QCAA (QCE) Accounting — Fully classified financial statement reporting and analysis for a sole trader business Questions & Answers | AusGrader

Q: How many QCAA Accounting questions cover Fully classified financial statement reporting and analysis for a sole trader business?

AusGrader has 30 QCAA Accounting questions on Fully classified financial statement reporting and analysis for a sole trader business, all with instant AI grading and detailed marking feedback.

Q2

2023

QCAA

1 mark

Q2

1 mark

A business is making good profits, but the owners have raised concerns regarding the trend in the turnover of inventory ratio.

	2021	2022	2023	Industry benchmark
Turnover of inventory ratio	4.5 times	4.3 times	4.0 times	5.15 times

The data shows that the

A

inventory is slow moving and could affect the business’s liquidity.

B

business has strong sales and is making profits, so the trend is not a concern.

C

turnover of inventory ratio is likely to fluctuate from year to year, so is not a concern.

D

trend is not a concern because the turnover ratios are close to the industry benchmark.

Q1

2021

QCAA

1 mark

Q1

1 mark

On 1 June 2021, a small business paid ＄13 200 (GST inclusive) for 3 months rent (in advance) for their warehouse storage facility.

On 30 June 2021, the balance of the Prepaid rent account will be

A

＄8 800

B

＄8 000

C

＄4 400

D

＄4 000

Q12

2024

QCAA

31 marks

Q12

Read Case study 2 (Stimulus 2, 3 and 4) in the stimulus book.

Q12a

12 marks

Use Stimulus 2 and 3 to prepare a fully classified Statement of Profit or Loss for the years ended 30 June 2024 and (projected) 30 June 2025.

Health Foods
Statement of Profit or Loss for year ended 30 June

2025			2024
$	$	$	$	$	$

Health Foods
Statement of Profit or Loss for year ended 30 June

	2025			2024
	＄	＄	＄	＄	＄	＄
Sales		78 000			60 000
Less Cost of sales
Cost of goods sold		19 550			17 000
Gross profit			58 450			43 000

Add Other Revenue
Interest revenue		790	790		790	790
			59 240			43 790
Less Other Expenses
Selling Expenses
Advertising	2 331			2 331
Delivery vehicle expenses	3 663			3 663
Depreciation on delivery vehicles	1 021			1 021
Website maintenance	666	7 681		666	7 681
Administrative Expenses
Bookkeeping expenses	1 665			1 665
Depreciation on computer equipment	1 000			1 000
Electricity	4 650			4 650
Insurance	555			555
Wages — office staff	20 000	27 870		20 000	27 870
Finance Expenses
Interest on loan	821	821		821	821
Total Expenses			36 372			36 372
Net profit			22 868			7 418

Marking Criteria

Classification Headings

Marking Bands

Descriptor	Marks
Correctly presents 4 classification headings	3
Correctly presents 2–3 classification headings	2
Correctly presents 1 classification heading	1
None of the above	0

Account Classification & Amounts

Marking Bands

Descriptor	Marks
Correctly classifies accounts and accurately records amounts for all 13 accounts for both years	5
Correctly classifies accounts and accurately records amounts for 9–12 accounts for both years	4
Correctly classifies accounts and accurately records amounts for 6–8 accounts for both years	3
Correctly classifies accounts and accurately records amounts for 3–5 accounts for both years	2
Correctly classifies accounts and accurately records amounts for 1–2 accounts for both years	1
None of the above	0

Sub-totals

Marking Bands

Descriptor	Marks
Correctly calculates 4 sub-totals for both years	2
Correctly calculates 1–3 sub-totals for both years	1
None of the above	0

Profit

Descriptor	Marks
Correctly determines gross profit figures for both years	1
Determines net profit figures for both years	1

Q12b

10 marks

Use Stimulus 2 and 3 to prepare a fully classified Statement of Financial Position for the years ended 30 June 2024 and (projected) 30 June 2025.

