MyStudyBro - Revision Exercise Tool

This Revision Handout includes the Questions and Answers of a total of 5 exercises!

Chapters:
Correction of Errors - Unit 1 (Pearson Edexcel)
Page 1 (WAC01 or WAC11) 2019 Winter
Page 3 (WAC01 or WAC11) 2019 Winter - Answer
Page 6 (WAC01 or WAC11) 2018 Summer
ICT

Page 11 (WAC01 or WAC11) 2018 Summer - Answer

Also Includes:
ICT

Page 18 (WAC01 or WAC11) 2018 Autumn

Page 21 (WAC01 or WAC11) 2018 Autumn - Answer
Page 25 (WAC01 or WAC11) 2017 Winter
Page 26 (WAC01 or WAC11) 2017 Winter - Answer
Page 29 (WAC01 or WAC11) 2017 Autumn
Page 32 (WAC01 or WAC11) 2017 Autumn - Answer
 Winter 2019 www.mystudybro.com Accounting Unit 1
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SECTION B
Answer THREE questions from this section.
3 The following draft Statement of Profit or Loss and Other Comprehensive Income was
prepared from the books of Cassia for the year ended 31 December 2018.
£
Revenue 84 000
Cost of sales (47 000)
Gross profit 37 000
General expenses (8 000)
Motor vehicle expenses (including depreciation) (18 000)
Advertising (12 000)
Loss for the year (1 000)
After completion of the statement above, Cassia found that the following errors had
been made.
(1) A sale of goods had been made to Johns for £2 800. Johns had returned £600 of
the goods as defective. No entries have been recorded in the books for the sale or
the return.
(2) The closing inventory had been overvalued by £1 300
(3) General expenses included £800 for insurance on the motor vehicles.
(4) A full year’s depreciation, £3 000, had been charged on a new motor vehicle
purchased on 1 August 2018. Cassia has the policy that depreciation is charged
on non-current assets in proportion to the months of ownership in a year.
(5) The advertising figure of £12 000 in the Statement of Profit or Loss and Other
Comprehensive Income included £4 500 for a campaign from 1 September 2018
to 31 May 2019.
Required
(a) Explain the difference between an error of compensation and an error of reversal.
(4)
(b) Prepare the journal entries to record the correction of errors (1) to (5) in the
books. Narratives are not required.
(12)
(c) Complete the table in the question paper showing the revised profit for the year
ended 31 December 2018 after the correction of all errors. You should show all
workings.
(8)
Cassia has been advised that the use of information communication technology (ICT)
would remove all chance of errors occurring in her books.
(d) Evaluate this advice.
(6)

(Total for Question 3 = 30 marks)

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(c) Complete the table showing the revised profit for the year ended
31 December 2018 after the correction of all errors. You should show
all workings.
(8)
Statement of Profit or Loss and Other Comprehensive Income for the year
ended 31 December 2018

Draft Workings Revised

£ £ £

Revenue 84 000

Cost of sales (47 000)

Gross profit 37 000

General expenses (8 000)

Motor vehicle expenses

(18 000)
(including depreciation)

Advertising (12 000)

Profit/(Loss) for the year (1 000)

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Question Answer Mark

Number
3 (a) AO1 (4)
AO1: Four marks for describing the difference.

Error of compensation

More than one error (1) AO1 which cancel each other
out (1) AO1

Error of reversal

A single error (1) AO1 where the debiting and crediting

are reversed (1) AO1 (4)

Question Answer Mark

Number
3 (b) AO1 (4), AO2 (8)
AO1: Four marks for correct description of
account.
A02: Eight marks for correct description of
account and numeric entry. (12)

General Journal

Debit Credit
£ £
Johns (1) AO1 2 800
Revenue/Sales 2 800 (1) AO2
Sales returns 600 (1) AO2
Johns 600 (1) AO2

Income statement (1) AO1 1 300

Inventory 1 300 (1) AO2

Motor vehicle expenses (1) AO1 800

General expenses 800 (1) AO2

Provision for depreciation (1) AO1 1 750

Income statement 1 750 (1) AO2

Advertising 2 500 (1) AO2

Income statement 2 500 (1) AO2

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Question Answer Mark

Number
3 (c) AO1 (3), AO2 (3), AO3 (2)
AO1: Three marks for arriving at profits.
A02: Three marks for calculating adjusted
balances.
AO3: Two marks for arriving at adjusted balances
where two errors have occurred.

