MINISTRY OF EDUCATION

FIJI YEAR 13 CERTIFICATE EXAMINATION 2018

ACCOUNTING

Time Allowed: 3 hours

(An extra 10 minutes is allowed for reading this paper)

INSTRUCTIONS

1. Write your Index Number on the front page and inside the back flap of the Answer Booklet.

2. Write all your answers in the Answer Booklet provided.

3. If you use extra sheets of paper, be sure to show clearly the question number(s) being
answered and to tie each sheet in your Answer Booklet at the appropriate places. Ensure that
your Index Number is written on the extra sheets.

4. Answer all the questions with a blue or black ballpoint or ink pen. Do not use red ink pen.
You may use a pencil only for drawing.

5. You may use a calculator, provided it is silent, battery-operated and non-programmable.

6. There are six questions in this paper. All the questions are compulsory.

SUMMARY OF QUESTIONS

QUESTION GUIDELINES MARK SUGGESTED

TIME
1 Review of the Fiji Year 12 Certificate Exam Coursework 15 27 minutes

2 Accounting for Partnership and Limited Liability 23 41 minutes

Companies

3 Accounting Theory 12 22 minutes

4 Analysis and Interpretation of Financial Statements 20 36 minutes

5 Cost Accounting 20 36 minutes

6 Internal Controls and Accounting Sub-Systems 10 18 minutes

TOTAL 100 180 minutes

COPYRIGHT: MINISTRY OF EDUCATION, FIJI, 2018.

 2.

QUESTION 1 REVIEW OF THE FIJI YEAR 12 [15 marks]

CERTIFICATE EXAM COURSEWORK
Part A Balance Day Adjustments (5 marks)

The Trial Balance of Timothy’s Accounting Services Company as at

30th June 2018, includes among other items, the following account balances.

Ledger Account Balances Dr ($) Cr ($)

Building 250 000
Accumulated Depreciation - Building 28 250
Professional Fees Revenue 185 000
Insurance 30 000
Salaries Expenses 72 200
Office Supplies on Hand 6 000

Note: Financial year ends on June 30th every year.

Balance Day Adjustments on 30th June 2018
1. On 1st January 2018, an insurance contract of $30 000 was signed and paid
for one year. It was debited to insurance account.
2. The building has a salvage value of $20 000. The estimated useful life
of the building is 50 years. Depreciation to be charged on building using
straight line method.
3. Part of the office supplies represented by the $6 000 balance on hand
have been consumed. An inventory count of the office supplies
actually on hand at 30th June 2018 totaled $3 245.
4. Professional Fees Revenue received in advance $550.

Required

(a) Prepare General Journal entries to record the balance day adjustments on
30th June 2018. Note: (Narrations are not required) (4 marks)

(b) State one purpose of balance day adjustments. (1 mark)

© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.

 3.

Part B Final Accounts of Non–Profit Organisation (6 marks)

The following information has been extracted from the books of Nailaga Club
as at 31st August 2018.
Statement of Financial Position of Nailaga Club as at 1st September 2017(Extract)
Assets $ Liabilities $
Cash at Bank 526 Wages accrued 30
Inventories- Refreshment 304 Loan 1 200
Furniture 750

Receipts and Payments Account of Nailaga Club for the year ended 31st August 2018

Receipts $ Payments $
Entrance Fees 400 Electricity 310
Subscriptions 1 900 Purchases- Refreshment 620
Donations 150 Wages 880
Sale of Refreshment 1 140 New Furniture 800
Sale of Furniture (Book Value $100) 170

Additional Information at 31st August 2018

1. Wages owing $60.

2. Inventories – Refreshment $388.
3. Provision for depreciation – Furniture 10% per annum on cost.
4. Interest on loan owing $100.
5. Subscriptions written off at $25.
6. Subscriptions due but not yet received $30.
7. Furniture sold had an original cost of $180.
Required

(a) Prepare the Income and Expenditure Statement of Nailaga Club for
the year ended 31st August 2018. (5 marks)

(b) State one difference between Receipts and Payments Account and
Income and Expenditure Statement. (1 mark)

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© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.
 4.

QUESTION 1 (continued)

Part C Incomplete Records (4 marks)

Sikeli Spare Parts Company maintains full set of books and record items manually.
The following information relates to the business for the month of July 2018.

