Haziq has not maintained full accounting records for his business. Haziq provided the following information for the year ended 31 July 2020. At 1 August 2019 $ At 31 July 2020 $ Bank loan 6000 4500 Inventory 8400 ? Non-current assets at net book value 35580 32450 Rent prepaid 240 Trade payables 6280 7460 Wages accrued 610 Summary of bank account for the year ended 31 July 2020 Date Details $ Date Details $ 2020 2019 July 31 Sales receipts 166000 Aug 1 Balance b/d 2150 Balance c/d 6600 2020 July 31 Payments to credit suppliers 96 220 Bank loan repayments 1500 Bank loan interest 300 Rent 2640 Wages 41400 General expenses 10890 Drawings 17500 172600 172600 Additional information 1 The gross margin was 40%. 2 All sales were for cash and all cash received was banked.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2020). The mark or mark type is shown in brackets.

1. [1] (a) Revenue 166 000
2. [1] (a) Purchases calculation (96 220 – 6 280 + 7 460) = 97 400
3. [1]OF (a) Less Closing inventory 6 200
4. [1]OF (a) Cost of sales 99 600
5. [1] (a) Gross profit 66 400
6. [1] (a) Rent calculation (2 640 + 240) = 2 880
7. [1] (a) Wages calculation (41400 + 610) = 42 010
8. [1] (a) General expenses 10 890
9. [1] (a) Depreciation of non-current assets (35 580 – 32 450) = 3 130
10. [1] (a) Loan interest 300
11. [1]OF (a) Profit for the year 7 190
12. [1] (b) Advantage: Enables easier production of financial statements
13. [1] (b) Advantage: Enables greater accuracy of the financial records
14. [1] (b) Advantage: Provides checks and balances to minimise possibility of fraud
15. [1] (b) Advantage: Facilitates easier decision making/easier for reference/easier comparisons/better understanding of finances
16. [1] (b) Disadvantage: May be complex and harder to understand for the non-accountant
17. [1] (b) Disadvantage: Time consuming
18. [1] (b) Disadvantage: May be costly to set-up
19. [1] (b) Disadvantage: Not all errors will be identified
20. [1] (b) Recommendation