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