Health Foods
Statement of Financial Position as at 30 June

2025				2024
$	$	$	$	$	$	$	$

Health Foods
Statement of Financial Position as at 30 June

	2025				2024
	＄	＄	＄	＄	＄	＄	＄	＄
Assets
Current assets
Cash at bank		36 889				14 000
Inventories		5 800	42 689			5 800	19 800
Non-current assets

Property, plant and equipment
Computer equipment	2 500				2 500
Less accumulated depreciation on computer equipment	2 200	300			1 200	1 300
Delivery vehicles	45 000				45 000
Less Accumulated depreciation on delivery vehicles	9 521	35 479	35 779	78 468	8 500	36 500	37 800	57 600

Liabilities
Current liabilities
A/c payable		5 290	5 290			5 290	5 290
Non-current liabilities
Loan due 30 June 2030		7 000	7 000	12 290		7 000	7 000	12 290

Net assets				66 178				45 310

Owner’s equity
Capital		45 310					39 892
Add Net profit		22 868					7 418
		68 178					47 310
Less drawings		2 000		66 178			2 000	45 310

Marking Criteria

Classifications

Marking Bands

Descriptor	Marks
Correctly presents 5 classifications	4
Correctly presents 4 classifications	3
Correctly presents 2–3 classifications	2
Correctly presents 1 classification	1
None of the above	0

Account Classification & Amounts

Marking Bands

Descriptor	Marks
Correctly classifies accounts and accurately records amounts for all 10 accounts for both years	5
Correctly classifies accounts and accurately records amounts for 8–9 accounts for both years	4
Correctly classifies accounts and accurately records amounts for 5–7 accounts for both years	3
Correctly classifies accounts and accurately records amounts for 3–4 accounts for both years	2
Correctly classifies accounts and accurately records amounts for 1–2 accounts for both years	1
None of the above	0

Balancing

Descriptor	Marks
Correctly balances the Statement of Financial Position for both years	1

Q12c

4 marks

Using Stimulus 2 and 3 and your responses to Questions 12a) and 12b), calculate the following ratios for 30 June 2024 and projected ratios for 30 June 2025.
Calculations should be rounded to two decimal places.

	2025	2024
Gross profit ratio
Net profit ratio
Return on owner’s equity
Current ratio

	2025	2024
Gross profit ratio	$\frac{58\,450}{78\,000} \times 100$	$\frac{43\,000}{60\,000} \times 100$
	74.94%	71.67%
Net profit ratio	$\frac{22\,868}{78\,000} \times 100$	$\frac{7\,418}{60\,000} \times 100$
	29.32%	12.36%
Return on owner’s equity	$\frac{22\,868}{0.5(45\,310 + 66\,178)} \times 100$	$\frac{7\,418}{0.5(39\,892 + 45\,310)} \times 100$
	41.02%	17.41%
Current ratio	$\frac{42\,689}{5\,290}$	$\frac{19\,800}{5\,290}$
	8.07:1	3.74:1

Marking Criteria

Descriptor	Marks
Correctly calculates 4 ratios for both years	4
Correctly calculates 3 ratios for both years	3
Correctly calculates 2 ratios for both years	2
Correctly calculates 1 ratio for both years	1
None of the above	0

Q12d

5 marks

Using Stimulus 2, 3 and 4 and your responses to Questions 12a), 12b) and 12c), advise Tamara on how to convince Health in Your Kitchen to buy her business.

Owing to the projected increases in sales of 30% and cost of goods sold of 15%, Tamara’s gross profit is estimated to increase from 71.67% to 74.94% or by ＄15 450 in 2025. This reaches the benchmark of 75%. There is also a very pleasing increase in net profit from ＄7 418 to a projected ＄22 868 or from 12.36% in 2024 to 29.32% in 2025. Once again, these compare favourably with the current benchmark of 30%.

With the ROE of 17.41% increasing to 41.02% and the current ratio increasing from 3.74:1 to 8.07:1, the benchmark results of 40% and 2:1 respectively have been easily met. The ROE shows a healthy return and the level of the current ratio suggests the business is well able to meet its debts in the short term. With the cash balance of ＄36 889, Tamara could consider repaying the loan of ＄7 000 before the due date.

The expenses are projected to remain constant at 2024 levels. Tamara’s results are excellent overall and represent an outstanding opportunity for a ‘bricks and mortar’ business to acquire a profitable and growing ‘online’ business in order to diversify and expand.

