The Institute of Chartered Accountants in Ireland
Accounting in a Computer Environment
Specimen Exam Paper 1
INSTRUCTIONS TO CANDIDATES – PLEASE READ CAREFULLY
Candidates are required to answer all questions. Time allowed: 3 hours.
In this examination paper each monetary amount is preceded with the dual symbol €/£ e.g. €/£170,000.
Thus, each monetary amount shown may be deemed as representing either euro or UK£ Sterling.
N.I. Candidates should deem each monetary amount shown to be stated in UK£ Sterling.
R.O.I. Candidates should deem each monetary amount shown to be stated in euro.
Candidates must use the PC hard-drive to save their work during the course of the examination. Your
solution files will then be transferred to a USB memory key at the end of the exam. Saving guidelines for
candidates are included overleaf and should be read carefully.
PLEASE ENSURE THAT YOU SAVE YOUR WORK REGULARLY.
On completion of your competence test, please tick the appropriate items below. You must return the items
indicated in item 5 to your invigilator. Your test cannot be marked unless this exam paper is enclosed in the
envelope provided.
Checklist: (Please tick the following, where appropriate)
1. Attempted Question 1
4. Attempted Question 4
2. Attempted Question 2
5. Exam paper placed in the envelope
3. Attempted Question 3
6. Solution files transferred to USB memory key
I have checked the files on the USB key and am satisfied that all the files relating to my work have been
saved:
Student’s Signature
Invigilator’s Signature
Student Room & Computer No:
(As appears on test envelope)
Student’s comments (if any):
Student Signature:
Date:
Invigilator’s Comments:
OFFICE USE ONLY
SP081D
Invigilator’s Signature:
1
The Institute of Chartered Accountants in Ireland
Accounting in a Computer Environment
Specimen Exam Paper 1
SAVING GUIDELINES FOR CANDIDATES
The instructions below are intended as guidance only, designed to assist candidates when saving their work.
However, candidates are reminded that it is YOUR RESPONSIBILITY to save your work during the
examination and to submit your answer files. The Institute, or the Test Centres, will not be held responsible
where students lose data as a result of not saving their work properly or not saving on a regular basis.
1. Open the required file, as indicated by the exam question (e.g. Open the file Q2). The question files are
located in the ICAI folder on the PC hard-drive (C:\ICAI).
Note:
Not all of the questions on the exam paper require a file to be opened. Where there is no
question file to be opened, a new file should be created on the PC and then candidates should
proceed to step 2 below.
2. Save the file into the C:\ICAI folder on the PC, using your student number and the file name specified in
the exam question (e.g. Student number Sol 2).
Note:
This folder and the file names set out in the questions MUST be used when saving your work.
3. Complete your work on the file saved in step 2. Save your work to this answer file on a regular basis.
4. When you have completed the question requirements, close your solution file.
5. At the end of the examination, you should have the following files in the ICAI folder:
 All of the original question files (Q2, Q3 etc.)
 4 answer files named Student number Sol 1, Student number Sol 2, etc.
6. These files will be transferred onto a USB memory key by the invigilator at the end of the examination.
You should check to ensure your solution files have been successfully transferred and then complete the
checklist on the previous page.
2
P.T.O.
The Institute of Chartered Accountants in Ireland
QUESTION 1
(30 marks)
Catfood PLC prepares it’s accounts to 30th September each year. As the Financial Accountant, you are required
to prepare the cashflow forecast for the six months from 01/10/X1. You may assume you have final results up
to 30.09.X1. You are supplied with the following information:
Receipts






Actual sales for the quarter ended on 30.09.X1 were €/£31.5m.
It is expected that this will increase by 15% for the first quarter of the projections.
Projected sales for the second quarter are 10% lower than the quarter ended on 30.09.X1.
Sales are spread evenly over the months in each quarter.
10% of sales are for cash.
The remaining credit sales are paid for two months in arrears (i.e. March credit sales are received in May).
Payments






All payments are made on an actual basis (i.e. paid for in the month incurred).
Sales personnel are paid 2% commission on cash sales.
Salaries are projected at €/£5.2m per month, with a 10% bonus paid in December.
General expenses are expected to be €/£1.1m per month.
Financial expenses are expected to be €/£850k per month.
Actual selling and distribution expenses for the quarter ended on 30.09.X1 were €/£7.8m. S&D expenses
are closely related to sales and, as such, are expected to follow the same pattern projected for sales above
(i.e. increasing by 15% in the first quarter of the projections and dropping by 10% in the second quarter).
Opening Bank Balance

