SAMPLE ASSESSMENT TASKS

ACCOUNTING AND FINANCE

ATAR YEAR 11
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Sample assessment task
Accounting and Finance – ATAR Year 11
Task 1 – Unit 1

Assessment type: Project

Conditions
Period allowed for completion of the task: 2 weeks
Some of the task requirements may be completed in class.

Task weighting
5% of the school mark for this pair of units

_______________________________________________________________________________________________________

Kay Jay has recently retired from the professional cycling circuit and has managed to save a small
sum of money. He has no formal business or accounting qualifications but has good people skills and
is considering purchasing a small business in your local area. He does not mind what sort of business
he operates and may need finance to realise his goal.

You have been asked to conduct research for Kay Jay to help him decide on the course of action to
take.

1. Complete the table below outlining the characteristics of three different types of business
ownership: sole trader, partnership and small proprietary company. (10 marks)

Small proprietary
Characteristics Sole trader Partnership
company

One owner
a. number of owners

b. liability of owners

c. ability to raise
capital
d. distributions of
profits
e. transfer of
ownership
f. accounting/legal
entity
g. continuity of
existence

Sample assessment tasks | Accounting and Finance | ATAR Year 11

2
2. Explain two (2) advantages and two (2) disadvantages of each type of business ownership (sole
trader, partnership and small proprietary company).
Note: Do not provide the same advantage or disadvantage for different types of business
ownerships i.e. do not use the same information more than once. (12 marks)

3. Kay Jay may need finance to purchase his desired business. Describe three (3) sources of finance
suitable for purchasing a business. (6 marks)

4. In order to obtain finance from a financial institution to purchase a business, Kay Jay will be required
to supply financial and legal information. Describe three (3) items of information he may be
required to supply. (6 marks)

5. a) If Kay Jay purchases a business, he will need to be aware of GST implications. Identify what
the acronym stands for and define GST. (2 marks)

b) Explain four (4) GST legal requirements for sole traders and partnerships. (4 marks)

6. After purchasing a business Kay Jay may find himself in financial difficulties if inappropriate business
decisions are made. This could result in bankruptcy.

a) Explain the concept of bankruptcy as outlined in the Bankruptcy Act 1966. (2 marks)

b) Outline three (3) disadvantages of becoming bankrupt. (3 marks)

7. Which type of business ownership would you recommend to Kay Jay?

Explain five (5) reasons to justify your choice. (10 marks)

Total = 55 marks

Sample assessment tasks | Accounting and Finance | ATAR Year 11

 3
Marking key for sample assessment task 1 — Unit 1

1. Complete the table below outlining the characteristics of different types of business ownership.
Description Marks

1–10
Characteristics of different types of business ownership (0.5 marks per each
characteristic)

Small proprietary
Characteristics Sole trader Partnership
company

a. number of owners 1 2 – 20 Less than 50

b. liability of owners Unlimited liability Unlimited liability Limited liability

c. ability to raise capital Limited Limited Shareholders

d. distributions of profits Not shared Shared Directors decide

e. transfer of ownership If business sold If part of agreement Shares may be sold

