (40 000)
Cost of sales 190 000 (1)of + w AO2
Gross profit 187 500
Plus Other income:
Rent receivable (1 750 + 750) 2 500 (1) AO2
190 000
Less
Depreciation – Land and buildings 2 000 (1) AO2
Motor vehicles 11 200 (1) AO2
Office equipment 6 000 (1) AO2
Wages and salaries 56 500 (1) AO1
General expenses (31 000 – 4 000) 27 000 (1) AO2
Allowance for doubtful debts increase 900 (1) AO2
Carriage outwards 7 450 (1) AO1
Insurance (3 650 – 600) 3 050 (1) AO2
Rent 12 000 (1) AO1
Motor vehicle expenses 9 800 (1) AO1
Bank loan interest (2 000 + 2 000) 4 000 (1) AO2
(139 900)
Profit for the year 50 100
Plus
Interest on drawings - Aaron 400 (1) AO2
Bitan 300 (1) AO2
Chaman 200 (1) AO2
900
51 000
Less
Salaries- Bitan 15 000
Chaman 12 000 (1) AO1
(27 000)
24 000

Share of profit Aaron 9 600 (1)of AO2

Bitan 9 600
Chaman 4 800 (1)of AO2
24 000
(20)
(iii)
AO1 (2), AO2 (4)
AO1: Two marks for transferring balances from the list of
balances to the account without amendment.
A02: Four marks for recording correct calculations from
appropriation.

Current Accounts
Aaron Bitan Chaman Aaron Bitan Chaman
£ £ £ £ £ £
Balance b/d 1 300 Balance 900
b/d
Salaries paid 15 000 12 000 Salaries 15 000 12 000
(1) AO2 Both (1) AO1 Both
Drawings 8 000 6 000 4 000 Share of 9 600 9 600 4 800
(1) profit (1)of AO2 All 3
AO1
Int on 400 300 200 Balance 100
drawing (1)of AO2 All 3 c/d
Balance c/d 4 200 600
9 700 25 500 16 800 9 700 25 500 16 800

Balance b/d 100 Balance 4 200 600

b/d (1) of AO2 All 3

(6)
Question Answer Mark
Number
1 (b) AO1 (4), AO2 (7), AO3 (1)
AO1: Four marks for correctly transferring
balances from the list of balances to the
position statement without amendment.
A02: Seven marks for adjusting balances for the
treatment of the item in the income statement.
AO3: One mark for correctly calculating the
adjusted trade receivables.

Statement of Financial Position at 31 July 2017

Assets
Non-current Assets
Cost Accumulated Carrying
Depreciation Value
£ £ £
Land and buildings 100 000 6 000 94 000 (1)of AO2
Motor vehicles 80 000 35 200 44 800 (1)of AO2
Office equipment 40 000 16 000 24 000 (1)of AO2
220 000 57 200 162 800

Current Assets
Inventory 40 000 (1) AO1
Trade receivables 48 000
Less Allowance for doubtful debts (2 400)
45 600 (1)of AO3
Other receivables: (4 000 + 750 +600 5 350 (1) AO2
Bank 5 000 (1) AO1
95 950
Total Assets 258 750

Capital and Liabilities

Capital Accounts
Aaron 54 000
Bitan 79 000
Chaman 27 000
160 000 (1)of AO2
Current Accounts
Aaron 100 Dr
Bitan 4 200 Cr
Chaman 600 Cr
4 700 (1)of AO2
Non-current Liabilities
8% bank loan (repayable December 2025) 50 000 (1) AO1

Current Liabilities
Trade payables 42 050 (1) AO1
Other payables: 2 000 (1) AO2
44 050
Total Capital and Liabilities 258 750
(12)
Question Indicative Content
Number
1 (c) AO1 (1), AO2 (1), AO3 (5), AO4 (5)

Potential arguments for

Greater resources available to business.
Can specialise to strengths of the partnership.
Cover for holidays and sickness.

Potential arguments against

Must share profits.
Cannot make decisions without referring to other
partners.
Need for mutual trust as joint and several liability.

Decision
Candidates may decide that the decision to join the
partnership was a positive or negative move. Candidate’s
decisions must be supported by a rationale of key points in
arriving at that conclusion.

