VCE-ACCT-U12 5.1 📋 – VCE Accounting Practice Exam 2

VCE Accounting Practice Exam 2

Special Journals, Ledger and Trial Balance

Question 1  (4 marks)

Question 2  (4 marks)

Question 3  (4 marks)

Question 4  (4 marks)

Question 5  (4 marks)

Question 6  (4 marks)

Question 7  (4 marks)

Question 8  (4 marks)

Question 9  (4 marks)

Question 10  (5 marks)

Question 11  (5 marks)

Question 12  (3 marks)

✦ Model Answer – Question 1 (4 marks)

Special journals: columnar books of original entry for large volumes of similar, recurring transactions.
Advantages: speed (pre-printed columns); division of labour; reduced postings (column totals posted, not individual entries).
Four types:
1. Sales journal: all credit sales of inventory.
2. Purchases journal: all credit purchases of inventory.
3. Cash receipts journal: all cash received.
4. Cash payments journal: all cash paid.
General journal handles all other non-routine transactions.

✦ Model Answer – Question 2 (4 marks)

AR control account: single general ledger account showing total owed by all credit customers. Posted with totals from sales journal (new credit sales) and cash receipts journal (customer payments).
AR subsidiary ledger: separate account for each individual customer.
Relationship: sum of subsidiary ledger balances must equal the control account balance. This is verified by regular reconciliation – any discrepancy indicates a posting error.
Control account: used in financial statements (total AR on balance sheet).
Subsidiary ledger: used operationally for customer statements, credit management and collections.

✦ Model Answer – Question 3 (4 marks)

Closing entries: transfer balances of temporary accounts (revenue, expenses, drawings) to Owner’s Equity, resetting them to zero.
Process:
1. Close revenue accounts: Dr each revenue; Cr P and L Summary.
2. Close expense accounts: Dr P and L Summary; Cr each expense account.
3. Close P and L Summary to Capital (net profit): Dr P and L Summary; Cr Capital.
4. Close Drawings: Dr Capital; Cr Drawings.
Why necessary: revenue/expense accounts must start each period at zero – otherwise the income statement accumulates across multiple periods. Closing also updates Capital to reflect current equity position.

✦ Model Answer – Question 4 (4 marks)

Trial Balance as at 31 March

Account | Debit | Credit
Cash | 4,800 |
AR | 2,200 |
Inventory | 9,000 |
Equipment | 15,000 |
Acc. Depreciation | | 1,000
Accounts Payable | | 3,100
Bank Loan | | 8,000
Capital | | 18,000
Drawings | 1,500 |
Sales Revenue | | 12,000
COGS | 7,200 |
Wages Expense | 2,400 |
Rent Expense | 1,000 |
TOTAL | 43,100 | 42,100

[Difference of $1,000 suggests a missing or incorrect entry – investigation needed.]

✦ Model Answer – Question 5 (4 marks)

1. Error of omission: transaction completely not recorded – BOTH debit and credit missing → trial balance STILL BALANCES.
2. Error of commission: correct account class but wrong specific account – equal debit and credit still posted → STILL BALANCES.
3. Error of principle: transaction in wrong type of account – equal debit and credit still posted → STILL BALANCES.
4. Single-sided posting: only one side posted → trial balance DOES NOT BALANCE – imbalance equals the missed amount.
5. Transposition error on one side: digits swapped (e.g. $5,400 entered as $4,500) → DOES NOT BALANCE – difference often divisible by 9.
6. Compensating errors: two equal and opposite errors cancel → STILL BALANCES despite two errors.

✦ Model Answer – Question 6 (4 marks)

Process:
1. At period end, rule off and total all columns in the cash receipts journal.
2. Cross-balance: total of credit columns should equal total of bank/cash debit column.
3. Post column totals to general ledger: total of ‘Sales’ column → credit Sales Revenue; total of ‘AR’ column → credit AR control account; total → debit Cash at Bank.
4. Individual entries: items in ‘sundry’ column posted individually.
5. Cross-reference: write ledger folio in journal and journal page in ledger – creating a cross-reference for tracing.
Why important: enables account balance calculations needed for trial balance and financial statements.

