Edexcel A-Level Accounting: Information and communication technology (ICT) in accounting (YAC11) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover topic 2.9, Information and communication technology (ICT) in accounting, of the Pearson Edexcel International Advanced Subsidiary/Advanced Level in Accounting (XAC11/YAC11) specification, Issue 2, September 2018: outcomes 2.9.1 and 2.9.2. Since it falls within Unit 2 (Corporate and Management Accounting), the topic is Unit 2 (A2) only. Every firm and person named is fictional, money is in dollars, and tax rates are assumed just for these questions.

Work through the study guide and the revision notes before attempting these. Course hub: /boards/edexcel/a-level/accounting/. Checklist: /checklists/edexcel/a-level/accounting/. Diagnostics: /diagnostics/.

Questions

1. Define the term “audit trail”. [2]

2. State three uses of a spreadsheet in providing management information. [3]

3. Explain how an Electronic Point of Sale (EPOS) system helps a retailer control its inventory. [4]

4. Stannard Lane Garage prices each car service with a spreadsheet. Cell B3 holds parts (86), B4 labour hours (2.5), B5 the labour rate per hour (24), B6 the overhead absorption rate per labour hour (10) and B11 the mark-up on cost (0.3). B7 is labour cost, B8 overheads absorbed, B9 total cost and B10 the price.

(a) Write the formulas needed in B7 and B9. [2] (b) Calculate the price of the service shown in B10. [2] (c) The labour rate rises to 27 per hour. Calculate the new price, and state which cell is changed. [2]

5. Zephyrine Florists uses an invoicing package. A hotel orders 150 stems at 2.40 each. The hotel receives a 5% trade discount, and sales tax of 12% is added to the net amount.

(a) Calculate the invoice total. [4] (b) State the double entry the package posts for this invoice. [2]

6. Glenquay Packaging uses a payroll package. Corisande Rotherwood worked 42 hours last week. The basic week is 38 hours at 15 per hour, and any hours beyond that earn time and a half. Assume income tax is 18% of gross pay above 150 a week, and a pension deduction is 5% of gross pay.

(a) Calculate Corisande’s gross pay. [2] (b) Calculate the deductions and Corisande’s net pay. [3] (c) State one advantage to Glenquay of using a payroll package rather than a manual payroll. [1]

7. Selwood Wholesale gives 30 days’ credit. Its accounting package produces this aged debtors list.

Customer	0-30 days	31-60 days	Over 60 days
Mirabel Deli	1,450	620	0
Ottoline Café	880	0	0
Pardoe Bistro	310	540	1,700

(a) Calculate the total of each column and the total trade receivables. [2] (b) Calculate the percentage of trade receivables outstanding beyond the credit terms, to one decimal place. [1] (c) Suggest two actions managers should take, using the list. [2]

8. Dovecraig Hardware sells LED bulbs. At the start of day 1 the EPOS record shows 150 bulbs. The reorder level is 60 and the reorder quantity 200. An order placed during a day arrives at the start of the second day after it. Sales for days 1-5 are 28, 34, 31, 19 and 26.

(a) Calculate the inventory record at the end of days 1 to 4, and state the day on which the order is placed. [3] (b) Calculate the inventory record at the end of day 5. [1] (c) At the end of day 5 a count finds 205 bulbs. Explain why this differs from the EPOS record and what the business should do. [2]

9. Explain two technical disadvantages of using ICT in accounting. [4]

10. Ferrisford Tile Studio keeps manual records and is considering a computerised accounting system.

One-off costs: hardware 9,000; software 4,200; staff training 2,100; transferring records 2,700. Annual running costs: licence 2,400; technical support 1,100. Annual savings: one clerk’s wages 14,000; stationery and postage 700; fewer errors 1,300.

(a) Calculate the total one-off cost, the net annual saving and the payback period in years and months. [5] (b) Evaluate whether Ferrisford should introduce the system. [7]

11. Ravenspoke Bicycles builds its cash budget in a spreadsheet, with columns B, C and D for January, February and March. Budgeted sales are 18,000, 21,000 and 24,000; December sales were 15,000. The proportion of sales received in the month of sale is held in cell B12 (0.6); the rest is received the following month. Payments are 17,500 each month. The bank balance on 1 January is 1,200.

(a) Calculate the receipts for each month. [3] (b) Calculate the closing bank balance for each month. [2] (c) B12 is changed to 0.4. Calculate the new closing balances. [2] (d) Explain how the spreadsheet helped in part (c), and one limitation of relying on it. [3]

Answers

1. The ability to trace a transaction from its source document through the books of prime entry and ledgers [1] to the financial statements, and back again [1]. [2] Examiner insight: A definition needs both directions or the full path; “a record of transactions” alone is too vague to gain both marks.

2. Any three, one mark each: preparing budgets (for example a cash budget) [1]; building cost cards to calculate product costs and prices [1]; what-if analysis of changed assumptions [1]; comparing budget with actual; charts for managers. [3] Examiner insight: “State” needs three distinct uses; three versions of “budgets” usually earn one mark.

3. Each sale is scanned at the till [1] and the inventory record for that item is reduced at once, giving a running inventory figure [1]. When inventory reaches the reorder level the system flags the item or orders automatically, so the business avoids running out [1]. Sales reports show fast and slow sellers, so managers can avoid overstocking slow lines [1]. [4] Examiner insight: “Explain” needs the link to control (avoiding stock-outs or overstocking), not just a description of scanning.