(12)
Level Mark Descriptor
0 A completely incorrect response.
Level 1-3 Isolated elements of knowledge and understanding recall
1 based.
Weak or no relevant application to the scenario set.
Generic assertions may be present.
Level 4-6 Elements of knowledge and understanding, which are
2 applied to the scenario.
Chains of reasoning are present, but may be incomplete or
invalid.
A generic or superficial assessment is present.
Level 7-9 Accurate and thorough understanding, supported
3 throughout by relevant application to the scenario.
Some analytical perspectives are present, with developed
chains of reasoning, showing causes and/or effects.
An attempt at an assessment is presented, using financial
and non-financial information, in an appropriate format and
communicates reasoned explanations.
Level 10-12 Accurate and thorough knowledge and understanding,
4 supported throughout by relevant and effective application
to the scenario.
A coherent and logical chain of reasoning, showing causes
and effects.
Assessment is balanced, wide ranging and well
contextualised using financial and non-financial information
and makes informed recommendations and decisions.
Question Answer Mark
Number
2 (a) AO2 (3)
AO2: Three marks for correctly identifying the
errors requiring a suspense account.

(1) (1) AO2

(4) (1) AO2
(6) (1) AO2
(3)

Question Answer Mark

Number
2 (b) AO1 (3), AO2 (13)
AO1: Three marks for correctly identifying
the account.
AO2: Thirteen marks for correctly identifying
the account and the entry and value.

Journal
Dr Cr
£ £
Suspense 3 250 (1) AO2
Revenue 3 250 (1) AO2

Gihan 850 (1) AO2

Gayesha 850 (1) AO2

Inventory (1) AO1 900

Income statement 900 (1) AO2

Discount Allowed 560 (1) AO2

Suspense (1) AO1 560

Rent 2 000 (1) AO2

Income statement (1) AO1 2 000

Telephone Expenses 180 (1) AO2

Suspense 180 (1) AO2

Computer 5 000 (1) AO2

Computer Expenses 5 000 (1) AO2
Income statement/
Depreciation 1 250 (1) AO2
Provision for depreciation 1 250 (1) AO2
(16)
Question Answer Mark
Number
2 (c) AO1 (2), AO2 (3)
AO1: Two marks for establishing the opening
balance of the account.
AO2: Three marks for posting the correct
narrative and value.

Suspense Account
£ £
Revenue 3 250 (1) AO2 Balance b/d 2 510 (2) /(1)of AO1
Telephone expenses 180 (1) AO2
Discount allowed 560 (1) AO2
3 250 3 250

(5)
Question Answer Mark
Number
2 (d)(i) AO1 (3)
AO1: Three marks for recording the correction
or balancing the account. (3)

Inventory Account
2017 £ 2017 £
31 Aug Balance b/d 41 600 31 Balance c/d 42 500
(1) AO1 Aug
Income Statement 900
(1) AO1
42 500 42 500

I Sept Balance b/d 42 500

(1)of AO1
(3)

Question Answer Mark

Number
2 (d)(ii) AO1 (3)
AO1: Three marks for recording the correction
or balancing the account. (3)

Discount Allowed Account

2017 £ 2017 £
31 Aug Balance b/d 1 320 31 Balance c/d 1 880
(1) AO1 Aug
Suspense 560
(1) AO1
1 880 1 880

1 Sept Balance b/d 1 880

(1)of AO1
(3)
Question Answer Mark
Number
2 (d)(iii) AO1 (3)
AO1: Three marks for recording the correction
or balancing the account. (3)

Computer Expenses Account

2017 £ 2017 £
31 Aug Balance b/d 12 300 31 Computer Account 5 000
(1) AO1 Aug (1) AO1
31 Balance c/d 7 300
Aug
12 300 12 300

1 Sept Balance b/d 7 300

(1)of AO1

(3)
Question Answer Mark
Number
2 (e) AO2 (9), AO3 (1)
AO2: Nine marks for identifying the correct
effect of the error.
AO3: One mark for correctly calculating the
depreciation. (10)

£
Draft profit for the year 23 350

Increase Decrease

£ £

(1) The Sales Day Book had been 3 250

under-cast by £3 250. (1) AO2

(2) Purchases on credit from Gayesha No effect

£850, had been recorded in the ledger (1) AO2
account of Gihan.

