Edexcel IGCSE Accounting: Technology in accounting and professional ethics (4AC1) – 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 sections 1.3 Use of technology in accounting and 1.4 Professional ethics of Topic 1, The accounting environment, in the Pearson Edexcel International GCSE in Accounting (4AC1) specification, Issue 1, October 2016. Paper 1 draws exclusively on Topics 1 to 3. Businesses and people are invented; amounts are in dollars.

Links: 4AC1 Accounting course hub, printable checklist, free 10-minute diagnostics, study guide and revision notes.

Questions

1. State two benefits to a business of using accounting software instead of a manual ledger system. [2]

2. Tarn Hill Bakery records its weekly sales in a spreadsheet. Sales for four weeks, in cells B2 to B5, are 3,200, 4,150, 3,875 and 4,425.

(a) Write a formula that would show the total of the four weeks in cell B6. [1] (b) Calculate the total sales and the mean weekly sales. [2] (c) The figure in B3 was typed incorrectly and is corrected. Explain one benefit of using a spreadsheet in this situation. [2]

3. Coastline Pet Supplies uses a spreadsheet to track gross profit. Revenue is 48,600 and cost of sales is 29,160.

(a) Calculate gross profit and the gross profit margin as a percentage of revenue. [3] (b) The supplier raises prices, and cost of sales is expected to be 31,000 with revenue unchanged. Calculate the new gross profit margin to one decimal place. [2] (c) Explain why a spreadsheet is useful for the calculation in (b). [1]

4. Rookery Lane Tiles enters 6 transactions an hour. It works 09:00 to 17:00 each day, Monday to Friday. A full backup is made at 17:00 on Fridays. The computer fails at 11:00 on the following Wednesday.

(a) Calculate the number of transactions that must be entered again. [3] (b) Calculate how many fewer transactions would need re-entering if a backup were made at 17:00 every day. [2]

5. Explain the three data security issues of data loss, access and confidentiality. Use a different accounting example for each. [6]

6. A small firm keeps all its records on one computer in an open-plan office.

(a) Describe one hardware method of protecting the data and explain which security issue it addresses. [2] (b) Describe one software method of protecting the data and explain which security issue it addresses. [2] (c) The owner keeps a backup disk next to the computer. Explain why this is a weakness. [2]

7. Anvil Road Cycles has three people using its accounting software: a bookkeeper who enters invoices and receipts, a shop assistant who needs to check whether a customer has paid, and the owner. Recommend the access each person should have, and justify each recommendation. [6]

8. Describe the principles of integrity and objectivity as they apply to a professional accountant. [4]

9. Apply the principles of professional ethics to each situation.

(a) An accounts clerk accepts a 120 gift voucher from a supplier and then pays that supplier’s invoice for 4,300 before older invoices from other suppliers. Identify the principle that is mainly at risk and explain why. [3] (b) A payroll assistant tells her brother, who owns a rival shop, that her employer’s monthly sales are 41,500. Identify the principle breached and explain why. [3]

10. Explain what is meant by the public interest, and explain how it is applied to the work of an auditor. [4]

11. Hollin Tools made a profit of 52,000 this year. The owner asks the accountant, Ewan Brask, to leave a repair bill of 7,500 out of the records so that profit shows as 59,500. The owner plans to show these figures to a bank to support a loan application.

(a) Calculate the percentage by which the owner’s figure overstates the true profit. Give your answer to one decimal place. [2] (b) Identify two professional ethics principles that Ewan would breach if he agreed, and explain each. [4] (c) Explain how the public interest applies to Ewan’s decision. [3]

12. A new business has to choose between a spreadsheet and accounting software for its records. Evaluate which it should choose, and reach a justified conclusion. [6]

Answers

1. Any two benefits, each with a reason: Speed, because one entry is posted to all linked accounts automatically [1] Accuracy, because the program does the calculations and posts both sides of the entry [1] (Other acceptable benefits: reports on demand; records easy to search.) [2] Examiner insight: A benefit such as “it is faster” needs its reason added.

2. (a) =SUM(B2:B5) (or =B2+B3+B4+B5) [1] (b) Total: 3,200 + 4,150 + 3,875 + 4,425 = 15,650 [1] Mean: 15,650 ÷ 4 = 3,912.50 per week [1] (c) The formula in B6 (and any cell that depends on it) recalculates automatically when B3 is changed [1], so no re-adding by hand is needed and a new error is less likely [1] [5] Examiner insight: A formula should refer to cells; a typed-in total would not recalculate, which is the point of (c).

3. (a) Gross profit = 48,600 − 29,160 = 19,440 [1] Margin = 19,440 ÷ 48,600 × 100 [1] = 40.0% [1] (b) Gross profit = 48,600 − 31,000 = 17,600 [1] Margin = 17,600 ÷ 48,600 × 100 = 36.2% [1] (c) Only the cost of sales cell needs changing; every dependent figure updates, so different “what if” cases can be tested quickly [1] [6] Examiner insight: Show the working line for a percentage, so that a small slip still shows a correct method.

4. (a) The last backup was Friday 17:00, so everything from Monday 09:00 is lost [1] Hours lost: Monday 8 + Tuesday 8 + Wednesday 2 (09:00 to 11:00) = 18 hours [1] 18 × 6 = 108 transactions [1] (b) With a daily backup at Tuesday 17:00, only Wednesday’s 2 hours are lost: 2 × 6 = 12 [1] Difference: 108 − 12 = 96 fewer [1] [5] Examiner insight: Write the hours lost on each day before multiplying, so a counting slip is easy to see.

