Mark Scheme

July 2017
Results

Pearson LCCI
Certificate in Accounting (VRQ)
(ASE20104)
Level 3
LCCI Qualifications

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Publication Code: 58612_ms
© Pearson Education Ltd 2017
July 2017
ASE20104
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.

• Where marks are awarded for own figure answers, these marks can only
be awarded if evidence of how the candidate arrived at their values has
been provided (their workings).

• If candidate's fail to provide their workings when instructed in the paper, it

may not be possible to achieve all marks associated with the question,
even if the final answer is correct.

• For calculation questions full marks can be awarded where correct answer
is seen with no workings shown, unless question states that candidate
must provide workings.

ASE20104
3 July 2017
Abbreviation

of Own Figure rule

Accuracy marks can be awarded where the candidates’ answer does not match the
mark scheme, though is accurate based on their valid method.

cao Correct Answer Only rule

Accuracy marks will only be awarded if the candidates’ answer is correct,
and in line with the mark scheme.

ASE20104
4 July 2017
Question Answer AO2 (18) Mark
Number
1(a) Award marks for correct figures with understandable
labels as indicated.
Danzing Ltd
Statement of financial Position at 31 March 2017

$
Assets
Non-current assets
Property, plant and equipment 406 152 (7of)

Current assets
Inventories 57 600 (1)
Trade and other receivables 85 000 (1)
Cash and cash equivalents 500 (1)
143 100
Total assets 549 252
Equity and liabilities
Equity
Share capital (ordinary shares at $1 200 000
each) (1 for
Share premium 50 000 all
General reserve 15 000 four)
Revaluation reserve 75 000
Retained earnings W3 45 772 (3of)
Total equity 385 772
Non-current liabilities
10% Bank loan 100 000 (1)
Current liabilities
Cash and cash equivalents 22 480 (1)
Trade and other payables 41 000 (1)
63 480
Total liabilities 163 480
Total equity and liabilities 549 252 (1of)

Cost Accumulated Carrying

Depreciation Value
W1 Land and 375 000 33 000 342 000
buildings (1) (1) (1of)

W2 Machinery 100 000 28 720 (1) + 7 64 152

(1) 128 (1) (1of)
= 35 848

406 152
(18)

ASE20104
5 July 2017
 W3
Retained earnings at 1 April 36 972
Profit for the year 34 000
Dividend paid (6 000) (1)
Inventory adjustment (19 200) (1)
45 772 (1of)

Additional guidance
Accept split figures for property, plant and equipment.
Accept split figures for trade and other receivables.
Award mark for bank loan only if it is under the heading non-current liabilities.
Accept split figures for trade and other payables.
Total Equity and Liabilities 1of mark must be equal to total assets.

ASE20104
6 July 2017
Question Answer AO1 (2) Mark
Number
1(b) Award 1 mark for each concept up to a maximum of
2 marks.

• Going concern (1)

• Consistency (1)
• Accruals (1)
• Prudence (1)

Accept any other appropriate responses. (2)

Question Answer AO1 (2) Mark

Number
1(c) Award 1 mark for each characteristic up to a
maximum of 2 marks.

• Relevance (1)
• Faithful representation (1)
• Comparability (1)
• Verifiability (1)
• Timeliness (1)
• Understand ability (1)
(2)

Total for Question 1 = 22 marks

ASE20104
7 July 2017
Question Answer AO2 (11) Mark
Number
2(a) Award 1 mark for figures against correct labels as indicated.

Aung
Extended trial balance extract at 30 April 2017
Trial balance Adjustments
Debit Credit $ Debit Credit
$ $ $
Bank 2 830
Discount allowed 1 895 125 (1)
Discount received 4 525 125 (1)
Fixtures and fittings 25 000 2
accumulated depreciation 500 (1)
Fixtures and fittings cost 50 000
Machinery accumulated 18 050 7
depreciation 695 (1)
Machinery cost 95 000
Office expenses 45 850
Opening equity 75 000
Opening inventory 35 450
Purchases 156 1
335 750 (1)
Rent 9 750 750 (1)
Revenue 291 460
Suspense 250 250
Wages and salaries 20 500 1
450 (1
)
Depreciation 10
195 (1
)
Drawings 1 750
(1)
Other payables 1 450
(1)
Other receivables 750 (1
) (11)
Additional Guidance
Accept split figures for depreciation mark.

ASE20104
8 July 2017
Question Answer AO2 (2) Mark
Number
2(b)(i) Award marks as indicated.

$12 500-$3 500= $9 000 (1)

$43 750 – (9 500 - 9 000) = $ 43 250(1of) (2)

Additional Guidance
Correct answer only scores 2 marks.
Award of mark only if $9 500 is deducted from the given value for the
inventory $43 750.

