paper 2a question 1(a) - hkeaa 2a – q1(b): sample 2 . 2013/11/5. 6 ... • wrong focus of the...
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2013/11/5
1
BUSINESS, ACCOUNTING
AND FINANCIAL STUDIES
EXAMINATION 2013
PAPER 2A
Section A
Paper 2A – Question 1(a)
State and explain the accounting
principle or concept that has been
violated and show the journal entries
to correct the above. (Narration is not
required.)
(4 marks)
2013/11/5
2
Paper 2A – Question 1(a): Marking Scheme
Poor
Could not state and apply the accounting principle or concept violated
Wrong journal entries
Paper 2A – Q1(a): Sample 1
2013/11/5
3
Good
Could state and explain the accounting principle or concept violated
Gave partly correction journal entries
Paper 2A – Q1(a): Sample 2
Very good
Prepared correction journal entries
Paper 2A – Q1(a): Sample 3
Related
explanation
2013/11/5
4
Paper 2A – Question 1(b)
Write up the cash at bank account for the
month of March 2013. (6 marks)
Paper 2A – Question 1(b): Marking Scheme
2013/11/5
5
Poor
Opposite side of opening cash at bank balance
Misinterpretation of the cheque 201542
Could not read the question carefully
Wrong account names as description for some entries
Paper 2A – Q1(b): Sample 1
Fair
Could not work out the double entries for the cheque 201542
Wrong account names as description for some entries
Paper 2A – Q1(b): Sample 2
2013/11/5
6
Good
Could not work out the double entries for the cheque 201542
Paper 2A – Q1(b): Sample 3
Paper 2A – Question 2(a) & (b)
For the retail business of Mr. Chan,
prepare the following accounts for the
year ended 31 December 2012:
(a) Equipment account (3 marks)
(b) Accumulated depreciation account – Equipment
(4 marks)
2013/11/5
7
Poor
Could not work out the double entries for disposal and depreciation expense
Was unable to distinguish between capital expenditure and revenue expenditure and the cost of the new equipment could not be correctly arrived
Paper 2A – Q2(a) & (b): Sample 1
Paper 2A – Question 2(a) & (b): Marking Scheme
2013/11/5
8
Fair
Could not work out the double entries for disposal of equipment
Wrong account names as description for the new equipment purchased
Wrongly ignored the calculation of depreciation for the new equipment
Paper 2A – Q2(a) & (b): Sample 2
Old equipment
Very good
Correct answers
Paper 2A – Q2(a) & (b): Sample 3
2013/11/5
9
Paper 2A – Question 2(c)
State and explain the accounting principle or
concept violated in the above situation.
(3 marks)
Paper 2A – Question 2(c): Marking Scheme
2013/11/5
10
Poor
Wrong spelling of the concept
Failed to give appropriate explanation
Did not explain why using different
depreciation methods to show stable operating
results continuously violated the principle
Paper 2A – Q2(c): Sample 1
Fair
Correctly identified the accounting concept violated
Failed to give appropriate explanation
Did not explain why using different depreciation methods to show stable operating results continuously violated the principle
Paper 2A – Q2(c): Sample 2
2013/11/5
11
Very good
Sufficient explanation of consistency principle
Paper 2A – Q2(c): Sample 3
Paper 2A – Question 3(a) & (b)
(a) Calculate the predetermined production overhead absorption rate for the year 2014. (2 marks)
(b) State one rationale for Hansan Ltd’s choice of using the existing absorption base to calculate its predetermined production overhead absorption rate. (2 marks)
2013/11/5
12
Paper 2A – Question 3(a) & (b): Marking Scheme
Poor
Wrongly included direct costs and administrative overheads in the calculation of predetermined production overhead absorption rate
Could not state the reason for using direct labour hours as the existing absorption base
Paper 2A – Q3(a) & (b): Sample 1
2013/11/5
13
Fair
Correctly calculated predetermined production overhead absorption rate
Could not state the reason for using direct labour hours as the existing absorption base
Paper 2A – Q3(a) & (b): Sample 2
Very good
