B124_19J

TMA 01 GUIDANCE NOTES

DEADLINE : 19 NOVEMBER 2019

As you will know TMA01 is due on 19th November. This is still some time away but it is a
good idea not to leave the TMA until the last minute and so you may want to make a start on
it. Below are some tips that you might find helpful. Don't forget that I am here to help so
please do ask if you have any questions or if anything is unclear.

1. Read the assessment guide up to and including TMA 01. Sections on what is expected of
you in the TMA, referencing & plagiarism are particularly important.

2. Read TMA 01 and note that you need to study Book 1 and Book 2 only before tackling
TMA 01. You will be able to answer the questions better if you read Book 1, Chapters 1 to 3,
and Book 2, Chapters 1 and 2.

3. Before you begin writing read each question and understand what is required to answer
the question. The notes above each question are quite useful.

4. Write the written answers in your own words. This will help you when you come to revise –
it is much easier to remember your own words than a great chunk of text from the Unit
(which is 'copying' and your work may be identified by turnitin software as having been
plagiarised). If you do copy text from the Unit or any other source, including websites make
sure that you reference correctly. Ask me if you need any help with this.

5. Note the word limits for some of the written questions and make sure that you do not
exceed these word limits.

6. Make sure that you answer separately each part of each question i.e. part (i), (ii) etc.
These will be your headings for each answer. There is no need to copy the question in your
TMA.

7. Start each question (i.e. 1,2 & 3) on a new page.

8. The glossary, which you can access by clicking on the resources tab, will provide helpful
definitions of some of the terms which you are required to explain, such as stakeholder,
tangible asset etc.

You can do your workings in Excel but submit the whole TMA as a Word (with a .doc
or a .docx extension) file. You can copy and paste from Excel into Word. Please do
not copy as a picture as I will not be able to comment on individual lines. You will
submit your TMA in electronic format.

Do not spend too much time on research on question 1. You can google on particular terms
or topics, but ensue that you acknowledge the source in your references. There is sufficient
information in your text and in the course website to produce good answers. The
Accounting Glossary in the Resources section of the course website can be quite
useful.

Page 1 of 13
Some brief guidance notes on the TMA below.

Question 1

The word limit for part (a) is 1,200 words, and for part (b) it is 600 words. You are allowed to
write 10% above the word limit i.e. 1,320 and 660 words respectively before you lose a mark
for exceeding the word limit.

There is a lot of explaining to do in this question. To explain is to inform someone of the

“how” and the “why” of what you are explaining. Needless to say you use your own words to
do this. There should be enough detail for a reader to understand what you are explaining.
As a rule of thumb one or two sentences per mark should be sufficient.

Part a

(i)
a. You explain each of the 4 characteristics in your own words. Please note that
anything taken from the textbook even if put within quotation marks will be
considered as copying. The only reference required is the source of these
qualities. Activity 1.1 on page 12 of Book 1 will help you. Select any four,
and stay with these four in parts (b) and (c).
b. Think of ONE piece of information that you have written about yourself in the
job application. Then write about how this piece of information meets the
criteria for ALL the 4 characteristics that you have explained in (a).
c. Think of all the pieces of information that you provide in your cv e.g. personal
details, qualifications, experience etc. Then explain why each of these items
of information about yourself meets the characteristics explained in (a).

(ii) Activity 1.1. explains benefit exceeding cost. Think of an accounting example
e.g. information on a source document, extracting some information from an
accounting system, understanding a journal etc. Then write about how long it
takes to extract or understand something for the benefit it provides.

(iii) Book 2/ Page 8 explains the business entity concept. Explain this in Peter’s
context, and how he has violated it. In part (c) you have to explain whether his
business profit is over or understated. You can make up numbers to explain.

(iv) The glossary provides a useful definition of a copyright. Also have a look at book 2
page 34 which discusses the different types of non-current assets.

(v) To answer part (v) you will need to read book 1 pages 18-21, which discusses the
three main functions of accounting.

Part b

Question 1(b)(i) is based on B124 book 1 chapters 2. The double entry system of accounting is
introduced in book 2 chapter 1.

Question 1(b)(ii) and 1(b)(iii) are based on book 1 chapter 3.

Page 2 of 13
Question 2

This question is based on book 2 chapters 1 and 3 (3.1 to 3.5). Completing activity 1.2 in chapter
1 of book 2 would be excellent preparation for part (a). Completing activity 3.2 in chapter 3 of
book 2 would be very good preparation for part (b).

Watching the video which explains the accounting equation will also be helpful. This video can
be found under week 3 activity A on the module website.

Question 3

Book 2 (chapters 1 & 2) will help you with this question.

You can combine the sections (a), (b), and (c). In Parts a, b and c you produce the ‘T’
accounts and close off each account carrying forward the balance if any. Make sure that
you open an account for each category of transaction i.e. capital, asset, liability, revenue,
expenditure.

