NCEA Level 1 Accounting (90976) 2011 — page 1 of 6
Assessment Schedule – 2011
Accounting: Demonstrate understanding of accounting concepts for small entities (90976)
Evidence Statement
Codes used (but not relevant for all questions) and majority of credit there was no code:
P – Explain an accounting concept leading to an in-depth understanding
F – Apply an accounting concept leading to s comprehensive understanding
Question
ONE
(a)
Evidence statement
Code
(i)

Creditors / suppliers / accounts payable

Bank / Lender

Mele’s Movie Theatre Manager

IRD / government

Potential owner / Potential lender
(ii)

(b)
Financial or chartered accountant
The Income Statement shows Mele the income, expenses and profit for the period / year of
Mele’s Movie Theatre. He can use this information to help focus on improving on a specific area,
(eg increase sales or decrease expenses) or compare this year’s expenses/income / profit to
help decide why they improved / worsened. The income statement will help Mele decide if he
should increase the selling price of the movie tickets/find a cheaper electricity supplier (eg) to
help improve Mele’s Movie Theatre’s profit for next year
Describe: Describes the purpose of the income statement with reference to key components for
the time period for Mele’s Movie Theatre (Not money / paid as wrong statement)
Explain (P): Explains the purpose of the income statement in terms of the key components for
the time period for Mele’s Movie Theatre in relation to making decisions and/or comparison
results
Applies (F): Explains the purpose of the income statement in terms of the key components for
the time period for Mele’s Movie Theatre and applies this by providing a specific decision Mele
could make using the income statement
(c)
P
OR
F
Accrual basis requires transactions (and other events) are recognized when they occur. They are
reported in the financial statements in the period to which they relate. As a result Mele’s Movie
Theatre will need to report the interest on term deposit which is owed to them in this period’s
financial statements. The interest on term deposit will increase in the current year’s Income
Statement by $120 because the interest was earned this period so needs to be reported this
year. Accrued Income will be reported as at current asset in the Statement of Financial Position
for $120. This represents the future inflow of $120 that will be received from the bank in the form
of interest (cash) in the next accounting period / because Mele’s Movie Theatre will receive the
money / interest next year
Describe: Describes accrual basis concept reporting the transaction in the period it relates to for
Mele’s Movie Theatre
Explain (P): Explains in context how the interest owing on term deposit is reported in each of the
income statement and / or the Statement of Financial Position
Applies (F): Explaining in detail why the interest on term deposit is reported in the Income
Statement and Statement of Financial Position in the context of the accrual basis and reporting
the interest in the period it was earned, although it won’t be received until next period
P OR
F
AND
P OR
F
NCEA Level 1 Accounting (90976) 2011 — page 2 of 6
Judgement Statement
N1
N2
A3
A4
M5
M6
E7
E8
 Recognises
one user or
specialised
area
 Recognises
two of
users or
specialised
area
OR
 describes
either the
purpose of
the income
or accrual
basis
TWO of:
 recognises
two
users
 recognises
the
specialised
area
 describes
what
Income
Statement
shows
 describes
accrual
basis
OR
ONE of:
 explain
income
statement
OR
 accrual
basis
TWO of:
 recognises
two of
users/
specialised
area
 describes
what
Income
Statement
shows
 describes
accrual
basis.
Recognises a
user or
specialised
area
 Recognises
a user or
specialised
area
 Recognises
two users /
specialised
area
 Recognises
two users /
specialised
area
N0/ = No response; no relevant evidence.
AND
AND
ONE of:
 explains in
general
terms how
Mele’s
income
statement
can be
used to
make a
financial
decision
 TWO of:
 explains in
general
terms that
Mele’s
income
statement
can be
used to
make
financial
decision
 explains
either
interest on
term
deposit
increasing
in the
Income
statement
OR
 accrued
income is
asset being
created in
Statement
of Financial
Position/
$120
 explains
either
interest on
term
deposit
increasing
in the
Income
statement
OR
accrued
income is
asset being
created in
Statement
of Financial
Position
AND
 Applies
ONE and
explains
ONE other
of:
 how the
Income
Statement
is used to
aid decision
making
OR
 why
increasing
interest on
term
deposit
$120 in the
Income
Statement
OR
 why
Accrued
Income
$120 is an
created as
an asset in
Statement
of Financial
Position
AND
 Applies
TWO of:
 how the
Income
Statement
is used to
aid decision
making
OR
 why
increasing
interest on
term
deposit
$120 in the
Income
Statement
OR
 why
Accrued
Income
$120 is an
created as
an asset in
Statement
of Financial
Position
NCEA Level 1 Accounting (90976) 2011 — page 3 of 6
Question
TWO
(a)
(b)
Evidence statement
Code
To show the assets, liabilities and equity of Mele’s Movie Theatre at a point in time / on balance
date
Equity = Assets – Liabilities
Equity = Assets (Bank 10 000 + Property, Plant and Equipment 170 000)
– Liabilities (Accounts Payable 5 000 + Mortgage 80 000)
Equity = $95 000
(c)
(i)
Assets: equipment / movie projectors / fittings increase by $12 000
Liabilities: accounts payable increases by $12 000
(ii)
Assets:
The movie projector is reported as an asset in the Statement of Financial Position as it meets the
characteristics of an asset. The movie projector was purchased on credit from Germany by Mele’s
Movie Theatre in the past. Mele’s Movie Theatre has present control over the use of the movie
theatre as they decide which movies are showed on it / have it locked in their buildings / have
exclusive right to use the projector. Mele’s Movie Theatre will use the projector to show movies to
their customers who will pay to buy tickets to see the movies which increases the ticket sales /
