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Further information on Higher Accounting
Course Assessment (November 2013)
Key messages
SQA is currently developing Course and Unit assessments. This document outlines our progress in
Course assessment for the Higher Course in Accounting.
Course assessment will consist of two components: an assignment, that will be externally
assessed, and a question paper.
The new Higher Accounting Course will maintain the standard of the current qualification at Higher,
and will continue to be benchmarked against SCQF level 6 as well as ensuring that the level of
demand for candidates is consistent with other Higher qualifications.
The question paper will assess numeracy, handling information, problem-solving, application of
knowledge and understanding, analytical skills and decision making.
The assignment will be IT based on, and will develop, mainly, the skills of using a spreadsheet for
accounting purposes. It will also sample accounting knowledge and understanding and the ability to
investigate, analyse and make decisions.
Skills developed at this level will provide good progression to further study in accounting courses at
Advanced Higher level and also courses in further and higher education institutes, as well as to
employment.
The Course assessment draws on approaches currently used in Higher Accounting, mainly in the
question paper component.
Course assessment will be out of 150 marks. 100 marks will be available in the question paper and
50 marks in the assignment.
Higher specimen question paper
(publication by 28 February 2014)
The question paper will sample knowledge and understanding from the mandatory information on
Course coverage. It will draw upon styles of questions used in the current Higher question paper.
The main changes are:
 All questions in the paper are mandatory.
 Questions will be based on partnerships and public limited companies (including manufacturing
concerns).
 Positive marking will be applied to all components of the Course assessment.
The question paper has 100 marks and will have a time limit of 2 hours. It has two sections.
Section 1 — 40 marks
Section 2 — 60 marks
one mandatory question — 40 marks
three mandatory questions — 20 marks each
 Questions from each section will sample the mandatory Course coverage, and will
ensure there is no duplication of content and that there is a balanced coverage across
the Units.
 Skills assessed: handling information, numeracy, problem-solving, analysis and
application of knowledge and understanding.
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(For sample questions from the current draft of the Specimen Question paper, please see
Appendix 1)
Higher assignment
(publication by 31 March 2014)
At Higher the assignment will have 50 marks.
The assignment will give candidates an opportunity to demonstrate IT skills through using a
spreadsheet for accounting purposes. It will also sample accounting knowledge and understanding
and the ability to analyse and make decisions. The content will be drawn from the mandatory
Course coverage.
The assignment brief will be based on a specific accounting scenario, and will give candidates the
opportunity to apply their accounting skills, knowledge and understanding and make appropriate
use of ICT. They will perform calculations, compare and analyse accounting information, make
decisions based on their analysis and present findings in a short report.
The assignment will be set by SQA on an annual basis and will be marked externally by SQA.
(For further information from the current draft of the Assignment, please see Appendix 2)
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Appendix 1
The following examples illustrate one question from each section in the
current draft of the Specimen Question Paper for Higher Accounting.
Section 1
Dalmeny plc has 3 Production Departments – Machining, Assembly and Finishing – and 2 Service
Departments – Personnel and Maintenance. They provided the following information about each
department.
Production Departments
Service Departments
Machining
Assembly
Finishing Personnel
Maintenance
2
Area (m )
2,400
3,000
4,000
1,200
1,400
No of Employees
18
26
24
6
12
Value of Machinery
£220,000
£260,000
£210,000
£30,000
Kw hrs
1,400
1,600
1,000
600
400
Indirect Materials
£59,860
£35,020
£6,180
£1,440
Direct Labour hours
48,000
40,000
30,000
Direct Machine hours
30,000
20,000
10,000
5,000
Direct Materials
£23,100
£54,750
£15,100
£25,100
The following are the estimated overheads for Year 2.
Overheads
Rent and Rates
Heat and Light
Power
Depreciation of Machinery
£
60,000
36,000
40,000
72,000
Using the information above:
(a)
(i)
Prepare the Overhead Analysis Statement for Year 2.
(ii)
Re-apportion the Personnel overheads on the basis of number of
employees.
(iii)
Re-apportion the Maintenance overheads on the basis of direct machine
hours.
14 marks
(b)
Calculate the departmental overhead recovery rate for each of the production departments.
3 marks
(c)
Calculate for each department the amount of overhead over- or under-absorbed.
6 marks
The following information relates to Job 22B.
