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Integrated Accounting System Sage 50 Accounts Northern Ireland Exam Paper 2011/12

2nd Year Examination: Exam Paper 2011/12

Paper: IAS Sage 50 Accounts (Northern Ireland)

INSTRUCTIONS TO CANDIDATES

PLEASE READ CAREFULLY

For candidates answering in accordance with the law and practice of Northern

Ireland.

Candidates should answer the paper in accordance with the appropriate provisions

up to and including the Finance Act 2011. The provisions of the Finance Act 2012

should be ignored.

All names and addresses mentioned are entirely fictitious.

This exam paper is copyright and may not be reproduced.

Candidates should allocate their time carefully.

The following inserts are enclosed with this paper:

• P46,

• P32.

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Company Information Business Name: Hard Music Shop Ltd. Address: 12 High Street

Belfast

BT5 6GR

Telephone: 028-9079 0908 Fax: 028-9079 0909 E-mail: [email protected] VAT Reg. No.: GB-818905679 Employer Reg. No.: GB-818905679 Directors: Mr. Neil Martin Ms. Sarah Marshall Business: Suppliers of music equipment and related ancillary products. Type of Business Entity: Private Limited Company

Business Profile Hard Music Shop Ltd. was incorporated as a Private Limited Company in 2004. Neil Martin and Sarah Marshall are the directors and shareholders of the company. The majority of Hard Music Shop Ltd.’s sales are on credit with some cash sales. The company is registered for VAT. VAT is charged on sales at the standard rate of 20%. The company accounts for VAT on a Sales Invoice basis. The accounting year of Hard Music Shop Ltd. is September to August. Assume that today is the 5th of December 2011 and you have recently been employed as the company’s accounting technician. As part of your duties you will be responsible for the administration of the payroll system and the preparation of the monthly management accounts. There are currently five employees paid on a monthly basis. A draft set of accounts up to 30th November 2011 were produced by your predecessor using Sage 50 Accounts. You are aware that there are some additional entries still to be posted and there are a few changes suggested by the directors before finalising the management accounts.

Integrated Accounting Systems - Sage 50 Accounts (NI) 2nd Year Paper

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Section A - Payroll: You are required to: 1. Restore the setup Sage 50 payroll files from the location indicated by the invigilator.

(Create a new company or restore over an existing company if necessary). (1 Mark) 2. Prepare and calculate the November 2011 payroll based on the information below.

(Ensure that you set the period to November before you begin.) (2 Marks) 3. Set yourself up as a new employee, identified by your examination number only (e.g. 2XXXXX). Insert your examination number in both the forename field and the surname field. You commenced employment on Monday 21st November 2011. You have been contracted on a part time basis. You will be paid a rate of £8.95 p/hr plus payment of time and a half for overtime hours worked. You are to be paid for 28.5 hours worked in November, plus 5 hours overtime. You are to be paid by cheque and you have not yet received a copy of your P45 from your previous employer. Your P46 is attached on page 11. Your National Insurance Category is A. (4 Marks)

4. Neil Martin is to receive a decrease in his annual salary of £5,000 effective from the 1st November 2011. Neil is also to be reimbursed £230 for receipted travel expenses incurred by him on a recent business trip to Edinburgh. Update the payroll package for these changes. (2 Marks)

5. Sarah Marshall is to receive backdated payment owing to her in November 2011 for three days sick leave that was incorrectly deducted from her in October 2011. Sarah also started a private pension effective from the 1st November 2011. She is to contribute 5% of her basic monthly gross salary and Hard Music Shop Limited will also contribute 3% from this date. Update the payroll package for these changes. (2 Marks)

6. Stephen Byrne left the company on the 15th November 2011. At this date Stephen had taken 3 days more holidays than he was due and the company wishes to reclaim any overpayment made. He is to be paid half a month’s salary for November and commission of 5% on his sales which totaled £6,000 in November. Update the payroll package for these changes. (2 Marks)

7. Hard Music Shop Limited pay employees Mileage Allowance Payments (MAPS) in line with HMRC guidelines at the following rates:

• First 10,000 miles per annum = 45p per mile

• Above 10,000 miles per annum = 25p per mile

Josh Stevens travelled 673 business miles in November bringing his total business miles in 2011 to 10,600. Calculate the MAPS due to Josh and update the payroll package for this change. (2 Marks)


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8. Print the payment summary report 1 & 2 (in landscape format), a payslip for the new employee only and the current NI contributions report for November 2011 to the print facility indicated by the invigilator. (2 Marks)

9. Complete the P32 return on page 12 for November 2011 and ensure that it is submitted to the invigilator at the end of the exam. (2 Marks)

10. Backup the Sage 50 Payroll dataset for Hard Music Shop Ltd. to the location indicated by the invigilator. (1 Mark) Total: (20 Marks)

NB: Assume all other employees NOT mentioned above are calculated as normal.