5. Data loss: records are destroyed or become unreadable, for example a virus corrupts the sales ledger and the business cannot tell which customers owe money [2] Access: control over who can open or change the records, for example a person without authority changes a supplier’s bank details to divert a payment [2] Confidentiality: information is kept private and only used for its purpose, for example a customer’s balance or the business’s profit is passed to a competitor [2] [6] Examiner insight: Each issue needs a meaning and an accounting example; an example unrelated to records is harder to credit.

6. (a) Any one: uninterruptible power supply, backup on a drive kept off-site, locked room or cabinet, keycard or fingerprint entry [1] Linked to the right issue, for example a locked room restricts access, or an off-site backup protects against data loss [1] (b) Any one: passwords with access levels, encryption, antivirus and firewall, automatic backups [1] Linked to the right issue, for example encryption protects confidentiality even if the file is taken [1] (c) A fire, flood or theft that destroys the computer is likely to destroy the disk too [1], so the data would be lost completely [1] [6] Examiner insight: A method works best when tied to the issue it solves; “it is secure” is too vague.

7. Bookkeeper: read and write access to sales and purchases records [1] because the job is to enter transactions [1] Shop assistant: read-only access to customer receivables [1] because they only need to see whether a balance is paid, and cannot then alter figures [1] Owner: full access, including approving changes [1], because the owner is responsible and reviews others’ work; each person has a separate password so changes can be traced [1] [6] Examiner insight: Link each recommendation to the person’s job; full access for everyone, with no reason, is weak.

8. Integrity: being honest and straightforward in professional work [1]; not being associated with information that is false or misleading [1] Objectivity: not allowing bias, a conflict of interest or pressure from other people to override professional judgement [1] [1] [4] Examiner insight: “Describe” asks what the principle means; repeating the word itself is not a description.

9. (a) Objectivity [1] Accepting a gift creates pressure to favour the supplier, so judgement about the order of payment is no longer unbiased [1], and other suppliers are treated unfairly [1] (b) Confidentiality [1] The monthly sales figure was learned through the job and was disclosed without permission [1], and a competitor could use it against the employer [1] [6] Examiner insight: Name the principle, then connect it to a fact in the scenario.

10. The public interest is the wellbeing of the wider community [1], including people who rely on accounts but are not the client, such as lenders, investors, suppliers and tax authorities [1] An auditor is paid by the business but reports on whether the statements give a true picture to outsiders [1], so the auditor must report honestly even if the client dislikes the finding [1] [4] Examiner insight: Show that the public interest goes beyond the client; “do what is best for the client” describes the opposite idea.

11. (a) Overstatement = 7,500 ÷ 52,000 × 100 [1] = 14.4% [1] (b) Integrity: leaving out a real expense produces figures that are false and misleading [1], and he would be linked with them [1] Objectivity (or professional competence and due care): the owner’s wish for a loan must not decide the figure [1]; the repair is an expense of the year and must be recorded [1] (c) The bank will rely on the profit figure to decide whether to lend [1], so false figures could lead to a loss for people outside the business [1]; Ewan should refuse because his duty extends to those who rely on the accounts, not only the owner [1] [9] Examiner insight: In a scenario question, quote the 7,500 and the bank’s reliance rather than writing generally.

12. Spreadsheet: low cost, flexible layout, good for budgets and what-if work [1]; relies on the user’s formulas and has few built-in checks, so a mistyped cell may go unnoticed [1] Accounting software: one entry posts to all accounts, with reports on demand [1]; costs more and takes time to learn [1] A relevant factor such as the number of transactions, or the need for accurate trial balances and statements [1] Justified conclusion, for example: software for a business with many daily transactions, because of automatic posting and accuracy [1] [6] Examiner insight: An evaluation needs a decision supported by a reason; listing both sides without choosing falls short.

Where marks are usually lost

• Giving a benefit with no reason.
• Mixing up an issue (such as data loss) with a method of protection (such as a backup).
• Giving a protection method that does not match the issue in the question.
• Counting backup hours from the wrong starting point.
• Naming a principle but not linking it to the facts in the scenario.
• Treating public interest as the interest of the client or employer alone.
• Evaluating without a conclusion.

Next steps

• Condense the unit with the revision notes.
• Go back to the study guide for explanations.
• Check coverage on the 4AC1 course hub and tick off the printable checklist.
• Take one of the free 10-minute diagnostics.
• Book a free trial class.

Frequently asked questions

What is the difference between a data security issue and a protection method? An issue is a risk, such as data loss, while a method protects against it, such as a backup. Questions ask for one or the other, so mixing them up, or giving a method that does not match the issue, loses marks.

How do you answer an “explain a benefit” question on technology? Give the benefit and the reason or effect, for example that software is faster because posting and totalling happen automatically. Writing “it is faster” with no reason does not earn the explanation mark.

Why do more frequent backups reduce data loss? Only work done since the last backup is lost when data fails, so a daily backup means at most a day’s transactions must be re-entered, compared with several days for a weekly backup. Count the lost time from the last backup to the failure.

How do you answer an “apply” question on professional ethics? Name the principle, link it to the facts in the scenario and say what the accountant should do. Saying a situation is unethical without naming the principle, or evaluating without a conclusion, loses marks in Edexcel IGCSE Accounting (4AC1).

Official syllabus

Pearson Edexcel International GCSE in Accounting (4AC1) specification, Issue 1, October 2016, published by Pearson Education Limited – Topic 1: The accounting environment, Use of technology in accounting and Professional ethics (1.3 and 1.4 on this site).