Marking Criteria

Discussion of Ratios

Marking Bands

Descriptor	Marks
Discusses 4 ratios	4
Discusses 3 ratios	3
Discusses 2 ratios	2
Discusses 1 ratio	1
None of the above	0

Advice

Descriptor	Marks
Provides justified advice regarding the sale of her business	1

Q12

2022

QCAA

17 marks

Q12a

8 marks

Read Case study 1 (Stimulus 6–8) in the stimulus book.

Prepare a fully classified Statement of Profit or Loss for the years ended 30 June 2021 and 2022.

	2022			2021
Particulars	$	$	$	$	$	$

Statement of Profit or Loss for year ended 30 June

	2022			2021
	$	$	$	$	$	$
Sales			74 880			62 400
Less Cost of Sales			22 464			18 720
Gross Profit			52 416			43 680

Less Other Expenses
Selling Expenses
Fuel - Delivery Vehicle	1 500			1 250
Hire - Delivery Vehicle	6 000	7 500		6 000	7 250

Administrative Expenses
Depreciation - Equipment	1 245			1 205
Depreciation - Office	24			24
Electricity expense	1 600			1 600
Insurance expense	1 750			1 600
Lease expense - shed	3 600			3 600
Telephone expense	1 200	9 419		1 200	9 229

Finance Expenses
Interest expense		200	17 119		500	16 979
Net Profit			35 297			26 701

Marking Criteria

Recording Revenue and Expenses

Marking Bands

Descriptor	Marks
Correctly records as revenue and expenses for at least 10 accounts	5
Correctly records as revenue and expenses for 9 accounts	4
Correctly records as revenue and expenses for 8 accounts	3
Correctly records as revenue and expenses for 5 accounts	2
Correctly records as revenue and expenses for 3 accounts	1
None of the above	0

Execution

Descriptor	Marks
Correctly determines gross and net profit figures	1
Uses correct classifications	1
Correctly classifies accounts	1

Q12b

9 marks

Stimulus 6 identifies a goal-oriented problem for the business.

Using Stimulus 6–8 and your response to Q12a), justify your advice to Kurt.

Profitability ratios will be used in providing advice:
The gross profit (GP) ratio (70% for each year) and the net profit (NP) ratio for the two years are 43% (2021) and 47% (2022).

Assumptions:

constant expenses of the business
constant sales and cost of sales so the GP ratio will not be affected
ongoing costs, e.g. maintenance, insurance, registration, depreciation of both options are similar.

Loan repayments total ＄38 940 over the five years (＄7 788 per year) including interest of ＄8 940 over the 5 years (＄1 788 per year).
Over the five years, lease payments (＄18 000) for the shed and vehicle hire costs (＄30 000) would be incurred.
The vehicle is a depreciable non-current asset, but its lifespan could mean the need to acquire another vehicle in the near future.
The annual cash outflow is ＄9 600 for both shed lease and vehicle rental. Purchasing the shed would increase the cash outflow to ＄13 788 and purchasing the vehicle would increase the cash outflow to ＄11 388 annually. The vehicle purchase assists short-term cash flow.
Expenses would decrease by ＄1 812 per year if the shed is purchased and by ＄4 212 if the van is purchased. Both options produce a positive effect on NP ratio bringing it to 49% with shed purchase or 52% with van purchase.
Purchasing the shed provides an appreciating asset with the potential for access to future funding for the purchase of a delivery vehicle. Kurt will maintain his goal with this option.

Marking Criteria

Descriptor	Marks
Provides one or more plausible assumptions that underlie the options	1
Identifies the relevant profitability ratio: gross profit ratio	1
Identifies the relevant profitability ratio: net profit ratio	1
Calculates the GP and NP ratios for 2021 and 2022 accurately	1
Uses financial data to support the viability of one option	1
Uses financial data to support the viability of a second option	1
Explains a plausible effect on profitability for one option	1
Explains a plausible effect on profitability for a second option	1
Provides plausible advice	1

Q11

2021

QCAA

22 marks

Q11

Read Case study 1 (Stimulus 1–4) in the stimulus book.

Q11a

7 marks

Record the additional balance day adjustments in the general journal. Narrations are not required.