f. accounting/legal entity Accounting entity Accounting entity Legal entity

g. continuity of existence No No Yes

Sample assessment tasks | Accounting and Finance | ATAR Year 11

4
2. Explain two (2) advantages and two (2) disadvantages of each type of business ownership (sole
trader, partnership and small proprietary company).
Note: Do not provide the same advantage or disadvantage for different types of business
ownerships i.e. do not use the same information more than once.
Description Marks
1–6
Explains two advantages of sole trader, partnership and small proprietary company
(1 per advantage)
Answer could include, but is not limited to, any two of the following for each business type.
Advantages of sole trader
• one owner doesn’t need to consult with others
• ease of formation
• the owner makes all business financial and operational decisions
• the owner keeps all profits
Advantages of partnership
• ease of formation
• business responsibilities may be shared among the partners
• losses may be shared among the partners
• additional capital and expertise may be contributed by partners
Advantages of small proprietary company
• separate legal entity
• limited liability
• ability to raise capital through shares
Subtotal /6
1–6
Explains two disadvantages
(1 per disadvantage)
Answer could include, but is not limited to, any two of the following for each business type.
Disadvantages of sole trader
• unlimited liability
• not a legal entity
• sources of finances may be limited
• limited expertise in all aspects of business operation
Disadvantages of partnership
• unlimited liability
• not a legal entity
• business profits shared
• mutual agency – each partner responsible for the implications of business actions of other partners
Disadvantages of small proprietary company
• ownership of the company and control of the company are separated
• shareholders aren’t able to make decisions on behalf of the company
• high cost of establishment (when compared to sole trader and partnership)
• many rules and regulations need to be followed
Subtotal /6
Total /12
Note: a duplicate advantage or disadvantage for a particular business type does not receive a second mark.

Sample assessment tasks | Accounting and Finance | ATAR Year 11

 5
3. Kay Jay may need finance to purchase his desired business. Describe three (3) sources of finance
suitable for purchasing a business.

Description Marks
2
Describes in detail an appropriate source of finance for purchasing a business
(per source of finance)
1
States an appropriate source of finance for purchasing a business
(per source of finance)
Total /6
Answer could include, but is not limited to, the following types of finance.
• bank loan – loans available for either a short term or long term for either current or non-current assets
• mortgage – long-term finance, generally for non-current assets
• lease – the business is able to hire and use a non-current asset over a period of time and then purchase
at the expiration of the lease
• overdraft – facility for businesses to keep withdrawing funds from their cash accounts when the balance
reaches zero
• loans from family and friends

4. In order to obtain finance from a financial institution to purchase a business, Kay Jay will be
required to supply financial and legal information. Describe three (3) items of the information
he may be required to supply.
Description Marks
2
Describes in detail an appropriate type of financial or legal information
(per type of information)
1
States an appropriate type of financial or legal information
(per type of information)
Total /6
Answer could include, but is not limited to:
• certificate of registration or incorporation and/or copy of business name registration
• details of any security offered such as property valuations, certificate of titles
• evidence of financial performance, such as income statement and balance sheet, personal or business
tax returns, bank statements
• business plan
• cash flow projections
• any leases or hire purchase details

5. a) If Kay Jay purchases a business, he will need to be aware of GST implications. Identify what
the acronym stands for and define GST.
Description Marks
Correctly identifies that the GST acronym stands for goods and services tax 1
Correctly defines GST 1
Total /2
Definition of GST could be either of the following:
• GST is a federal tax collected by business which imposes a 10% levy on most goods and services
• GST is a broad-based consumption tax levied on most goods and services conducted by business
carrying on an enterprise in Australia.

Sample assessment tasks | Accounting and Finance | ATAR Year 11

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b) Explain four (4) GST legal requirements for sole traders and partnerships.
Description Marks
1–4
Explains the GST legal requirements for sole traders and partnerships
(1 per requirement)
Total /4
Answer could include, but is not limited to:
• must register for GST if they have an annual turnover above $75,000
• must have registered for an ABN
• may decide not to register for GST if their turnover is below $75,000
• may choose not to register for GST if they believe the record keeping will be too great
• must complete a BAS statement for each tax period

6. After purchasing a business, Kay Jay may find himself in financial difficulties if inappropriate
business decisions are made. This could result in bankruptcy.

a) Explain the concept of bankruptcy as outlined in the Bankruptcy Act 1966.

