Mark Scheme

November 2018

Pearson LCCI
Certificate in Accounting Level 3
(ASE20104)
LCCI Qualifications

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Publication code: 57546_MS
© Pearson Education Ltd 2018

ASE20104
2 November 2018
General Marking Guidance

• All candidates must receive the same treatment. Examiners must

mark the first candidate in exactly the same way as they mark the last.

• Mark schemes should be applied positively. Candidates must be

rewarded for what they have shown they can do rather than penalised
for omissions.

• Examiners should mark according to the mark scheme not according to

their perception of where the grade boundaries may lie.

• There is no ceiling on achievement. All marks on the mark scheme

should be used appropriately.

• All the marks on the mark scheme are designed to be awarded.

Examiners should always award full marks if deserved, i.e. if the
answer matches the mark scheme. Examiners should also be prepared
to award zero marks if the candidate’s response is not worthy of credit
according to the mark scheme.

• Where some judgement is required, mark schemes will provide the

principles by which marks will be awarded and exemplification may be
limited.

• When examiners are in doubt regarding the application of the mark

scheme to a candidate’s response, the team leader must be consulted.

• Crossed out work should be marked UNLESS the candidate has

replaced it with an alternative response.

• Where marks are awarded for own figure answers, these marks can only be
awarded if evidence of how the candidate arrived at their values has been
provided (their workings).

• If candidate's fail to provide their workings when instructed in the paper, it

may not be possible to achieve all marks associated with the question, even
if the final answer is correct.

• For calculation questions full marks can be awarded where correct answer is
seen with no workings shown, unless question states that candidate must
provide workings.

ASE20104
3 November 2018
Abbreviation

of Own Figure rule

Accuracy marks can be awarded where the candidates’ answer does not
match the mark scheme, though is accurate based on their valid method.

cao Correct Answer Only rule

Accuracy marks will only be awarded if the candidates’ answer is
correct, and in line with the mark scheme.

ASE20104
4 November 2018
 Question AO1 (2)
Number Mark
1(a) Award 1 mark for each correct answer up to maximum of 2
marks.

Profit and loss is shared equally (1)

No interest on capital (1)
No interest on drawings (1)
No salary (1)
5% interest on partner’s loan (1) (2)

Question Answer AO1 (1) Mark

Number
1(b) Award 1 mark as indicated.

A partner may have withdrawn more money than they were entitled to.
(1)
Accept any other appropriate responses (1)

Question Answer AO1 (1) Mark

Number
1(c) Award 1 mark as indicated.

A general partner has unlimited liability / a limited partner has limited

liability. (1)

Accept any other appropriate responses

(1)

Question AO2 (6) Mark

Number
1(d) Award 1 mark for each correct figure as indicated.
Award 1 mark for all correct labels and dates.

Current Account — Aung

Date Details $ Date Details $

1 May Balance b/d 3 500 30 April Appropriation 7 500
2017 2018 (1)
30 Drawings 14 000 Appropriation 16 000
April (1) (1)
2018
Capital - 20 500 Appropriation 14 500
Aung (1of) (1)
38 000 38 000

(6)

ASE20104
5 November 2018
Question AO2 (5) Mark
Number
1(e)(i) Award 1 mark for each correct figure as indicated.

$12 300 (5) W1

W1
$
275 000 Credit (1)
+ 3 500 Credit (1)
-2 500 Debit (1)
-257 550 Debit 528 000 Credit 270 450 (1)
18 450x2/3=12 300 (1of)
(5)
Additional Guidance
No specific layout required
Correct answer only scores 5 marks.

Question AO2 (3) Mark

Number
1(e)(ii) Award 1 mark for each correct figure as indicated.

$182 800 (3) W1

W1

$
150 000
+20 500 Credit (1of from d)
+12 300 Credit (1of from e(i))
182 800 (1of)
(3)
Additional Guidance
No specific layout required
Correct answer only scores 3 marks.

TOTAL FOR QUESTION 1 = 18 MARKS

ASE20104
6 November 2018
Question Answer AO2 (2) Mark
Number
2(a) Award 1 mark for each correct column.

Schedule of non-current assets extract for the

year ended 30 June 2018
Warehouse Office
machinery equipment
$ $
Cost/valuation
Balance at 1 July 220 000 100 000
2017
Additions 5 150
Disposals (20 000)
Balance at 30 June 200 000 105 150
2018
Accumulated
depreciation
Balance at 1 July 69 000 43 680
2017
Charge for the year 30 000 12 294
Disposals (9 000)
Balance at 30 June 90 000 55 974
2018
Carrying value
At 30 June 2018 110 000 49 176
(1) (1) (2)