(8)

Statement of Profit or Loss and Other Comprehensive Income for the year ended
31 December 2018

Draft Workings Revised

£ £ £
Revenue 84 000 + 2 800 - 600 86 200 (1) AO3

Cost of sales (47 000) +1 300 (48 300) (1) AO2

Gross profit 37 000 37 900 (1of) AO1

General expenses (8 000) -800 (7 200) (1) AO2

Motor vehicle (18 000) -1 750 +800 (17 050) (1) AO3
expenses (including
depreciation)
Advertising (12 000) - 2 500 (9 500) (1) AO2

Profit/(loss) for the (1 000) 4 150 (2/1of) AO1

year

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Question Indicative Content Mark

Number
3 (d) AO2 (1), AO3 (2), AO4 (3)

Positive points for ICT

Errors will be reduced because many of the functions of the

software are automated.
The software will ensure that for every debit there is a credit
so single entry errors will not occur.
Regular reconciliations are available to minimise errors.

Negative points ICT

Requires professional input.

Expenses and incomes can still be incorrectly categorised.

Decision
Candidates may conclude that errors would be significantly
reduced but not eliminated. Candidates should support that (6)
decision with an appropriate rationale.
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.

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2 Roshan’s bookkeeper extracted the following trial balance on 30 April 2018.

Dr Cr
£ £
Capital 60 000
Drawings 11 900
Revenue 205 000
Purchases 125 000
Returns inwards 800
Inventory – 1 May 2017 31 000
Non-current assets (cost) 64 000
Provision for depreciation
– non-current assets 36 000
Discount allowed 1 680
Discount received 3 100
Trade receivables 19 000
Trade payables 15 650
Allowance for doubtful debts 400
Wages 27 000
Rent and rates 8 500
Electricity and gas 4 600
General expenses 23 500
Cash in hand 3 170
Suspense 42 300

341 300 341 300

Roshan was aware that the bookkeeper had made some errors in drafting the trial
balance.
Required
(a) Complete the trial balance in your question paper, correcting all errors.
(8)

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After the correction of the trial balance, the bookkeeper completed the financial
statements, which showed a profit for the year of £30 700. Roshan then identified
that there had been some errors in the year-end adjustments.
(1) The inventory at 30 April 2018 was recorded in the financial statements as
£35 500. There was an error in the inventory count, which should have shown the
total as £32 700
(2) No adjustment had been made for discount receivable owing.
£3 100 had been recorded in the financial statements when this should
have been £3 450
(3) No adjustments had been made for general expenses prepaid £1 200 and owing
£550
(4) Annual depreciation on non-current assets had been charged at the rate of 25%
on cost, when this should have been 15% on cost.
(5) No adjustment had been made to the allowance for doubtful debts, which should
have been maintained at 4%.
(6) A provision should have been made for an injury claim from one of Roshan’s
employees. The injury claim would be for 7 weeks’ loss of earnings at £180 per
week plus a total loss of bonus of £120. No entry had been made in the financial
statements.
Required
(b) Complete the table in the question paper, to calculate the revised profit/loss after
the corrections of (1) to (6).
(14)

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The following information related to three of Roshan’s ledger accounts.

Balance Payments by Balance Transfer to statement of

1 May 2017 cheque 1 May 2018 profit or loss and other
comprehensive income

£ £ £ £

Allowance for To be
400 Nil To be calculated
doubtful debts calculated

Wages 650 Cr 27 650 175 Cr To be calculated

Electricity and
250 Dr 4 350 360 Cr To be calculated
gas

Required
(c) Prepare the following ledger accounts for the year ended 30 April 2018, showing
the balance brought down at 1 May 2018:
• Allowance for Doubtful Debts Account
• Wages Account
• Electricity and Gas Account.
(9)
(d) Explain the difference between:
(i) the accounting concepts of accruals and money measurement
(4)
(ii) bad debts and allowance for doubtful debts
(4)
(iii) social accounting and ethical accounting.
(4)
Roshan is considering computerising his accounts using information and
communication technology (ICT). He believes that this will eliminate the errors in his
financial statements.
(e) Evaluate the proposal that information and communication technology (ICT)
will eliminate the errors made by his bookkeeper in recording transactions and
preparing the trial balance and the financial statements.
(12)

(Total for Question 2 = 55 marks)

TOTAL FOR SECTION A = 110 MARKS

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Source material for Question 2 is on pages 5 to 7 of the source booklet.