b) Outline three (3) disadvantages of becoming bankrupt.
Description Marks
Explains the concept of bankruptcy 2
States the meaning of bankruptcy but incorrectly explains the concept or does not
1
explain it
Answer could include, but is not limited to:
• when people are unable to pay their debts and their affairs are administered by a registered trustee
• people who have unmanageable debt and who voluntarily lodge a petition to become bankrupt and have
that petition upheld
• people who are unable to pay a creditor the amount owing of $5000 or more, and have the creditor
apply to have the person declared bankrupt
1–3
Outlines three disadvantages of becoming bankrupt
(1 per consequence)
Answer could include, but is not limited to:
• business and personal assets may be sold to cover debt
• creditors can continue to demand payment for secured debts
• ability to travel overseas will be affected as permission to travel is required and passport may have to be
surrendered
• ability to obtain future credit will be affected
• government rates and charges (council rates, water rates) still need to be paid
• credit rating is negatively affected as reporting agencies keep a record of bankruptcy for up to five years
or longer
Total /5

Sample assessment tasks | Accounting and Finance | ATAR Year 11

 7
7. Which type of business ownership would you recommend to Kay Jay? Explain five (5) reasons
to justify your choice.
Description Marks
1–2
Explains a valid reason for the recommended type of business ownership 2 (per reason)
States a valid reason but incorrectly justifies it or does not justify it 1 (per reason)
Total /10
Answer could include, but is not limited to:
Sole trader
• ease of formation
• one owner
• not required to share business profits with others
• owner makes all financial business decisions
• owner makes all operational business decisions
• accounting entity
Partnership
• ease of formation
• Partnership Act provides regulations/guidance of operation
• capacity for increased finance because of number of partners
• increased expertise available (partners contribute)
• sharing of business responsibilities
• sharing of business losses
• accounting entity
Small proprietary company
• unlimited liability
• legal entity
• capacity for increased capital raised through shares
• separation of ownership and control
• transfer of ownership
• continuity of existence
• shareholders not bound by the financial actions/decisions of other shareholders

Sample assessment tasks | Accounting and Finance | ATAR Year 11

8
Sample assessment task
Accounting and Finance – ATAR Year 11
Task 11 – Unit 2

Assessment type: Test

Conditions
Time for the task: 30 minutes under invigilated conditions
Calculators may be used

Task weighting
5% of the school mark for this pair of units

_______________________________________________________________________________________________________

Refer to the following table when answering question 1.

Profitability ratios Formula Industry average

profit
profit net sales 14.00% or 0.14:1
gross profit
gross profit net sales 35.00% or 0.35:1
operating expenses
expense net sales 21.00% or 0.21:1
profit
rate of return on assets average total assets 200.00% or 2.0:1.0

1. An extract from the income statement of Gravity Enterprises for the year ended 30 June 2016
revealed the following:

Gravity Enterprises Income statement (extract) for the year ended 30 June 2016

$
Sales 250,000
Gross profit 60,000
Profit (Loss) (10,500)

Note: Total Assets at 1 July 2015 = $28,000 and at 30 June 2016 = $40,000

a) In the table above, industry average figures for profitability ratios are provided. Calculate
the four (4) profitability ratios for Gravity Enterprises. Round to two decimal places.
(15 marks)

b) For the gross profit ratio and the profit ratio, state one (1) possible reason for the variation
between your calculation for Gravity Enterprises and the industry average. Outline one (1)
suggestion to improve the ratio.
(4 marks)

Sample assessment tasks | Accounting and Finance | ATAR Year 11

 9
2. a) Which of the following ratios is the best indicator of short-term risk? (1 mark)

• quick asset ratio

• profit ratio
• debt to equity ratio
• expense ratio

b) Justify your choice. (1 mark)

3. Explain the main difference between liquidity ratios and the leverage ratio. (2 marks)

4. Although specific financial items are used to measure business performance, ratio results are not
absolute. Outline two (2) reasons for the limitations of ratio analysis and give an example to
support one (1) of the reasons.
(3 marks)

Total = 26 marks

Sample assessment tasks | Accounting and Finance | ATAR Year 11

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Marking key for sample assessment task 11 — Unit 2

1. a) Calculate the four (4) profitability ratios for Gravity Enterprises. Round to two decimal
places.

