QCAA Accounting Managing resources for a sole trader business
6 sample questions with marking guides and sample answers
Read Case study 2 (Stimulus 5–6) in the stimulus book.
Identify and explain the errors in Stimulus 6.
Reveal Answer
1/7/2019: Installation of machinery incorrectly recorded as revenue expenditure. Should be capitalised.
1/1/2020: Accounts payable should be Bank.
30/6/2020: Depreciation amount is incorrect due to incorrect recording of capital expenditure on 1/7/2019 (calculated on amount of ＄50 000, rather than ＄51 000).
1/4/2021: Accumulated depreciation is incorrect, due to previous years’ incorrect depreciation calculations.
1/4/2021:
• Straight line method of depreciation used instead of diminishing value.
• Depreciation was calculated for only 8 months, instead of 9 months.
• Depreciation was calculated on ＄50 000, rather than ＄51 000.
1/4/2021: Accumulated depreciation amount will need to change to reflect different depreciation figures in previous years.
1/4/2021: Not a gain on disposal; a loss on disposal.
| Descriptor | Marks |
|---|---|
Correctly identifies and explains the incorrectly recorded entries for at least 6 errors | 4 |
Correctly identifies and explains the incorrectly recorded entries for at least 5 errors | 3 |
Correctly identifies and explains the incorrectly recorded entries for at least 3 errors | 2 |
Correctly identifies and explains the incorrectly recorded entries for at least 1 error | 1 |
None of the above | 0 |
Use your answer for Question 12a) to record the general ledger accounts as they should have been presented.
Business 2
General Ledger (extract)
| Date | Particulars | Debit ＄ | Credit ＄ | Balance ＄ | Dr/Cr |
|---|---|---|---|---|---|
| Machinery | |||||
| Accumulated depreciation | |||||
| Disposal of machinery | |||||
Reveal Answer
Business 2
General Ledger (extract)
Machinery
| Date | Particulars | Debit | Credit | Balance | Dr/Cr |
|---|---|---|---|---|---|
| 1/7/2019 | Accounts payable — Machinery Retailer | 50 000 | 50 000 | ||
| Accounts payable — Machinery Installer | 1 000 | 51 000 | |||
| 1/4/2021 | Disposal of machinery | 51 000 | 0 |
Accumulated depreciation
| 30/6/2020 | Depreciation of machinery | 10 200 | 10 200 | ||
| 1/4/2020 | Depreciation of machinery | 6 120 | 16 320 | ||
| 1/4/2020 | Disposal of machinery | 16 320 | 0 |
Disposal of machinery
| 1/4/2021 | Machinery | 51 000 | 51 000 | ||
| Accumulated depreciation of machinery | 16 320 | 34 680 | |||
| Accounts receivable — Machinery Retailer | 25 000 | 9 680 | |||
| Loss on disposal | 9 680 | 0 |
Machinery Ledger
Marking Bands| Descriptor | Marks |
|---|---|
Correctly records particulars and amounts in the machinery ledger account for 3 entries, including balance | 2 |
Correctly records particulars and amounts in the machinery ledger account for 2 entries | 1 |
None of the above | 0 |
Depreciation Calculation
| Descriptor | Marks |
|---|---|
Correctly calculates and records the depreciation of machinery amount using correct method of depreciation | 1 |
Correctly calculates and records the depreciation of machinery amount using 9 months: $6 120 | 1 |
Accumulated Depreciation Ledger
Marking Bands| Descriptor | Marks |
|---|---|
Correctly records particulars and amounts in the accumulated depreciation ledger account for 3 entries, including balance | 3 |
Correctly records particulars and amounts in the accumulated depreciation ledger account for 2 entries | 2 |
Correctly records particulars and amounts in the accumulated depreciation ledger account for 1 entry | 1 |
None of the above | 0 |
Loss on Disposal
| Descriptor | Marks |
|---|---|
Calculates the loss on disposal | 1 |
Disposal Ledger
Marking Bands| Descriptor | Marks |
|---|---|
Correctly records particulars and amounts in the disposal of machinery ledger account for 4 entries, including balance | 4 |
Correctly records particulars and amounts in the disposal of machinery ledger account for 3 entries | 3 |
Correctly records particulars and amounts in the disposal of machinery ledger account for 2 entries | 2 |
Correctly records particulars and amounts in the disposal of machinery ledger account for 1 entry | 1 |
None of the above | 0 |
A motor vehicle was purchased on 1 July 2018 for ＄50 000 and sold on 31 October 2020 for ＄18 000. The depreciation method used is straight line. The useful life is five years, and there is no residual value. As at 30 June 2020, the accumulated depreciation for the motor vehicle was recorded as ＄20 000.