(3) On 31 August 2017, a page from the 900

inventory count (stock-take), for a total (1) AO2
of £900, had been omitted.

(4) Discount allowed of £280 had been 560

credited to the Discount Allowed (1) AO2
Account.

(5) Rent of £6 000 had been paid for the 2 000

period 1 May - 31 October 2017. The (1) AO2
full amount had been charged to the
Statement of Profit or Loss and Other
Comprehensive Income.
(6) Telephone expenses of £750, had been 180
correctly recorded in the Bank Account (1) AO2
but had been recorded in the Telephone
Expenses Account as £570.
(7) The purchase of a new computer, 5 000 1 250
£5 000, had been recorded in the (1) AO2 (1) AO3
Computer Expenses Account.
Depreciation is charged on computers at
the rate of 25% per annum using the
straight line method.
Sub total 11 150 1 990

Revised profit for the year 32 510

(2)/(1)of
AO2
Question Indicative Content Mark
Number
2 (f) AO1 (1), AO2 (1), AO3 (5), AO4 (5)

Potential arguments for

Prepares draft figures for use.
Gives a reasonable estimate of profit.
Assists the making of decisions.
Easier to adjust draft statements to prepare
final statements.

Potential arguments against

Reliance cannot be placed upon the information
which is not accurate.
Work has to be repeated – time and cost.
Can lead to incorrect decisions.

NOT
Any discussion of errors such as type, location,
identification etc.
Check accuracy.

Decision
Candidates may decide that the decision to
prepare financial statements when there are
errors in the books was a positive or negative
move. Candidate’s decisions must be
supported by a rationale of key points in
arriving at that conclusion. (12)
Level Mark Descriptor
0 A completely incorrect response.
Level 1 1-3 Isolated elements of knowledge and understanding
recall based.
Weak or no relevant application to the scenario set.
Generic assertions may be present.
Level 2 4-6 Elements of knowledge and understanding, which are
applied to the scenario.
Chains of reasoning are present, but may be
incomplete or invalid.
A generic or superficial assessment is present.
Level 3 7-9 Accurate and thorough understanding, supported
throughout by relevant application to the scenario.
Some analytical perspectives are present, with
developed chains of reasoning, showing causes and/or
effects.
An attempt at an assessment is presented, using
financial and non-financial information, in an
appropriate format and communicates reasoned
explanations.
Level 4 10 - 12 Accurate and thorough knowledge and understanding,
supported throughout by relevant and effective
application to the scenario.
A coherent and logical chain of reasoning, showing
causes and effects.
Assessment is balanced, wide ranging and well
contextualised using financial and non-financial
information and makes informed recommendations
and decisions.

Question Answer
Number Mark
3 (a) (i) AO2 (4)
AO2: Four marks for completing the
calculations.
Revenue
£
Cash receipts 34 000 (1) AO2
Cheque receipts 106 000 (1) AO2
Trade receivables at end 9 200
149 200
Trade receivables at start (10 400) (1) AO2
Revenue 138 800 (1)of AO2

(4)

Question Answer
Number Mark
3 (a) (ii) AO2 (3)
AO2: Three marks for completing the
calculations.
Purchases
£
Cheque payments 95 000 (1) AO2
Trade payables at end 15 000
110 000
Trade payables at start (8 000) (1) AO2
Purchases 102 000 (1)of AO2

(3)
Question Answer
Number Mark
3 (b) (i) AO3 (3)
A03: Three marks for calculations for
closing inventory.

Closing inventory

Sales 138 800 x 100 = Cost of sales 104 100 (1)of AO3
133 1/3

(13 600 + Purchases 102 000 of)= 115 600 (1)of AO3- Cost of sales
104 100 = 11 500 (1)of AO3

(3)

Question Answer
Number Mark
3 (b) (ii) AO1 (2), AO2 (1)
AO1: Two marks for establishing receipts
and payments.
A02: One mark for adjusting the
calculations for opening balance.

