MINISTRY OF EDUCATION

FIJI YEAR 13 CERTIFICATE EXAMINATION 2022

ACCOUNTING

COPYRIGHT:
© MINISTRY MINISTRY OF
OF EDUCATION, EDUCATION,
FY13CEE FIJI, 2022.
2022: ACCOUNTING.
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QUESTION 1 NATURE OF ACCOUNTING [12 marks]

Part A Conceptual Framework and Accounting Bodies

(a) (i) Drawbacks of Business Entity Concept:

 The owner is responsible for all debts
 The accounts do not make clear to creditors what actual assets are available to
meet their claims or what other liability must be met of the resources or
assets.
(ii) Going Concern Concept:
 It may mislead because some firms stop operations after presenting final
accounts
 Information is not given on the consequence of abandoning the concept which
may provide important information to an unsecured creditor or lender
 Alternative causes of action cannot be evaluated
Note: = 1 mark   
(2 marks)
(b) Roles of FASB
 Develop and improve the way financial accounting standards are issued for publicly
traded companies. It does so by working with various partners in order to determine
what should be considered for their statements, education stakeholders, and issue
Statements of Financial Accounting Standards (SFASs).
 It is the independent accounting standard setting body for preparing General
responsible Accepted Accounting Principles (GAAP)
 Note: for partly described answer= 1 mark
fully described = 2 marks
(2 marks

(c) Role of the office of the Auditor General

 It looks after and audits the government department’s account and present it to
parliament/Public Accounts Committee.
Note: Note: for partly described answer= 1 mark
fully described = 2 marks

(2 marks)

Part B Ethics and Fraud

(a) (i) Bribery – offering, giving, receiving or soliciting of something of value for purpose
of influencing an official act.     (1 mark)

(ii) Skimming of cash – is the theft of cash from the victim entity prior to its entry in an
accounting system:       (1 mark)

(b) Code of conducts for professional:

 Integrity
 Objectivity
 Professional Competence and Due Care
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 Confidentiality
 Professional behaviour
Note: 1 mark = one correct institution
2 marks = two correct institutions (2 marks)

(c)Role of a Whistleblower:
 Exposes any kind of information or activity that is deemed illegal, unethical, or not
correct within an organization that is either private or public. This is done to protect
the organization from corruption.
Note: for partly explained answer= 1 mark
fully explained = 2 marks
(2 marks)

QUESTION 2 PARTNERSHIP ACCOUNTING [20 marks]

Part A Nature of Partnership Business (4marks)

(a)Disadvantages of Partnership:
 Partnership has limited life, i.e. it is dissolved on the death of a partner.
 The business has unlimited liability. As the partnership is not a separate legal entity.
The owners are liable for partnership debts. In the event of bankruptcy of the
partnership, the partner’s private assets can be used to settle debts.
 Conflicts and disagreement can arise between the partners.
 Profits are shared between the partners unlike sole trader.
Note: = 1 mark
 = 2 marks (2 marks)


(b) Two major legal requirements for Partnership:

 Partnership Act
 Partnership Agreement
Note: 1 mark = 
 2 marks =        (2 marks)

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Part B Partnership Formation (4 marks)

General Journal
Date Particulars Dr ($) Cr ($)
2021 Aug 1 Cash 40 000
Capital - Sam 40 000

Accounts Receivables 2 000

Inventories 5 000
Motor Vehicle 30 000
Equipment 3 000
Accounts payable 11 500
Capital - Raju 28 500

Note:½ x 8 = 4 marks

Part C Annual Accounts of Partnership (5 marks)

(a) Current Account:

 is used for credit of profit or debit of loss, interest on partners’ capital and drawings. This
account fluctuates from year to year.
 Records the periodic changes in the Partner’s account
(1 mark)

(b) Major accounts of partnership

 Statement of Financial Performance.
 Statement of Financial Position.
 Profit & Loss Appropriation Account/Statement.
Note: = 1 mark (1 mark)

(c) (i) General Journal (opening entries)

Date Particulars Debit ($) Credit ($)
Mar 31 Interest on capital - Bongo 6 750
Current Account 6 750

½ mark each (1 mark)

or
General Journal (closing entries)
Date Particulars Debit ($) Credit ($)
Mar 31 Profit Distribution 6 750

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Interest on capital - Bongo 6 750

½ mark each (1 mark)

(ii) General Journal (opening entries)

Date Particulars Debit ($) Credit ($)
Mar 31 Current Account 450
Interest on current account – Tango 450