Summary Information Amount ($)

Accounts Payable Balance at 1st July 2018 15 540
Accounts Receivable Balance at 1st July 2018 10 200
Cash paid to Accounts Payable 3 690
Sales Returns and Allowances 963
Interest charged by Accounts Payable 665
Contra Account Transferred to Accounts Receivables ledger 450
Debtors cheques dishonoured 256
Accounts Payable Balance at 31st July 2018 25 600
Accounts Receivable Balance at 31st July 2018 16 500
Spare Parts returned to suppliers 340
Discount Allowed to Accounts Receivable 230
Discount Received from Accounts Payable 182
Doubtful Debts 352

Required

Select the relevant information and prepare the Accounts Payable Control Account
of Sikeli Spare Parts Company to determine the credit purchases for the month of
July, 2018. (4 marks)

© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.

 5.
QUESTION 2 ACCOUNTING FOR PARTNERSHIP [23 marks]
AND LIMITED LIABILITY COMPANIES
Part A Accounting For Partnership (11 marks)
I. On 31st January 2018, Raju and Ravonu decided to amalgamate their sole
trader business, in order to form a partnership and operate as RR Shoppers.
At the date of amalgamation, their business financial positions were as follows:
Statement of Financial Position of Raju Enterprises as at 31st January 2018
Assets $ $ Equities $
Accounts Receivable 7 500 Bank Overdraft 11 300
Inventories 9 300
Motor vehicle 25 500
Less Acc Depreciation 5 000 20 500 Capital - Raju 154 000
Land 128 000
165 300 165 300
Statement of Financial Position of Ravonu Enterprises as at 31st January 2018
Assets $ $ Equities $
Cash at Bank 8 230 Accounts Payable 5 600
Accounts Receivable 10 300
Less Prov. for Doubtful Capital - Ravonu 85 330
Debts 300 10 000
Inventories 12 700
Furniture 60 000
90 930 90 930

For the purpose of amalgamation the following revaluation took place,

while other assets and liabilities were taken over at book value.

Raju Enterprises Ravonu Enterprises

$ $
Accounts Receivable 7 400 9 900
Inventories 9 000 13 000
Land 130 000 -
Furniture - 58 500
Agreed value of business 161 000 87 000

Required
Using the information given above, prepare the general journal entries to record
the formation of partnership business.
(8 marks)
II. Short Answer Questions

(a) State two clauses included in the Partnership Act. (1 mark)

(b) Name the final account that records interest on drawings. (1 mark)

(c) Give a reason for change in ownership in a partnership business. (1 mark)

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© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.
 6.
QUESTION 2 (continued)
Part B Accounting For Limited Liability Companies (12 marks)
The following balances have been extracted from the books of Great Value
Company Ltd, as at 31st October 2018.

Ledger Account Balances Dr ($) Cr( $)

Cash at Bank 52 763
Sales 152 760
Issued Capital (150 000 shares @ $1 per share) 150 000
Uncalled Capital (10 000 shares @ 50c per share) 5 000
Purchases 76 350
Profit and Loss Appropriation (01/11/17) 4 850
Director’s Fees 1 266
General Reserves 20 000
Discount Allowed 300
Debentures 162 180
Accounts Payable 12 256
Advertising Expense 1 800
Bad Debts 467
Preliminary Expense 8 000
Accounts Receivable 10 000
Calls in Advance (10 000 shares @ 10c per share) 1 000
Unpaid capital (1 000 shares @ 10c per share) 100
Provision for Doubtful Debts 255
Building at cost 135 000
Land 150 000
Accumulated Depreciation on Building 4 000
Interim Dividend Paid 12 900
Shares in Hi Fi Investment Ltd 10 000
Commission Received 2 395
Inventories (01/11/17) 45 750

© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.

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Additional Information at 31st October 2018

1. Provision for doubtful debts to decrease by $80.
2. Provision for final dividend $20 500.
3. Building to be depreciated at a rate of 6% per annum using straight line
method.
4. Interest on debentures unpaid $8 109.
5. Transfer $3 000 to general reserves.
6. Profit and Loss Appropriation balance after adjustments is $17 720 Credit.
7. Land to be revalued at $230 000.
8. Provision for income tax is $12 123.
9. Inventories on 31/10/18 is valued at $34 600.
10. Advertising expenses unexpired $800.

Required

Using the relevant information, prepare a fully classified Statement of Financial

Position of Great Value Company Ltd, as at 31st October 2018. (12 marks)

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© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.

 8.

QUESTION 3 ACCOUNTING THEORY [12 marks]

(a) Historical cost concept plays a crucial role in the reporting process of the
business.
In relation to the above statement:

(i) Define Historical Cost Concept. (1 mark)

(ii) List two drawbacks of adopting historical cost concept

by accountants. (2 marks)

(iii) State one consequence of using historical cost concept. (1 mark)

(b) State the meaning of the following terms/concepts:

(i) Verifiability (1 mark)

(ii) Realisation Account (1 mark)

(iii) Conservatism Concept (1 mark)

(iv) Accounting Standards (1 mark)

(c) Study the statements given below and identify the accounting concept
that has been violated.