Bank

£ £
Receipts Payments
Trade receivables 106 000 Trade receivables 95 000 (1)
Cash sales 3 000 General expenses 6 500 AO1
109 000 (1) AO1 101 500

Opening balance (1 700) + 109 000 – 101 500 = 5 800 (1)of AO2

(3)
Question Answer Mark
Number
3 (c) AO1 (4), AO2 (3)
AO1: Four marks for transferred
balances.
A02: Three marks adjusting balances to
be included.

Statement of Profit or Loss and Other Comprehensive Income

for the year ended 30 September 2017
£ £
Revenue 138 800 (1)of AO1

Opening inventory 13 600

Purchases 102 000 of
115 600
Closing inventory (11 500) (1)of AO1
Cost of sales 104 100
Gross profit 34 700 (1)of AO2

Less
Motor van expenses 7 800 (1) AO1
Wages (14 000 + 900) 14 900 (1) AO2
Motor van depreciation 3 100 (1) AO1
General expenses (6 500 – 400) 6 100 (1) AO2
31 900
Profit for the year 2 800

(7)

Question Answer Mark

Number
3 (d) AO1 (1), AO3 (1)
AO1: One mark for stating the meaning of
the concept.
AO3: One mark for naming the concept.

Accounting/Business entity (1) AO3 the owner

and the business will have a separate identity (1)
AO1.

(2)
Question Answer Mark
Number
3 (e) AO1 (2)
AO1: Two marks for explaining the
method and its application.

Revaluation method (1) AO1 based on the

reduction in the market value over the
accounting period. (1) AO1

(2)
Question Indicative Content Mark
Number
3 (f) AO2 (1), AO3 (2), AO4 (3)

Potential positive points for maintaining a set of

books
Balances of personal accounts available at all
times.
Profit can be ascertained.
Assists decision making.

Potential arguments for not maintaining a set of

books
Cost and employment of accounting specialist.
More time to run the business.

NOT
Decision about errors.

Decision
Candidates may decide that maintaining a formal
set of books is a positive or negative move.
Candidate’s decisions must be supported by a
rationale of key points in arriving at that
conclusion.
(6)
Level Mark Descriptor
0 A completely incorrect response.
Level 1 1-2 Isolated elements of knowledge and understanding
which are recall based.
Generic assertions may be present.
Weak or no relevant application to the scenario set.
Level 2 3-4 Elements of knowledge and understanding, which are
applied to the scenario.
Some analysis is present, with developed chains of
reasoning, showing causes and/or effects applied to the
scenario, although these may be incomplete or invalid.
An attempt at an evaluation is presented, using
financial and perhaps non-financial information, with a
decision.
Level 3 5-6 Accurate and thorough knowledge and understanding.
Application to the scenario is relevant and effective.
A coherent and logical chain of reasoning, showing
causes and effects is present.
Evaluation is balanced and wide ranging, using financial
and perhaps non-financial information and an
appropriate decision is made.
Question Answer Mark
Number
4 (a) (i) AO1 (2)
AO1: Two marks for stating how the
concepts apply to depreciation.

Going concern
It is assumed that the business will have perpetual
life (1) AO1 Therefore the cost of non-current
assets should be matched to each accounting
period over the useful life of the asset. (1) AO1

(2)

Question Answer Mark

Number
4 (a) (ii) AO1 (2)
AO1: Two marks for stating how the
concepts apply to depreciation.

Consistency
Whichever method of depreciation and rate has
been chosen for a non-current asset it should be
consistently applied to the non-current assets’
useful life (1) AO1 to avoid distortion of profit.
(1) AO1
(2)

Question Answer Mark

Number
4 (b) (i) AO2 (2)
AO2: Two marks for completing the
calculations.

Land and buildings

250 000 + 60 000 = 310 000 (1) AO2 x 10%

= 31 000 (1)of AO2

(2)
Question Answer Mark
Number
4 (b) (ii) AO2 (2), AO3 (1)
AO2: Two marks for completing the
calculations.
A03: One mark for adjusting the
calculations for disposals.

Motor vehicles

Carrying value after disposal 37 000 (1) AO3 +

23 000 = 60 000 (1) AO2 x 25% = 15 000 (1)of
AO2

OR

((42 000 – 5 000 (1) AO3) + 23 000 (1) AO2))

x 25% = 15 000 (1)of

(3)

Question Answer Mark

Number
4 (b) (iii) AO2 (1), AO3 (2)
AO2: One mark for completing the
calculations.
A03: Two marks for adjusting the
calculations for disposals.