Question Answer AO1 (1) AO3 (1) Mark

Number
2(b)(ii) Award 1 mark for identifying the impact on gross
profit and 1 mark for justification/reasoning.

The gross profit will decrease (1) as the cost of sales will
increase (1) due to decrease in the closing inventory (1)
(2)
Additional Guidance
Must mention effect on gross profit to get initial mark.

Question Answer AO1 (2) Mark

Number
2(b)(iii) Award 1 mark for each method up to a maximum of
2 marks.

• First in First out (FIFO) (1)

• Last in First out (LIFO) (1)
• AVCO/weighted average (1)
• Standard cost (1)
(2)

Question Answer AO2 (2) Mark

Number
2(c) Award marks as indicated.

$(7 500 –500) = $7 000x5%= $350 (1)

$600-$350=$250 (1of)
(2)
Additional Guidance
Correct answer only scores 2 marks.
No specific layout required.

Total for Question 2 = 19 marks

ASE20104
9 July 2017
Question Answer AO2 (3) Mark
Number
3 (a)(i) Award marks as indicated.

Ally $7 000 (1)

Bella $5 250 (1)

Claire $4 250 (1)

(3)

ASE20104
10 July 2017
Question Answer AO2 (7) Mark
Number
3(a)(ii) Award 1 mark for each correct figure as indicated.
Award 1 mark for all correct labels and dates.

Current Account

Date Details Ally Bella Claire Ally Bella Claire

Date Details
$ $ $ $ $ $

1 April Balance b/d 8 000 1 April Balance 15 000 12 000

2016 2016 b/d (1 for
all)

31 Share of loss 4 580 3 435 5 335 31 Interest on 7 000 5 250 4 250

March (1 for all) March capital
2017 2017 (1of for
all)
Drawings Salaries
(1 for all) 17 000 24 500 16 850 (1 for all) 12 000 12 000 12 000
Capital *
Capital * 12 420 6 065 (1of for 18 685
all)
34 000 35 935 28 250 34 000 35 935 28 250
(7)
Additional guidance
Award marks if the current accounts are not done in columnar format.

ASE20104
11 July 2017
Question Answer AO2 (5) Mark
Number
3(b) Award marks as indicated.

Purchase consideration = $(156 250 x 1.60)=250 000 (1)

+ Trade payables $5 450 (1)
+ Allys capital (motor vehicle) 12 000 (1)
- (Non-current assets 208 500 + inventory 7 850 + trade receivables
6 350) = $222 700 (1)

Profit on realisation = $44 750

Ally = $44 750 x 4/10 = $17 900
Bella = $44 750 x 3/10 = $13 425 (1of for all)
Claire = $44 750 x 3/10 = $13 425

(5)
Additional Guidance
Correct answer only scores 5 marks
No specific layout required

ASE20104
12 July 2017
Question Answer AO2 (6) Mark
Number
3 (c) Award 1 mark as indicated.

$
Balance b/d 100 000
(1)
Current account 12 420
(1of from (aii))
Profit on realisation 17 900
(1of from (b))
Motor vehicle (12 000)
(1)
Shares (100 000)
(1)
Amount due to Ally 18 320
(1of)

(6)
Additional guidance
Correct answer only scores 6 marks.
No specific layout is required.

Total for Question 3 = 21 marks

ASE20104
13 July 2017
Question Answer AO1 (2) Mark
Number
4(a) Award 1 mark for each difference stated up to a
maximum of 2 marks.

• Financial accounting is for both external and

internal purposes / management accounting is for
internal purposes only (1)

• Financial accounting is based on historical/past

data / management accounting is for the current
and future period (1)

• Financial accounting must follow certain format for

presentation / management accounting does not
have any specific format (1)

(2)
Additional Guidance
Accept: Financial accounting is for external purposes / management
accounting is for internal purposes.

ASE20104
14 July 2017
Question Answer AO3 (4) AO5 (1) Mark
Number
4(b) Max 4 marks for discussion of marginal costing and
absorption costing.
Award 1 mark for decision.
Decision mark can only be awarded if at least one
point of discussion is provided for each costing
technique.

Absorption costing (max 3 marks)

• Absorption costing absorbs fixed overheads to the
products (1)
• There is no fixed rule to absorb the fixed
overheads (1)
• It ensures that all the costs are covered in long
run (1)
• Total cost is unrealistic as it is based on estimated
overhead absorption rate (1)
• Inventory valuation is more realistic as it is based
on full cost (1)
• It helps in determining selling price (1)

Marginal costing (max 3 marks)

• It treats the fixed overheads as the period costs
(1)
• It uses contribution per unit to make decisions (1)
• It is used in the short run to make the decisions
(1)
• It gives lower profit in the current year if there is
an increase in closing inventory (1)
• Inventory valuation is not realistic as it is based on
variable cost (1)
• It is used to make decision when there is spare
capacity (1)
• It helps to determine selling price for special
orders (1)

Any supported decision (1)

Accept any other reasonable responses. (5)

ASE20104
15 July 2017
Question Answer AO2 (3) Mark
Number
4(c) Award marks as indicated
$230 000+$119 740 = $349 740 (1)
$(14.00 - (2.50+4.50+1.20=8.20) = $5.80 (1)

=60 300 (footballs) (1of) (3)

Additional guidance
Correct answer only scores 3 marks.