2 (a) Complete the trial balance, correcting all errors.
(8)
Roshan
Trial balance at 30 April 2018

Dr Cr

£ £

Capital

Drawings

Revenue

Purchases

Returns inwards

Inventory – 1 May 2017

Non-current assets (cost)

Provision for depreciation – non-current assets

Discount allowed

Discount received

Trade receivables

Trade payables

Allowance for doubtful debts

Wages

Rent and rates

Electricity and gas

General expenses

Cash in hand

Suspense

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(b) Complete the table, to calculate the revised profit/loss after the corrections of
(1) to (6).
(14)
Corrected profit/(loss) for the year ended 30 April 2018

Draft profit for the year 30 700

Increase Decrease

£ £

(1) The inventory at 30 April 2018 was

recorded in the financial statements
as £35 500. There was an error in the
inventory count, which should have
shown the total as £32 700
(2) No adjustment had been made for
discount receivable owing. £3 100
had been recorded in the financial
statements when this should have
been £3 450
(3) No adjustments had been made
for general expenses prepaid
£1 200 and owing £550
(4) Annual depreciation on non-current
assets had been charged at the rate
of 25% on cost, when this should
have been 15% on cost.
(5) No adjustment had been made to
the allowance for doubtful debts,
which should have been maintained
at 4%.
(6) A provision should have been
made for an injury claim from one
of Roshan’s employees. The injury
claim would be for 7 weeks’ loss of
earnings at £180 per week plus a
total loss of bonus £120. No entry
had been made in the financial
statements.
Total

Revised profit/(loss) for the year

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Question Answer Mark

Number
2 (a) AO1 (5), AO2 (3)
AO1: Five marks for correcting trial
balance.
AO2: Three marks for matching trial
balance totals.

(8)

Roshan
Trial balance at 30 April 2018
Dr Cr
£ £
Capital 60 000
Drawings 11 900
Revenue 205 000
Purchases 125 000
Returns inwards 800 (1)AO1
Inventory -1 May 2017 31 000
Non-current assets (cost) 64 000
Provision for depreciation
– non-current assets 36 000
Discount allowed 1 680 (1)AO1
Discount received 3 100 (1)AO1
Trade receivables 19 000 (1)AO1
Trade payables 15 650
Allowance for doubtful debts 400 (1)AO1
Wages 27 000
Rent and rates 8 500
Electricity and gas 4 600
General expenses 23 500
Cash in hand 3 170 (1)AO2
Suspense - -___
320 150 320 150 (2/1of)AO2
The
same

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Question Answer Mark

Number
2 (b) AO2 (12), AO3 (2)
AO2: Twelve marks for adjusting profit.
AO3: Two marks for calculating depreciation.

(14)

Corrected profit/(loss) for the year ended 30 April 2018

£
Draft profit for the year 30 700
Increase Decrease
£ £
(1) The inventory at 30 April 2018 2 800
was recorded in the financial (1) AO2
statements as £35 500. There correct
was an error in the inventory number
count which should have been (1) AO2
£32 700. correct
treatment
(2) No adjustment had been made 350
for discount receivable owing. (1) AO2
£3 100 had been recorded in correct
the financial statements when number
this should have been £3 450. (1) AO2
correct
treatment
(3) No adjustment had been made 1 200 550
for general expenses prepaid £1 (1)AO2 (1) AO2
200 and owing £550.

(4) Annual depreciation on non- 6 400

current assets had been (1) AO3
charged at the rate of 25% on correct
cost, when this should have number
been 15%. (1) AO2
correct
treatment
(5) No adjustment had been made 360
to the allowance for doubtful (1) AO2
debts which should have been correct
maintained at 4%. number
(1) AO2
correct
treatment

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(6) A provision was to be made for 1 380

an injury claim from one of (1) AO3
Roshan’s employees. The injury correct
claim would be for 7 weeks loss number
of earnings at £180 per week (1) AO2
plus a total loss of bonus £120. correct
treatment
Total 7 950 (5 090) 2 860