(i) Quality Company Ltd changes its accounting methods to record

depreciation each year, to suit the best needs of the business.

(ii) Don Smith owns a company business. Recently he withdrew

$1 000 to pay for his house rent. The accountant recorded this
as business expense. (2 marks)

(d) State the function of the following institutions:

(i) Fiji Tax Agents Board (1 mark)

(ii) Institute of Auditors in Fiji . (1 mark)

© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.

 9.

QUESTION 4 ANALYSIS AND INTERPRETATION [20 marks]

OF FINANCIAL STATEMENTS
Part A Analysing Financial Statements (12 marks)

Super Savers Ltd and Best Savers Ltd are in stiff competition, selling variety of
household products and groceries. The following information has been extracted
from the annual reports of the two businesses for the year ending 30th April 2018.
Information Extracted from the Statement of Super Savers Ltd Best Savers Ltd
Financial Position: ($) ($)
Assets
Accounts Receivable 23 000 37 000
Bills Receivable 13 000 16 000
Inventories 58 000 64 000
Expenses Prepaid 300 500
Cash at Bank 12 000 -
Investment in Bond Ltd 28 000 -
Property, Plant and Equipment 57 000 85 500
Goodwill 15 000 18 000
206 300 221 000
Liabilities and Shareholder’s Fund
Accounts Payable 29 900 17 000
Bank Overdraft (Secured $5 000) 18 000 30 000
Provision for Taxation 7 600 9 000
Unclaimed Dividend 4 800 2 500
Mortgage on Land 47 000 58 000
Authorised and Paid Up Capital at $1 per share 70 000 89 000
Profit and Loss Appropriation 29 000 15 500
206 300 221 000
Additional Information
Sales 125 000 150 000
Opening Inventories 30 000 48 000
Gross Profit 45 000 60 000
Net Profit Before Tax 38 000 45 000
Income Tax 7 600 9 000
Total Assets (01/05/2017) 198 700 215 300
Both businesses operated for 365 days during the year.

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© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.
 10.

QUESTION 4 (continued)

Required

Calculate the following ratios and percentages correct to two decimal places
for both firms for the year 2018. Show formula and full working in the space
provided in the Answer Booklet.

(i) Gross Profit ratio

(ii) Rate of Return on Total Assets percentage

(iii) Quick Assets ratio

(iv) Inventory Turnover in days

(v) Debt to Equity Percentage (12 marks)

Part B Interpreting Financial Statements (8 marks)

The following information relates to Stylish Trading Ltd for three consecutive
financial years.

Measure 30/06/16 30/06/17 30/06/18

Net Profit percentage 18% 20.4% 17%
Rate of Return on Shareholder’s Equity 3.6% 7.4% 6.7%
Rate of Return on Total Assets 5.6% 12.4% 11%
Earnings Per Share $1.20/share $0.95/share $0.88/share
Quick Asset ratio 1.10:1 0.93:1 0.90:1
Inventory Turnover 5.4 times 6.2 times 6.5 times
Turnover of Accounts Receivables in 24 days 45 days 49 days
days

Required
Use the information given above and your knowledge to answer the questions
that follow.

(a) Comment on the following ratios:

(i) Rate of Return on Shareholders Equity.

(ii) Inventory Turnover
(iii) Quick Asset ratio (3 marks)

© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.

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(b) State one way in which the business can improve its Net Profit Percentage
in 2018. (1 mark)

(c) The Accounts Receivables turnover has increased to 49 days from 2016
to 2018. What conclusion can be drawn from this trend? (1 mark)

(d) What is the meaning of Earnings per share of $1.20 for 2016? (1 mark)

(e) Give one limitation of traditional accounting reports. (1 mark)

(f) Define Horizontal Analysis. (1 mark)

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© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.
 12.

QUESTION 5 COST ACCOUNTING [20 marks]

Part A Job Order Costing (6 marks)

Trendy Manufacturers uses the job order costing system.

The following information was obtained for the month of May 2018.
Raw Materials at 1st May, 2018 $17 500

Raw Materials were purchased on credit for $85 000.

Materials requisitioned for jobs during May were:
$
Job No. 520 2 000
Job No. 521 3 400
Job No. 522 2 800
Job No. 523 5 500
Indirect materials 2 800

The payroll details for the month were as follows:

$
Job No. 520 3 750
Job No. 521 2 280
Job No. 522 4 250
Job No. 523(unfinished) 3 900
Indirect labour 6 240

Factory overhead is applied at 110% of direct labour costs.

