NCEA Level 1 Accounting 90976 (1.

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SAMPLE ASSESSMENT SCHEDULE Accounting 90976 (1.1): Demonstrate understanding of accounting concepts for small entities
Assessment Criteria
Achievement Demonstrate an understanding of accounting concepts for small entities means recognising and describing accounting concepts. Merit Demonstrate an in-depth understanding of accounting concepts for small entities means explaining accounting concepts. Excellence Demonstrate a comprehensive understanding of accounting concepts for small entities means applying accounting concepts with a clear relationship to the small entity.

Evidence Statement
One (a) (b) (i) Expected Coverage Purpose: to show income, expenses, and net profit. Users include: (ii) creditors banks suppliers owner (Samantha) employees. Creditors to see the ability of Simply Sports to repay debt. Banks to see whether to extend further credit to Simply Sports. Suppliers to see whether they should continue selling to Simply Sports on credit. Owner to see if Simply Sports is making a profit. Employees to see if Simply Sports can offer them ongoing employment. Achievement THREE of: in (a), describes the purpose of an income statement in (b) (i), identifies TWO relevant users in (b) (ii), briefly states a reason for the interest without explaining it in (c), states that business and personal expenses must be kept separate in (d), states that the life of a business is divided up into specified periods. Merit TWO of: in (b) (ii), gives a reason why a specific user would be interested in the income statement and links it to Simply Sports in (c), recognises how the accounting entity concept applies by explaining that Samanthas finances must be kept separate from those of the business in (d), applies the concept of period reporting to Simply Sports by explaining that its life is divided into specified periods in order to make comparisons. Excellence In (c), recognises how the advice illustrates the accounting entity concept and explains why Samanthas personal expenses should not be included in the income statement but rather be treated as drawings. AND In (d), applies the concept of period reporting to Simply Sports by explaining that its life is divided into annual periods (or reference to the date year ended 31 March) so that its position AND /OR performance can be compared over time.

Reason for interest:

(c)

Illustration of accounting entity: Samantha must record her personal telephone expense as drawings. This is because Samanthas financial affairs/ personal finances must be kept separate from Simply Sports financial affairs. Illustration of period reporting: The life of Simply Sports is divided into yearly periods for the year ended 31 March, so that financial statements can be prepared that measure performance / position and make comparisons (of an item for example profit).

(d)

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Two (a) (b) (i)

Expected Coverage Identifying transactions: (See Appendix A). Reason not an asset: Simply Sports will use the display cabinets to display the inventory in order to make sales and create an inflow of cash. Only Simply Sports can use the display cabinets / Simply Sports restricts others from using display cabinet. Past Transaction. Application of historical cost policy: Simply Sports will record its equipment at its original purchase price. Illustration of accrual basis: Simply Sports will report the amount of insurance prepaid as a decreasing (insurance) expense for the current period in the Income Statement (or as an asset in the balance sheet).

Achievement THREE of: in (a), recognises and identifies three correct capital or revenue expenditures in (b) (i), states the display cabinets are used to make sales / income in (b) (ii), states that they are the only ones to use the display cabinets in (b) (iii), states past transaction in (c), states that assets are recorded at original purchase price in (d), states that transactions are reported to the period they relate.

Merit TWO of: in (b) (i), explains the link of how the display cabinets will be used (to display inventory) and what income they will create (sales) in (b) (ii), explains in context to Simply Sports and the display cabinets in (c), explains in context to Simply Sports and the equipment being recorded at original purchase price in (d), explains in context to Simply Sports and the insurance being reported to the period it relates.

Excellence In (c), applies how Simply Sports will use the display cabinets (to display inventory) and how its use will create an inflow of cash (make sales and create an inflow of cash). AND In (d), applies how Simply Sports will report the insurance to the period it relates by reporting it to the Income Statement as an insurance expense (or as an asset prepayments in the Balance Sheet).

(ii)

(iii) (c)

(d)

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Three (a) (i) (ii)

Expected Coverage Classifying accounts: Assets: term deposit, accounts receivable, prepayments Liabilities: accounts payable, accrued expenses, GST payable, bank overdraft Effects of transactions (See Appendix B). D - Received $400 in full settlement of a $380 account. E - Sold goods on credit $700. Expense concept: Electricity is an expense for Simply Sports as it decreases asset bank when it is paid, it decreases equity due to a decrease in profit and is not drawings by Samantha. Going concern concept: Simply Sports will continue to operate into the foreseeable future, this is shown by Simply Sports classifying its assets and liabilities as current and non-current.

Achievement THREE of: in (a), recognises and identifies three assets and three liabilities in (b), records any two transactions correctly in (c), recognises that an expense decreases asset, decreases equity and is not from owners drawings in (d), recognises that going concern means the business will continue to operate into the foreseeable future.

Merit TWO of: in (b) explains any one transaction correctly in (c) explains how electricity decreases an asset (bank) and decreases equity (from a decrease in profit) and is not owners drawings in (d) explains in context to Simply Sports continuing to operate into the foreseeable future.

Excellence In (c), applies the definition of an electricity expense in context by referring to Simply Sports and Samantha in their explanation of the asset bank decreasing and equity decreasing from a decrease in profit and not being drawings by Samantha. AND In (d), applies going concern to Simply Sports by showing how they exemplify operating into the foreseeable future in their statements by classifying their assets and liabilities as current and noncurrent (or referring to the shop fittings as being noncurrent).

(b) (i) (ii)

(c)

(d)

Judgement Statement
Achievement Minimum of 2A Achievement with Merit Minimum of 2M Achievement with Excellence Minimum of 2E

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Appendix A Transaction Purchase of the new display cabinets Freight paid to deliver the display cabinets Installation of the display cabinets Annual insurance for the display cabinets Capital expenditure Revenue expenditure

Appendix B Simply Sports accounting equation extract Bank Accounts receivable Shop fittings Expenses Accounts payable Loan Equity Income

- 400

+400

+2000

+2000

-450

+50

-400