Mark Scheme Summer 2007

GCE

GCE Accounting (8011/9011)

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Summer 2007 All the material in this publication is copyright Edexcel Ltd 2007

Contents 6001 Unit 1 Mark Scheme04 6002 Unit 2 Mark Scheme20

8011-9011 GCE Accounting Summer 2007

Unit 1 Mark Scheme Question 1 (a) Nutwell Book Club Book trading account for the year ended 30 April 2007 Book sales 19 980 less Opening stock of books 1 650 Book purchases 16 700-2 750+4 400 18 350 (one for each correct adjustment) 20 000 Closing stock of books 2 100 Cost of sales 17 900 Profit on book sales 2 080 Income and expenditure account Profit on book sales 2 080 Subscriptions 8 100 +540 - 70 -420 +95 -1 080 7 165 (one for three, two for four, three for Investment income 20 +40 60 five or 8245) 9 305 1 200 310 1 610 600 2 000 2 120 1 650 250 9 740 435

less Mortgage interest 1 100+100 Insurance 320 +25 35 Electricity 1 410 -150 +350 Accounting fees Redecoration Depreciation premises - fixtures Visiting speakers Deficit

8011-9011 GCE Accounting Summer 2007

Balance sheet as at 30 April 2007 Fixed assets Premises 98 000 + 5 880 Fixtures and fittings Current assets Book stock Investment account Subs in arrears Insurance prepaid Investment income due Bank Current liabilities Book creditors Building creditors Subs in advance 420 + 1 080 Electricity accrued Mortgage interest accrued Net current assets less Mortgage Accumulated fund Deficit 103 880 9 350

113 230 2 100 2 000 95 35 10 6 445 10 685 4 400 8 000 1 500 350 100 14 350 (3 665) (18 000) 91 565 92 000 (435) 91 565 (16)

(b) Market price

is different from cost (2)

(c) The accrual (matching) concept apportions the value of capital items which will be used for more than one accounting period to those accounting periods on the basis that cost is matched to the benefit gained. In the case of a premises extension this is capital expenditure and the benefit will be received for a number of years and therefore the cost should be apportioned to those years by matching only a small element of the cost to each year. Capital In the case of the redecoration of the premises, this is revenue expenditure because there is no long term addition to the premises and therefore the whole of the expenditure will be charged to the year of expenditure and the accruals concept will not apply. Revenue (4)

8011-9011 GCE Accounting Summer 2007

(d) Evaluation Valid points may include: Benefits: Cash received early May result in lower borrowings and savings in interest Members maintained for 10 years No collection costs for 10 years. Disadvantages: Cash received in single payment will be low to tempt members to pay for ten years in a single payment. Liability to provide services long after the cash has been spent. For each benefit or disadvantage x 3 MAX two benefits or disadvantages For decision if supported by rationale (4) (Total 26 marks)

8011-9011 GCE Accounting Summer 2007

Question 2 (a) Eclipse manufacturing account for the year ended 30 April 2007 Regular Premium Total Opening stock of raw materials 48 000 Purchases of raw materials 176 000 224 000 Closing stock of raw material 49 000 Raw materials consumed 100 000 75 000 175 000 or 4x if no workings above Direct labour 88 000 102 000 190 000 PRIME COST 188 000 177 000 365 000 OF if RM + DL Factory overheads: Management salaries Premises and general running Depreciation W.I.P at start at end MANUFACTURING/PRODUTION COST 309 600 334 000 643 600 OF 30 000 60 000 32 000 122 000 8 600 (9 000) (400) 36 000 80 000 41 500 157 500 10 500 (11 000) (500) 66 000 140 000 73 500 279 500 19 100 (20 000) (900)

one each one each

Balance b/d Creditor/Bank

200 000 80 000 280 000

Machinery account Disposal balance c/d

50 000 230 000 280 000

Disposal Balance c/d

Machinery provision for depreciation account 12 500 Balance b/d 100 000 129 000 Profit and loss 41 500 141 500 141 500 Disposal account

Machinery

50 000

Depreciation Creditor Loss

12 500 20 000 17 500

50 000

OF if 3 other items 50 000 included in account (16)

