Revision thread - Accounting (AQA) Unit ACCN2 - 16 January 2012 (pm)

AAt why cant you reconsider your answer for a moment, and think on the wavelength im thinking

Reply 142

can you make an unoffical markscheme for the whole paper excluding the theory questions?

Reply 143

OP

Original post by Captivity of negativity

AAt why cant you reconsider your answer for a moment, and think on the wavelength im thinking

Your comments include:

"dude its not logical how can you take away the cost !!!!!!!!!!!! l0l be reasonable lol youve got to add the cost and take away the nrv "

My answer:

We are assuming the cost value was included in the stock take so this must be removed as under IAS2 - Inventories which states the valuation of stock is the lower of cost or NRV. Since NRV is the lower value this should of been included however we assume cost was included. Hence remove cost and include NRV value. It appears you are only removing the "net difference", which should not be the case.

Closing Inventory value:
original stock value 14682 - 2800(cost) + 2620 (NRV) = 14502.

Reply 144

im not saying that im saying

14682+2800-2620

Reply 145

OP

Original post by Captivity of negativity

im not saying that im saying

14682+2800-2620

Then in relation to what I have already said I agree it is not clear if the £2800 cost value was already included (most likely it was). However you would not subtract the NRV amount as does this achieve? You would only do do this if NRV had been included in the closing inventory valuation when in a situation it should not have been. Clearly in this question NRV is the lower value compared to cost price so NRV must be the value to include in the closing stock valuation i.e. added, not subtracted.

Reply 146

im saying the cost was included the nrv is taken away...... look at the situation in may 2011 paper its the same situation.

They assume you to have to cost included in the closing stock, exactly the same thing here

personally i believe the £2800 was not included....... if its not included then youve got to add it back on then take away NRV

look at may 2011 paper its same thing

(edited 12 years ago)

Reply 147

borca ltd question 4.jpg228.2KB

OP

Original post by Captivity of negativity

im saying the cost was included the nrv is taken away...... look at the situation in may 2011 paper its the same situation.

They assume you to have to cost included in the closing stock, exactly the same thing here

personally i believe the £2800 was not included....... if its not included then youve got to add it back on then take away NRV

look at may 2011 paper its same thing

Comments as follow relate to exam paper ACCN2 24 May 2011 Borca Ltd question (not the latest paper).

Adjustment 1 states “Inventory (stock) costing £43 586 has been included in the closing inventory (stock). No account has been taken of the fact that this inventory (stock) has been damaged and can only be sold if it is repaired. The repair costs will be £13 586 and the inventory (stock) could then be sold for £45 000.”

Note: This adjustment differs from the Jan 2012 paper where the value is not stated to be included. Only it would be assumed.

This does not mean in Jan 2012 you have to follow any pattern and actually include cost to copy the approach in May 2011 as the approach taken in May 2011 is relating to changes directly to cost of sales rather than to inventory and them cost of sales. You include what should be included according to IAS2 Inventories i.e. NRV or Cost. So:

If Cost is included and NRV is lower then remove cost and add NRV.
If NRV is included and is higher than cost then remove NRV and add cost. ok?
If no value is actually included then include the lower of NRV or cost.
as per IAS2-Inventories.

Furthermore if you have seen the answer / mark scheme for ACCN2 24 May 2011 the “netting off” is actually to the cost of sales value given that the question does not provide a closing inventory in the draft income statement, just cost of sales stated as 898 760.

So for ACCN2 24 May 2011 paper the approach should be taken to remove the cost value of 43586 and include NRV at (45000 – 13586) £31414 as NRV is lower than cost. Approach is to essentially remove cost and include NRV or just remove the difference (prefer not to net off but gives the same answer) which is a higher value relating to inflated closing inventory. 43586 – 31414 = 12172 but removing the 12172 from closing stock will result in a higher cost of sales.

(see picture)

We cannot actually adjust closing inventory as mentioned above the value was not given. We can only adjust cost of sales. (to illustrate the change see picture. We can use dummy values when learning the accounting rather than take up time in examination)

To conclude:
It appears your approach for adjusting has been taken from the Borca Ltd exam question yet it is a different approach to what this question was expecting.

However, they did specifically state the cost was included in closing inventory unlike the Jan 2012 question. However, stated or not it is more likely cost was included rather not at all. But not stating so is rather unfair for Accounting students.

(edited 12 years ago)

Reply 148

Original post by A.A.T.

Then in relation to what I have already said I agree it is not clear if the £2800 cost value was already included (most likely it was). However you would not subtract the NRV amount as does this achieve? You would only do do this if NRV had been included in the closing inventory valuation when in a situation it should not have been. Clearly in this question NRV is the lower value compared to cost price so NRV must be the value to include in the closing stock valuation i.e. added, not subtracted.

If the closing stock is included then im right. if the closing stock is not included your correct.

The information tells us the following has been overlooked, if its been overlooked i assume it has been included.

whats your opinion on grade boundaries high or low? it was a tough paper...

Reply 149

Personally i will stick with my guns and the previous paper, its just written in different way and asking the same thing.
The following additional information was overlooked when preparing the draft income statement
(trading and profit and loss account).

