Pearson LCCI

Certificate in Accounting
(VRQ)
Level 3
(ASE20104)

Examiners’ Report
September 2018

2012-2013

1 LCCI Certificate in Accounting ASE20104

LCCI Qualifications
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September 2018
Publication code: 57541_ER

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© Pearson Education Ltd 2018

1 LCCI Certificate in Accounting ASE20104 Level 3

Introduction
Pearson (LCCI) redeveloped the new specification at Level 3 Certificate in
Accounting (VRQ) (ASE20104) as a part of Finance and Quantitative suite
of qualifications from Level 1 to Level 4.

The Pearson LCCI Level 3 Certificate in Accounting (VRQ) gives candidates

an overview of the fundamental accounting principles and concepts that
underlie all financial accounting. Candidates are introduced to topic areas
they are likely to encounter in their working lives in practical, scenario-
based situations.

The qualification has been revised to allow candidates to progress to the

Pearson LCCI Level 4 Certificate in Financial Accounting (VRQ), which
extends and introduces new advanced topic areas in this field.

The assessment is of 100 marks comprising of a total of 5 questions. All

the questions are compulsory.

This assessment covered these topics:

• accounting concepts and framework

• Recording financial transactions
• preparation of financial statements
• Preparation of accounting records from incomplete records
• interpretation of financial statements
• budgetary control
• Introduction to decision making

Candidates performed very well on numerical question such as preparation

of statement of financial position for a limited company, statement of
changes in equity and capital investment appraisal. Candidates struggled
with questions on preparation of ledger accounts and the preparation of
statement of profit or loss and preparation of a cash budget. The
performance on straight-forward state questions was better but the
candidates struggled with explain, discuss and evaluate questions.

The performance on some topics indicate that candidates either did not
complete the lower level qualifications or that they lack the underpinning
knowledge and understanding of fundamentals required to complete this
level successfully.

2 LCCI Certificate in Accounting ASE20104

Question 1
The majority of the candidates scored above average marks on this
question.

Part (a). The majority of the candidates were able to prepare the statement
of changes in equity correctly. The main mistakes were not accounting for
the dividend and bonus issue correctly.

See below an example of (a):

Part (b). The majority of the candidates were able to state the name of
three sections of the statement of cash flows. Less well-prepared
candidates struggled with this question as they listed the individual items
rather than the sections.

See below an example of (b):

3 LCCI Certificate in Accounting ASE20104

Part (c). Most of the candidates were able to identify the stakeholders and
their interest correctly, except the competitors and investors.

See below an example of (c):

Examiner Comments
The bonus issue is an increase of capital without cash by using
the reserves and, if stated to leave the reserves in most flexible
form, the retained earnings are used last – this means
candidates must use the share premium first.

Examiner Tip
The total of the balances at the end must be equal to the total
of the total column.

4 LCCI Certificate in Accounting ASE20104

Question 2
Most of the candidates scored below average marks on this question.

Part (a)(i) and (ii). For part (i), the majority of the candidates were unable
to prepare the trade receivables ledger control account correctly with all
routine items to calculate the credit sales. The main mistakes were either
recording the entries the wrong way around or including the allowance for
doubtful debts in the trade receivables ledger control account. This is
assessed extensively at lower levels. Part (ii) was done to a reasonable
standard but there were still a few candidates from some centres who did
not know which side balances provided/entries were to be recorded.

See below an example of (a)(i) and (ii):

5 LCCI Certificate in Accounting ASE20104

Part (b). Most of the candidates were unable to account the return inwards,
the rental income with adjustments, the electricity with adjustments and
allowance for doubtful debts correctly. Few candidates recorded the rental
income as an expense.

See below an example of (b):

6 LCCI Certificate in Accounting ASE20104

Part (c). The majority of the candidates were able to identify the accounting
concept correctly and provided a generic explanation about the concept,
but they were unable to relate it with the allowance for doubtful debts to
score full marks.

See below an example of (c):

Examiner Comments
Memorise the format for the control accounts to prepare these
correctly, especially the narratives.

When asked to prepare an account, especially where asked to

balance the account, candidates prepare these in the ledger
format (‘T’ account).

Examiner Tip
Try to relate the accounting concepts to the scenario provided
to score full marks.

7 LCCI Certificate in Accounting ASE20104

Question 3
The majority of the candidates scored above average marks on this
question.

Part (a). Most of the candidates were able to prepare the statement of
financial position in the correct format. The main mistakes made were not
showing the trade and other receivables, and trade and other payables, on
one line. Some candidates did not add the headings for the sections of the
statement of financial position, such as non-current assets, current assets,
equity, non-current liabilities and current liabilities and total for each
subsection with labels as appropriate. Some candidates also prepared the
statement of changes in equity and recorded only the total equity in the
statement of financial position, which is not a correct approach. All the
items/columns of the statement of changes in equity must be listed
individually in the statement of financial position.