Question Answer AO2 (5) Mark

Number
4(d) Award 1 mark as indicated

Revenue $1 190 000 (1)

+ $135 000 (1)
$1 325 000
Less variable cost
Material cost $250 000
Labour cost $450 000
Royalties $120 000
$820 000 (1)
Contribution $505 000
Less fixed cost $230 000 (1)
Profit $275 000 (1of) (5)
Additional guidance
Correct answer only scores 5 marks.

ASE20104
16 July 2017
Question Answer AO4 (4) AO5 (1) Mark
Number
4(e) Award 1 mark for analysis of each option up to a
maximum of 2 marks for each option.
Award 1 mark for decision
Decision mark can only be awarded if both options
are analysed.

Option 1
• The contribution per unit will increase (1)
• The profit will be more than the existing profit (1)
• The profit increase assumes that the business will
be able to sell the product at the full selling price
(1) which was not the case during current year.
• It will have a negative impact on work force as the
workers will be without jobs (1)

Option 2
• It is based on estimated increase in the number of
units which may not happen (1).
• The increase in selling price of $2 per football may
have negative impact on demand (1).
• The contribution per unit will increase as the other
variable costs remain unchanged (1)
• The profit will be more than the existing profit (1)

Any supported decision (1)

Accept any other reasonable responses.

(5)

Total for Question 4 = 20 marks

ASE20104
17 July 2017
Question Answer AO1 (2) Mark
Number
5(a) Award 1 mark for each stakeholder up to maximum of 2
marks.

• Bank/providers of external finance (1)

• Suppliers (1)
• Owners (1)
• Managers/ directors (1)
(2)

Question Answer AO2 (4) Mark

Number
5(b) Award 1 mark for figures with understandable label as
indicated.
Homcomp Ltd
Trade receivables budget for the three months ending 30
November 2017
September October November
$ $ $
Opening balance 38 400 86 400 91 200 (1for
row)
(Credit) sales 48 000 43 200 39 360 (1for
row)
86 400 129 600 130 560
Receipts/bank/cash 38 400 48 000 (1for
row)
Closing balance 86 400 91 200 82 560 (1of
for
row)
(4)

Question Answer AO2 (4) Mark

Number
5(c) Award 1 mark for figures with understandable label as
indicated.
Homcomp Ltd
Trade payables budget for the three months ending 30
November 2017
September October November
$ $ $
Opening balance 96 800 77 000 63 800 (1for
row)
(Credit) purchases 33 000 30 800 44 000 (1for
row)
129 800 107 800 107 800
Payments/bank/cash 52 800 44 000 33 000 (1for
row)
Closing balance 77 000 63 800 74 800 (1of
for
row)
(4)

ASE20104
18 July 2017
Question Answer AO2 (4) Mark
Number
5(d) Award 1 mark for figures with understandable label
as indicated.
Homcomp Ltd
Inventory budget for the three months ending 30
November 2017
September October November
$ $ $
Opening 61 600 50 600 41 800 (1for
row)
balance
Purchases 33 000 30 800 44 000 (1for
row)
94 600 81 400 85 800
Sales 44 000 39 600 36 080 (1for
row)
Closing 50 600 41 800 49 720 (1of
for
balance row)

Or

September October November

$ $ $
Opening 2 800 2 300 1 900 (1for
row)
balance
Purchases 1 500 1 400 2 000 (1for
row)
4 300 3 700 3 900
Sales 2 000 1 800 1 640 (1for
row)
Closing 2 300 1 900 2 260 (1of
for
balance row)

(4)

Question Answer AO1 (1) AO3 (1) Mark

Number
5(e) Award 1 mark for identification of the reason for
difference and 1 mark for linked
justification/reasoning.

A statement of profit or loss is prepared on accrual

basis/concept (1) but the figures in the cash budget are
different as they are prepared on receipt and payment
basis (1).
(2)

ASE20104
19 July 2017
Question Answer AO3 (2) Mark
Number
5(f) Award marks for each point of reasoning, maximum
2.

They will be concerned in the month of July as there is no

sales revenue (1)

In future months only 20% of total sales are for cash and
remaining are paying after two months (1)
(2)

(Total for Question 5 =18 marks)

TOTAL FOR PAPER = 100 MARKS

ASE20104
20 July 2017