Revised profit/(loss) for the 33 560

year (2/1of)
AO2

Question Answer Mark

Number
2 (c) AO1 (6), AO3 (3)
AO1: Six marks for transferring entries to
the accounts correctly and balancing off
accounts.
AO3: Three marks for deriving bank or
income statement figures.
(9)

Allowance for Doubtful Debts Account

£ £
2017
1 May Balance b/d 400 (1)
AO1
2018 2018
30 Balance c/d 760 30 Income 360 (1of)
April April statement AO3
760 760
1 May Balance b/d 760 (1of)
AO1

Wages Account
£ £
2017/18 Bank/cheque 27 650 2017
(1) AO3
2018 1 May Balance b/d 650
30 April Balance c/d 175 2018
____ 30 Income 27 175
April statement (1) AO1
27 825 27 825
1 May Balance b/d 175 (1)
AO1

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Electricity and Gas Account

£ £
2017
1 May Balance b/d 250
2017/18 Bank/cheque 4 350 (1)
AO1
2018 2018
30 April Balance c/d 360 30 Income 4 960 (1)
April statement AO3
4 960 4 960
1 May Balance b/d 360 (1)
AO1

Question Answer Mark

Number
2 (d)(i) AO1 (4)
AO1: Four marks for explaining the
distinction.

(4)

Accruals Money measurement

Matches income to expenditure for a Recognises that some assets cannot
period be measured in monetary terms in
financial statements
Applies to all expenses and incomes Some assets to the business such as
peoples skill cannot be recorded on
the SOFP
Ensures not overstating profits All assets liabilities which can be
measured in monetary terms should
be included

Marks awarded only if two points are distinguished, one from each concept (1)
AO1 x 4

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Question Answer Mark

Number
2 (d)(ii) AO1 (4)
AO1: Four marks for explaining the
distinction.

(4)

Bad debts Allowance for doubtful debts

Actual bad debts from the last period Estimate of possible debts in the next
period
Actual figure Estimate only

Expense of the period entered in the Application of prudence concept to

income statement value trade receivables accurately

These have occurred in the current This is for a debt which might occur in
period a future period

Two marks awarded for first category and two marks for second category (1)
AO1 x 4

Question Answer Mark

Number
2 (d)(iii) AO1 (4)
AO1: Four marks for explaining the
distinction.

(4)

Social accounting Ethical accounting

Business should consider their actions Businesses should report with honesty
in a social context not just profit
Considers impact on workers, Not misleading by issuing incorrect
community, environment etc statements or financial statements
Long term benefit for business and Not withholding relevant information
society

Marks awarded only if two points are distinguished, one from each concept (1)
AO1 x 4

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Question Indicative Content Mark

Number
2 (e) AO1 (1), AO2 (1), AO3 (5), AO4 (5)

Positive points for the proposal

Errors may be reduced because the software

package will complete the double entry so the
correct corresponding account will receive the entry.
The software package will produce financial reports/
statements on as regular a basis as is required.
Therefore the construction and base data used will
be correctly applied.
The computer will ensure no arithmetical/calculation
errors.

Negative points for the proposal

Although the double entry will be completed with

the debit and credit the computer can only apply the
figures supplied by the inputter. An error in
inputting from the source documents will not be
detected by the computer.
Regular financial reports/ statements will require
period end financial adjustments. If these are not
accurately applied the outcome will be inaccurate.
If poorly programmed errors may occur.
Repetitive input can lead to errors.
Lack of training can lead to input errors.
Some of the errors which do not affect the trial
balance will still not be detected if using ICT e.g.
error of omission or error of original entry.

Decision
Candidates may conclude that errors will be reduced
but there is no guarantee of elimination of errors.
Candidates should support that decision with an
appropriate rationale.

NOT
General advantages and disadvantages of using ICT.
ALL errors not revealed by the trial balance will still
not be detected.

(12)

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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 Mark

Number
3 (a) AO1 (4)
AO1: Four marks for identifying possible
reasons for the fall.