income which also increases bank as customers pay for the tickets. (NOT because the projector
can be sold in the future)
P/F
(asset)
The movie projector will be reported as a non-current asset under the sub-heading Property Plant
and Equipment because it will be used to generate income/not be turned into cash beyond the
next accounting period, and it is reported as $12 000 in New Zealand dollars
The projector is reported in at NZ$12 000 because the monetary measurement concept states
that all transactions should be recorded/reported in New Zealand dollar terms / a common
currency of NZ$. Therefore even though the movie projector was purchased from Germany, it
should be reported as NZ $12 000 in Mele’s Movie Theatre’s financial statements (converted from
Euro’s into NZ$), because they are a New Zealand business
The movie projector will be reported as $12 000 because this is its original acquisition cost to
Mele’s Movie Theatre, and the historical cost concept states that all assets should be reported at
their original purchase price, which is $12 000.
The projector is reported as a non-current asset which supports the use of the Going Concern
concepts which states that the financial statements are prepared under the assumption that the
business will continue to operate into the foreseeable future. By reporting as a non-current asset
as opposed to a current one, Mele’s Movie Theatre is indicating they intend to continue to operate
into the foreseeable future
Asset
P/F
(concept)
Describe: Describes the three characteristics of an asset
Explain (P): Explains how the reporting the projector meets the asset characteristics of the projector in context
Applies (F): Applies how the reporting the projector meets the asset characteristics of the projector, by fully explaining
how the projector will generate future economic benefit in the future from the customers paying to watch the movies
Relevant Concept
Describe: Describes how the reporting of the projector meets an appropriate accounting concept
Explain (P): Explains how the reporting of the projector meets the concept in context (eg. NZ$12 000 / classification)
Applies (F): Applies the concept(s) to the reporting of the projector, and fully explains how the concept is applied to the
situation (eg purchasing from German and reporting in NZ$ / currency)
NCEA Level 1 Accounting (90976) 2011 — page 4 of 6
Judgement Statement
N1
N2
A3
A4
M5
M6
E7
E8
ONE of:
 states
assets /
liabilities /
equity in (a)
 attempts
accounting
equation
 recognises
that asset
increases
or liabilities
increase in
(c) (i)
 identifies a
relevant
concept in
(c)
 some of the
asset
definition
correct
TWO of:
 states two
of assets /
liabilities /
equity in (a)
 attempts
accounting
equation
OR
ONE of the
following as
the only
correct
evidence:
 calculates
$95000
 recognises
that asset
increases
and
liabilities
increase in
(c) (i)
 correct
definition of
asset or
concept
THREE of:
 describes
purpose of
statement
of financial
position
 accounting
equation
some
correct
working in
(b)
OR
 equity of
$95 000 is
shown (no
working)
 recognises
that asset
increases
and / or
liabilities
increase in
(c) (i)
 definition of
an asset
 definition of
either:
 monetary
measurement
OR
historical
cost
OR
going
concern
 recognises
that movie
projector is
a noncurrent /
PPE asset
 recognises
move
projector
will be
reported as
$NZ 12 000
OR
 explains
ONE
concept/as
set and one
correct
bullet
above
FOUR of:
 describes
purpose of
statement
of financial
position
 accounting
equation
some
correct
working in
(b)
OR
 equity of
$95 000 is
shown (no
working)
 recognises
that asset
increases
and / or
liabilities
increase in
(c) (i)
 definition of
an asset
 definition of
either:
 monetary
measurement
OR
historical
cost
OR
going
concern
 recognises
that movie
projector is
a noncurrent /
PPE asset
 recognises
move
projector
will be
reported as
$NZ 12 000
OR
 explain
asset and
one
concept
only
THREE of:
 assets and
liabilities
shown in
(b) and
equity of
$95 000 is
calculated
(or correct
working
with minor
error)
 explains
that
equipment /
fittings /
projectors
increase by
$12000
OR
 accounts
payable
increase by
$12000
 (not
negated in
asset
answer)
 explains
projector
purchase in
terms of
asset
 explains
projector
purchase in
terms of
monetary
measurement
OR
historical
cost
OR
 going
concern
 explain that
projector is
a noncurrent
asset and
reported at
NZ$12 000
 (If asset &
concept not
explained
but applied
allow
higher level
credit)
FOUR of:
 assets and
liabilities
shown in
(b) and
equity of
$95 000 is
calculated
(or correct
working
with minor
error)
 explains
that
equipment /
fittings /
projectors
increase by
$12000
OR
 accounts
payable
increase by
$12000
 (not
negated in
asset
answer)
 explains
projector
purchase in
terms of
asset
 explains
projector
purchase in
terms of
monetary
measurement OR
historical
cost OR
going
concern
 explain that
projector is
a noncurrent
asset and
reported at
NZ$12 000.
 (If asset &
concept not
explained
but applied
allow
higher level
credit)
ONE of:
 assets and
liabilities
forming the
accounting
equation in
(b) and
equity of
$95000 is
calculated
OR
 explains that
equipment
increase by
$12000 and
accounts
payable
increase by
$12000
AND
 applies ONE
of the
following and
explains a
second from:
 asset
OR
 monetary
measurement
OR
 going
concern
 to explain
how the
movie
projector
should be
reported.
 no significant
errors
 assets and
liabilities
forming the
accounting
equation in
(b) and
equity of
$95000 is
calculated
OR
 explains
that
equipment
increase by
$12000 and
accounts
payable
increase by
$12000
AND
 applies how
the movie
projector
should be
reported in
terms of
meeting
criteria of an
asset
AND
ONE of:
 applies how
the movie
projector
should be
reported in
terms of
meeting
ONE of the
concepts of:
 monetary
measurement
 going
concern
OR
TWO
explained
 no
significant
errors
N0/ = No response; no relevant evidence.
NCEA Level 1 Accounting (90976) 2011 — page 5 of 6
Question
Evidence statement
THREE
(i)
(a)

