Small lapses of clarity but overall it adds up

Both higher and ordinary-level students should have been pleased with yesterday morning's accounting papers. The higher-level accounting paper was long but manageable, according to Ms Sheila Conneely, a representative of the Business Studies Teachers Association of Ireland.

Students were satisfied with the paper, though it was "stiff enough", she added. They will earn their As and Bs. The club accounts, which came up in section 1, would have been more welcome in section 2, where they would have accounted for 100 marks rather than 60, said Ms Conneely, who teaches in Seamount College, Kinvara, Co Galway.

The question on revaluation (see sample question) was new but expected. The inclusion of an issue of shares in the cash-flow question was also new as was the abridged profit and loss. Students were not familiar with the latter term and it may have thrown some of them, she said.

The ASTI subject representative, Mr Joseph Keating, said the higher-level paper was fair and reflected the breadth of the syllabus. There were no real surprises.

He had a few quibbles. Question 1 now accounts for 120 marks instead of 130 but the length was similar to past questions. In question 2, part 5, students were told the subscriptions include "two life memberships of £3,000". It was not clear if this meant two memberships of £3,000 each or two memberships totalling £3,000, said Mr Keating, who teaches in Cabinteely Community School in Dublin.

There was also an ambiguity in the first line of question 6(i), where the adjustment gave rise to an expense of £35. "Due to the entity concept this is ambiguous as to whether the expense is a charge against the business or something which `Tobin' has created in his private capacity," Mr Keating said. The answer should be accepted whether students decided to treat it as an expense against the business or otherwise, he suggested.

The layout in questions 8 and 9 was not satisfactory, he added. In question 8, the columns of information were separated by a chasm of pink space, while bold type was used where it was not appropriate and not used where it was needed, he explained. In question 9, the information was not clearly labelled. Quibbles aside, students who worked should have been able to display their knowledge in this exam, he said.

At ordinary-level, both teachers were agreed that the paper was fine. Ms Conneely noted that the appearance of a family of farmers, the Williams, and their accounts, was a new departure but, otherwise, the paper was similar to previous years. "It was a testing paper but manageable," she said. Mr Keating called it "very manageable with no major surprises".

Sample question

Leaving Cert Accounting, higher level

Q4. Revaluation of fixed assets

On 1 January 1985 Tridant Ltd purchased property for £250,000, consisting of land £50,000 and buildings £200,000. The company depreciates buildings at the rate of 2% using the straight line method. It is the company's policy to apply a full year's depreciation in the year of acquisition and nil depreciation in the year of disposal.

The following details are taken from the firm's books:

Jan 1 1993 Revalued property at £480,000. Of this revaluation £120,000 was attributable to land

Jan 1 1994 Sold for £140,000 land which cost £50,000 but was since revalued on January 1 1993.

Jan 1 1995 Purchased building for £150,000. During 1995, £30,000 was paid to a building contractor for an extension to these buildings. The company's own employees also worked on the extension and they were paid wages amounting to £20,000 by Tridant Ltd for this work.

Jan 1 1996 Revalued buildings owned at £700,000 (a 25% increase in respect of each building).

Jan 1 1997 Sold for £510,000 the buildings purchased on 1/1/1985. The remaining buildings were revalued at £300,000.

You are required to: Prepare the relevant ledger accounts in respect of the above transactions for the 5 years ended 31 December 1993 to 31 December 1997. (Bank account and profit and loss not required.)