On 30 September 2011, Harry carried out a physical stocktake. Some goods which
had originally cost £2800 had been damaged. These goods could be repaired at a
cost of £580 and could then be sold for £3200.

only if it was included would you add it back on and minus nrv

Reply 150

OP

Original post by Captivity of negativity

Personally i will stick with my guns and the previous paper, its just written in different way and asking the same thing.
The following additional information was overlooked when preparing the draft income statement
(trading and profit and loss account).

On 30 September 2011, Harry carried out a physical stocktake. Some goods which
had originally cost £2800 had been damaged. These goods could be repaired at a
cost of £580 and could then be sold for £3200.

only if it was included would you add it back on and minus nrv

If you want to talk in terms of "adding it back and minus NRV" then this would be to the cost of sales value NOT inventory as I showed in the example. To inventory you would do the oposite, which is minus cost price from inventory and add NRV."

Reply 151

Mr.money

Original post by Captivity of negativity

dude how can you take away the cost price of something

your wrong the cost has to be added then you take away the nrv

jus thort id add my opinion to this matter..

the note: On 30 September 2011, Harry carried out a physical stocktake. Some goods which had originally cost £2800 had been damaged. These goods could be repaired at a
cost of £580 and could then be sold for £3200.

the origial stockfigure which is 14 682, put it this way, in that 14,682, it ALREADY includes the cost of 2800 (now it has been damaged) and the nrv is 2620(3200-580) so the stock figuire 14682, should NOT contain the 2800 anymore, and it shud contain the lower of cost or nrv right? so therefore from 14682 you minus the origianl cost of 2800(as it is higher than nrv) and you pluss 2620 (as 1, ur being prudent, and this shud be the stock figuire which has been damaged and contains the cost of repaires..
or you cuda found the diffrence and taken it away (2800-2620=180) so 14,682-180, u shud get the same figuire..

im not agreeing widd AAT, buh jus saying thats how i was taught it in college

Reply 152

OP

Original post by Mr.money

jus thort id add my opinion to this matter..

the note: On 30 September 2011, Harry carried out a physical stocktake. Some goods which had originally cost £2800 had been damaged. These goods could be repaired at a
cost of £580 and could then be sold for £3200.

the origial stockfigure which is 14 682, put it this way, in that 14,682, it ALREADY includes the cost of 2800 (now it has been damaged) and the nrv is 2620(3200-580) so the stock figuire 14682, should NOT contain the 2800 anymore, and it shud contain the lower of cost or nrv right? so therefore from 14682 you minus the origianl cost of 2800(as it is higher than nrv) and you pluss 2620 (as 1, ur being prudent, and this shud be the stock figuire which has been damaged and contains the cost of repaires..
or you cuda found the diffrence and taken it away (2800-2620=180) so 14,682-180, u shud get the same figuire..

im not agreeing widd AAT, buh jus saying thats how i was taught it in college

You are "not agreeing" yet you have just explained the exact same accounting approach as I did which I might add is correct! If you were not agreeing then were you disagreeing or were you "on the fence"? If there is any element of Accounting you are usure about - ask!

Reply 153

Hwee Ling

Original post by camlough1

yeh i done the same i think thats right, seemed like alot of marks for nothing really

hey!! i am really worried about my results! i found this paper hard and i rmb this question . for the revenue calculation all i did was add up all the revenue expenditure!. will i get marks?! i think they are wrong because they are all worth 6 marks

Reply 154

sukhys

Original post by Hwee Ling

hey!! i am really worried about my results! i found this paper hard and i rmb this question . for the revenue calculation all i did was add up all the revenue expenditure!. will i get marks?! i think they are wrong because they are all worth 6 marks

well it depends on what you added up as revenue expenditure, i know for the last note you had to do some calculation which was 2400/12 months = 200 per month x 2 months = £400
personally i thought this paper was much easier compare to june 11, but we will see what the grade boundaries are in march

An insurance policy to minimise any losses caused by a failure of the new payroll and
budgeting system was taken out on 1 November 2011. The policy cost £2400 for the year
to 31 October 2012.

Reply 155

Hwee Ling

Original post by sukhys

well it depends on what you added up as revenue expenditure, i know for the last note you had to do some calculation which was 2400/12 months = 200 per month x 2 months = £400
personally i thought this paper was much easier compare to june 11, but we will see what the grade boundaries are in march

An insurance policy to minimise any losses caused by a failure of the new payroll and
budgeting system was taken out on 1 November 2011. The policy cost £2400 for the year
to 31 October 2012.

okay, i am sure i wont get marks for that6 marks question. i am planning to do a third time re-sit in May , would you guys consider or think this is a good idea because it was the hardest paper i have ever done and i am aiming for at least a B and previously i scored a U because i just memorised all the layout without understanding. and i really thought JUne 11 was easier than the Jan 16!! , so is third time resit a good idea in May because i have my A2 6 exam papers to sit for in June and 2 Re-sits (Economics unit 2 and accoutning unit 2) in may . Adivse please!!

Reply 156

sukhys