8011-9011 GCE Accounting Summer 2007

(b) Characteristics: Expense is a fixed cost or contains a high fixed cost element, e.g., rent. Expense does not vary with levels of production. Expense is an indirect cost and therefore cannot be directly related to a product. Cost has to be absorbed into product cost. per point for recognition plus per point for development x 3 (6) (c) Evaluation: Valid points may include: Benefits: Straight line is simpler to operate. Gives equal depreciation for equal benefit received in each year. Does not distort profit with higher levels of depreciation in early years. Disadvantages: Machinery will lose more value in early years of ownership than later years. Balance sheet values may not be in line with market value of machinery. Total costs of ownership will increase using straight line as maintenance costs rise as the asset becomes older for recognition x 3 ( MAX 2 benefits or disadvantages). for decision based upon a valid rationale. (4) (Total 26 marks)

8011-9011 GCE Accounting Summer 2007

Question 3 (a) Journal Purchases Office stationery Returns inwards Debtor Bank Suspense Rent receivable Discount received Creditor/supplier Debtors Sales Bad debts Debtor (b) Purchases ledger control account Returns outward Bank 950 33 200 ( Balance b/d Purchases (29 470+1 200) OF) 55 980 Sales ledger control account Balance b/d Sales (68 650 + 4 000) Dishonoured cheques 36 400 72 650 1 450 110 500 Returns in (900 + 2 800) Bad debts (2 100 + 1 500) Bank Balance c/d 3 700 3 600 63 000 40 200 110 500 one each adjustment ( OF) (10) Mark number only 25 310 30 670 one each adjustment Dr 1 200 Cr Account + entry 1 200 2 800 2 800 400 122 522 20 20 4 000 4 000 1 500 1 500 (8) Account one entry one ,

Discount received (850 20) 830 Balance c/d 21 000 55 980

8011-9011 GCE Accounting Summer 2007

(c)

Limitations of trial balance: Does not reveal errors if one account has been debited and another account credited with the same value. If transaction omitted from the accounts the trial balance will not record the error. Provides a summarised position for many creditors and debtors which may contain many errors. Only records the position as at a point in time. per limitation x 2 Errors of principle One account has been correctly posted but the other account is incorrect because the wrong class of account has been posted e.g motor vehicles instead of motor expenses. Error of reversal Both accounts have been incorrectly posted with the debit entry credited and the credit entry debited. e.g debit sales credit the debtor. (4)

(d) Valid points may include: Benefits of control accounts: Control accounts act as a check against the total of debtors or creditors. Act as a protection against fraud. Reveal errors such as incorrect addition Disadvantages The control account will not identify errors in individual accounts. Considerable additional work will be required to pinpoint errors. Errors not revealed by the trial balance will not be revealed by the control accounts. for recognition x 3 ( MAX 2 benefits or disadvantages). for decision based upon a valid rationale. (4) (Total 26 marks)

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Question 4 (a) Realisation Account Fixed assets 127 000 Current liabilities Current assets 58 400 Hameed - vehicle Profit on realisation: Bank Gill 33 000 Hameed 22 000 240 400 Capital accounts Realisation Bank Hameed 30 700 93 000 71 300 93 000 102 000 Gill Balance b/d Realisation Gill 60 000 33 000 93 000 Hameed 80 000 22 000 102 000 9 700 30 700 200 000
_________

240 400

OF

Bank account Balance b/d Solar Systems 4 300 200 000 204 300 Loan Capital: Gill Hameed 40 000 93 000 71 300 204 300 (8) (b) (i) The balance sheet will record the values of the tangible assets. Solar Systems will be prepared to pay more than the net value of the tangible assets if they believe that there are intangible assets known as goodwill. Value of business above not value of tangible assets Examples of goodwill could: Location of the business Established customers Product being offered

x 2 for examples

(ii) Asset that becomes realised on sale of business To enable the asset to be split between parties x2 (6)

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(c) Valid points may include: Benefits: Clear statement of how the partners will work together and their responsibilities. Clear agreement of how profit will be apportioned Less room for disputes at a later date. Disadvantages: Generally requires legal services to prepare. If not prepared provisions of 1890 Partnership Act imposed. benefit disadvantages (2) (Total 16 marks)

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Question 5 (a) Gross profit to sales % Stock turnover Fixed assets to sales Current ratio Liquid ( acid test) Jameel 180 x 100 =36% 500 320 = 8 times 40 500 =2.17 per 1 230 of sales or 46% 140 = 2:1 70 95 = 1.36:1 70 Kalid 160 x 100 = 32% 500 340 20 = 17 times