Dividends received

Interest received

Rent received
Code
 Popcorn sales
(ii)
 Interest on loan

Purchases

Electricity
 Cleaning
No credit if same account in both classifications
(b)
Movie ticket sales are income for Mele’s Movie Theatre because ticket sales will increase the
economic benefits in the form of inflows of cash from the customers buying movie tickets to watch
the movie. This increases Mele’s Movie Theatre’s assets by increasing the bank account. The
movie ticket sales increase profit which leads to an increase in Mele’s equity in Mele’s Movie
Theatre and it is not Mele making a contribution to Mele’s Movie Theatre
Describe: Describes the characteristics of income
Explain (P): Explains that the ticket sales will increase assets by increasing the bank account and
equity by increasing profit for Mele’s Movie Theatre, and not a contribution by Mele
Applies (F): Applies the characteristics of an income to the movie ticket sales by detailing the
reasoning behind HOW the bank and / or profit will increase, in addition to explain expectations
(c)
P OR
F
Till paper is an expense for Mele’s Movie Theatre because purchasing the till paper causes an
outflow of cash when Mele’s Movie Theatre pays for the till paper from their supplier. This
decreases Mele’s Movie Theatre’s assets by decreasing the bank account (or increases accounts
payable when it is purchased on credit). The purchase of the till paper decrease the movie
theatre’s profit which leads to a decrease in Mele’s equity in Mele’s Movie Theatre, and it is not
Mele taking home drawings
Describe: Describes the characteristics of explain
Explain (P): Explains that the till paper will decrease assets by decreasing the bank account (or
increases liabilities by increasing accounts payable) and equity by decreasing profit for Mele’s
Movie Theatre and is distribution to Mele.
Applies (F): Applies the characteristics of an expense to the till paper by detailing the reasoning
behind HOW the bank will decrease / accounts payable increase and / or profit will decrease, in
addition to explain expectations.
P OR
F
NCEA Level 1 Accounting (90976) 2011 — page 6 of 6
Judgement Statement
N1
N2
A3
A4
M5
M6
E7
E8
 recognises
one income
OR
 one
expense.
 recognises
two
incomes
AND / OR
 expenses.
 recognises
THREE
incomes
and
THREE
expenses
Maximum 1
foreign item
OR
 describes
either
income or
expenses
AND
 recognises
FOUR
incomes or
expenses
All of:
 recognises
four
incomes or
expenses
 describes
income
 describes
expense
FOUR
incomes and
/ or expenses
recognised,
AND
ONE of:
 explains
that ticket
sales is
income
 explains
that till
paper is an
expense
FOUR
incomes and
/ or expenses
recognised,
AND
explains
ONE and
describes the
other of:
 ticket sales
is income
 till paper is
an expense
FIVE incomes
and expenses
recognised,
AND
ONE of :
 applies how
ticket sales
are income
 applies how
till paper is
an expense
FIVE incomes
and expenses
recognised,
AND
BOTH of:
 applies how
ticket sales
are income
 applies how
till paper is
an expense
N0/ = No response; no relevant evidence.