See below an example of (a):

8 LCCI Certificate in Accounting ASE20104

9 LCCI Certificate in Accounting ASE20104
Part (b)(i), (ii) and (iii). The majority of the candidates were unable to
calculate the ratios correctly, where candidates tried they did not express
the ratios correctly, such as assets turnover in times and quick (acid test)
ratio is 1(:1) and they did not calculate the trade receivables by using the
net trade receivables figure.

See below an example of (b)(i),(ii) and (iii):

Examiner Comments
Statements of financial position must have the headings for
each section and each section must have a total with a label.

Examiner Tip
Retained earnings are shown as a single figure after adding
the profit for the year and deducting the dividend paid and
any transfer to the reserves from the opening balances
provided.

10 LCCI Certificate in Accounting ASE20104

Question 4
The majority of the candidates scored below average marks on this
question.

Part (a). Most of the candidates were unable to prepare the cash budget
correctly. The main mistakes made were either treating the investment/
capital as opening balance or omitting the opening balance provided,
missing out the materials and fixed overheads for October and not
accounting for the interest on opening balance provided correctly.

See below an example of (a):

11 LCCI Certificate in Accounting ASE20104

Part (b). The majority of the candidates struggled to calculate the number
of the units required to earn the target profit correctly as they struggled to
work out the fixed cost and contribution per unit.

See below an example of (b):

Part (c). The majority of the candidates were unable to state the benefits
and limitations of preparing a cash budget as expected to make the final
decision/conclusion. Most of the candidates either stated the basic benefits
or limitations of the budgetary control without relating it to the cash budget,
or stated the cash budget will allow one to know the expenses/losses or
income/profits, hence demonstrating a lack of understanding of the nature
of a cash budget.

Examiner Comments
List each item in the cash budget individually rather than
grouped up together.

Examiner Tip
Answer for discuss question must have a decision/
conclusion.

12 LCCI Certificate in Accounting ASE20104

Question 5
The majority of the candidates scored average marks on this question.

Part (a)(i). Most of the candidates were unable to state an advantage of

the leasing and explain it further to score the second mark.

See below an example of (a)(i):

Part (a)(ii). The majority of the candidates were able to state two other
methods of funding the purchase of the new machine.

See below an example of (a)(ii):

Part (b). Most of the candidates were unable to calculate the net present
value correctly as they were unable to find the cash inflows from the
payback period provided.

See below an example of (b):

13 LCCI Certificate in Accounting ASE20104

Part (c). Most of the candidates were able to calculate the accounting rate
of return (ARR) correctly for Machine 2 but few candidates used the
information for Machine 1 to calculate the accounting rate of return (ARR).

See below an example of (c):

Part (d). Most of the candidates were unable to evaluate which machine
was better for factory B. Candidates from a few centres discussed the wrong
machines, i.e. those related to factory A. Where candidates tried, they
scored only one mark for each method as the development was not
sufficient to score the second mark.

See below an example of (d):

14 LCCI Certificate in Accounting ASE20104

Examiner Comments
Read the question carefully, especially the words highlighted
in bold, to answer the questions correctly.

Examiner Tip
Candidates must show the workings for any calculation to
score the marks.

15 LCCI Certificate in Accounting ASE20104

Paper Summary

Candidates performed very well on numerical question such as the

preparation of statement of financial position for a limited company,
statement of changes in equity and capital investment appraisal.
Candidates struggled with questions on preparation of ledger accounts and
preparation of the statement of profit or loss and preparation of a cash
budget. The performance on straight-forward state questions was better
but the candidates struggled with explain, discuss and evaluate questions.
Overall performance was poor compared to the previous series.

The candidates will benefit from the following:

• Candidates must learn and practice the International Accounting

Standards (IAS) terminology and formats to show subtotal and totals
including the labels for financial statements.

• Candidates must show their workings/notes with reference number

such as W1/Note1, W2/Note 2 etc

• Candidates must use the labels for the figures used in the
Notes/workings.

• Candidates must learn and practice on preparation of ledger accounts

with full details.

• Candidates must learn and practice on preparation of all financial

statements with full details and in proper format for the company
accounts.

• Candidates must learn and practice on preparation of all budgets with

full details.

• Do not just practice numerical questions but also understand the

theory to be able to answer the explain questions.

• Practice discuss question by providing the comparative statements

for both sides.

• Practice to analyse the results from the information provided by

answering the reasons or what impact it will have on the business
currently or in future.
• Visit Pearson website for various resources to support candidates
learning

https://qualifications.pearson.com/en/qualifications/lcci/financial-
and-quantitative/accounting-2015.coursematerials.html

16 LCCI Certificate in Accounting ASE20104

Grade Boundaries
Grade boundaries for this, and all other papers, can be found on the
website on this link:

http://qualifications.pearson.com/en/support/support-topics/results-
certification/grade-boundaries.html

17 LCCI Certificate in Accounting ASE20104