4. (a) B7: =B4*B5 [1]. B9: =B3+B7+B8 [1]. (b) Labour 2.5 × 24 = 60; overheads 2.5 × 10 = 25; total cost 86 + 60 + 25 = 171 [1]. Price 171 × 1.3 = 222.30 [1]. (c) Change B5 only [1]. Labour 67.50; total cost 178.50; price 232.05 [1]. [6] Examiner insight: Formulas must refer to cells, not typed numbers; =86+60+25 does not update in a what-if, so it may not gain credit as a formula.

5. (a) List price 150 × 2.40 = 360.00 [1]. Trade discount 5% = 18.00, net 342.00 [1]. Sales tax 12% × 342 = 41.04 [1]. Total 383.04 [1]. (b) Debit the hotel’s account (and the sales ledger control account) 383.04 [1]; credit sales 342.00 and sales tax 41.04 [1]. [6] Examiner insight: Tax is calculated on the amount after trade discount; working it on 360 gives a wrong figure for every later step.

6. (a) Basic 38 × 15 = 570; overtime 4 × 22.50 = 90 [1]. Gross pay 660 [1]. (b) Income tax 18% × (660 − 150) = 91.80 [1]. Pension 5% × 660 = 33.00 [1]. Net pay 660 − 91.80 − 33.00 = 535.20 [1]. (c) Any one: calculations are accurate and quick; payslips and wages totals are produced automatically; labour cost is available by department for costing [1]. [6] Examiner insight: Show the taxable amount (510) before applying the rate, so your method is visible.

7. (a) Columns: 2,640; 1,160; 1,700 [1]. Total 5,500 [1]. (b) (1,160 + 1,700) ÷ 5,500 × 100 = 52.0% [1]. (c) Chase Pardoe Bistro first, as 1,700 is over 60 days [1]. Stop further credit to Pardoe until it pays, or review the allowance for irrecoverable debts [1]. [5] Examiner insight: Actions should name the customer from the list; general advice such as “chase debts” gains less.

8. (a) Day 1: 122; day 2: 88 [1]; day 3: 57; day 4: 38 [1]. The order is placed on day 3, when inventory falls below 60 [1]. (b) 200 arrive at the start of day 5: 38 + 200 − 26 = 212 [1]. (c) Seven bulbs are missing, through theft, breakage or sales not scanned [1]. The business should adjust the record to the count and investigate the cause [1]. [6] Examiner insight: No second order on day 4: one is already outstanding, and double-counting it changes every later figure.

9. Any two, each identified and explained. Breakdown or power failure [1] stops invoicing and recording until fixed [1]. Viruses or hacking [1] can corrupt or expose financial data unless backups and security are in place [1]. Also creditworthy: wrong input produces wrong output in every linked record; packages may not fit the business or link together. [4] Examiner insight: Cost of a system is a financial point, not a technical one; keep the aspect the question asks for.

10. (a) One-off: 9,000 + 4,200 + 2,100 + 2,700 = 18,000 [1]. Savings 16,000 less running costs 3,500 [1] = net annual saving 12,500 [1]. Payback 18,000 ÷ 12,500 = 1.44 years [1] = 1 year 5 months (0.44 × 12 = 5.3) [1]. (b) For: payback well under two years; over three years the gain is 3 × 12,500 − 18,000 = 19,500 [1]. Faster invoices and debtors lists should improve cash flow; arithmetic is accurate [1]. A computerised audit trail logs each entry and user [1]. Against: in year 1 the business is 5,500 worse off [1]. A clerk loses their job; other staff need training and may resist [1]. Breakdowns, hacking and data loss need backups and security, and the savings are estimates [1]. Judgement: introduce it, with training and backups in place, and redeploy the clerk if possible [1]. [12] Examiner insight: Use the payback from part (a) in part (b); judgements that draw on your own figures and the scenario earn more than general lists.

11. (a) January 0.6 × 18,000 + 0.4 × 15,000 = 16,800 [1]; February 12,600 + 7,200 = 19,800 [1]; March 14,400 + 8,400 = 22,800 [1]. (b) January 1,200 + 16,800 − 17,500 = 500; February 2,800 [1]; March 8,100 [1]. (c) Receipts become 16,200, 19,200, 22,200 [1]. Balances: January (100) overdrawn; February 1,600; March 6,300 [1]. (d) Only one cell was changed and every receipt and balance recalculated at once [1], showing an overdraft risk in January before it happens [1]. Limitation: the output is only as good as the inputs; if the sales estimates are wrong, the budget is wrong [1]. [10] Examiner insight: Show the overdrawn January balance in brackets or with a minus sign; a missing sign reverses its meaning.

Where marks are usually lost

• Naming a software brand instead of describing the software’s function.
• Applying sales tax before deducting trade discount.
• Typing numbers into spreadsheet formulas instead of cell references.
• Placing a second EPOS order while one is outstanding.
• Ignoring annual running costs when calculating a net saving.
• Giving payback in years only when the question asks for years and months.
• Putting cost under “technical” or breakdowns under “financial”.
• Ending an evaluation without a judgement about the business named.

Next steps

• Revision notes
• Study guide
• Budgeting practice questions
• Course hub
• Printable checklist
• All free 10-minute diagnostics
• Book a free trial class

Official syllabus

Pearson Edexcel International Advanced Subsidiary/Advanced Level in Accounting (XAC11/YAC11) specification, Issue 2, September 2018 (first teaching September 2015), Unit 2: Corporate and Management Accounting, topic 2.9 Information and communication technology (ICT) in accounting, outcomes 2.9.1-2.9.2.