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9706 · 3.4.1

Computerised Accounting Systems — practice questions

Practice and worked examples for 9706 Computerised Accounting Systems. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

The directors of Z plc review the Statement of Cash Flows for the year. Net cash from operating activities was $420,000; investing outflows $180,000; dividends paid $95,000.

Explain why the Statement of Cash Flows is essential for assessing liquidity.

Show solution outline

Profit per the SoPL can include non-cash items (depreciation, accruals). The SoCF shows actual cash generated ($420,000 from operations), whether the firm can fund investments ($180,000) and dividends ($95,000) without external borrowing, and highlights liquidity risk even when reported profit is higher.

Worked example 2

PQR Trading is transferring its accounts to a new computerised system on 1 May 2024. The closing balance of its trade payables control account in the old system at 30 April 2024 was $28,750. After entering the individual supplier balances, a report from the new system shows a total for trade payables of $27,850. The list of balances entered is as follows:

  • Supplier A: $12,300
  • Supplier B: $9,400
  • Supplier C: $6,150

Required:

  1. Calculate the total of the individual balances entered.
  2. Identify the discrepancy between the old control account and the new system's total.
  3. Suggest two possible reasons for this discrepancy.
Show solution outline

This reconciliation is a critical step in ensuring data integrity during the transfer.

Step 1: Calculate the total of individual balances entered To verify the data entry, we sum the individual supplier balances: $12,300(SupplierA)+$9,400(SupplierB)+$6,150(SupplierC)=$27,850\text{\textdollar}12,300 (Supplier A) + \text{\textdollar}9,400 (Supplier B) + \text{\textdollar}6,150 (Supplier C) = \text{\textdollar}27,850 This matches the total reported by the new system, so the error is not in the summation within the new system itself.

Step 2: Identify the discrepancy We compare the total from the new system with the control account balance from the old system.

  • Old System Control Account Balance: $28,750
  • New System Total Balances: $27,850
  • Discrepancy: $28,750 - $27,850 = $900

The trade payables balance in the new system is $900 lower than the control account from the old system.

Step 3: Suggest possible reasons for the discrepancy This $900 difference must be investigated and resolved before the old system is retired. Possible reasons include:

  1. A missing supplier account: A supplier with an outstanding balance of $900 may have been accidentally omitted during data entry.
  2. An incorrect entry: A balance may have been entered incorrectly. For example, a balance of $7,050 might have been entered as $6,150 (a transposition error of $900).
  3. A payment not recorded: A payment of $900 made to a supplier might have been recorded in the old system just before the cut-off but was not reflected in the final list of outstanding invoices used for data entry.
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