Mark Scheme

July 2019

Pearson LCCI
Level 3 Certificate in Accounting
ASE20104
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Publication Code: 64211_MS

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© Pearson Education Ltd 2019

ASE20104
2 July - 2019
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 - 2019
Question Answer (AO2) 19 Mark
Number
1 (a) Award marks for correct figures with labels as indicated.

Alvin Ltd
Statement of Profit or Loss for the year ended 31 May 2019
$ $
Revenue 1 895 382
(1)
Cost of sales W1 (899 377)
(3)
Gross profit 996 005
(1of)
Administrative expenses W2 518 095
(5)
Distribution costs W3 240 864
(4)
(758 959)
Profit from operations 237 046
(1of)
Finance costs (4 200)
(1)
Profit before tax 232 846
(1of)
Tax (34 825)
(1)
Profit for the year 198 021
(1of)
W1
Opening inventory 321 550
Purchases 875 827
Carriage inwards 34 500 (1)
1 231 877
Closing inventory (332 500) (1)
899 377 (1of)
W2
Administrative expenses 467 325
Depreciation 48 000 (1)
Irrecoverable debt 1 550 (1)
Allowance for doubtful debts adjustment (380) (1)
Electricity 1 600 (1)
518 095 (1of)
W3
Distribution costs 161 114
Carriage outwards 51 750 (1)
Depreciation 32 000 (1)
Advertising (4 000) (1)
240 864 (1of) (19)
Additional Guidance
Accept if the allowance for doubtful debts adjustment is added to the gross profit.

ASE20104
4 July - 2019
Question Answer (AO1) 1 Mark
Number
1 (b) Award 1 mark as indicated. Maximum 1 mark.

Managers (1)
Suppliers (1)
Customers (1)
Employees (1)
Government (1)
Investors (1)
Trade unions (1)

Accept any other appropriate response. (1)

Question Answer (AO1) 2 Mark

Number
1 (c) Award 1 mark as indicated. Maximum 2 marks.

Faithful representation (1)

Comparability (1)
Verifiability (1)
Timeliness (1)
Understandability (1) (2)

TOTAL FOR QUESTION 1 – 22 MARKS

ASE20104
5 July - 2019
Question Answer (AO1) 1 Mark
Number
2(a)(i) Award 1 mark as indicated.

A parent company is one that controls another company by holding more

than 50% of its equity share capital. (1)

(1)

Question Answer (AO1) 1 Mark

Number
2(a)(ii) Award 1 mark as indicated.

Pre-acquisition profits are those earned by the subsidiary before

acquisition. (1)
(1)

Question Answer (AO1) 1 Mark

Number
2(a)(iii) Award 1 mark as indicated.

Goodwill is the excess of the purchase consideration over the net assets
acquired. (1)
(1)

Question Answer (AO2) 3 Mark

Number
2(b)(i) Award marks as indicated.

$16 640 (3) W

W
$
Purchase price 112 500
Share capital 60 000 (1)
Retained earnings 35 860 (1)
(95 860)
Goodwill 16 640 (1 of)

(3)
Additional guidance
Correct answer only scores 3 marks.
No specific layout required.

ASE20104
6 July - 2019
Question Answer (AO2) 2 Mark
Number
2(b)(ii) Award marks as indicated.

$155 820 (2) W

148 220 + 7 600 (1) = $155 820 (1 of)

(2)
Additional guidance
Correct answer only scores 2 marks.
No specific layout required.

Question Answer (AO2) 2 Mark

Number
2(b)(iii) Award marks as indicated.

$25 865 (2) W

W
$
Share capital 15 000
Retained earnings 10 865 (1)
25 865 (1 of)
(2)
Additional guidance
Correct answer only scores 2 marks.
No specific layout required.

ASE20104
7 July - 2019
Question Answer (AO2) 8 Mark
Number
2(c) Award one mark for each figure with label as indicated.

C plc

Consolidated statement of financial position at 30 April 2019

$
Assets
Non-current assets
Goodwill 16 640 (1 of)
Property, plant and equipment 411 000 (1)
427 640
Current assets 100 410 (1)
Total assets 528 050

Equity and liabilities

Equity
Share capital 300 000
Retained earnings 155 820 (1 of)
Equity attributable to shareholders of parent 455 820 (1 of)

Non-controlling interest 25 865 (1 of)

Current liabilities 46 365 (1)

Total equity and liabilities 528 050 (1 of)

(8)
Additional guidance
Award of mark if total equity and liabilities are equal to total assets.

TOTAL FOR QUESTION 2 – 18 MARKS

ASE20104
8 July - 2019
Question Answer (AO1) 3 Mark
Number
3(a) Award marks as indicated.

Scenario Accounting concept

Non-current assets are shown
at historical cost rather than Going concern (1)
market value.
The business always uses the
straight line method of Consistency (1)
depreciation for non-current
assets.
Goods taken for own use
recorded as drawings. Business entity (1)

(3)

Question Answer (AO2) 2 Mark

Number
3(b) Award marks as indicated.

$23 600 (2) W

W
Average inventory = $20 000 (1)
Closing inventory= $40 000 - $16 400=$23 600 (1of) (2)
Additional guidance
Correct answer only scores 2 mark.
No specific layout required.

ASE20104
9 July - 2019
Question Answer (AO2) 4
Number Mark
3(c) Award 1 mark for each correct figure as indicated.
Award 1 mark for all correct details and dates.