Based on this data, and rounding to the nearest whole number, the general journal entry to record the disposal would be
Loss on disposal of motor vehicle Dr ＄28 667
Disposal of motor vehicle Cr ＄28 667
Loss on disposal of motor vehicle Dr ＄12 000
Disposal of motor vehicle Cr ＄12 000
Loss on disposal of motor vehicle Dr ＄8 667
Disposal of motor vehicle Cr ＄8 667
Loss on disposal of motor vehicle Dr ＄2 000
Disposal of motor vehicle Cr ＄2 000
Reveal Answer
Loss on disposal of motor vehicle Dr ＄28 667
Disposal of motor vehicle Cr ＄28 667
This option incorrectly ignores the opening accumulated depreciation of ＄20,000. It calculates the carrying amount using only the current period's depreciation (＄3,333), resulting in an overstated book value and loss.
Loss on disposal of motor vehicle Dr ＄12 000
Disposal of motor vehicle Cr ＄12 000
This calculation fails to record the depreciation expense for the four months of the current financial year (July to October). It compares the book value as of 30 June 2020 (＄30,000) directly to the proceeds, missing the ＄3,333 adjustment.
Loss on disposal of motor vehicle Dr ＄8 667
Disposal of motor vehicle Cr ＄8 667
The loss is calculated by comparing the carrying amount at the date of sale to the proceeds. First, update depreciation for 4 months (), making total accumulated depreciation ＄23,333. The carrying amount is . The loss is .
Loss on disposal of motor vehicle Dr ＄2 000
Disposal of motor vehicle Cr ＄2 000
This result comes from incorrectly comparing the accumulated depreciation balance (＄20,000) directly to the sales proceeds (＄18,000), rather than comparing the asset's net book value to the proceeds.
A business purchased furniture for ＄16 500 (including GST) on 30 September 2020. The furniture was to be depreciated at 10% using the straight-line method over 10 years. The owner decided to sell the furniture on 30 June 2023 for ＄12 500 cash.
Calculate the accumulated depreciation balance to be transferred to the disposal account.
＄3 000
＄4 125
＄4 500
＄4 538
Reveal Answer
＄3 000
This amount represents only two years of depreciation (). It incorrectly ignores the additional 9 months the asset was held between purchase and the end of the first financial year.
＄4 125
First, exclude GST to find the cost base: . The asset was held for 33 months (2.75 years) from Oct 2020 to June 2023. Accumulated depreciation is .
＄4 500
This calculates depreciation for three full years (). The asset was held for only 2 years and 9 months (2.75 years), so this overstates the accumulated depreciation.
＄4 538
This calculation incorrectly includes the GST component in the depreciable cost base (). Depreciation must be calculated on the ex-GST cost of .
A business owner purchased a television for ＄3 960 (including GST) on 30 December 2023. The television was expected to have a useful life of six years and a residual value of ＄300. It was to be depreciated at 20% using the diminishing balance method. The owner sold the television on 30 June 2025 for ＄660 (including GST).
The loss on disposal of the television was
＄1 704
＄1 932
＄1 992
＄2 175
Reveal Answer
＄1 704
This incorrectly calculates a full year of depreciation in the first year instead of apportioning it for the six months the television was owned.
＄1 932
This correctly calculates the carrying amount but fails to exclude the GST from the sale price when determining the loss on disposal.
＄1 992
The GST-exclusive cost is ＄3,600. Depreciation is ＄360 for the first 6 months and ＄648 for the next year, leaving a carrying amount of ＄2,592. Subtracting the GST-exclusive sale price of ＄600 gives a loss of ＄1,992.
＄2 175
This incorrectly uses the straight-line method of depreciation instead of the diminishing balance method specified in the question.
Read Case study 1 (Stimulus 1) in the stimulus book.
Prepare general journal entries to record all outstanding transactions as at 30 June 2024. Narrations are not required.
