Examinersreport

FA1RecordingFinancialTransactions
June2012

GeneralComments
The June 2012 paper was slightly disappointing compared to the December 2011. Again not all questions were
attemptedwhichisverydisappointinginamultiplechoicepaper,ifacandidatedoesntknowthecorrectanswera
guesswillgivea25%chanceofacorrectanswer.

Candidates performed exceptionally well in the question asking for classification of an asset in the financial
statements, otherquestionsreferringtotheelementswithinthefinancialstatementswerealsoansweredwell.As
thisisakeyareainthehigherlevelpapers,thisispleasingtosee.

Candidatesagainperformedverywellinthequestionsaboutdocumentation,itisveryclearthatthisisanareaofthe
syllabusthatcandidatesareveryhappywith.

Itwasverypleasingtoseethatsomeofthefundamentalareasofthesyllabussuchasdealingwithdoubleentries,
balancing off accounts, the accounting equation, and constructing a trial balance were dealt with well, this again
bodes well for the later papers. However the questions dealing with the day books, and posting the entries from
these,wereverydisappointinganddealingwithdiscountsandsalestaxwereconsistentlyansweredbadly.

Therewasalsoamixedperformanceonthecodingquestions,withadisappointingoutcomeinthepureknowledge
discursivetypeofquestionbutahighpassrateinthecodingapplicationquestion.Thiswasunusualastheknowledge
questionsarenormallydealtwithbetterthantheapplicationquestions

SAMPLEQUESTIONSFORDISCUSSION

Question16wasabankreconciliationquestion.AswiththeDecember2011paperthisproduceddisappointing
results.
ThebalanceonMaxsbankstatementwas$5,460credit.Maxhadunpresentedchequesof$1,230andoutstanding
lodgementsof$870.

WhatshouldbethebalanceonthebankaccountinMaxsgeneralledger?
A$5,100debit
B$5,100credit
C$5,820debit
D$5,820credit

CorrectanswerisA

Thiswasfoundbytakingthebalanceof$5,460whichwaspositivewiththebank,addingtheoutstandinglodgements
of$870anddeductingtheunpresentedchequesof$1,230.

$5,460+$870$1,230=$5,100

Candidatesyetagainstruggledwithwhetherthebalancewasadebitorcreditbalance.Whenitsaysacreditbalance
atthebank,thismeansthatthebankowescashtoitscustomers,sofromthebusinesspointofviewacreditbalance
atthebankmeansithasapositivecashbalance.Theunpresentedchequeshadtobedeductedfromthisbalanceand
theoutstandinglodgementsaddedon.

Question24dealtwiththeagedreceivablesanalysis.

ExaminersreportFA1June2012

Whichofthefollowingstatementsinrelationtotheagedreceivablesanalysisis/arecorrect?
1.Itisananalysisofthecreditperiodsallowedtoeachindividualcustomer
2.Itshowshowoldthesupplierbalancesare
Statement1
Statement2
A
Correct
Correct
B
Correct
Incorrect
C
Incorrect
Correct
D
Incorrect
Incorrect

CorrectanswerisD

Theagedreceivablesanalysisanalysescustomersaccountbalancesshowinghowlongtheyhavebeenoutstanding,
thushighlightingwhichreceivablebalancesareoverdue.
Statement1talksaboutcreditperiodsthishasnothingtodowiththeduedatesandsothisisincorrect.
Statement 2 says it is the age of supplier balances the aged receivables report covers customer balances, not
suppliers,sothisisalsoincorrect.

Question25isasalestax/daybookquestion
On1AugustBarrymadethefollowingtransactions:
1.Hemadeacashsaleof$3,680
2.Hereceivedcashof$2,760inrelationtoacreditsaleinthepreviousmonth.
Bothtransactionswereinclusiveofsalestaxat15%
Howmuchsalestaxwouldberecordedinthecashbookfortheabovetransactions?

A$480
B$360
C$840
D$552

CorrectanswerisA

Salestaxshouldberecordedinthedaybookthefirsttimethetransactionisrecorded.Thecashsalewillberecorded
forthefirsttimeinthecashbook,sothesalestaxwouldberecordedthere.Thesaleisgivenincludingthe15%sales
taxwhichmakesitequalto115%,so$3,680x15/115=$480.
Whenthecashisreceivedfromthecreditsale,thissalewouldhavebeenrecordedforthefirsttimeinthesalesday
bookinthepreviousmonthandthesalestaxwouldberecordedherenotinthecashbook,givingtheanswerofA.

Question33dealtwiththerecordingofthesalesfigure
Ginosoldgoodswithalistpriceof$12,000excludingsalestax.Heofferedcustomersa5%tradediscountanda5%
settlementdiscount.Ginoisregisteredforsalestaxat15%
WhatamountshouldGinorecordashissalesfigures?
A$10,830
B$13,800
C$13,110

ExaminersreportFA1June2012

D$11,400

CorrectanswerisD
Salesarerecordednetofsalestaxandasweweregiventheamountexcludingsalestaxthiswasalreadythenet
figure.Thetradediscountisdeductedfromthesalesfigure,butthesettlementisnt,abusinesswillonlyknowifa
customerhastakenadiscountwhentheypay,sothesaleisrecordedignoringthisdiscount.Thismeanswetakethe
listpricenet$12,000lessthe5%tradediscount,giving$11,400.

FA1 covers both knowledge of the syllabus and the application of that knowledge. Candidates on the whole
performedbetterontheknowledgequestionsthanthosewhereanapplicationofthoseconceptswasrequired.Ason
previouspapersthequestionsthatrequiredcandidatestoperformcalculationswerenotperformedaswellasthose
that were pure narrative. Candidates therefore seem to be reading and digesting the material but not practicing
enoughnumericalquestions.

As previously stated it is very important that all questions are attempted and although candidates cannot have a
detailed knowledge of every area of the syllabus, it may be possible to eliminate the distracters to improve the
chancesofpassingaquestion.

ExaminersreportFA1June2012