On average an employee works 260 days per annum.


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Section B - Integrated Accounts and Double Entry: You are required to: 1. Restore the Sage 50 Accounts dataset for Music Shop Ltd. from the data location as

indicated (creating a new company if necessary). Please note that the username is “manager” and there is no password. (1 Mark)

2. Change the company name so it reads: “Hard” Music Shop Ltd. – your examination

number (e.g. 2XXXXX) (1 Mark)

3. Post the salary journal for the month of November 2011 using the information produced

in section A. (You should set up any new nominal codes required.) (5 Marks) 4. Set up the following new product. The details are as follows: Description: Top 50 00’s Hits-Album Code: T00 Cost Price: £8.33

Sales Price (Ex VAT): £18.50 (1 Mark)

5. Generate a quotation, for Music Central, from Sage 50 Accounts similar to that on page 8. Print the quotation to the print facility indicated by the invigilator, and ensure that it is submitted to the invigilator at the end of the exam. (2 Marks)

6. Later that day, Music Central contacted you to make the following amendments to the

quotation produced in question 5. Product New Order Quantity Top 50 80's Hits- Album 8 Top 50 90's Hits- Album 10 Top 50 00's Hits- Album 20

Amend the quotation and convert to a sales invoice from Sage 50 Accounts dated 10th November 2011. Ensure that the sales invoice is posted/updated. Print the sales invoice to the print facility indicated by the invigilator, and ensure that it is submitted to the invigilator at the end of the exam. (2 Marks)


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7. Set up a new supplier account for Thomas & Co. Accountants. The supplier details are as follows:

Supplier Code: THO01 Supplier Name: Thomas & Co. Accountants Address: Unit 4A

Low Lane Belfast BT5 6GR

Telephone: 028-7936 7253 Contact name: David Davis

Email: [email protected] VAT no: GB 692909261 (1 Mark)

8. Enter the purchase invoice on page 9. (2 Marks) 9. On the 21st of November 2011 the directors paid the full amount outstanding on Music

Madness Ltd.’s supplier account by personal credit card. Enter and allocate an appropriate journal on the creditor’s ledger to reflect that the supplier invoice has now been paid by the directors. (3 Marks)

10. On the 24th of November 2011 the directors sent a euro draft for €5,132.09 to Media Mad

Ltd. costing £4,523.94 for payment of invoice number 9498. A bank charge of £22.50 is included in this figure and the difference is the currency gain/loss. Enter all of the above through the purchase ledger and allocate this payment against the invoice and related charges. (3 Marks)

11. The company entered into a new lease on 1st November 2011 in order to purchase new computer equipment at a cost of £9,360. Interest of £1,440 in total will be charged over 3 years. Ignoring VAT implications, you are required to:

(i) Capitalise the new asset and show the lease liability at the date of acquisition i.e. 1st November 2011. (4 Marks)

(ii) Calculate, set up and post a recurring cash payment for the monthly lease repayment starting on 1st November 2011 and to be processed monthly.(3 Marks)

(iii) Calculate, set up and post the recurring monthly journal to charge lease interest to

the Profit and Loss Account on the same date as (ii) above. (3 Marks)

Students should also note the following before attempting this question:

- Students should put their examination number as the transaction reference when creating the recurring transaction,

- Students should set up any new nominal codes required.