500 = 2.50 per 1 200 of sales 75 = 0.6:1 125 60 = 0.48:1 125

or 40%

(8) (b) Profitability is the ability to make an surplus of income as measured by sales turnover less costs/expenditure as measured by the total costs/expenditure incurred during an accounting period. The profit is then measured against a yardstick of sales or capital employed to generate that profit to ensure its sufficiency. (2) (c) Customer Jameel More stock in evidence. More/newer fixed assets Less on expenses service may be slower. for recognition x 2 Creditor Good current ratio Good acid test ratio Funded by long term debt Low risk to provide credit for recognition x 2 (4) Very poor current ratio Poor acid test ratio Funded by short term creditors High risk to provide credit. Kalid Minimal stock available. Fewer/older fixed assets More on expenses service May be quicker. No OF

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(d) Valid points may include: Benefits Provides a yardstick against accepted standards e.g current ratio Provides a yardstick against other similar businesses. A quantitative objective measure. Disadvantages Does not take account of state of assets e.g probability of debtors paying. Does not take account of non financial factors e.g skill of workforce or management. Benefit Disadvantage (2) (Total 16 marks)

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Question 6 (a) Fixed cost A cost which tends to be unaffected by variations in volume of output. e.g business rent or rates. Semi fixed cost A cost which is partly fixed and partly variable (b) Cost of mini digger Depreciation 6 000 Maintenance 3 000 Labour 2 hrs @ 20 Gen overhead 6 000 Daily cost of mini digger Cost of Greg Labour 8 2 hours @ 20 Daily cost inc Greg Alternative: Depreciation Maintenance Salary Gen overhead Per Day Digger 2 500 1 250 2 000 2 500 8 250 50 165 Digger + Driver 3 500 1 750 40 11 200 3 500 19 950 70 285 (6) (c) (i) The rate charged of 250 per day for the digger alone, compared to a cost including the time of Greg seems high. The rate charged for Greg of an additional 100 (350-250) seems low compared to the above additional cost of 120 (285-165) for recognition x 2 (ii) Vary his pricing to reflect actual cost. Reduce cost of digger hire but increase operator cost. By reducing costs overall increase demand and spread fixed costs over greater level of activity. Spare capacity Digger currently used only 120 days out of approx 250 working days available. for recignition x 2 (4) per day 50 25 40 50 165 120 285 e.g telephone. (4)

OF if all costs present OF if all costs present

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(d) Valid points may include: Benefits: Calculate current costs accurately. Project impact of different levels of activity. Link costing to financial accounts. Disadvantages: Cost of employing an accountant disadvantage Personal time commitment in dealing with accountant. for benefit disadvantage (2) (Total 16 marks) for benefit

for a

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Question 7 (a) Provision for doubtful debts account 170 Balance b/d 1 120 950 1 120 1 120 Rent receivable account 475 Bank 270 Bank 1 925 Bank Bank Balance c/d 2 670 Telephone account Balance b/d 480 Western telephones 2 060 Blue phones 2 000 Balance c/d 320 4 860 Balance b/d Profit and loss Balance c/d 160 4 450 250 4 860 (10) (b) (i) A provision for doubtful debts prudently withholds profit where debtors payment is in doubt. The value of debtors in the balance sheet is reduced by the value of the provision therefore not overstating the projected value (i) The accruals concept attempts to match all expenditure to the accounting period that it will be used up. The materiality concept attempts to write off expenses in the period in which they are paid unless in so doing this would distort the calculation of profit. Therefore, for small expenditures which will be used up over more than one accounting period, the concepts are in conflict. (MAX 4)

Profit and loss Balance c/d

Balance b/d Suspense Profit and loss

475 475 745 475 500 2 670

Could be 2170

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(c) Valid points may include: Benefits Provides a framework for preparation. Accounts of different businesses can be compared. Profit calculations can be relied upon. Disadvantages Concepts can be in conflict with each other. Requires professional skills to implement. each point x 3 ( MAX 2 benefits or disadvantages). for decision based upon a valid rationale. (2) (Total 16 marks)