Loose tools

15 000 + 6 000 = 21 000 (1) AO2 – 14 000

= 7 000 (1) AO3 – 5000 = 2 000 (1) AO3

(3)
Question Answer Mark
Number
4 (c) AO1 (5), AO2 (7)
AO1: Five marks for inserting figures in the
table.
A02: Seven marks for applying provision for
depreciation correctly.

Schedule of Non-current Assets at 30 June 2017.

Land and Motor Loose
buildings vehicles tools

£ £ £

Cost at 30 June 250 000 72 000 15 000

2016
Additions for year 60 000 23 000 6 000
(1) AO1 (1) AO1 (1) AO2
Disposals for year ( - ) ( 25 000 ) ( - )
(1) AO2
Total non- 310 000 70 000 21 000
current asset
cost
Less
depreciation
Provision at 30 ( 80 000 ) ( 30 000 ) ( 5 000 )
June 2016
Depreciation on - 20 000 -
non-current asset (1) AO2
disposals
Depreciation for ( 31 000 ) ( 15 000 ) ( 2 000 )
the year ended 30 (1) of AO2 (2)(1)of (1)of
June 2017 AO2 AO2
Total (111 000) ( 25 000) ( 7 000)
accumulated
depreciation
Carrying value at 199 000 45 000 14 000
30 June 2017 (1)of AO1 (1)of AO1 (1)of
AO1

(12)
Question Indicative Content Mark
Number
4 (d) AO2 (1), AO3 (2), AO4 (3)

Potential positive arguments for the policy

Buildings will require depreciation because they will
deteriorate.
Accruals/matching concepts are being applied.
Prudence concept has been applied.
Straight line method is the same depreciation each
year and does not distort profit.

Potential negative points for the policy

Land is not normally depreciated.
At 10% the rate is too high for matching/accruals
concept.
The book value may not be near to the market value.

NOT
Less time to calculate.
Less errors.

Decision
Candidates may decide that the application of 10%
straight line depreciation to land and buildings is
appropriate or not appropriate. Candidate’s decisions
must be supported by a rationale of key points in
arriving at that conclusion.
(6)
Level Mark Descriptor
0 A completely incorrect response.
Level 1 1-2 Isolated elements of knowledge and understanding
which are recall based.
Generic assertions may be present.
Weak or no relevant application to the scenario set.
Level 2 3-4 Elements of knowledge and understanding, which are
applied to the scenario.
Some analysis is present, with developed chains of
reasoning, showing causes and/or effects applied to the
scenario, although these may be incomplete or invalid.
An attempt at an evaluation is presented, using
financial and perhaps non-financial information, with a
decision.
Level 3 5-6 Accurate and thorough knowledge and understanding.
Application to the scenario is relevant and effective.
A coherent and logical chain of reasoning, showing
causes and effects is present.
Evaluation is balanced and wide ranging, using financial
and perhaps non-financial information and an
appropriate decision is made.
Question Answer Mark
Number
5 (a) (i) AO1 (2)
A01: Two marks for explaining the terms.

Semi-variable cost

The cost includes a fixed (1) AO1 and a variable

component (1) AO1
OR
Electricity, telephone charges where there is a
fixed cost (standing charge) (1) and a variable
cost (cost of calls or electricity usage) (1). (2)

Question Answer Mark

Number
5 (a) (ii) AO1 (2)
A01: Two marks for explaining the terms.

Overhead allocation

Costs which are wholly identifiable (1) AO1 with

one cost centre. (1) AO1

(2)
Question Answer Mark
Number
5 (a) (iii) AO1 (2)
A01: Two marks for explaining the terms.

Absorption of overheads

A basis of recovering the total costs of a cost

centre by the jobs that pass through them (1)
AO1. This may be by a labour hour rate or
machine hour rate. (1) AO1

OR

The money charged for customers jobs (1) based

on the calculated budgeted overhead absorption
rate (1)
(2)
Question Answer Mark
Number
5 (b) AO1 (2), AO2 (4), AO3 (1)
AO1: Two marks for transferring the
allocated overheads and totalling.
A02: Four marks for identifying the correct
basis of apportionment and carrying out the
apportionment.
AO3: One mark for apportioning
depreciation.