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12. Enter the following petty cash vouchers for the month ended 30th November 2011:

Date Details Receipt Net

Amount VAT Total

No. £ £ £

03/11/2011 Ink Cartridges 1042 19.90 3.98 23.88

(Printing and Stationery)

21/11/2011 Taxis 1043 15.00 0.00 15.00

(Travel expenses)

(2 Marks)

13. Before attempting to reconcile the bank account you notice the following:

(i) On 30th November 2011, the directors cashed a petty cash cheque for £150 using cheque number 500532. Enter this cheque in Sage 50 Accounts on 30th November 2011. (2 Marks)

(ii) Enter any amounts from the attached bank statement on page 10 that may not have been recorded, then reconcile the cashbook balance to the bank statement for November 2011. (6 Marks)

14. Provide for depreciation for the month of November based on the following fixed assets depreciation policies:

– Land and Buildings – 2% p.a. straight line – Plant and Machinery – 10% p.a. straight line – Furniture and Fixtures – 20% p.a. straight line – Computer Equipment – 33 1/3 % p.a. straight line – Office Equipment – 20% p.a. straight line – Motor Vehicles – 20% p.a. straight line – Leased Assets – over the life of the lease

It is also the company’s policy to charge a full year’s depreciation in the year of acquisition and no deprecation in the year of disposal. (6 Marks)

15. Reverse the accountancy accrual at 30th of November 2011 as the invoice has now

been received. (Please note that the accrual for accountancy was previously entered net of VAT) (2 Marks)

16. Backup the Sage 50 Accounts dataset for Hard Music Shop Ltd. to the location

indicated by the invigilator. (1 Mark)

Total: (50 Marks)


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QUOTATION

Hard Music Shop Limited

DATE: 10TH NOVEMBER 2011

12 High Street Belfast BT5 6GR

To Music Central Unit 12 The Grange Lisburn BT27 5EA

CODE DESCRIPTION QTY

UNIT PRICE

£

VAT

AMOUNT

£

T80 Top 50 80's Hits-Album 5 18.50 1 92.50

T90

Top 50 90's Hits-Album

5

18.50

1

92.50

T00 Top 50 00's Hits-Album 5 18.50 1

92.50

SUBTOTAL 277.50

RATE NET VAT

VAT

55.50

20% 277.50 55.50 TOTAL 333.00

VAT Number: GB-818905679

THANK YOU FOR YOUR BUSINESS!


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Thomas & Co. Accountants

Unit 4A Low Lane Belfast

BT5 6GR Tel: 028-7936 7253

VAT No. GB 692909261

26th November 2011

Invoice No.: 107265

Invoice To: Hard Music Shop Limited

12 High Street Belfast BT5 6GR

Details Total

£

Preparation of financial statements for the year ended 31st August 2011. 2,200.00

Outlay to included printing and post 13.25

Payment due upon receipt of invoice.

Rate Net Vat NET £ 2,213.25

20% £2,213.25 £442.65 VAT £ 442.65

Total £2,655.90


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First Bank Plc. 92-36-76

Main Street, Newry, BT34 4FW

STATEMENT OF ACCOUNT

Hard Music Shop Ltd 30-Nov-11

12 High Street Belfast

BT34 2QU

Statement No: 173

Account No.

28374693

DATE PARTICULARS DEBIT (£) CREDIT (£) BALANCE

( ) Denotes Debit

Nov – 11 1 Balance b/fwd 66,552.08

Lease - DD 300.00

Lodgement 100424 8,690.78 74,942.86

2 Govt Duty 25.00 74,917.86

3 Lodgement 100425 9,726.66 84,644.52

8 Lodgement 100426 8,034.92 92,679.44

14 Lodgement 100427 7,234.34 99,913.78

18 EFT Charges 15.00 99,898.78

19 S/O VAT 100 - DD 10,672.74 89,226.04

21 NIE – DD 1,854.81 87,371.23

23 PAYE/ NIC – DD 5,786.73 81,584.50

24 Euro Bank Draft 4,523.94 77,060.56

25 Bank Charges 23.64

BT - DD 297.64 76,739.28

30 Cheque 500532 150.00

30 Net Salaries 11,185.87 65,403.41


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Examination Number:

Section C - MS Excel:

You are required to prepare a month by month budget for the 3 months from 1st December 2011 to 29th February 2012 based on the actual figures for September 2011. 1. Export the Trial Balance for September 2011 from the Sage 50 Accounts dataset into an

MS Excel worksheet and save the file as ‘Budget for 3 months ended 29th February 2012” Ensure that you:

• Remove all rows that do not include profit and loss items,

• Unwrap and unmerge all cells as necessary,

• Ensure all the figures for September 2011 are in the same column,

• Remove all columns that contain no data.