Machining
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Assembly
Finishing
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Material (kilos)
30
20
5
£5
£4
£10
2
4
6
Labour rate (per hour)
£16
£14
£12
Direct machine hours
25
30
45
?
?
?
Material cost (per kilo)
Direct labour (hours)
Overheads
(d)
Profit Mark-up - 25% ; VAT – 20%
Using the information above prepare a quotation showing clearly the selling
price of Job 22B.
14 marks
(e)
Explain what a cash budget is and state a reason for its preparation.
3 marks
Total 40 Marks
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Section 2
O’Connell Enterprises plc has capital available for investment in one of the following projects. The
following information has been received from the company's project consultants.
Project 1
Initial investment
Residual Value
Project life
Estimated net cash flow (excluding initial investment)
Year 1
Year 2
Year 3
Year 4
Year 5
(a)
(i)
Project 2
£140,000
£40,000
5 years
£110,000
£50,000
5 years
£55,000
£46,000
£35,000
£29,000
£26,000
£75,000
£30,000
£20,000
£18,000
£16,000
Calculate the profit earned in each year for each project.
6 marks
(ii) Calculate the payback period for each project
5 marks
(iii) Calculate the accounting rate of return for each project, based on average
profits earned on the initial investment
5 marks
(b) (i)
State one advantage and one disadvantage of using the Payback
Method as a means of investment appraisal.
2 marks
(ii) Explain two ways in which the use of computer software could help the
Finance Department when carrying out an investment appraisal exercise.
2 marks
Total 20 Marks
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Appendix 2
The following example illustrates the style of tasks in the current draft of the
Assignment for Higher Accounting.
Task 2
Tik Tok plc sells their products directly to the public on a retail basis and on credit to trade
customers.
Using any appropriate information from Task 1 and the information Mrs Campbell has provided you
with below, you are required to prepare a Production Budget and a Cash Budget for Tik Tok plc for
Year 3.
Instructions to candidates
 Task 2 must be completed using spreadsheet software.
 The file Production Budget shown on page 8 has been provided for the completion of Task 2.
Cells marked ‘f’ must contain an appropriate formula. Cells marked ‘d’ should contain data.
 On completion of Task 2, you should submit 2 printouts, one showing figures and one
showing formulae.
 Ensure your name and presenting centre is on both printouts. Each printout must fit on one
page.
January
Total Sales in Units
1,000
February
1,200
March
1,400
April
1,600
May
1,800
June
2,000
July
2,200
Closing stock at the end of each month is equal to the level of credit sales of the following month.
Credit sales are 80% of total sales.
(a) Prepare the Production Budget for the period January to June.
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Additional Information
 Selling price per unit is £50. This price may be subject to change in the future and so an
appropriate formula should be used.
 All trade customers receive 20% trade discount
̶ Debtors settle their accounts one month after sale.
 Costs per unit are as follows:
̶ Material - £15 per unit, payable in the month before production.
̶ Labour - £10 per unit, payable in the month of production.
̶ Variable Overheads - £12 per unit, payable in the month before production.
̶ A bonus system will be introduced in Year 3. If production rises above 1,500 units in
any month, a bonus of £5 per unit will be paid for the additional units in the month
following production.
 Fixed costs, excluding depreciation of £27 per month, are £2,500.
 Tik Tok plc plan to sub-let part of their buildings at an annual rental of £20,000 payable
quarterly starting in January.
 A new machine is to be purchased in March for £100,000, payable as follows: initial deposit
of 50% payable in March and the remaining balance paid in 4 equal monthly instalments
beginning in April.
(b) Prepare the Cash Budget for January to April Year 3.
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A
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
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25
26
27
28
29
30
31
32
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34
35
36
B
C
Tik Tok plc
Production Budget from January to June Year 3
January
February
Sales (units)
d
d
Opening Stock
d
f
f
f
Closing Stock
f
f
Production
f
f
D
E
F
G
March
d
f
f
f
f
April
d
f
f
f
f
May
d
f
f
f
f
June
d
f
f
f
f
Tik Tok plc
Cash Budget for January to April Year 3
Cash Selling Price
Credit Selling Price
Materials
Labour
Variable Overheads
d
f
d
d
d
Opening Balance
January
d
February
f
March
f
April
f
Receipts
Cash Sales
Receipts from Debtors
Rental Income
Total Receipts
f
d
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
d
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
f
Payments
Material
Labour
Variable Overhead
Bonus
Fixed Costs
Purchase of Asset
Total Payments
Closing Balance
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