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ASSESSMENT GRID Question 1 (a) (b) (c) (d) 2 (a) (b) (c) 3 (a) (b) (c) (d) 4 (a) (b) (c) 5 (a) .(b) (c) (d) 6. (a) (b) (c) (d) 7 (a) .(b) (c) TOTAL % PAPER % SPEC 32 2 3 2 2 4 2 2 1 2 2 AO1 4 2 2 4 4 3 4 2 3 2 4 2 2 2 2 4 2 50 35 20 AO2 7 2 4 7 2 5 4 3 3 4 3 2 2 1 2 2 2 2 4 2 44 32 34 2 2 28 19 1 20 14 100 AO3 5 AO4 Total 16 2 4 4 16 6 4 8 10 4 4 8 6 2 8 2 4 2 4 6 4 2 10 4 2 142 100

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Unit 2 Mark Scheme Question 1 (a) (i) Profit and Loss Appropriation Ordinary Share Dividend Ordinary Share Dividend Bank (ii) Profit and Loss Appropriation Preference Share Dividend (iii) Profit and Loss Appropriation General Reserve (iv) Profit and Loss Appropriation Provision for Licence Fee (v) Ordinary Shares of 1 Bank Profit and Loss Appropriation Capital Redemption Reserve (vi) Trading & Profit and Loss Stock (b) Authorised Share Capital Ordinary Shares of 1 100 000 8% 1 Preference Shares Issued Share Capital Ordinary Shares of 1 8% 1 Preference Shares Capital Redemption Reserve Profit and Loss Reserve General Reserve Debit 20 000 Credit 20 000 20 000 20 000 8 800 for 8800 50 000 50 000 120 000 120 000 100 000 100 000 100 000 100 000 8 000 8 000 9 marks 800 000 100 000 400 000 80 000 100 000 128 200 70 000 C

8 800

} }

Total Shareholders Interest

778 200

o/f 7 marks

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(c) Calculation of Gearing Ratio Gearing Ratio = Debt_____ Debt + Equity x 100

___________300 + 80_____ _____ x 100 300 + 80 + 400 + 100 + 128.2 + 70 o/f = 380 1078.2 x 100 = 35.2 % o/f

Also accept: If Licence Fee transferred to Reserve: Debt_____ Debt + Equity = 380 x 100 1198.2 = 31.7% Using a different formula: Debt Equity = 380 x 100 698.2 = 54.42% If Licence Fee Transferred to Reserve: Debt Equity = 380 x 100 818.2 = 46.4% 4 marks

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(d) Evaluation of redeeming ordinary shares ; Answers may include : Case For : Leaves a gearing ratio of 35.2 % o/f which is medium/ low / not over 50% Redemption will improve the figure for ROCE or EPS Future dividends / cash leaving the company may be reduced. But shareholders probably receive higher dividends per share in the future which may keep them happy Company may have surplus funds / excess working capital etc so may afford / be in a position to redeem Case Against : Leaves a gearing ratio of 35.2 % could have been lower without redemption Company may not have surplus funds / excess working capital etc so may not afford/ be in a position to redeem May upset shareholders who receive lower future dividends overall as they have less shares Or who have stayed loyal when times were leaner eg last year The funds used to redeem may be needed for company growth etc Maximum for arguing one side only = 4 marks Conclusion Should reflect / relate to above. 6 marks Total 26 marks

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Question 2 Profit and Loss Account for Achilles plc for Year Ended 31st March 2007 Turnover Cost of sales Gross profit Distribution costs Administrative expenses Other operating income Other investment income Interest payable 1850000 589500 1260500 431240 221250 1850 11650 25000 C C C o/f o/f

W1 Cost of Sales Direct Labour Direct materials Research + Devlmnt Factory Deprctn Stock Adjust W2 Distribution Costs Advertising Commission on sales Shop Rent Motor Lorries Depctn Lorry Drivers Wages Shop staff wages W3Administrative Expenses Bad Debts Written Off Legal Fees Office staff Managing director Finance Director

270000 195000 49000 80000 -4500 589500 18240 8500 84000 67500 65000 188000 431240

}
3

} }

250 14000 112000 52000 43000 221250

}
}

Profit on ordinary activities before tax Corporation tax Profit on ordinary activities after tax

596510 100000 496510 7 marks

o/f C W4 Interest Payable o/f Bank Overdraft Debenture TOTAL 3400 21600 25000 11 marks 18 Marks 2