Ensure that the Nominal Accounts are listed under the relevant financial headings and that a formula is inserted at the bottom of each category to show the total:

• Sales (Total Sales),

• Cost of Sales (Total Cost of Sales),

• Operating Expenses (Total Operating Expenses),

• Gross Margin and Net Profit/Loss should also be calculated and shown. (3 Marks)

2. In the same worksheet in new columns: - Set up a month by month budget template for the 3 months from December 2011

to February 2012, - Insert formulas to the month by month budget template to reflect the monthly

income/expense for the 3 months from December 2011 to February 2012, taking into account all of the following information:

• Sales and all cost of sales accounts should be 3% higher per month based on the September 2011 figures,

• Staff salaries should be 5% lower based on the September 2011 figures. Directors’ Remuneration is to stay at September 2011 levels. ER NIC should be 13.8% of staff salaries,

• Depreciation should be based on the September 2011 figures while also taking into account the additional depreciation for the new fixed asset additions as outlined in Section B. (Refer to the company’s fixed assets depreciation polices set out on page 7.)

• Provision should be made for the monthly lease interest as outlined in Section B,

• All other operating expenses are to be 2% lower per month based on the September 2011 figures.

- Insert formulas to show totals for income, cost of sales, gross margin, total operating expenses, net profit etc.,

- Calculate the total budgeted figures for the 3 months ending 29th February 2012. (Students should use the absolute formula throughout where possible) (5 Marks)


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3. Format the whole spreadsheet to the following: - Adjust all columns to the appropriate width size to ensure all figures and text is

visible, - Border all “total” figures, - All figures to be comma style, have no decimal places and have a “£” sign, (with

the exception of percentages), - All text and figures should be in Arial style and in font size 10. - Bold and underline all month headings, - Using any Word Art, title the page “Budget for 3 months ending 29th February

2012” in font size 20 and paste at the top of your page, - Insert today’s date as a footer on the right section and your examination number

(e.g. 2XXXXX) on the left side section. Both should be in italic and font size 11, - Insert gridlines on the page. (4 Marks)

4. In a new worksheet, create a “column” chart showing projections based on the total

figures for the 3 months ending 29th February 2012 for the expense codes from Travel Expenses to Cleaning. The column chart should be formatted as follows:

- Column chart should be titled “Other Operating Expenses for Qtr 2”, - The Y-axis should be formatted to the following:

(i) No decimal places, (ii) Major unit to be £200, (iii) Include £ sign.

- The X-axis should be formatted to the following: (i) All text should be in upper caps, (ii) All text to be horizontal.

- Series should appear on the bottom and be titled “Expenses”, - Insert your examination number (e.g. 2XXXXX) as a header in the centre section.

(5 Marks) 5. On completion of the above MS Excel tasks:

- Print the following worksheets to the print facility indicated by the invigilator:

• One printout of the budget worksheet showing figures as normal,

• One printout of the budget worksheet adjusted to show formulas instead of figures,

• One printout of the graph. (Ensure each page prints on one page only and in landscape.) - Save the MS Excel file “Budget for 3 months ending 29th February 2012” to the

location indicated by the invigilator.

(3 Marks)

Total: (20 Marks)


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Printing: Upon completion of Section B and Section C (Integrated Accounts & MS Excel), print the following to the print facility indicated by the invigilator: Sage 50 Accounts Reports:

• A trial balance as at 30th November 2011,

• A detailed audit trail by posting number starting at posting 229 and ending at the last posting number in Sage 50 Accounts, (must be printed in portrait format)

• A print list detailing all recurring journals,

• An aged creditors report as at 30th November 2011 (detailed),

• An un-reconciled bank transaction report for First Bank Plc. as at 30th November 2011 (showing both outstanding receipts and payments),

• A supplier address list report for Thomas & Co. Accountants.

Ensure all reports are clearly labeled and are submitted to the invigilator at the end of the exam.