Description Marks
Ratio Calculations
Gross profit 60,000 (1)/250,000 (1) = 0.24 x 100% = 24.00% 2
Expense 60,000 (1) – (10,500) (1) = 70,500
4
70,500/250,000 (1) = 28.20% (1)
Profit (10,500) (1)/250,000 (1) = (4.20)% 2
Rate of return 28,000 (1) + 40,000 (1) = 68,000 (1) / 2 = 34,000 (1)
on assets 7
(10,500) (1) / 34,000 (1) = (30.88)% (1)
Total /15
Note: Working does not have to be shown i.e. award full marks if ratios are correct without workings.

b) For the gross profit ratio and the profit ratio, state one (1) reason for the variation between
your calculation for Gravity Enterprises and the industry average. Outline one (1)
suggestion to improve the ratio.
Description Marks
Outlines one (1) suggestion to improve the ratio for the variation in the gross profit ratio 1
Result 24.0%. Industry average 35.0%.
Answer could include, but is not limited to any one of the following reasons.
• the selling prices may be below the industry average
• cost of sales may be above the average
• combination of the two
Suggestion could be any one of the following, but is not limited to:
• raise prices but improve quality control
• reduce the cost of sales by sourcing cheaper supplies and buying in bulk
• become more efficient e.g. producing on a larger scale
2
States one reason and one suggestion for the variation in the profit ratio.
(1 mark each)
Result (4.2%). Industry average 14.0%.
Answer could include, but is not limited to:
• the business is making losses as profit is well below the average and expense ratio higher than industry
average
• expenses are high suggesting the level of control over expenses is insufficient
• the business overheads and depreciation are not controlled and may be higher than average.
Suggestion to improve the ratio:
• review all expenses and operating costs with a view to reducing them as they are contributing to profits
that are much lower than industry average
• review any depreciation methods applied to assets as they may be over-estimated thus reducing the
final profit ratio
Total /4

Sample assessment tasks | Accounting and Finance | ATAR Year 11

 11
2. a) Which of the following ratios is the best indicator of short-term risk?
• quick asset ratio
• profit ratio
• debt to equity ratio
• expense ratio
b) Justify your choice.
Description Marks
Correctly selects the best indicator (quick asset ratio) 1
Provides a valid reason for selection 1
Total /2
Answer could include, but is not limited to:
• measures the ability of the business to meet its immediate short-term debts, as it considers current
assets less inventory and prepayments, and current liabilities less bank overdraft
• measures current assets which can readily be converted to cash and current liabilities

3. Explain the main difference between liquidity ratios and the leverage ratio.
Description Marks
Explains the difference between liquidity ratios and the leverage ratio 1–2
Total /2
Answer could include, but is not limited to:
Liquidity ratios
• measure the ability of a business to meet its short term debts and obligations by measuring current
assets and current liabilities
• measure the ability of a business to pay its short term liabilities when they fall due by measuring current
assets and current liabilities
But
The leverage ratio
• considers debt to equity – measures whether the business debt level is manageable or sustainable by
measuring total liabilities and total equity
• measures the liabilities of a business compared to its equity

4. Although specific financial items are used to measure business performance, ratio results are
not absolute. Outline two (2) reasons for the limitations of ratio analysis and give an example to
support one (1) of those reasons.
Description Marks
1–2
Outlines appropriate reason for limitation of ratio analysis
(1 per reason)
Provides a relevant example 1
Total /3
Answer could include, but is not limited to:
• the concept that, on its own, for one financial period, a ratio does not provide very useful information,
basis for comparison or indication of trends
Example: additional financial data is needed to support the ratio analysis for one financial period
• different accounting practices used can distort comparisons in figures
Example: leasing equipment versus buying equipment
• ratios should be measured for consecutive financial periods
Example: examining past financial periods helps to determine trends
• ratios should be compared with industry benchmarks or industry averages for that particular type of
business
Example: service industry results should not be compared with a business producing goods, or businesses
producing similar types of goods should be used
• ratios are based on the financial reports of a business, assuming that errors have not been made in them
Example: if sales are overstated, or expenses understated, or liabilities minimised, ratio results will be
distorted

Sample assessment tasks | Accounting and Finance | ATAR Year 11