ASE20104
7 November 2018
Question AO2 (20) Mark
Number
2(b) Award marks for correct figures with understandable labels as
indicated.
Thomps plc
Statement of profit or loss for the year ended 30 June 2018
$ $
Revenue 550 000
(1)
Cost of sales Note 1 (244 500)
(4)
Gross profit 305 500
(1of)
Expenses
Administrative expenses Note 2 (80 219)
(5)
Distribution costs Note 3 (118 435)
(5)
Profit from operations 106 846
(1of)
Finance costs (10 000)
(1)
Profit before tax 96 846
(1of)
Taxation (19 000)
Profit for the year 77 846
(1of)
Note 1
Cost of sales $ $
Opening inventory 80 000
Purchases 267 000
Returns outwards (17 000) (1)
Carriage inwards 12 500 (1)
Closing inventory (98 000) (1)
244 500 (1of)
Note 2
Administrative expenses $
General expenses 66 300 (1)
Depreciation charge on office equipment 12 294 (1of
from a)
Irrecoverable debt 5 000 (1)
Allowance for doubtful debts (3 375) (1)
80 219 (1of)
Note 3
Distribution costs $
Selling expenses 64 875 (1)
Depreciation charge on warehouse machinery 30 000 (1 of
from a)
General expenses 22 100 (1)
Loss on disposal of warehouse machinery 1 460 (1) (20)
118 435 (1of)
TOTAL FOR QUESTION 2 = 22 MARKS

ASE20104
8 November 2018
 Question AO1(2) Mark
Number
3(a) Award 1 mark for each correct answer up to
maximum of 2 marks.

Demotivates if unrealistic budget (1)

Does not encourage creativity (1)
Expensive/ Time consuming (1)

Accept any other appropriate responses. (2)

Question AO2(3) Mark

Number
3(b)(i) Award marks as indicated.

Janvi
Inventory budget for each of the four months ending 30 April 2019

Details January February March April

$ $ $ $
Opening - 1 400 900 900
balance
Purchases 5 400 5 000 6 000 7 000 (1 for
row)
Cost of sales (4 000) (5 500) (6 000) (6 500) (1 for
row)
Closing 1 400 900 900 1 400 (1 of
balance for (3)
row)

ASE20104
9 November 2018
Question AO2(7) Mark
Number
3(b) Award marks as indicated with understandable labels.
(ii)
Janvi
Cash budget for each of the four months ending April 2019
Details January February March April
$ $ $ $
Receipts
Cash sales 1 280 1 760 1 920 2 080 (1 for
row)
Trade receivables - 2 560 6 080 7 360 (1 for
row)
(Credit sales)
Bank loan 20 000 (1 for
row)
Total receipts 21 280 4 320 8 000 9 440

Payments
Trade payables - 5 400 5 000 6 000 (1 for
row)
(Credit purchases)
Repayment to bank 2 400 (1 for
row)
Office equipment 6 250 1 250 1 250 1 250 (1 for
row)
Operating 2 000 2 000 2 000 2 000
expenses
Total payments 8 250 8 650 10 650 9 250
Net 13 030 (4 330) (2 650) 190
inflows/outflows
Opening balance - 13 030 8 700 6 050
Closing balance 13 030 8 700 6 050 6 240 (1 of
for
row) (7)
Additional guidance
Accept the split of repayment to bank $2 000 and $400
Accept the split of office equipment for January $5 000 and $1 250
Award of mark for closing balance only if operating expenses are included in payments.

Question AO2(1) Mark

Number
3(c) Award mark as indicated.
$12 160 (1) (1)
Additional Guidance
No specific layout required.
Correct answer only scores 1 mark.

ASE20104
10 November 2018
Question AO1(2) Mark
Number
3(d) Award 1 mark for each correct answer.

Trade receivables (1)

Trade payables (1)

Accept any other appropriate responses. (2)

Question AO3 (2) Mark

Number
3(e) (i) Award 1 mark for identification and 1 mark
for linked justification.

Janvi must show her non-current assets at

cost/carrying value not at market value (1) as
the going concern concept assumes that the
business will continue in the foreseeable future
(1)

Accept any other appropriate responses. (2)

Question AO1 (2) Mark

Number
3(e) (ii) Award 1 mark for each correct answer.

Prudence (1)
Consistency (1)
(2)

TOTAL FOR QUESTION 3 = 19 MARKS

ASE20104
11 November 2018
Question AO2(6) Mark
Number
4(a) Award marks as indicated

Year Net cash flow Discount Present value

$ factor at 8% $
0 (250 000) 1.0000 (250 000)

1 66 000 (1) 0.9259 61109.40

2 67 800 (1) 0.8573 58124.94

3 50 160 (1) 0.7938 39817.01

4 50 160 (1) 0.7350 36 867.60

5 50 160 (1) 0.6806 34138.90

Disposal 25 000 (1) 0.6806 17015.00

Net present value (2 927.15) (6)

Question AO2(1) Mark

Number
4(b)(i) Award marks as indicated

45 000 W1 (1)

W1

($250 000 - $25 000 from(a))/5=$45 000 (1of) (1)

Additional Guidance
No specific layout required
Correct answer only scores 1 mark.