Total: (10 Marks)

On completion of the examination, ensure that a backup of your Sage 50 Payroll, Sage 50 Accounts and MS Excel data has been correctly saved in a folder, using your Examination Number as the folder name, in the location indicated by the invigilator. It is the student’s responsibility that all work is saved as required above. Accounting Technicians Ireland cannot be held responsible for any marks lost as a result of the above not being completed correctly. Total Exam Marks: (100 Marks) End of Exam Paper


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Summary Suggested Solution

IAS (Hard Music) – Sage NI

Please Note: Due to the nature of this subject, it is not possible to provide solution dataset files as these will not work correctly with more recent versions of the software.

For this reason, a number of system reports are provided here as a summary.

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Date: 06/07/2012 Hard Music Shop Ltd - NI Solution

Time: 12:19:47 Audit Trail (Detailed)

Date From: 01/01/1980Date To: 31/12/2019

Transaction From: 229Transaction To: 99,999,999

Exclude Deleted Tran: No

No Type A/C N/C Dp Details Date Ref Net Tax T/C Pd Paid V B Bank Rec. Date

229 JD 7002 30/11/2011 W&S 7,567.95 0.00 Y 7,567.95 -

229 7002 0 Wages and Salaries - Nov 11 7,567.95 0.00 T9 7,567.95 -

230 JD 7003 30/11/2011 W&S 6,821.20 0.00 Y 6,821.20 -


231 JD 7006 30/11/2011 W&S 1,534.25 0.00 Y 1,534.25 -


232 JD 7007 30/11/2011 W&S 105.00 0.00 Y 105.00 -

232 7007 0 Wages and Salaries - Nov 11 105.00 0.00 T9 105.00 -

233 JD 7400 30/11/2011 W&S 412.85 0.00 Y 412.85 -


234 JC 2210 30/11/2011 W&S 4,975.38 0.00 Y 4,975.38 -


235 JC 2220 30/11/2011 W&S 11,185.87 0.00 Y 11,185.87 -


236 JC 2230 30/11/2011 W&S 280.00 0.00 Y 280.00 -


237 SI MUS03 10/11/2011 1 703.00 140.60 N 0.00 -

237 4000 0 Top 50 80's Hits- Album 148.00 29.60 T1 0.00 N

238 4000 0 Top 50 90's Hits- Album 185.00 37.00 T1 0.00 N

239 4000 0 Top 50 00's Hits-Album 370.00 74.00 T1 0.00 N

240 PI THO01 26/11/2011 107265 2,213.25 442.65 N 0.00 -

240 7601 0 Accounts for year end 31st August 2,213.25 442.65 T1 0.00 N

241 PC MUS01 21/11/2011 555.26 0.00 Y 555.26 -

241 2204 0 Paid by Directors Loan 555.26 0.00 T9 555.26 -

555.26 to PI 169 21/11/2011 44023 555.26

242 PI MED01 24/11/2011 Fees 22.50 0.00 Y 22.50 -

242 7901 0 Bank Draft Fee 22.50 0.00 T9 22.50 -

22.50 from PA 244 24/11/2011 Draft 22.50

243 PC MED01 24/11/2011 FX 4.13 0.00 Y 4.13 -

243 7902 0 FX Gain 4.13 0.00 T9 4.13 -

4.13 to PI 174 24/11/2011 9498 4.13

244 PA MED01 24/11/2011 Draft 4,523.94 0.00 Y 4,523.94 R 30/11/2011

244 1200 0 Purchase Payment 4,523.94 0.00 T9 4,523.94 -

4501.44 to PI 174 24/11/2011 9498 4,501.44

22.50 to PI 242 24/11/2011 Fees 22.50

245 JD 0035 01/11/2011 9,360.00 0.00 Y 9,360.00 -

245 0035 0 New Computer Lease 9,360.00 0.00 T9 9,360.00 -

246 JC 2350 01/11/2011 10,800.00 0.00 Y 10,800.00 -


247 JD 2355 01/11/2011 1,440.00 0.00 Y 1,440.00 -


248 BP 1200 01/11/2011 R10XXXX 300.00 0.00 Y 300.00 R 30/11/2011

248 2350 0 Monthly Lease Repayment 300.00 0.00 T9 300.00 -

249 JD 7907 01/11/2011 R10XXXX 40.00 0.00 Y 40.00 -