Trade Receivables Ledger Control Account

Date Details $ Date Details $

1 Balance b/d 21 985 30 Cash book 181 640
May April
2018 2019
30 Sales day book 185 250 Cash book/ Discount 1 015
April (1) allowed
2019
Journal/Irrecoverable 380
debts (1 all
three)
Balance c/d 24 200

207 235 207 235

1 Balance b/d 24 200
May (1of)
2019

(4)

ASE20104
10 July - 2019
Question Answer AO2 (8) Mark
Number
3(d) Award 1 mark for each correct figure with label as indicated.

James
Statement of financial position at 30 April 2019

$ $
Assets
Non–current assets W1 83 384 (2)

Current assets
Inventory 23 600
Trade receivables 24 200
Cash and cash equivalents 1 066
48 866 (1of)

Total assets 132 250

Equity and liabilities

Equity
Opening equity 141 755 (1)
Loss for the year (15 245) (1of)
126 510
Drawings (6 500) (1)
Total equity 120 010

Current liabilities
Trade and other payables 12 240
12 240 (1)

Total equity and liabilities 132 250 (1of)

W1 $104 230 - $20 846 (1) = $83 384 (1of) (8)

Additional guidance
Award of mark if total equity and liabilities are equal to total assets.

ASE20104
11 July - 2019
Question Answer AO4 (4) AO5 (1) Mark
Number
3(e) Award 1 mark for each correctly identified point up to a maximum of
4 marks.
Award 1 mark for supported decision.

Sample answer

Improvement in inventory turnover means the inventory will be moving

faster hence converting inventory into sales and profit quicker (1). This will
also reduce the inventory holding cost and increase profitability (1).
If there is a sudden increase in demand (1), the sales will be lost causing
decrease in profitability (1).

Overall improvement in inventory turnover will improve profitability (1).

Accept any other appropriate responses.

(5)

TOTAL FOR QUESTION 3 = 22 MARKS

ASE20104
12 July - 2019
Questio Answer (AO1) 3 Mark

Number
4 (a) Award marks as indicated.

Financial Management
accounting accounting
Primarily for internal use 
(1)

Primarily shows historical 

data (1)

Produced following 
accounting conventions to (1)
show a true and fair view. (3)

Question Answer (AO2) 3 Mark

Number
4 (b)(i) Award marks as indicated.

Year 1 $10 000 (1)

Year 2 $22 000 (1)

Year 3 $33 400 (1)

(3)
Additional guidance
Correct answer only scores 3 marks.
No specific layout required.

Question Answer (AO2) 3 Mark

Number
4 (b)(ii) Award marks as indicated.

33.54 % (3) W

W
$21 800 (1of based on b(i)) / $65 000 (1) = 33.54% (1of)

(3)
Additional guidance
Correct answer only scores 3 marks.
No specific layout required.

ASE20104
13 July - 2019
Question Answer (AO3) 2
Number Mark
4 (c) Award 1 mark for identification and 1 mark for linked justification.

To know the return generated from the capital invested (1) which enables
the business to compare investments (1)

Accept any other appropriate responses.

(2)

Question Answer AO3 (4) AO5 (1) Mark

Number
4(d) Award 1 mark for each point of discussion up to a maximum of 4
marks.
Award 1 mark for supported decision.

Sample answer
The initial cost of purchasing the machine will involve a large outflow of cash
(1) which could affect the liquidity of the business (1)

The cost of renting the machine will be a recurring expense (1) which will
affect the profitability of the business (1)

Any supported decision (1)

Accept any other appropriate responses. (5)

Question Answer (AO3) 2

Number Mark
4(e) Award 1 mark for identification and 1 mark for linked justification.

If the machine was to have a breakdown the supplier would have to either
repair or replace the machine (1) which would ensure continuity of
production (1)

(2)

TOTAL FOR QUESTION 4 – 18 MARKS

ASE20104
14 July - 2019
Question Answer (AO2) 15 Mark
Number
5 (a) Award marks as indicated.

Pontus
Cash budget for the three month period ending 31 December 2019

October November December

$ $ $
Receipts

Cash sales 75 600 75 600 75 600 (1)

Trade receivables 46 700 48 650 50 050

(credit sales) (1) (1) (1)
Total receipts 122 300 124 250 125 650

Payments

Cash purchases 7 680 7 760 8 624

(1) (1) (1)
Production staff wages 8 640 8 730 8 820 (1)

Machinery 25 000 15 000 (1)

Salaries 40 000 40 000 41 600 (1)

Commission 952 980 1 008 (1)

General expenses 28 500 28 500 28 500 (1)

Overdraft interest 130 (1)

Total payments 85 772 111 100 103 552

Net inflow/(outflow) 36 528 13 150 22 098

Opening balance (6 500) 30 028 43 178 (1of)

Closing balance 30 028 43 178 65 276 (1of)

(15)

ASE20104
15 July - 2019
Question Answer (AO2) 5 Mark
Number
5(b) Award marks for each correct figure with label as indicated.

Pontus
Budgeted statement of financial position at
31 December 2019

Assets
Current assets
Inventory W1 17 444 (2)
Trade receivables 64 400 (1)
Cash and cash equivalents 65 276 (1of)
147 120 (1of)

W1 $8 624 + $8 820 (1) = $17 444 (1of)

(5)

TOTAL FOR QUESTION 5 = 20 MARKS

TOTAL FOR PAPER = 100 Marks

ASE20104
16 July - 2019