Sales will probably be falling

If sales for cash, smaller cash inflow
If for sales on credit, fewer trade receivables to
convert into cash
Inventory may rise unless purchases are
restrained
May require bank overdraft to pay expenses
Difficulty in paying trade payables

MAX 4 x (1) AO1 (4)

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SECTION B
Answer three questions from this section.
3 Argit extracted a trial balance on 31 August 2018 and prepared a draft Statement of
Profit or Loss and Other Comprehensive Income that showed a profit for the year of
£7 100
On the 31 August 2018 after completion of the draft Statement of Profit or Loss and
Other Comprehensive Income, the following balances remained in the ledger.
£
Inventory 3 800
Wages and salaries 1 900 Dr
Rent and rates 1 100 Dr
Bank interest and charges 500 Cr
Non-current assets (cost) 30 000
Provision for depreciation
Non-current assets 8 000
General expenses 200 Cr
Trade receivables 9 800
Allowance for doubtful debts 400
Argit was aware that the trial balance contained several errors and the draft
Statement of Profit or Loss and Other Comprehensive Income required adjustments.
The following errors were found:
(1) Cash sales of £3 600 had not been recorded in the books.
(2) Cash sales of £4 500 had been posted to the ledger as £5 400
(3) Inventory at 31 August was valued incorrectly. The value should have been £4 350
(4) Wages at 31 August 2018 of £1 900 were recorded incorrectly as they were
accrued not prepaid.
(5) A salary bonus payment of £250 had not been recorded in the books.
(6) Rent and rates had been calculated incorrectly. The rent was prepaid £800 and the
rates were accrued £300 at the 31 August 2018.
(7) A provision of £3 000 for bank interest and charges had been made in the
financial statements. The actual sums were bank charges £1 750 and bank
charges £90
(8) Depreciation on non-current assets had been calculated at the rate of 25% using
the straight line method instead of 25% using the reducing balance method.
(9) General expenses included a payment of £600 interest on a loan for Argit’s
personal use. Business expenses of £75 paid by Argit, had not been recorded in
the books.
(10) The allowance for doubtful debts was to be maintained at 5% of trade receivables.

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Required
(a) Complete the table showing adjustments and the corrected Statement of Profit or
Loss and Other Comprehensive Income.
(20)
(b) Explain the use of the following in correcting errors in the ledger:
• Suspense Account
• the Journal.
(4)
(c) Evaluate the preparation of a draft Statement of Profit or Loss and Other
Comprehensive Income when it is known that there are errors in the ledger.
(6)

(Total for Question 3 = 30 marks)

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SECTION B
Answer THREE questions in this section.
Indicate which question you are answering by marking a cross in the box . If you change your
mind, put a line through the box and then indicate your new question with a cross .
If you answer Question 3 put a cross in the box .
Source material for Question 3 is on pages 10 and 11 of the source booklet.
3 (a) Complete the table showing adjustments and the corrected Statement of Profit or
Loss and Other Comprehensive Income.
(20)

Draft Adjustment Corrected

£ £

Revenue 85 000

Cost of sales 39 000

Gross profit 46 000

Less

Wages and salaries 18 400

Rent and rates 4 000

Bank interest and charges 3 000

Depreciation 7 500

General expenses 5 900

Allowance for doubtful debts increase 100

38 900

Profit for the year 7 100

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Question Answer Mark

Number
3 (a) AO1 (5), AO2 (12), AO3(3)
AO1: Five marks for calculating balances.
A02: Twelve marks for correct adjustment
figure or final balance.
AO3: Three marks for depreciation and
allowance for doubtful debts.

(20)

Statement of Profit or Loss and Other Comprehensive Income for the year ended
30 August 2018
Draft Adjustment Corrected
£ £
Revenue 85 000 +3 600 (1) AO2 87 700 (1of)
-900 (1) AO2 AO3
Cost of sales (39 000) -550 (1) AO2 (38 450) (1of)
AO1
Gross profit 46 000 49 250

Less

Wages and 18 400 +3 800 (1) AO2 22 450 (1of)

salaries +250 (1) AO2 AO2

Rent and rates 4 000 +600 (1) AO2 4 600 (1of) AO1

Bank interest and 3 000 -1 160 (1) AO2 1 840(1of) AO1

charges
Depreciation 7 500 -2 000 (1) AO3 5 500 (1of) AO1

General expenses 5 900 -600 (1) AO2 5 375 (1of) AO2

+75 (1) AO2
Allowance for 100 -10 (1) AO3 90 (1of) AO2
doubtful debts
increase
38 900 39 855

Profit for the year 7 100 9 395 (1) AO1

Adjustment (1) mark for correct figure

Corrected balance (1of) mark for correct adjustment, figure and orientation.