In each of the ‘T’ accounts you must clearly show the balances brought and carried forward,
and the transactions taking place in the period. Please see the fully worked question below
(Dan) which you can use as a template to set out your work.

In Part d you will set out all the balances that you extracted in Parts a, b and c in a Trial
Balance. Make sure that you know which ledger balances appear in the TB.

You may find it easier to do this question in Excel, but make sure that you copy and paste
into Word. Please do not transfer to Word as a picture as it will prevent me from
commenting on individual lines.

Finally

Finally, read and fully understand the questions before you tackle them. If anything here is
not clear then do ask preferably in the TGF as there may be others who have the same
question to ask.

The deadline is 19 November but do not submit your TMA early as I start marking from 19
November. Work at it a bit at a time rather than rush through the whole TMA before
submitting it. This gives you time to review your work and produce your best work.

All the best

Pradip

Handout 1
Dan, a sole trader, owns and manages a small business, which sells stationery. Dan
balances the business accounts at the end of each month of the financial year.

Page 3 of 13
On 1 October the balances on his accounts were as follows:

Account name £ £
Capital 16,000
Equipment 11,500
Bank 5,362
Receivables 2,852
Payables 3,714

During October, the following transactions took place.

Date Amount of Transaction

transaction
(£)
1 240 Receives payment from a receivable
2 1400 Pays a supplies account (payable)
3 267 Receives a credit note from a payable for stationery that was
previously invoiced but not delivered
6 30,000 Wins £30,000 on the lottery and decides to put this money into the
business
9 680 Pays cash on delivery for paper and other stationery items
9 4,000 Purchases stationery on credit
10 846 Receives payment from a receivable
11 455 Delivers stationery to a customer and is paid in cash.
14 170 Delivers stationery to a customer and agrees 30 days credit terms
15 700 Invoices a customer on 30 days credit terms
16 2,007 Receives payment from a customer
18 1,500 Dan purchases new office equipment for his own business
20 25,000 Purchases a van for deliveries
24 500 Dan takes drawings
25 986 Invoices a customer on 30 days credit terms
28 545 Invoices a customer on 30 days credit terms
29 1,900 Pays a supplier
31 885 Invoices a customer on 30 days credit terms

Required:

(a) Set out Dan’s general ledger accounts at 1 October. Present the ledger accounts as T
accounts.

Page 4 of 13
(b) Following on from a), post the October transactions and balance off the general ledger
accounts.

(c) Present the trial balance at 1 November.

(continued)

Page 5 of 13
Handout 2 (this is the answer to the question on handout 1)

A step by step approach to answering this question can be found after the answer

Below are the debits and credits that need to be made in order to record the
transactions in the accounts for the month of October. Note that this list of “journal
entries” is not required for your TMA.

Octobe Debit (£) Credit (£)

r
1 Bank 240 Receivables 240
2 Payables 1,400 Bank 1,400
3 Payables 267 Purchase returns 267
6 Bank 30,000 Capital 30,000
9 Purchases 680 Bank 680
9 Purchases 4,000 Payables 4,000
10 Bank 846 Receivables 846
11 Bank 455 Sales 455
14 Receivables 170 Sales 170
15 Receivables 700 Sales 700
16 Bank 2,007 Receivables 2,007
18 Equipment 1,500 Bank 1,500
20 Van 25,000 Bank 25,000
24 Drawings 500 Bank 500
25 Receivables 986 Sales 986
28 Receivables 545 Sales 545
29 Payables 1,900 Bank 1,900
31 Receivables 885 Sales 885

Step by step approach to answering this question

Step 1: Open the T accounts listed on the 1st October and insert the opening balances.

Capital
£ £
16,00
1 Oct Balance b/d 0

Equipment
£ £
11,50
1 Oct Balance b/d 0

Page 6 of 13
  

Bank
£ £
1 Oct Balance b/d 5,362

Receivables account
£ £
1 Oct Balance b/d 2,852

Payables account
£ £
1 Oct Balance b/d 3,714

Step 2: Identify the double entry for each of the October transactions. Note that new T
accounts need to be prepared for sales, purchases, purchases returns, drawings and
van.

Remember that each of these transactions will have 2 effects on the T accounts: a debit
effect on one T account and a credit effect on a second T account.

Refer to the rules of double entry on page 52 of book 2 and remember:

Debit entries increase assets, expenses, drawings (and decrease liabilities)

Credit entries increase liabilities, sales, capital (and decrease assets)

Page 7 of 13
The DEAD CLIC (see below) can be a good way of remembering these rules. Note
debit entries are recorded on the left hand side of the T account and credit entries are
recorded on the right hand side.

The DEAD CLIC 

DEBIT   CREDIT

Expenses   Liabilities

Assets   Income

Drawings   Capital

 
During October, the following transactions took place.