Metal shop Paint shop Administration

£ £ £
Allocated overheads 39 000 53 000 24 000 (1) AO1
Rent and rates 12 000 6 000 2 000 (1) AO2

Depreciation 4 000 20 000 4 000 (1) AO3

Insurance 1 000 5 000 1 000 (1) AO2

Management salaries 25 000 15 000 5 000 (1) AO2

81 000 99 000 36 000
Reallocation 27 000 9 000 (1)of AO2
Total 108 000 108 000 (1)of AO1
(7)
Question Answer Mark
Number
5 (c) (i) AO2 (1), AO3 (1)
A02: One mark for calculating the hourly rate.
A03: One mark for calculating the annual
hours chargeable to customer’s jobs.

Metal shop

£108 000 = £12 (1)of AO2

9 000 (1) AO3

(2)

Question Answer Mark

Number
5 (c) (ii) AO2 (1), AO3 (1)
A02: One mark for calculating the hourly rate.
A03: One mark for calculating the annual
hours chargeable to customer’s jobs.

Paint shop

£108 000 = £20 (1)of AO2

5 400 (1) AO3

(2)
Question Answer Mark
Number
5 (d) AO1 (1), AO2 (6)
A01: One mark for transferring the profit
figure to the quotation.
A03: Six marks for calculating the corrected
figure and then correctly inserting it into the
quotation.

Quotation
£ £
Raw materials £250 + 20% 300 (1) AO2

Direct labour
Metal shop 16 x £7.5 120 (1) AO2
Paint shop 20 x £10 200 (1) AO2
320
Overheads
Metal shop 16 x £12 192 (1)of AO2
Paint shop 20 x £20 400 (1)of AO2
592
Total 1 212
Profit 150 (1) AO1
Quotation price 1 362 (1)of
AO2

(7)
Question Indicative Content Mark
Number
5 (e) AO2 (1), AO3 (2), AO4 (3)

Potential positive arguments for apportionment

A realistic estimate of the usage of specific costs by
each department.
A departmental rate can be calculated for
quotations.

Potential negative points for apportionment

Only an estimate.
Cost may not be reduced if the department is
removed or under performs.
Costly, time consuming, requires skill.

Decision
Candidates may decide that apportionment is useful or
not useful. Candidate’s decisions must be supported by
a rationale of key points in arriving at that conclusion.
(6)
Level Mark Descriptor
0 A completely incorrect response.
Level 1 1-2 Isolated elements of knowledge and understanding
which are recall based.
Generic assertions may be present.
Weak or no relevant application to the scenario set.
Level 2 3-4 Elements of knowledge and understanding, which are
applied to the scenario.
Some analysis is present, with developed chains of
reasoning, showing causes and/or effects applied to the
scenario, although these may be incomplete or invalid.
An attempt at an evaluation is presented, using
financial and perhaps non-financial information, with a
decision.
Level 3 5-6 Accurate and thorough knowledge and understanding.
Application to the scenario is relevant and effective.
A coherent and logical chain of reasoning, showing
causes and effects is present.
Evaluation is balanced and wide ranging, using financial
and perhaps non-financial information and an
appropriate decision is made.
Question Answer Mark
Number
6 (a) (i) AO1 (2)
A01: Two marks for explaining the terms.

Profitability – The amount of profit earned (1)

AO1 by a business for every £ of capital/sales
invested in it. (1) AO1

(2)

Question Answer Mark

Number
6 (a) (ii) AO1 (2)
A01: Two marks for explaining the terms.

Liquidity – The ability of the business to meet

financial commitments/current liabilities (1)
AO1 turning current assets into cash. (1) AO1

(2)

Question Answer Mark

Number
6 (b) AO1 (1), AO2 (3)
A01: One mark for using the opening
bank balance.
A02: Three marks for calculating the total
receipts and expenditure and calculating
the closing balance.
(4)
Receipts £ Payments £
Receipts from trade receivables 625 000 Payments to trade payables 580 000
6% Loan taken out by Yaso 300 000 Non-current assets 250 000
Expenses paid 125 000
Drawings 40 000
925 000 995 000

Balance 40 000 (1) AO1+ 925 000 (1) AO2– 995 000 (1) AO2= 30 000 overdraft (1)of AO2
Question Answer Mark
Number
6 (c) (i) AO2 (1), AO3 (1)
A02: One mark for the correct answer with
descriptor.
A03: One mark for calculating the corrected
figure and then correctly inserting it into the
ratio.