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Question Answer Mark

Number
3 (b) AO1 (4)
AO1: Four marks for explaining the terms.

The Suspense Account will be opened with the

difference in the value of the debits and
credits in the trial balance/because not all
transactions have a debit and credit entry of equal
value (1) AO1 as errors are located the Suspense
Account will be debited or credited with the
individual differences found. (1) AO1

The Journal is a book of prime entry (1) AO1

which will be used for the authorisation of the
entries to be made to correct the double
entry/record the correction. (1) AO1 (4)

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Question Indicative Content Mark

Number
3 (c) AO2 (1), AO3 (2), AO4 (3)

Points in favour of preparation with errors

Gives an indication of the profit that has been

achieved.
This may assist decision making, but there is the
danger that important decisions may be made on
incorrect information.

Points against preparation with errors

The results will not be accurate which may impact

upon decision making.
The work will need to be repeated when the errors
are located which will be expensive in time and
cost.

Decision
Candidates may be in favour or against the
preparation of the income statement with known
errors. Candidate’s conclusion should be supported
with an appropriate rationale.

NOT
A discussion about errors.
(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.

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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.

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4 Sanith prepared a trial balance on 30 November 2016 that failed to agree. In checking
his transactions for the month of November, he found that the account of one of his
suppliers, Kamila, contained errors. The account was recorded as follows:

Kamila Account

2016 £ 2016 £
8 November Purchases 1 400 1 November Balance b/d 8 000
15 November Bank 5 600 15 November Discount 400
30 November Balance c/d 1 930 20 November Returns 530
8 930 8 930
1 December Balance b/d 1 930

On inspection of the books Sanith found the following errors:

(1) Purchases of £1 400 had been correctly entered in the Purchases Account but
debited to the account of Kamila.
(2) Discount received of £400 on 15 November had been credited to the account of
Kamila. Other entries for this transaction were correct.
(3) A credit purchase of goods from Kamila on 18 November, £2 100, had been
posted to the account of Robson.
(4) A return of goods, £350, to Kamila on 20 November had been correctly recorded
in the book of prime entry. This had been recorded in Kamila’s account as £530
(5) A payment of £1 500 made by cheque to Kamila on 25 November was omitted
from the books.

Required
(a) Prepare the journal entries to correct the errors (1) to (5) in the books.
Narratives are not required.
(10)
(b) Complete the account of Kamila in your question paper, showing the additional
entries required to correct the errors.
(10)
(c) Explain the difference between an:
(i) error of compensation and an error of reversal
(2)
(ii) error of principle and an error of commission.
(2)
(d) Evaluate the use of the trial balance.
(6)

(Total for Question 4 = 30 marks)

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Question Answer Mark

Number
4(a) AO2 (8), AO3 (2)
A02: Eight marks for carrying out the adjustment
correctly.
A03: Two marks for calculating and carrying out the
adjustment correctly.

Journal
Dr Cr
£ £
Suspense 2 800 (1) AO2
Kamila 2 800(1) AO2

Kamila 800 (1) AO2

Suspense 800(1) AO3

Robson 2 100 (1) AO2

Kamila 2 100(1) AO2

Kamila 880 (1) AO2

Suspense 880(1) AO3

Kamila 1 500 (1) AO2

Bank 1 500(1) AO2 (10)

Question Answer Mark

Number
4(b) AO1 (4), AO2 (4), AO3 (2)
A01: Four marks for identifying the correct narrative.
A02: Four marks for posting the correct value to the
correct side of the account.
A03: Two marks for calculating the correct figure and
inserting this into the correct side of the account.
(10)

Kamila Account
2016 £ 2016 £
8 November Purchases 1 400 1 November Balance b/d 8 000
15 November Bank 5 600 15 November Discount 400
30 November Suspense 800 (1) AO2 20 November Returns 530
Suspense (1) AO1 880 (2) AO3 30 November Suspense 2 800 (1) AO2
Bank (1) AO1 1 500 (1) AO2 Robson (1) AO1 2 100 (1) AO2
Balance c/d 3 650
13 830 13 830
1 December Balance b/d 3 650(1of) AO1

Note:
Ignore dates
Mark number and narrative separately. If mark for number accept any
reasonable narrative.
Note (4) award 350 (1) + 530 (1) = 880

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Question Answer Mark

Number
4(c) AO1 (4)
A01: Four marks for explaining the differences.