Date Amount of Transaction

transaction
(£)
1 240 Receives payment from a receivable

This transaction will increase the asset bank, as the business will be receiving £240
from their customer so:

Dr Bank £240

The transaction will decrease the asset receivable as the customer will no longer owe
£240 to the business so:

Cr Receivables £240

Now identify the debits and credits for each of the remaining transactions (although
note that you do not need to present this list in your TMA answer):

Octobe Debit (£) Credit (£)

r
1 Bank 240 Receivables 240
2 Payables 1,400 Bank 1,400
3 Payables 267 Purchase returns 267
6 Bank 30,000 Capital 30,000
9 Purchases 680 Bank 680

Page 8 of 13
 9 Purchases 4,000 Payables 4,000
10 Bank 846 Receivables 846
11 Bank 455 Sales 455
14 Receivables 170 Sales 170
15 Receivables 700 Sales 700
16 Bank 2,007 Receivables 2,007
18 Equipment 1,500 Bank 1,500
20 Van 25,000 Bank 25,000
24 Drawings 500 Bank 500
25 Receivables 986 Sales 986
28 Receivables 545 Sales 545
29 Payables 1,900 Bank 1,900
31 Receivables 885 Sales 885

Step 3: Post the transactions into your T accounts one by one. Remember you will
need to open new T accounts for sales, purchases, purchases returns, drawings and
van.

Octobe Debit (£) Credit (£)

r
1 Bank 240 Receivables 240

Page 9 of 13
 Capital
£ £
16,00
1 Oct Balance b/d 0
3 46,00 30,00
1 Oct Balance c/d 0 6 Oct Bank 0
46,00 46,00
0 0
46,00
  1 Nov Balance b/d 0

Equipment
£ £
11,50 3 13,00
1 Oct Balance b/d 0 1 Oct Balance c/d 0
1
8 Oct Bank 1,500  
3,000 3,000
13,00
1 Nov Balance b/d 0

Bank
£ £
1 Oct Balance b/d 5,362 2 Oct Payables 1,400
1 Oct Receivables 240 9 Oct Purchases 680
30,00 1
6 Oct Capital introduced 0 8 Oct Equipment 1,500
2 25,00
0 Oct Van 0
1 2
0 Oct Receivables 846 4 Oct Drawings 500
1 2
1 Oct Sales 455 9 Oct Payables 1,900
1 3
6 Oct Receivables 2,007 1 Oct Balance c/d 7,930
38,91 38,91
0 0
1 Nov Balance b/d 7,930

Receivables account
£ £
1 Oct Balance b/d 2,852 1 Oct Bank 240
1
4 Oct Sales 170

Page 10 of 13
1
5 Oct Sales 700 10 Oct Bank 846
2
5 Oct Sales 986 16 Oct Bank 2,007
2
8 Oct Sales 545
3
1 Oct Sales 885 31 Oct Balance c/d 3,045
6,138 6,138
1 Nov Balance b/d 3,045

Payables account
£ £
2 Oct Bank 1,400 1 Oct Balance b/d 3,714
3 Oct Purchases returns 267 9 Oct Purchases 4,000
2
9 Oct Bank 1,900
3
1 Oct Balance c/d 4,147  
7,714 7,714
  1 Nov Balance b/d 4,147
Sales
£ £
  11 Oct Bank 455
  14 Oct Receivables 170
  15 Oct Receivables 700
  25 Oct Receivables 986
  28 Oct Receivables 545
3
1 Oct Balance c/d 3,741 31 Oct Receivables 885
3,741 3,741
  1 Nov Balance b/d 3,741

Purchases
£ £
9 Oct Bank 680
9 Oct Payables 4,000
3
1 Oct Balance c/d 4,680
4,680 4,680
1 Nov Balance b/d 4,680

Purchases returns
£ £
3
1 Oct Balance c/d 267 3 Oct Payables 267
267 267
  1 Nov Balance b/d 267

Drawings
£ £

Page 11 of 13
 2
4 Oct October 500 31 Oct Balance c/d 500
500 500
1 Nov Balance b/d  500

Van
£ £
2 25,00 3 25,00
0 Oct Bank 0 1 Oct Balance c/d 0
25,00 25,00
0 0
25,00
1 Nov Balance b/d 0

Step 4: When all the transactions have been posted into T accounts, balance the T
accounts and prepare your trial balance. The trial balance is a list of all the balances
on the T accounts in the general ledger).

(c) Trial balance at 1 November

Account name Debit Credit

£ £
Capital 46,000
Equipment 13,000
Bank 7,930
Receivables 3,045
Payables 4,147
Sales 3,741
Purchases 4,680
Purchases returns 267
Drawings 500
Van 25,000
Totals 54,155 54,155

Page 12 of 13
Page 13 of 13