Correctly stated using direct labour hours more than machine hours
Only failed to state the reason for using direct labour hours as the existing absorption base
Paper 2A – Q3(a) & (b): Sample 3
2013/11/5
14
Paper 2A – Question 3(c)
Calculate the selling price of this job,
showing separately the amount of:
- prime cost
- production cost
- total cost
(6 marks)
Paper 2A – Question 3(c): Marking Scheme
2013/11/5
15
Poor
Made a wrong classification of costs
Wrongly ignored the calculation of the selling price of the job
Paper 2A – Q3(c): Sample 1
Fair
Correctly calculated the prime cost
Could not apply the predetermined overhead absorption rate to calculate the production overhead for the job
Wrongly ignored the selling price of the job
Paper 2A – Q3(c): Sample 2
2013/11/5
16
Very good
Only failed to apply the net profit margin of
50% to set the price
Paper 2A – Q3(c): Sample 3
BUSINESS, ACCOUNTING
AND FINANCIAL STUDIES
EXAMINATION 2013
PAPER 2A
Section B
2013/11/5
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35
Paper 2A – Question 4 (a): Marking Scheme
*
*
*
*
36
Paper 2A – Question 4 (b): Marking Scheme
2013/11/5
19
PAPER 2A- QUESTION 4(A): SAMPLE 1
• Failed to deal with revaluation and goodwill adjustments for partner changes
• Wrong entry for bank payment to retiring partner
PAPER 2A- QUESTION 4(A): SAMPLE 2
• Failed to deal with revaluation adjustments:
i) Ignored allowance for trade receivable
ii) Misinterpreted loss on revaluation of equipment “ decreased by 20% ”, NOT “decreased to 20%”
2013/11/5
20
PAPER 2A- QUESTION 4(B): SAMPLE 2
• Missed items like current account of partner Daisy and loan from Carrie.
40
Paper 2A – Question 4 (c)
*
*
2013/11/5
21
41
Paper 2A – Question 4 (c): Marking Scheme
PAPER 2A- QUESTION 4: SAMPLE 1
• Unable to record profit appropriation properly in the current account.
2013/11/5
22
Paper 2A- Question 4: Sample 2
• Able to include all the appropriated profit elements, but
i) interest on capital based wrongly on current account balance.
ii) failed to deduct partner’s salary and interest on capital before sharing profit $300,000
• Wrongly captured the cash injection by Ellen in current account.
44
Paper 2A – Question 4 (d)
(d) Give one reason why asset revaluation is necessary
upon the retirement of a partner.
(2 marks)
Marking Scheme
2013/11/5
23
PAPER 2A- QUESTION 4: SAMPLE 1
• Got confused in asset revaluation and profit and loss sharing issues in dealing with retirement of partner.
PAPER 2A- QUESTION 4: SAMPLE 2
• Wrong focus of the answer. The question focused on:
i) retirement of partner, not admission of partner.
ii) asset revaluation, not cost of goods
2013/11/5
26
51
Paper 2A – Question 5 (a): Marking Scheme
52
Paper 2A – Question 5 (b): Marking Scheme
2013/11/5
27
PAPER 2A – QUESTION 5: SAMPLE 1
• Unable to identify and determine the amount of sales and expenses items from incomplete records.
PAPER 2A – QUESTION 5: SAMPLE 1
• Unable to draw up proper T account for trade payable. The debits and credits were completely reversed.
2013/11/5
28
55
PAPER 2A – QUESTION 5: SAMPLE 1
• Unable to draw up proper T accounts for cash and bank.
PAPER 2A – QUESTION 5: SAMPLE 2
• Understood the pricing policy of mark-up of 40%.
• Unable to determine cash loss and failed to include all expenses like depreciation.
2013/11/5
29
PAPER 2A – QUESTION 5: SAMPLE 2
• Omitted insurance claim receivable in the current assets.
• Ignored note (i), all sales were made on cash basis.
• Depreciation wrongly computed based on reducing balance method.
58
PAPER 2A - QUESTION 6 (AI-III)
2013/11/5
30
59
PAPER 2A - QUESTION 6 (BI-III)
60
Paper 2A – Question 6 (a): Marking Scheme
* *
*
*
*
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31
61
Paper 2A – Question 6 (b): Marking Scheme
[ ($190,000+$57,000) / 0.6 ]
[ $411,667 – $380,000 ]
62
Paper 2A – Question 6: Sample 1
• Unable to identify variable costs for contribution margin computation and used wrong breakeven formula.