Inventory turnover (times)

560 000 (1) AO3 = 14 times (1)of AO2

(35 000 + 45 000)/2

(2)

Question Answer Mark

Number
6 (c) (ii) AO2 (1), AO3 (1)
A02: One mark for the correct answer
with descriptor.
A03: One mark for calculating the
corrected figure and then correctly
inserting it into the ratio.

Current ratio

45 000 + 160 000 +20 000 (1) AO3 = 2.50:1 (1)of AO2
60 000 + 30 000 of

(2)
Question Answer Mark
Number
6 (c) (iii) AO2 (2)
A02: Two marks for calculating the
correct answer with descriptor.

Liquid (acid test) ratio

160 000 +20 000 = 2:1 (1)of AO2

60 000 + 30 000 of (1) AO2

(2)

Question Answer Mark

Number
6 (c) (iv) AO2 (2)
A02: Two marks for calculating the
correct answer with descriptor.

Trade payables payment period (in days)

60 000 x 365 = 38.42 days (1) AO2

570 000 (1) AO2

(2)
Question Answer Mark
Number
6 (c) (v) AO2 (2)
A02: Two marks for calculating the
correct answer with descriptor.

Trade receivables collection period (in days)

160 000 x 365 = 73 days (1) AO2

800 000 (1) AO2

(2)

Question Answer Mark

Number
6 (c) (vi) AO2 (1), AO3 (1)
A02: One mark for the correct answer
with descriptor.
A03: One mark for calculating the
corrected figure and then correctly
inserting it into the ratio.

Revenue to non-current assets

800 000 = 2.5:1 (1) AO3

320 000 (1) AO2

OR

250% (1)

(2)
Question Indicative Content Mark
Number
6 (d) AO2 (1), AO3 (2), AO4 (3)
Own figure rule applies
Potential positive arguments for liquidity
The current and liquid (acid test) ratio are higher
than the accepted benchmark.
Inventory is being turned over quicker than last
year or the sector average.
The current and liquid (acid test) ratio are higher
than last year and the sector average.
Trade payables payment period is slightly better
than last year and the sector average.

Potential negative points for liquidity

The current and liquid (acid test) ratio mainly
consist of outstanding trade receivables.
The trade receivables collection at 73 days is too
high and debt collection procedures need reviewing.
Trade receivables collection has worsened and is
more than twice the sector average.
Although the revenue to non-current assets is
comparable with last year and the sector average.
The purchase of £320 000 of new non-current
assets has had an effect on the availability of cash.

Decision
Candidates may decide that the liquidity is sufficient or
insufficient. Candidate’s decisions must be supported
by a rationale of key points in arriving at that
conclusion. (6)
Level Mark Descriptor
0 A completely incorrect response.
Level 1 1-2 Isolated elements of knowledge and understanding
which are recall based.
Generic assertions may be present.
Weak or no relevant application to the scenario set.
Level 2 3-4 Elements of knowledge and understanding, which are
applied to the scenario.
Some analysis is present, with developed chains of
reasoning, showing causes and/or effects applied to the
scenario, although these may be incomplete or invalid.
An attempt at an evaluation is presented, using
financial and perhaps non-financial information, with a
decision.
 Level 3 5-6 Accurate and thorough knowledge and understanding.
Application to the scenario is relevant and effective.
A coherent and logical chain of reasoning, showing
causes and effects is present.
Evaluation is balanced and wide ranging, using financial
and perhaps non-financial information and an
appropriate decision is made.

Question Answer Mark

Number
6 (e) AO1 (4)
A01: Four marks for listing non-financial
factors.

Skill of the staff

Management
Product range
Product development
Location of the business
Reputation/goodwill
Customer loyalty
Relationship with suppliers
Competitive environment

4 x (1) AO1
(4)

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