249 7907 0 Monthly Interest Charge 40.00 0.00 T9 40.00 -

250 JC 2355 01/11/2011 R10XXXX 40.00 0.00 Y 40.00 -

250 2355 0 Monthly Interest Charge 40.00 0.00 T9 40.00 -

251 CP 1230 03/11/2011 1042 19.90 3.98 Y 23.88 -

251 7500 0 Ink Cartridges 19.90 3.98 T1 23.88 N

252 CP 1230 21/11/2011 1043 15.00 0.00 Y 15.00 -

252 7400 0 Taxis 15.00 0.00 T9 15.00 -

253 JC 1200 30/11/2011 500532 150.00 0.00 Y 150.00 R 30/11/2011

253 1200 0 Petty Cash 150.00 0.00 T9 150.00 -

254 JD 1230 30/11/2011 500532 150.00 0.00 Y 150.00 -

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Date: 06/07/2012 Hard Music Shop Ltd - NI Solution

Time: 12:19:47 Audit Trail (Detailed)

No Type A/C N/C Dp Details Date Ref Net Tax T/C Pd Paid V B Bank Rec. Date

254 1230 0 Petty Cash 150.00 0.00 T9 150.00 -

255 PA BT01 25/11/2011 DD 297.64 0.00 Y 297.64 R 30/11/2011

255 1200 0 Purchase Payment 297.64 0.00 T9 297.64 -

297.64 to PI 176 25/11/2011 85 297.64

256 BP 1200 16/11/2011 EFT 15.00 0.00 Y 15.00 R 30/11/2011

256 7901 0 EFT Charges 15.00 0.00 T9 15.00 -

257 BP 1200 23/11/2011 DD 5,786.73 0.00 Y 5,786.73 R 30/11/2011

257 2210 0 Oct P32 5,786.73 0.00 T9 5,786.73 -

258 BP 1200 30/11/2011 DD 11,185.87 0.00 Y 11,185.87 R 30/11/2011

258 2220 0 November Net Wages 11,185.87 0.00 T9 11,185.87 -

259 JD 8003 30/11/2011 Depn 533.33 0.00 Y 533.33 -

259 8003 0 Depn Nov 11 533.33 0.00 T9 533.33 -

260 JC 0051 30/11/2011 Depn 533.33 0.00 Y 533.33 -

260 0051 0 Depn Nov 11 533.33 0.00 T9 533.33 -

261 JD 8002 30/11/2011 Depn 563.91 0.00 Y 563.91 -

261 8002 0 Depn Nov 11 563.91 0.00 T9 563.91 -

262 JC 0041 30/11/2011 Depn 563.91 0.00 Y 563.91 -

262 0041 0 Depn Nov 11 563.91 0.00 T9 563.91 -

263 JD 8005 30/11/2011 Depn 86.94 0.00 Y 86.94 -

263 8005 0 Depn Nov 11 86.94 0.00 T9 86.94 -

264 JC 0036 30/11/2011 Depn 86.94 0.00 Y 86.94 -

264 0036 0 Depn Nov 11 86.94 0.00 T9 86.94 -

265 JD 8005 30/11/2011 Depn 260.00 0.00 Y 260.00 -

265 8005 0 Depn Nov 11 260.00 0.00 T9 260.00 -

266 JC 0036 30/11/2011 Depn 260.00 0.00 Y 260.00 -

266 0036 0 Depn Nov 11 260.00 0.00 T9 260.00 -

267 JD 2109 30/11/2011 Rev Accrua 2,213.25 0.00 Y 2,213.25 -

267 2109 0 Reverse Accountancy Accrual 2,213.25 0.00 T9 2,213.25 -

268 JC 7601 30/11/2011 Rev Accrua 2,213.25 0.00 Y 2,213.25 -

268 7601 0 Reverse Accountancy Accrual 2,213.25 0.00 T9 2,213.25 -

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Statistical Analysis – By Question

Question No. 1 2 3 4

Average Mark (%) 83% 83% 78% 86%

Nos. Attempting 180 180 180 180

Statistical Analysis - Overall

Pass Rate 85%

Average Mark 82%

Range of Marks Nos. of Students

0-59 22

60-69 6

70 and over 152

Total No. Sitting Exam 180

Total Absent 9

Total Approved Absent 2

Total No. Applied for Exam 191

General Comment:

Overall presentation was again of an extremely varied standard. Candidates are reminded that all exam material submitted for correction should be well presented and in clear order. Candidates should note that the IAS exam is an assessment of the operation of computerised payroll and accounting packages; therefore supporting workings will, under no circumstances, be afforded marks where calculations have not been posted into the audit trail.