2013/11/5
32
Paper 2A – Question 6: Sample 1
• Ignored the requirement of showing calculations to support the recommendation.
PAPER 2A – QUESTION 6: SAMPLE 2
• Able to identify relevant costs for contribution margin computation and work out breakeven analysis.
• Wrongly used breakeven sales dollar as the denominator of the margin of safety.
2013/11/5
33
Paper 2A – Question 6: Sample 2
• Overlooked the requirement of presenting the margin of safety in percentage form.
PAPER 2A – QUESTION 6: SAMPLE 2
• Ignored to state the effect of sales commission on breakeven sales.
• Failed to realise that additional sales would bring in additional variable costs, including those from direct material, direct labor and variable production overhead.
2013/11/5
34
Paper 2A – Question 6: Sample 2
• Wrongly classified the 5% sales commission as part of the sales, instead of a variable cost item.
PAPER 2A – QUESTION 6: SAMPLE 3
• Well prepared incremental profit analysis.
2013/11/5
35
PAPER 2A – QUESTION 6
(c) Why is a decline in the margin of safety an issue
of concern to the management of a company?
(2 marks)
Marking Scheme
PAPER 2A – QUESTION 6: SAMPLE 1
• Wrong interpretation of the decline of margin of safety
2013/11/5
36
PAPER 2A – QUESTION 6: SAMPLE 2
• Failed to identify or explain the impact brought on by the decline of margin of safety.
• A very general description of margin of safety. Failed to indicate that a decline of margin of safety would mean a decrease in profit and an increase in the possibility of having a loss.
PAPER 2A – QUESTION 6: SAMPLE 3
• Able to identify and explain the impact brought on by the decline of margin of safety.
2013/11/5
37
BUSINESS, ACCOUNTING
AND FINANCIAL STUDIES
EXAMINATION 2013
PAPER 2A
Section C
Paper 2A Question 7
2013/11/5
38
Paper 2A Question 7
Paper 2A Question 7 (Sample 1)
Correct
Only (i) 2011
Incorrect
Reasons ~
• Ignored
omitted
sales
• Wrong
equations
2013/11/5
39
Paper 2A Question 7 (Sample 1)
ALL incorrect
Wrong equations
Paper 2A Question 7 (Sample 1)
Incorrect
(b) (i) Not making the comparison
(b) (ii) Not mentioning the correct ways to reduce
current liabilities
2013/11/5
40
Paper 2A Question 7 (Sample 2)
ALL
correct!
Paper 2A Question 7 (Sample 2)
Correct
Only (iv) 2011
Incorrect
Reasons ~
• Ignored the effect on
gross profit
• Retained profit for the
year vs. Retained
profits carried forward
to next year
2013/11/5
41
Paper 2A Question 7 (Sample 2)
Incorrect
(b) (i) Not giving an accurate conclusion
(b) (ii) Not mentioning the correct ways to reduce
current liabilities
Paper 2A Question 7 (Sample 3)
ALL correct except for two highlighted figures
GOOD practice ??
2013/11/5
45
Paper 2A Question 8 (Sample 1)
Could not obtain the correct gross profit
ratio and sales commission in %
Paper 2A Question 8 (Sample 1)
Many mistakes, in particular, omitted all
unavoidable costs (e.g. 4/5 office expenses of
shop C) and forfeited rental deposit
2013/11/5
46
Paper 2A Question 8 (Sample 1)
Incorrect
(c) No supporting reason for making conclusion
(d) Not answering the question
Paper 2A Question 8 (Sample 2)
Careless mistake made (3/7 instead of 2/7)
2013/11/5
47
Paper 2A Question 8 (Sample 2)
Mistakes made:
sales, salary
per month
instead of per
year and same
careless
mistake as in (a)
Paper 2A Question 8 (Sample 2)
Incorrect
Wrong conclusion
2013/11/5
48
Paper 2A Question 8 (Sample 2)
Incorrect
Not justifiable assumptions and explanations
Paper 2A Question 8 (Sample 3)
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