National 5 Accounting Practice

National 5 Accounting Assignment Assessment: Highland Fling (June 2017 Edition)

This document contains vital information pertinent to the preparation and assessment of the National 5 Accounting assignment. It is important to understand the structure and requirements of the assignment as outlined below.

Introduction

• This document serves to provide marking instructions and candidate guidelines for the National 5 Accounting assignment.

• It should be read in conjunction with the course specification.

• Total Marks Distribution: 50 marks for the assignment out of a total of 180 marks available for the course assessment.

• The assignment is one of two components of the course assessment; the other being a question paper.

Instructions for Teachers and Lecturers

• Prior to candidates commencing the assignment, ensure the following e-file is downloaded:

  • Highland Fling: A spreadsheet file containing three worksheets:

  • Income Statement

  • Statement of Financial Position

  • Expansion

• The file must remain secure and not accessed by candidates prior to the assignment.

Marking Instructions

General Marking Principles

• The general principles provided are essential for understanding how to mark responses effectively.

• Marks must be assigned in alignment with these principles and the specific marking instructions detailing key features required in candidate responses.

• Marking should adopt a positive approach:

  • Candidates earn marks for demonstrating relevant skills, knowledge, and understanding rather than penalizing them for errors or omissions.

• Candidates are recognized for showing calculations and following accounting processes, even if incorrect figures are presented.

Treatment of Errors

• Guidance includes advice on handling errors, such as extraneous items or arithmetic errors.

• Printouts of candidate work must be provided as directed in the instructions; missing printouts result in no marks awarded.

• Formula printouts must represent accurate calculations; truncating a formula results in no marks awarded.

Layouts Requirements

• Specific layout illustrations are provided for guidance but candidates are not penalized for using appropriate alternatives.

• For instance, in the Income Statement, adding Gains before subtracting Expenses is acceptable.

Consequential Errors

• Consideration for consequential errors is taken into account; merit is given for following correct processes and formulas even in cases of errors.

• Nomenclature may include both old and new terms; however, consistency in use is expected.

Task Instructions

Task 1 and 2: Extraneous Items

• Definition: Items that appear only once but are incorrectly placed in the financial statements.

  • Example: Trade Receivables appearing in Expenses without representation elsewhere is considered an extraneous item.

• +/− Rule: An entry that appears in two areas when it should appear only once.

  • Example: If Trade Receivables is listed in both Expenses and Current Assets, indicate a +/− for each entry and do not award a mark.

• It is critical for an entry to appear only once to qualify for a mark in the Trial Balance section.

• Specific Examples and Conditions:

  • Figures for Provision for Depreciation of Machinery (£5,000) and Machinery cost (£120,000) should not be marked as +/− or extraneous under specific conditions outlined.

  • For Depreciation of Machinery, if both new and existing entries show in the Expenses section, do not award any marks.

Headings and Layout Requirements for Marks

To be awarded a heading/layout mark, candidates must include:

• Gross Profit

• Profit for Year

• Non-Current Assets

• Current Assets

• Current Liabilities

• Equity (or relevant equivalent)

• An acceptable layout for the Income Statement is essential. The Non-Current Liabilities heading is not mandatory.

Subtotals Mark

• A subtotal mark is awarded for correctly applying totals/subtotals.

• Example: Not awarding a mark if Cost of Sales incorrectly adds to Sales Revenue.

• Marking Code Legend:

  • E = No extraneous items

  • L = Correct layout/headings

  • S = Correct subtotals/totals

Specific Marking Instructions

Task 1 — Value View Solution

Income Statement of Highland Fling for Year Ended 31 December Year 3

• Sales Revenue:

  • Sales Revenue: £218,000

  • Sales Revenue Returns: £2,100 (thus, total Sales Revenue: £215,900)

• Cost of Sales:

  • Opening Inventory: £4,600

  • Purchases: £80,000

  • Add Carriage In: £4,200 (Total Cost of Goods Sold = £84,200)

  • Less Closing Inventory: £5,900 (Final Cost of Sales: £82,900)

• Gross Profit: £133,000

• Less Expenses:

  • Carriage Out: £2,900

  • Finance Costs: £1,500

  • General Expenses: (£7,400 + £2,500) = £9,900

  • Insurance: (£800 − 300) = £500

  • Rental of Workshop: £6,600

  • Staff Wages: £61,000

  • Provision for Bad Debts: (5% × £12,000) = £600

  • Depreciation of Machinery: (15% × £120,000) = £18,000

Total Expenses Calculation

• Total Expenses: £101,000

• Profit for the Year Calculation:

• Profit Result: £32,000

• Add Income: Discount Received: £700

• Final Profit for Year: £32,700

Task 1 Key Points for Awarding Marks

• Nomenclature and correct effect for figures must be established (applies for both Task 1 and Task 2)

• Adjustments must yield the right effect.

Task 2 — Financial Position Overview

Statement of Financial Position of Highland Fling as at 31 December Year 3

• NON-CURRENT ASSETS:

  • Machinery: £120,000

  • Provision for Depreciation: (£5,000 + £18,000) = £23,000

  • Net Machinery Value: £97,000

• CURRENT ASSETS:

  • Inventory: £5,900

  • Trade Receivables: (£12,000 − £600) = £11,400

  • Other Receivables (Insurance): £300

  • Total Current Assets: £17,600

• CURRENT LIABILITIES:

  • Trade Payables: £11,200

  • Other Payables (General Expenses): £2,500

  • Cash and Cash Equivalents: £900

  • Total Current Liabilities: £14,600

• Working Equity: £3,000

• Total Assets Net Calculation: £100,000

• LESS NON-CURRENT LIABILITIES:

  • Loan: £14,000

• NET ASSETS: £86,000

Equity Calculation

• Opening Balance: £57,000

• Add Profit for the Year: £32,700

• Less Drawings: £3,700

• Final Equity Balance: £86,000

Key Points for Task 2

• Ensure correct treatment of PBD adjustments, must be positioned directly under Trade Receivables.

• Adjustment figures must have appropriate effects; equity can be displayed in various orders.

Task 3 Overview

Production Data for Highland Fling

Required Calculations for Year 4

• Basic labour hours: 1,500 for the new staff member expected to work overtime (1,680 hours).

• Contribution per kilt (USA: £183.00, Canada: £223.00).

• Contribution per labour hour (USA: £91.50, Canada: £89.20).

• Labour hours required to meet maximum sales demand: 900 (USA), 1,250 (Canada).

• Labour hours used to maximise profits: 900 (USA), 780 (Canada).

• Number of kilts produced (USA: 450, Canada: 312).

• Total contribution: £82,350 (USA) + £69,576 (Canada) = £151,926.

Formulae View for Task 3

• Use of spreadsheet formulas outlined for calculations ensuring a link between contribution, labour efforts, and costs are maintained.

Instructions for Candidates

• This assessment assesses the skills:

  • Preparing and presenting accounting statements

  • Using ICT for straightforward accounting information

• Assignment time: 2 hours (excluding printing)

• Materials Allowed:

  • SQA files, personal computer (no internet), spreadsheet software.

• Tasks must be completed in order using provided spreadsheet file, ensuring all printouts include the candidate's name and task number.

Administrative Information

• Published: June 2017, Version 1.0

• Copyright Notice: This document is protected under Scottish Qualifications Authority regulations. Reproduction is permissible for assessment purposes only without profit.

Notes accompanying each task should be properly recorded to satisfy marking requirements based on the structure of candidate responses, ensuring adherence to best practices for accounting submissions.