The opening bank balance at 01/10/X1 is a €/£1,120,000 overdraft.
Overdraft Interest



Interest is incurred on the bank overdraft, at a rate of 11% per annum, on the basis of the closing balance
for the previous month. No interest is receivable if the bank balance is positive.
The interest is paid in the month following the month in which the overdraft occurred (i.e. Interest must be
paid in October based on the overdraft in existence at the end of September).
The overdraft interest must be shown separately in the cashflow projection and not included with the other
payments.
3
P.T.O.
The Institute of Chartered Accountants in Ireland
Requirement
(a) Prepare the cashflow forecast, by month, for the six months beginning on 01/10/X1. Format the forecast
in a comma style and use WordArt for the cashflow title.
(20 marks)
Marks will be awarded for:




A Table of Variable Data set up on a separate worksheet.
Links from the variable data worksheet to the worksheet containing the cashflow forecast.
Formulae and calculations which must only be used in the cashflow forecast worksheet.
A clear, concise, neat layout.
(b) Using an appropriate Excel tool create the following scenarios in the Table of Variable Data worksheet:



Scenario 1
– The sales increase in the first quarter of the projection is 20%.
– S&D expenses are similarly affected.
– Salaries are €/£5.5m per month.
Scenario 2
– The sales increase in the first quarter of the projection is 12%.
– S&D expenses are similarly affected.
– Salaries are €/£5m per month.
Scenario 3
– Figures are as they were originally stated in the question.
(6 marks)
(c) Format the cashflow forecast for printing purposes as follows:

With a landscape layout

With a header containing the date of print
Note:
You are not required to print the page – You are required to set up the page so that it will print
as outlined above.
(4 marks)
Save your answer as Sol 1.
4
P.T.O.
The Institute of Chartered Accountants in Ireland
QUESTION 2
(30 marks)
Open the file Q2.
The file contains the following trial balance, which was extracted from the records of Eglinton Ltd. as at 30th
September 20X1. Two errors of commission have been made during its preparation.
Trial Balance as at 30th September 20X1
Debit
€/£'000
Accumulated Depreciation - Office Equipment
Administration expenses
Bank Balance (in credit)
Office Equipment at Cost
Ordinary shares @ €/£1 each
Payables
Profit brought forward at 1.10.20X1
Purchases
Receivables
Sales
Selling costs
Share premium
Stock at 1.1.2003
Trade Mark at Cost
VAT due from the Revenue Commissioners
Wages and salaries
Credit
€/£'000
96.00
202.00
805.00
220.00
800.00
876.00
147.00
2,704.00
1,152.00
3,675.00
97.00
50.00
110.00
80.00
29.00
245.00
4,542.00
6,746.00
The file also contains the following additional information:
1. During the year new office equipment was purchased for €/£20,000, this amount was posted to the
administration expenses account.
2. Depreciation is to be provided on office equipment on hand at 30th September 20X1 at a rate of 25% per
annum straight line.
3. The trade mark was acquired on 1st October 20X0 and is to be amortised over 8 years in equal instalments.
4. Provision is to be made for auditors' remuneration of €/£10,000
5. Included in administration expenses is rates paid of €/£18,000 for the year ended 31 March 20X2.
6. Branco Ltd, who owed the company €/£25,900 at 30th September 20X1 has gone into liquidation. The
liquidator has indicated that 20 cent/pence in the €/£ will be paid.
7. Sales staff are entitled to a commission of 5% on sales in excess of €2 million.
8. Corporation tax of €/£27,000 is to be provided for.
5
P.T.O.
The Institute of Chartered Accountants in Ireland
Requirement
(a) In the Trial Balance worksheet, correct the two errors of commission in order to balance the trial balance
(both errors relate to account balances being entered on the incorrect side of the trial balance).
(2 marks)
(b) In the Trial Balance worksheet, insert comments in the appropriate cells in column A indicating whether
each account balance represents an asset, liability, income or expense.
(8 marks)
Note:
For each requirement below there should be NO figures typed in any of the newly created
worksheets. You MUST ONLY USE formulas and links.
(c) Create a new worksheet entitled Journals and prepare the year-end journal entries based on the additional
information above, using links from the Trial Balance and Additional Information worksheets. [For each
account in each journal entry, you should specify whether it is an Income Statement or Balance Sheet
account.]
(8 marks)
(d) Create a second worksheet entitled Adjusted TB and prepare the adjusted Trial Balance using links from
the Trial Balance and Journals worksheets.
(12 marks)
Save your answer as Sol 2.
6
P.T.O.
The Institute of Chartered Accountants in Ireland
QUESTION 3
(10 marks)
Open the file Q3.
An inexperienced accounts clerk has prepared the information shown for the month of March 20X1. An up to
date cheque listing is not kept and so the clerk prepared the cheque listing from the bank statements. The
cheques are shown in the order in which they appeared on the statements. The outstanding cheques list was
prepared using post month end statements.
You may assume the following:
1. The first cheque written in the month was number 1678; the last was 1852.
2. The outstanding cheque list is correct.
3. The amounts shown for the opening balance in the bank account, the deposit account transfer and the Bank
Statement balance are all correct.
Requirement
You are required to correct the work prepared by the accounts clerk. Specifically:
(a) Produce a correct list of cheques written in the month.
(2 marks)
(b) Prepare the correct bank account. Formulas must be used.
(3 marks)
(c) Prepare the correct bank reconciliation. Formulas must be used.
(3 marks)
(d) Format all €/£ amounts to currency style with no decimal places and format the bank reconciliation with a
blue font.
(2 marks)
Save your answer as Sol 3.
7
P.T.O.
The Institute of Chartered Accountants in Ireland
QUESTION 4
(30 marks)
You are an audit manager in Barrow and Associates, Main Road, Dublin 1. The firm also has offices on Centre
Street, Belfast. It is now the 2nd of October 20X1 and you are planning the audit of SB Communications (SB
Comm.) for the year ended 31st December 20X1. The company is a subsidiary of SB Communications
International, which provides telecommunication services worldwide. The company presents their final
accounts to their shareholders at an AGM on the 15th February each year.
You have determined the staffing requirements to be as follows:
1 supervisor required for 4 weeks.
2 teams, each comprising an audit senior and 2 audit assistants for 4 weeks. One team will work in SB
Comm.’s retail outlet in Dublin, the other in their Belfast outlet.
1 week of manager (your) time
2 days of partner time
1 day = 7 hours
1 week = 5 days
No overtime
Your company charges clients based on the hours worked by each staff member as follows:
Partners: €/£500 per hour
Managers: €/£250 per hour
Supervisors: €/£150 per hour
Seniors: €/£100 per hour
Assistants: €/£50 per hour
The audit fee is €/£100,000.
The interim audit will address the issues outlined below and will take one week in December (dates to be
determined). The final audit will take 3 weeks and must be completed by the 31st January 20X2 in order to
meet the reporting deadlines of SB Comm. International.
This is the 3rd year of the audit of SB Comm. and there have been no significant issues in previous years.
However, 2 items require particular attention this year – they have installed a new payroll system and have
replaced their financial controller. The payroll system is not integrated with the Nominal Ledger and has only
been operating since the last week of September 20X1. The new financial controller was appointed last week.
The previous one left the company at the end of July.
Requirement
(a) Draft a memo to the audit supervisor, Stephen Bush, setting out the salient information for the audit of SB
Comm. and requesting a meeting next Monday at 9am to discuss the audit. The audit supervisor has just
joined the firm and so has not worked on this job previously.
(10 marks)
(b) Draft a letter to Andrew Maxwell the audit partner in the Belfast office of Barrow and Associates
requesting an audit team to work on the audit at SB Comm.’s offices in Belfast. This has not been
necessary in previous years but there is insufficient staff available in the Dublin office this year. The audit
fees will be split according to the hours worked.
(10 marks)
(c) Create a slide presentation to be given to the audit teams which indicates the key issues and dates for the
audit of SB Comm.
Note:
(10 marks)
Marks will be awarded for identifying the salient points, summarising them in a grammatically
correct manner and using appropriate document formats and writing styles.
8