✦ Model Answer – Question 7 (4 marks)

Step 1 – Close Revenue to P and L Summary:
Sales Revenue Dr $80,000
Interest Income Dr $1,000
P and L Summary Cr $81,000

Step 2 – Close Expenses to P and L Summary:
P and L Summary Dr $71,000
COGS Cr $45,000
Wages Cr $15,000
Rent Cr $8,000
Depreciation Cr $3,000

P and L Summary: $81,000 – $71,000 = $10,000 Cr (Net Profit)

Step 3 – Close Net Profit to Capital:
P and L Summary Dr $10,000; Capital Cr $10,000

Step 4 – Close Drawings:
Capital Dr $5,000; Drawings Cr $5,000

Net effect on Capital: +$10,000 profit – $5,000 drawings = +$5,000.

✦ Model Answer – Question 8 (4 marks)

Bank reconciliation: comparing the business’s Cash at Bank ledger balance with the bank statement balance and explaining differences. Prepared monthly.
Purpose: verify Cash at Bank ledger accuracy; detect errors and fraud; determine true available cash.
Why differences arise:
1. Outstanding cheques: business has debited its Cash account but bank not yet processed the cheque.
2. Outstanding deposits: business has recorded cash receipt but bank not yet credited it.
3. Bank charges: charged by bank but not yet recorded by business.
4. Direct credits/interest: bank credits interest the business hasn’t yet recorded.
5. Dishonoured cheques: rejected cheque – bank debits the account; business may not yet know.
6. Timing differences in electronic payments.

✦ Model Answer – Question 9 (4 marks)

Advantage 1 – Recording efficiency: special journals use pre-printed columns for common elements. A credit sale can be recorded in one line in the sales journal vs four or five lines in the general journal. For 200 credit sales per month this saves enormous recording time.
Advantage 2 – Posting efficiency: instead of posting each individual debit and credit to the general ledger (200 × 2 = 400 postings per month), only column totals are posted once – one credit to Sales Revenue, one debit to AR control. Dramatically reduces posting volume and error risk.
Additional – Division of labour: different employees maintain different special journals simultaneously, improving efficiency and providing internal control.

✦ Model Answer – Question 10 (5 marks)

Sales Journal:
Date | Customer | Inv.No | Amount
Day 1 | Gomez | 101 | $2,200
Day 2 | Singh | 102 | $1,800
Day 3 | Park | 103 | $3,500
| TOTAL | | $7,500

Posting the total:
1. General Ledger – AR control account: Debit $7,500
2. General Ledger – Sales Revenue: Credit $7,500

Subsidiary Ledger (individual amounts):
– Gomez: Debit $2,200
– Singh: Debit $1,800
– Park: Debit $3,500

Verification: Sum of subsidiary postings ($7,500) = Control account posting ($7,500) ✓

✦ Model Answer – Question 11 (5 marks)

1. Error of omission: transaction completely omitted – neither debit nor credit recorded. Nothing added to either column → trial balance still balances. Example: $3,000 cash sale not recorded – assets and revenue understated, but balance unaffected.
2. Error of commission: posted to correct class but wrong specific account – equal debit and credit still made. Example: payment to ‘Metro Pty Ltd’ posted to ‘Metro Wholesale’ – both accounts wrong but debit total = credit total.
3. Error of principle: wrong type of account used – still equal debit and credit. Example: new computer $2,000 debited to Office Supplies Expense instead of Computer Equipment – assets understated, expenses overstated, but trial balance balances.

✦ Model Answer – Question 12 (3 marks)

An error of principle records a transaction in the wrong account category – e.g. treating an asset as an expense. Trial balance still balances but financial statements are significantly distorted.
Example: equipment $10,000 recorded as: Dr Office Supplies Expense $10,000; Cr Cash $10,000 (WRONG).
Should be: Dr Equipment $10,000; Cr Cash $10,000.
Effect on Income Statement: Operating Expenses overstated $10,000 → Net Profit understated $10,000.
Effect on Balance Sheet: Non-current Assets understated $10,000 → Total Assets understated → Owner’s Equity understated $10,000.
Consequences: incorrect tax return; incorrect management decisions based on understated profit; annual depreciation charge also incorrect.