Factory overhead costs incurred during May were:
$
Factory utilities 1 200
Depreciation on factory equipment 900
Factory maintenance 2 300

Jobs 520, 521 and 522 were completed and transferred to finished goods.
Required
Using the relevant information given above:
(a) Prepare the schedule for Job Number 520 in the Answer Booklet. (2 marks)

(b) Prepare General Journal entries to record the following:

(i) Acquisition of Raw Materials
(ii) Direct Labour used
(iii) Factory Overhead incurred. (3 marks)

Note: Narrations not required.

(c) State one advantage of using predetermined overhead rate to assign costs
to production. (1 mark)

© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.

 13.

Part B Manufacturing Statement (8 marks)

General Manufacturers Ltd manufactures timber for local and export suppliers.
The following is an extract of balances from the Trial Balance of General
Manufacturers Ltd as at 31st March, 2018.

Balances $

Direct materials Inventories at 1st April 2017 75 500

Work In Progress Inventories at 1st April 2017
 Direct Materials 90 200
 Direct Labour 100 000

 Factory Overhead 65 200

Wages for Factory workers 189 600

Direct Materials Purchased 240 000

Office Rent 59 300

Cartage Outwards 21 000

Factory Securities wages 98 800

Depreciation on Office Equipment 25 300

Depreciation on Plant 35 150

Cell Phone expense – Factory 10 256

Factory Electricity 23 120

Factory Supplies 38 760

Additional Information at 31st March 2018

1. Work In Progress Inventories

Direct Materials $47 600

Direct Labour $28 400
Factory Overhead $32 750

2. Factory Electricity is due but not yet paid $1 200.

3. Direct Materials Inventory at 31st March 2018, $150 000.

Required
Prepare a fully classified Manufacturing Statement of General
Manufacturers Ltd for the year ended 31st March, 2018. (8 marks)
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© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.
 14.

QUESTION 5 (continued)

Part C Cost-Volume-Profit Analysis (6 marks)

Shama operates a factory producing biscuits known as Tasty Biscuits Ltd.

The following graph shows the details of sales, total cost and other costs for
one accounting period.

CVP Analysis Graph for Boxes of Biscuits

Rev/Cost
$
50
(
(000’s) Sales
45

40
35 Total cost
30
25
20
15
Fixed cost
10
5

0 1 2 3 4 5 6 7 8
Boxes of Biscuits
(000’s)
Required

Study the graph given above and answer the questions that follow.

(a) What is the Break Even in terms of:

(i) Units

(ii) Dollars (2 marks)

(b) Calculate the selling price per box of biscuit. (1 mark)

(c) Suppose the business produces 8 000 boxes of biscuits, what would be
the variable cost per box? (1 mark)

(d) What number of boxes of biscuits must be sold in order to make a

profit of $10 000? (1 mark)
(e) State one assumption of Cost Volume Profit analysis. (1 mark)

© MINISTRY OF EDUCATION, FY13CE 2018: ACCOUNTING.

 15.

QUESTION 6 INTERNAL CONTROLS [10 marks]

AND ACCOUNTING SUB-SYSTEMS
Answer the following questions that relate to the internal control of business firms.

(a) Study the extract given below and use your knowledge to answer the
questions that follow.

Tevita works for SMS Fish Factory and as an employee for 15 years is
happy with the way the Wages system operates. Each day employees write
their names in a log book available at the entrance of the factory, with the
time of arrival and departure.
A card is filled by them each week, on the overtime worked and gets it
signed by the supervisor. The supervisor then passes the card to the wage
clerk, who prepares wages, gets cash and pays them every Friday.

(i) Identify one major weakness from the situation given above. (1 mark)

(ii) Suggest one way in which the above business can improve its
current internal control over payroll. (1 mark)

(b) Identify the journal that would be used to record the following
transactions for a furniture company.

(i) Bought a new vehicle for cash $40 000.

(ii) Sold furniture on account to Timoci $8 000. (2 marks)

(c) State one internal control procedure that must be followed, while
handling accounts payable. (1 mark)

(d) Give one disadvantage of using Last In First Out method of inventory
valuation. (1 mark)

(e) Name two types of credit facilities available to customers by commercial

banks. (2 marks)

(f) List two input devices that can be used within a computer system. (1 mark)

(g) State two factors that need to be considered while calculating

depreciation using straight line method. (1 mark)

THE END

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COPYRIGHT: MINISTRY OF EDUCATION, FIJI, 2018.