Garden Supplies — General journal (extract)
| Date | Particulars | DR $ | CR $ |
|---|---|---|---|
Reveal Answer
Garden Supplies — General journal (extract)
| Date | Particulars | DR ＄ | CR ＄ |
|---|---|---|---|
| 30 June 2024 | Machinery/bobcat | 30 000 | |
| GST clearing | 3 000 | ||
| Bobcat Sellers | 33 000 | ||
| (Bought machinery/bobcat from Bobcat Sellers) | |||
| Machinery/bobcat | 4 000 | ||
| GST clearing | 400 | ||
| Cash at bank | 4 400 | ||
| (Paid for installation of air-conditioning) | |||
| Bobcat Sellers | 1 650 | ||
| Cash at bank | 1 650 | ||
| (Paid 5% deposit) | |||
| Cash at bank | 31 350 | ||
| Loan | 31 350 | ||
| (Obtained a loan) | |||
| Bobcat Sellers | 31 350 | ||
| Cash at bank | 31 350 | ||
| (Paid Bobcat Sellers amount owing) | |||
| Depreciation of machinery/bobcat | 3 450 | ||
| Accumulated depreciation of machinery/bobcat | 3 450 | ||
| (Depreciation for nine months) |
Working:
Recording Entries
Marking Bands| Descriptor | Marks |
|---|---|
Correctly records 6 general journal entries | 6 |
Correctly records 5 general journal entries | 5 |
Correctly records 4 general journal entries | 4 |
Correctly records 3 general journal entries | 3 |
Correctly records 2 general journal entries | 2 |
Correctly records 1 general journal entry | 1 |
None of the above | 0 |
Recording Amounts
Marking Bands| Descriptor | Marks |
|---|---|
Correctly records amounts in 6 general journal entries | 3 |
Correctly records amounts in 3–5 general journal entries | 2 |
Correctly records amounts in 1–2 general journal entries | 1 |
None of the above | 0 |
Droon Designs sells furniture. The business reports annually on 30 June. The furniture includes lounge suites imported from overseas.
In May 2022, Droon Designs purchased 16 leather lounge suites costing ＄64 000 (plus GST). Delivery costs were ＄4 800 (plus GST). The lounge suites were delivered on 30 May.
In June 2022, Droon Designs imported a large quantity of chairs, cushions, rugs and other furniture, costing ＄90 000 (plus GST). Delivery costs were ＄7 200 (plus GST). These items were delivered together, in a shipping container.
Explain how the two delivery costs should be treated.
Reveal Answer
- the delivery costs incurred on the transaction in May 2022 were a product cost
- they were a cost incurred to get the lounge suites into location ready for sale and could be logically allocated to each individual lounge suite
- the delivery costs incurred on the transaction in June 2022 were a period cost
- they were a cost incurred to get the inventory into location ready for sale and could not be logically allocated to each individual type of inventory.
| Descriptor | Marks |
|---|---|
Identifies that the delivery costs incurred on the transaction in May 2022 were a product cost | 1 |
Explains that they were a cost incurred to get the lounge suites into location ready for sale and could be logically allocated to each individual lounge suite | 1 |
Identifies that the delivery costs incurred on the transaction in June 2022 were a period cost | 1 |
Explains that they were a cost incurred to get the inventory into location ready for sale and could not be logically allocated to each individual type of inventory | 1 |
After opening the shipping container, the owner finds that, instead of the 50 chairs that were ordered and paid for, 80 chairs have been delivered. The overseas supplier is unaware of the discrepancy and is unlikely to take any legal action in the future. It would be too expensive to return the additional 30 chairs.
The 50 chairs that were ordered cost ＄40 each (plus GST) and are expected to be sold in the next few months for ＄100 each (plus GST). The owner believes that the additional 30 chairs can be sold but that it will take several months to sell them.
The owner is unsure what to do. The owner's family believes that the chairs should be treated as an unexpected gain, and that no action is required.
Discuss any ethical and financial issues that the owner should consider when deciding how to deal with the additional chairs.
Reveal Answer
| Descriptor | Marks |
|---|---|
Detailed understanding of financial and ethical implications of decisions made by a business owner. Comprehensive discussion of the positive and negative implications of decisions made by the business owner. Accurate use of correct accounting terminology and discussion of the implications of the impact on the performance of the business | 5 |
Demonstrates a strong understanding of financial and ethical implications. Discusses positive and negative implications of decisions made by the business owner. Good use of correct accounting terminology and discussion of the implications of the impact on the performance of the business | 4 |
Demonstrates an understanding of financial and ethical implications of decisions made by the business owner. Refers to both positive and negative implications of decisions made by the business owner. General use of correct accounting terminology and reference to the implications of the impact on the performance of the business | 3 |
Demonstrates a basic understanding of financial and ethical implications. Refers to some implications of decisions made by the business owner. Limited use of accounting terminology | 2 |
Basic, if any, reference to ethical or financial considerations. Identifies at least one ethical issue; or identifies at least one financial issue | 1 |
Displays no knowledge of ethical and financial issues | 0 |