Business 1
General Journal (extract)

Date	Particulars	Ref	Debit ＄	Credit ＄

Business 1
General Journal (extract)

Date	Particulars	Debit $	Credit $
2021
30 June	Interest expense	250
	Accrued expense		250
	(Interest payable for 1 month)
	Rent revenue	10 500
	Unearned revenue		10 500
	(Rent received in advance for 7 months)
	Prepaid expense	660
	Telephone expense		660
	(Prepayment for telephone for 3 months)

Marking Criteria

Identification of Accounts

Marking Bands

Descriptor	Marks
Correctly identifies all 6 accounts affected by transactions	4
Correctly identifies 4 accounts affected by transactions	3
Correctly identifies 2 accounts affected by transactions	2
Correctly identifies 1 account affected by transactions	1
None of the above	0

Recording Amounts

Marking Bands

Descriptor	Marks
Correctly records amounts for all 3 adjustment entries	3
Correctly records amounts for 2 adjustment entries	2
Correctly records amounts for 1 adjustment entry	1
None of the above	0

Q11b

4 marks

Calculate the adjusted net profit as at 30 June 2021.


Net profit	$55 000
Less Accrued interest expense	$250
Less Unearned rent revenue	$10 500
Add Prepaid telephone expense	$660
Adjusted net profit	$44 910

Marking Criteria

Adjustments

Marking Bands

Descriptor	Marks
Correctly adds or subtracts from net profit for all 3 accounts	3
Correctly adds or subtracts from net profit for 2 accounts	2
Correctly adds or subtracts from net profit for 1 account	1
None of the above	0

Calculation

Descriptor	Marks
Correctly calculates adjusted net profit	1

Q11c

11 marks

Prepare a fully classified Statement of Financial Position, showing working capital.

Business 1
Statement of Financial Position as at 30 June 2021

Particulars	＄	＄	＄	＄

Business 1
Statement of Financial Position as at 30 June 2021

	$	$	$	$
Current assets
Accounts receivable control		75 000
Inventories control		35 800
Prepaid expense		660	111 460
Less Current liabilities
Bank overdraft		3 000
Accounts payable control		50 000
GST clearing		4 000
Accrued expense		250
Unearned revenue		10 500
Fixed-term loan (due 31 December 2021)		50 000	117 750
WORKING CAPITAL				(6 290)
Add Non-current assets
Property, plant and equipment
Motor vehicle	80 000
Less Accumulated depreciation — motor vehicle	12 000	68 000
Land and buildings		250 000	318 000
Investments
Debentures			18 000
Intangibles
Goodwill		25 000
Patents	15 000
Less Accumulated amortisation — patents	3 000	12 000	37 000	373 000
Less Non-current liabilities
Mortgage on land and buildings				160 000
NET ASSETS				206 710
Represented by Owner’s equity
Capital		203 800
Add Net profit		44 910	248 710
Less Drawings			42 000	206 710

Marking Criteria

Classification

Marking Bands

Descriptor	Marks
Correctly lists accounts within the main headings of classifications for all 5 sections	5
Correctly lists accounts within the main headings of classifications for 4 sections	4
Correctly lists accounts within the main headings of classifications for 3 sections	3
Correctly lists accounts within the main headings of classifications for 2 sections	2
Correctly lists accounts within the main headings of classifications for 1 section	1
None of the above	0

Adjustments

Marking Bands

Descriptor	Marks
Correctly incorporates adjustments to prepaid expenses, accrued expenses and unearned revenue for all 3 accounts	3
Correctly incorporates adjustments to prepaid expenses, accrued expenses and unearned revenue for 2 accounts	2
Correctly incorporates adjustments to prepaid expenses, accrued expenses and unearned revenue for 1 account	1
None of the above	0

Calculations

Descriptor	Marks
Correctly calculates working capital	1
Correctly calculates net assets	1
Correctly calculates owner’s equity	1

QCAA Accounting Fully classified financial statement reporting and analysis for a sole trader business

Classification Headings

Account Classification & Amounts

Sub-totals

Profit

Classifications

Account Classification & Amounts

Balancing

Discussion of Ratios

Advice

Recording Revenue and Expenses

Execution

Identification of Accounts

Recording Amounts

Adjustments

Calculation

Classification

Adjustments

Calculations

Frequently Asked Questions

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