½ mark each (1 mark)

or
General Journal (closing entries)
Date Particulars Debit ($) Credit ($)
Mar 31 Interest on current account – Tango 450
Profit Distribution 450

½ mark each (1 mark)

(iii) General Journal (opening entries)

Date Particulars Debit ($) Credit ($)
Mar 31 Current Account 600
Interest on drawings – Bongo 600

½ mark each (1 mark)

or
General Journal (closing entries)
Date Particulars Debit ($) Credit ($)
Mar 31 Interest on drawings – Bongo 600
Profit Distribution 600

½ mark each (1 mark)

Part D Capital Adjustments (7 marks)

(a) Reasons for change in ownership:

 Admission of a new partner
 Retirement of a partner
Note: 1 mark = 
2 marks =         (2 marks)

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(b) Capital Adjustment Account

Date Particulars $ Date Particulars $
Jan 31 Inventories 5 000.00 Jan 31 Land 10 000.00
Acc. depreciation 3 500.00 Goodwill 25 000.00
Accounts receivable 200.00
Building 5 000.00
Prov. For d/debts 382. 50
Capital - Tex 10 458.75
Capital - Max 5229.37
Capital - Rex 5229.38 _________
35 000.00 35 000.00
10/2 = 5marks

QUESTION 3 COMPANY ACCOUNTING [20 marks]

Part A Nature of Company Business (5 marks)
(a) Features of Private Company:
 Easy formation
 Limited number of members
 Minimum paid Up Capital
 Restrictions on selling shares
 Issuing prospectus
 Perpetual succession
 Limited liability
 Shareholder's Liability
 Owners 2 - 50
Note:  - 1 mark
(1 mark)
(b) Duties of a director:
 Follow the company’s constitution 
 Promote the success of the company
 Exercise independent judgment
 Exercise reasonable care, skill and diligence
 Avoid conflict of interest
 Not accept benefits from third parties
 Comply with additional legislation and regulations
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 Manage/Run the business

Note:  - 1 mark (1 mark)

(c)Type of Shares:
 Ordinary shares
 Preference shares
Note: = 1 mark
 = 2 marks (2 marks)

(d) Purpose of the AGM:

 To present the audited accounts in front of the company’s members and shareholders and
get the approval by them.
 To elect the new Board of Directors (BOD) by means of voting system
 The appoint the auditor for the upcoming calendar year
 To declare and affirm the dividends as provided by the company's BOD
Note:- 1 mark (1 mark)

Part B Formation of Companies [7 marks]

(a) (i) Call in Arrears – call made but not yet received by the business. (1 mark)

(b) (i) General Journal

Date Particulars Debit ($) Credit ($)
Uncalled Capital/Equity Receivable 100 000
Unissued Capital 100 000

½ mark (1 mark)

(ii) General Journal

Date Particulars Debit ($) Credit ($)
May 1 Cash at Bank - Share Trust 75 000
Application 75 000

 ½ mark (1 mark)


(iii) General Journal
Date Particulars Debit ($) Credit ($)
May 31 Application 20 000
Cash at Bank - Share Trust 20 000

½ mark (1 mark)

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(iv) General Journal

Date Particulars Debit ($) Credit ($)
June 1 Application (5000 x 0.60) 3 000
Allotment 3 000

½ mark (1 mark)

(v) General Journal

Date Particulars Debit ($) Credit ($)
June 1 Cash at Bank - General (70000 – 2000) 55 000

Cash at Bank - Share Trust 55 000

½ mark (1 mark)

(vi) General Journal

Date Particulars Debit ($) Credit ($)
June 1 Cash at Bank - General (30000 – 3000) 27 000
Allotment 27 000

½ mark (1 mark)

Part C Annual Accounts of Companies [8 marks]

(a) Capital Reserve:

 A line item in the equity section of a company's balance sheet that
indicates the cash on hand that can be used for future expenses or to offset any capital
losses.
 It is derived from the accumulated capital surplus of a company and is created out of its
Profit.
 Capital amount set aside for future use.
Note:- 1 mark

(b) Importance of Internal Auditing:

 Provides objective insight.
 Improves efficiency of operations.
 Evaluate risks and protects assets.
 Assesses organisational control.
 Ensure legal compliance.
 Check for accuracy/fraud/errors/biasness.
Note:- 1 mark
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Statement of Financial Performance of triple ‘T’s Company Ltd for the year ended 30th June,
2021.
($) ($) ($)
Sales 105 000
Less Sales returns 800
104 200
Inventory 01/07/20 8 500
Purchases 35 000
Less Purchases Returns 950 34 050
Custom Duty 2 800
Goods available for sale 45 350
Less Inventories 30/06/21 14 000
Cost of Goods Sold 31 350
Gross Profit 72 850
Add Other Operating Revenues
Discount received 310
Commission received 350
Total Revenue 73 510
Less Other Operating Expenses
General and Administration Expenses
Rent 7 500
Electricity 1 250
Office salaries 13 000
Audit fees 1 000
Repairs and maintenance 2 100
Director’s fees 4 000
Amortisation of goodwill 2 000 30 850
Finance Expenses
Interest on debentures (3000 + 3500) 6 500
Doubtful debts 190 6 690 37 540

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Net Operating Profit before tax 35 970

Income Tax 7 000
Less Over-provision of income tax 215 6 785
Net Operating profit after tax 29 185

(= ½ mark)

QUESTION 4 CASH FLOW STATEMENTS [10 marks]

(a) Statement of Cash Flows:

 The statement of cash flows is one of the financial statements issued by a business,
and describes the cash flows into and out of the business. 
 Statement that shows the inflows and outflows of cash in a business 
Note: = 1 mark
(1 mark)

(b) Purpose of a Statement of Cash Flows:

 Assess its ability to generate cash and determine the future cash needs
 Check the accuracy of the past assessment of cash flows
 Assess the firm’s financial structure including its liquidity and solvency
 Obtain external finance when necessary
 Examine the relationship between profitability and net cash flow
 Fund changes in the scope and the nature of its activities
Note: = 1 mark (1 mark)

(c)Ways of using Cash Flows to assist the business:

 Short term planning and keeping control of cash
 Provides the details of where the money is spent
 Creating the excess cash
 Revealing the cash planning results
 Long term planning
 Knowing the optimum level of cash balance
 Helps in analysing the working capital
Note: = 1 mark
 = 2 marks (2 marks)

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Statement of Cash Flow of P. Banao Ltd for the year ended 31st March, 2022
$ $ $
Cash Flows from Operating activities
Cash was provided from:
Receipts from customers for sales/services 219 000

Cash was applied to:

Payment to suppliers for purchases 130 000
Payment to employees 30 000
Interest paid 10 000
Payment for other operating expenses 37 000 207 000
Net cash provided by operating activities 12 000

Cash Flows from Investing activities

Cash was provided from:
Proceeds from sales of Plant and Equipment (210 000- 20 000
190 000)
Net Cash provided by Investing activities 20 000

Cash Flows from Financing activities

Cash was provided from:
Proceeds from Capital contributions (335 000 – (288 28 000
000 + Net Profit 19 000)

Cash was applied to:

Repayment of loan (100 000 – 90 000) 10 000
Net cash used in Financing activities 18 000

Net increase in cash held 50 000

Cash at the beginning of the period 100 000
Cash at the end of the period $150 000

(= ½ mark) (6 marks)

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QUESTION 5 ANALYSIS AND INTERPRETATION [18 marks]

OF FINANCIAL STATEMENTS

Part A Analysing Financial Statements (12 marks)

Ratios / Formula Working Answer

Percentages
(i) Gross Profit
Ratio (2020) Gross Profitor GP : Net Sales 280 000 
Net Sales 780 000 0.36 : 1

(ii) Net Profit Net Profit after Tax or 25 950 

after tax ratio Net Sales 812 000
(2021) 0.03 : 1
NP after Tax
NS

(iii) Earnings per NP after tax – Pref. Dividends  25 000 – 4 500

share (2020) No. of Ordinary Shares 110 000

$0.19
iv) Price Current Market Value  3.10
earnings ratio Earnings per share 0.19
(2020) $ 16.32 : 1

(v) Dividends Total Dividends 4 500 + 11 000
per share (2021) No. of Ordinary Shares 110 000

15 500
110 000 $0.14/share

(vi) Quick Asset CA – Closing Stock - Prepayment 357 800 – 215 000 – 8 800
Ratio (2021) CL – B/OD Secured 126 700 – 0
or 
134 000 1.06 : 1
QA : QL 126 700
(vii) Working
Capital in $ CA – C:L 348 750 – 104 000
(2020) or
248 750 – 104 000 $244 750 or

$144750
(viii) Inventory Cost of Goods Sold 500 000
Turnover Average Inventory (107 400 + 105 000)½
(number of
times in 2020) 500 000
106 200
4.71 times

(= ½ mark) (12 marks)

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Part B Comments on Ratios [6 marks]

(a) Methods of Presenting Accounting Reports:

 Written reports
 Reports which are mostly figures
 Graphs and diagrams
(1 mark)
(b) Ways of Analysing Ratios:
 Vertical analysis
 Horizontal analysis
 Trend analysis
 Ratio analysis
 Percentage Analysis
(1 mark)

(c) (i) Equity ratio:

 measures the percentage of assets or funds provided by shareholder
 measures the owner’s claim over the business
 = 1 mark

(ii) Rate of return of accounts receivable – measures the effectiveness of collections

and whether accounts receivables are too high/low.