Payroll:

In general, candidates scored highly in the Payroll section. Common areas where marks were lost included:

• Taxing receipted expenses;

• Applying the pension to backdated payments;

• Not accounting for the Employers pension contribution;

• Not accounting for the Mileage Allowance Payment;

• Completing the P32 for the wrong period.

Accounts:

The basic foundations of Double Entry bookkeeping are crucial to the effective operation of a computerised accounting package and, when preparing for the IAS examination, students are strongly encouraged to ensure that they are comfortable with these principles particularly with regard to period end adjustments.

Integrated Accounting Systems (IAS)

Exam Paper 201 1/2012 – Hard Music Shop Limited (NI)

For the second year in a row the Salary Journal was very well addressed by candidates and most students attained high marks in this task. A number of students failed to address the Pension liability correctly.

The requirement to account for payment to a creditor by directors’ personal funds seemed to cause confusion for students and a high number of students did not post any entry. Other candidates entered, but did not allocate, the supplier payment.

The foreign currency transaction usually presented few problems for candidates, however it was noted that students were not as comfortable dealing with a foreign currency gain, rather than a loss.

There was a significant improvement in accounting for a Lease this year and candidates had obviously prepared well for this requirement. Mistakes that arose, specific to the treatment of Lease transactions, included:

• Setting up the Lease Obligation and Lease Interest Suspense Accounts in the P&L, or setting

up the nominal accounts as current asset or fixed asset accounts;

• Reversing the Lease journal;

• Posting the charge for lease interest as a bank payment.

The basic journal for depreciation should be familiar to all students from first year Financial Accounting and there seemed to be improvement in this area also. Close attention should continue to be paid in this area as common mistakes, specific to the treatment of Depreciation, include:

• Crediting the ‘Asset at Cost’ account when recording Accumulated Depreciation;

• Not calculating the correct value for Depreciation, particularly for the leased asset;

• Posting ‘year to date’ depreciation for the leased asset;

• Accounting for a year’s depreciation, rather than for one month, as requested;

• Reversing the depreciation journal.

Students should remember, with regard to depreciation, that the detail of each nominal account balance for each class of fixed asset should be closely analysed as the summary balance may be misleading when calculating depreciation values i.e. asset at cost accounts may include leased assets which are subject to a different depreciation policy.

While the main areas (e.g. Accounting for Leases, Depreciation, Salary Journals) showed marked improvement it was noted that a number of marks were sacrificed in other areas. For example, marks were frequently forfeited for the following reasons:

• Posting the Accountancy invoice to Cost of Sales, Purchases, etc (Item 8);

• Posting Petty Cash payments as bank receipts (Item 12);

• Debiting the petty cash with a directors loan (Item 13(i));

• Posting supplier payments to expense accounts i.e. the BT DD in the bank statement;

• Including VAT when reversing the accountancy accrual (Item 11).

Excel:

Candidates should note that the syllabus for IAS clearly defines Excel as a required competency that constitutes 20% of the overall grade. There was a significant increase in the number of students who only made a cursory attempt at this section and this had a noticeable effect on the pass rate. Where a reasonable attempt was made candidates tended to receive a majority of the available marks so

students are strongly encouraged to prepare adequately for this section of the syllabus. It was noted that a significant number of students did not select the correct range for the column chart and that the requirement to indicate a major unit of £200 was often overlooked.

Reporting:

A small number of candidates printed the requested reports before all activity was completed, again this means that marks may be sacrificed as the reports will not be complete; all requested reports and printouts should be produced after all intended work has been carried out. Hard copy printouts should not be obscured with any ‘workings’ as marks may be lost if printouts are not legible. Particular attention should also be paid to the specific parameters indicated in the reporting requirement.

Conclusion:

Attention to detail and a high level of ‘first-time’ accuracy, with regard to dates, calculations, and journal entries is critical when using computerised software; such an approach is also essential for securing high marks in the IAS Examination. Sufficient preparation and practice with the available material is therefore strongly recommended. Candidates are urged to pay close attention to the specific requirements of the paper and are also reminded to ‘update/process’ the work that they have carried out e.g. quotations, recurring journals to ensure they gain the maximum marks for their activities.

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