(i) Compensation – there is more than one error which

collectively cancel each other out (1) AO1

Reversal – there has been a debit and a credit entry of

equal value (1) AO1 which have been reversed in the books.

(2)
(ii)Principle is an error of posting to an account of a different
class (1) AO1

Commission is an error in posting to an account in the same

class. (1) AO1

(2)

(4)

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Question Indicative content Mark

Number
4(d) AO2 (1), AO3 (2), AO4 (3)

Potential positive arguments for

• Gives prima facie evidence of correct posting. It is a
checking device for the accuracy of the double entry
• Financial statements can be prepared with certainty that
the underpinning information is probably accurate.

Potential negative points for

• Errors not affecting the balancing of the trial balance will
not be revealed
• Time consuming to prepare.

NOT

• Fraud prevention
• Eliminates errors
• Calculate profit.

Decision
Candidates will conclude that a trial balance is useful in the
accounting system. The decision should be supported by
reasoned arguments. (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.

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2 Marvan extracted a trial balance on 31 August 2017. The trial balance failed to
balance so Marvan opened a Suspense Account to record the difference.
On inspection of the books and draft financial statements, Marvan discovered the
following errors:
(1) The Sales Day Book had been under-cast by £3 250
(2) Purchases on credit from Gayesha of £850, had been recorded in the ledger
account of Gihan.
(3) On 31 August 2017, a page from the inventory count (stock-take), for a total of
£900, had been omitted.
(4) Discount allowed of £280 had been credited to the Discount Allowed Account.
(5) Rent of £6 000 had been paid for the period 1 May - 31 October 2017. The
full amount had been charged to the Statement of Profit or Loss and Other
Comprehensive Income.
(6) Telephone expenses of £750 had been correctly recorded in the Bank Account but
had been recorded in the Telephone Expenses Account as £570
(7) The purchase of a new computer, £5 000, had been recorded in the Computer
Expenses Account. Depreciation was charged on computers at the rate of 25% per
annum using the straight line method.
Required
(a) Identify which of the above errors could be corrected by using the Suspense
Account.
(3)
(b) Prepare the journal entries to record the correction of all errors.
Narratives are not required.
(16)
(c) Prepare the Suspense Account after the correction of all errors, showing the
opening balance.
(5)

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On the 31 August 2017, the following balances were recorded in the ledger before
the correction of errors.
Inventory Account £41 600
Discount Allowed Account £1 320
Computer Expenses Account £12 300
Required
(d) Prepare the following corrected ledger accounts:
(i) Inventory Account
(3)
(ii) Discount Allowed Account
(3)
(iii) Computer Expenses Account.
(3)
Although the trial balance had failed to balance, Marvan prepared draft financial
statements that showed a draft profit for the year of £23 350
(e) Calculate the revised profit or loss for the year after the correction of all errors by
completing the table in your Question Paper.
(10)
(f ) Evaluate the usefulness of preparing draft financial statements when it is known
that there are errors in the books.
(12)

(Total for Question 2 = 55 marks)

TOTAL FOR SECTION A = 110 MARKS

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Although the trial balance had failed to balance, Marvan prepared draft financial
statements that showed a draft profit for the year of £23 350
(e) Calculate the revised profit or loss for the year after the correction of all errors by
completing the table.
(10)

Draft profit for the year 23 350

Increase Decrease

£ £

(1) The Sales Day Book had been under-cast

by £3 250
(2) Purchases on credit from Gayesha £850,
had been recorded in the ledger account
of Gihan.
(3) On 31 August 2017, a page from the
inventory count (stock-take), for a total of
£900, had been omitted.
(4) Discount allowed of £280 had been
credited to the Discount Allowed Account.
(5) Rent of £6 000 had been paid for the
period 1 May – 31 October 2017. The full
sum had been charged to the Statement
of Profit or Loss and Other Comprehensive
Income.
(6) Telephone expenses of £750, had been
correctly recorded in the Bank Account
but had been recorded in the Telephone
Expenses Account as £570
(7) The purchase of a new computer,
£5 000, had been recorded in the
Computer Expenses Account.
Depreciation was charged on computers
at the rate of 25% per annum using the
straight line method.

Sub total

Revised profit for the year

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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)

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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)

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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)

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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

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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.

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