ASE20104
12 November 2018
Question AO2(4) Mark
Number
4(b)(ii) Award marks as indicated

8.62% W1 (4)

W1
Net Depreciation Profit
cash charge
flows $ $
$
66 000 45 000 21 000 (1of)
67 800 45 000 22 800 based
50 160 45 000 5 160 on a
50 160 45 000 5 160
50 160 45 000 5 160
OR
284 280 225 000 59 280 (1of)
based
on a

$59 280/5=$11 856 (1of)

$137 500 (1of based on a for disposal

proceeds)

($11 856 /$137 500) x 100 =8.62% (1of) (4)

Additional Guidance
No specific layout required
Correct answer only scores 4 marks.

ASE20104
13 November 2018
Question AO2(1) Mark
Number
4(c)(i) Award mark as indicated

9 375 (1)

(1)
Additional Guidance
No specific layout required
Correct answer only scores 1 mark.

Question AO2(1) Mark

Number
4(c)(ii) Award mark as indicated

21.88 % (1of based on (c)(i))

(1)
Additional Guidance
No specific layout required
Correct answer only scores 1 mark.

Question AO2(2) Mark

Number
4(c)(iii) Award marks as indicated

11 125 (1)

$222 500 (1of) Based on number of units.

(2)
Additional Guidance
No specific layout required
Correct answer only scores 2 marks.

ASE20104
14 November 2018
Question AO3 (4) AO5 (1) Mark
Number
4(d) Award 1 mark for each point of discussion for an
issue of shares and an issue of debentures up to
a maximum of 4 marks.
Award 1 mark for supported decision.

Debentures will increase the liabilities of the company,

whereas the issue of shares will increase the equity of
the company (1)

Debentures must be repaid after a fixed term, whereas

with issue of shares no need to return the money back
(1).

Debentures require the company to pay fixed interest,

whereas for issue of shares there is no need to pay
dividends (1).

Interest on debentures is deducted as an expense in

this statement of profit or loss, whereas dividend paid
on shares is recorded in the statement of changes in
equity (1).

Interest on debentures will reduce the profit hence the

tax payable, whereas dividend paid on shares is an
appropriation of profits (1).

Debentures, being an external source of finance, will

reduce the confidence of potential investors, whereas
an issue of shares, being an internal source of finance,
will increase the confidence of the investors (1).

Any supported decision (1)

Accept any other appropriate responses (5)

TOTAL FOR QUESTION 4 = 20 MARKS

ASE20104
15 November 2018
Question AO1(2)
Number Mark
5(a) Award marks as indicated up to a maximum
of two marks.

Help to prepare financial statements (1)

Help to monitor profitability (1)
Help to monitor liquidity (1)

Accept any other appropriate response. (2)

Question AO2(1) Mark

Number
5(b)(i) Award marks as indicated

$576 000 (1) (1)

Additional Guidance
No specific layout required
Correct answer only scores 1 mark.

Question AO2(1) Mark

Number
5(b)(ii) Award marks as indicated

$583 200 (1) (1)

Additional Guidance
No specific layout required
Correct answer only scores 1 mark.

ASE20104
16 November 2018
Question AO2(10)
Number Mark
5(c) Award marks for each correct figure with understandable
label as indicated.
Millo
Statement of financial Position at 31 August 2018
$
Assets
Non-current assets
Property, plant and equipment 351 000 (1)

Current assets
Inventory 75 800 (1)
Trade receivables 90 000 (1)
Cash and cash equivalents 28 000 (1of bal
fig)
193 800
Total assets 544 800 (1of)
Equity and liabilities
Equity
Equity 420 000 (1)
Profit for the year 72 000 (1)
Drawings (12 000) (1of bal
fig)
Total equity 480 000 (1)
Current liabilities
Trade payables 64 800 (1of)
based on
b(ii)
Total equity and liabilities 544 800 (10)
Additional guidance
Total assets 1of mark must be equal to total equity and liabilities.

Question AO3 (2) Mark

Number
5(d) Award 1 mark for identification and 1 mark for
linked justification.

If the accountant doesn’t have Millo’s consent it will be

compromised (1) as doing so Millo’s financial
information may be used to his disadvantage (1).

Accept any other appropriate responses. (2)

ASE20104
17 November 2018
Question AO4(4) and AO5(1) Mark
Number
5(e) Award 1 mark for analysis of each ratio up to a maximum of 4
marks.
Award 1 mark for evaluation.
Evaluation mark can only be awarded if at least two ratios are
analysed.

The profit for the year as a percentage of revenue percentage/margin

for 2018 has deteriorated which indicates poorer control over operating
expenses (1).

Asset turnover for 2018 decreased indicating the business is not

generating the same amount of revenue in comparison to the assets
used/ due to poor utilisation of resources (1).

Trade receivables collection period for 2018 has increased indicating

poorer credit control / may have negative impact on cash flow (1).

Trade payables payment period for 2018 increased indicating liquidity

problem as business is paying suppliers before collecting money from
customers/may impact future relationship with suppliers/supply of
goods in future (1).

Any supported evaluation (1).

Accept any other appropriate responses. (5)

TOTAL FOR QUESTION 5 = 21 MARKS

TOTAL FOR PAPER= 100 MARKS

ASE20104
18 November 2018