3 Rate of return on owner’s equity:

 measures the return on investment provided by the shareholders
 Measures the return on owners’ investment
 = 1 mark

4 Dividend yield – measures dividend received per share expressed as a

percentage of the market price per share.
1 mark each (4 marks)

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QUESTION 6 COST ACCOUNTING [20 marks]

Part A Manufacturing Statement (6 marks)
Salisali Manufacturing Ltd
Manufacturing Statement for the year ended 31st December, 2021
$ $ $
Work in progress (01/01/22) 37 000
Direct Materials
Inventories – direct materials (01/01/22) 28 000
Purchases – direct materials 182 000
Add Cartage - direct materials 4 000
186 000
Direct materials available for use 214 000
Less Inventories – direct materials (31/12/22) 22 000
Cost of direct materials used 192 000
Direct Labour
Direct wages 203 000
Factory Overhead
Indirect wages 41 000
Factory light and purpose 24 000
Depreciation on machinery 40 000
Other manufacturing expenses 33 000 138000
570 000
Less Work in progress (31/12/22) 41 000
Cost of Production $529 000
 = ½ mark (6 marks)

Part B Job Order Costing (7 marks)

(a) Type of product costing:

 Process cost system/Process Costing
 Job order cost system/Job Order Costing    
   (1 mark)

(b) Purpose of Job cost sheet is to summarise/record/calculate all of the costs incurred on
specific job.
(1 mark)

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(c) Materials Requisition Form/Tax Invoice/Cheque Butt/Bank Statement  

   (1 mark)

(d) Advantages of using predetermine factory overhead rate:

 It is available when it is most needed for pricing jobs, for current costing of jobs,
planning and other management action during the year.
 There is consistency in the cost of similar batches which are produced throughout the
financial year.
 It may encourage planning and budgeting for better decision making.
 Simplifies year end overhead reconciliation.
 Note: one correct answer for 1 mark (1 mark)

(e) (i) Predetermine overhead rate = Estimated Factory Overhead

Estimated cost driver/Base/Direct Labour
= 465 000
93 000
= $5/direct labour hour
Note: Correct Formula only - ½ mark (1½ marks)

(ii) Applied manufacturing overhead cost: 

= Predetermined overhead rate x Actual Cost driver
= 5 x 1500
= $7500
Note: Correct Formula only - ½ mark (1½ marks)

Part C Cost Volume Profit Analysis [6 marks]

(a) Assumptions under CVP analysis:

 costs can be classified into two categories: fixed costs and variable costs
 fixed costs will not change at all levels of sales within the assumed relevant range of
activity
 selling price per unit remains constant and that variable costs vary in direct proportion
to changes in activity
 Note: 1 mark (1 mark)

(b) Variable cost - company expense that changes in proportion to how much a company
produces or sells.
        (1 marks)

(c) Advantages of CVP Analysis:

 Gives a view of the effect of changes in activity level on the cost
 Shows direct relationship between cost drivers and costs
 Helpful for management in decision making
 Costs can be identified as variable or fixed with some degree of accuracy
 It helps in evaluating market strategies
Note: 1 mark
2 marks (2 mark)
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(d) (i) Contribution Margin = Sales per unit – Variable cost per unit
= 68 – 39
= $29 per ton of sugar   (1 mark)

(ii) Net Income = Sales – (Fixed Cost + Variable Cost)

64 000 = 68x – (16 000 + 39x)
64 000 + 16 000 = 29x
80000 = 29x
x = 2758.62 tons of sugar (2 marks)
…………………………………………………………………………………………………………..
or

(i) Contribution Margin = Sales per unit – Variable cost per unit
= 80 – 41.60
= $38.40per ton of sugar   (1 mark)

(ii) Net Income = Sales – (Fixed Cost + Variable Cost)

64 000 = 80x – (16 000 + 41.60x)
64 000 + 16 000 = 38.40x
80000 = 38.40x
x = 2083.33 tons of sugar (2 marks)

THE END

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© MINISTRY OF EDUCATION, FY13CE 2022: ACCOUNTING.