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Question 2 (b) (i) The sports book shops should be shown as a Discontinued Operation in the accounts next year. All revenues and expenses relating to these should be shown separately. 2 marks (b) (ii) Benefits This will benefit users of accounts because they can see that profits or losses from the Discontinued Operations will not be expected to be realised in the future. This allows reader to predict more accurately future expected performance. This may help future potential investors / shareholders / creditors etc with decision making. Should be beneficial if required to be shown by Accounting Standards / FRS3. Disadvantages Adds more figures and details to the accounts so makes them more difficult to understand. Maximum for arguing only one side 4 marks

Evaluation Should conclude that it is beneficial to show Continued and Discontinued Activities. 12 x = 6 marks

TOTAL 26 Marks

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Question 3 (a) (i) Calculation of Purchase price for The Look Buildings Machinery Fixtures and Fittings Vehicles Stock Debtors Bank Cash Goodwill Creditors Purchase Price (a) (ii) Purchase Price 567 000 1.25 (b) Buildings Fixtures and Fittings Vehicles Stock Bank Cash Sundry Shareholders (Profit on Realisation) Femme Fatalle Realisation Account 400 Creditors 80 Feeling Good 30 (Purchase Consideration) 25 37 28 o/f 210 The Look 450 40 22 45 80 26 6 3 40

} }

(145) 567

o/f 4 marks

= 453 600 shares 1 mark

46 764

810

810 4 marks

Femme Fatalle Sundry Feeling Good 764 (Purchase Consideration 611 200 shares at 1.25 each)

Shareholders Account Share Capital Share Premium Profit & Loss Account Realisation Account (Profit on Realisation)

300 50 204 210

o/f

764

764

4 marks

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(c) Balance sheet of Feeling Good Limited as at April 1st 2007 Buildings Machinery Fixtures and Fittings Vehicles Goodwill Fixed Assets Total Stock Debtors Bank Cash Current Assets Total Creditors Working capital Net Assets Ordinary Shares of 1 each Share Premium Capital Employed Feeling Good Limited 1010 40 82 75 115 1322 100 26 43 31 200 191 9

} }

1331 1064.8 266.2 1331 7 marks

(d) Evaluation of merger Possible answers could include: For Merger Shareholders in Femme Fatalle receive a profit on realisation of 210 000 also Goodwill valuation of 75 000 New company should enjoy benefits of vertical integration as in same line of business. New company could enjoy economies of scale eg bulk buying Against Merger Dilution of ownership/voting power The Look do not appear to be in a healthy financial state. Original balance sheet appears to have many assets overvalued . Also liquidity position is worrying as they appear to have no working capital before adjustments . The Look may be a drain on the liquid resources of the new company, especially with the large amount of creditors to pay. We do not know the market price of the Femme Fatalle shares. We do not know what the market price of Feeling Good shares are likely to be. (Maximum of 4 marks for argument if candidate argues only one side of argument) Evaluation Should conclude and relate to points made above.

6 marks Total 26 marks

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Question 4 Years 1 Normal Years 1 Special Year 2 Year 3 Normal Year 3 Special Year 4 Year 5 Depreciation Running Expenses Year Year Year Year Year 1 2 3 4 5 23 3 23 3 5000 5000 5000 5000 0.8 0.9 0.8 0.9 15 20 18 24 1,380,000 270,000 1,656,000 324,000 1,650,000 1,650,000 1,980,000 Totals 1,980,000 1,980,000 316,000 o/f

8000000 400000 1650000 1650000 1980000 1980000 1980000

100000

7900000

25

84,000 84,000 104,000 104,000 104,000

1,566,000 1,566,000 1,876,000 1,876,000 1,876,000

1,566,000 3,132,000 5,008,000 6,884,000 8,760,000

} }

Payback is after

4 years

1,116,000 1,876,000 o/f

12

4 years

7.14 months

o/f 12 Marks

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Question 4 b) For Investment Pay back is after 4 years and 7 months which is within the five year period the directors require, so invest. (Could be conclusion) There are also years after the payback period which should be profitable as well. Against Investment Figures are only estimates. Figures may depend on how well the team is doing which is most important factor. Question where the 8 million is coming from. Will this huge outlay mean other areas of the club have to suffer shortage of funds eg team, or training facilities etc Pay back does not take into account the falling value of money over time unlike NPV Maximum of 2 marks if candidate argues for only one side Conclusion whether to invest or not and should relate to points made above. 4 marks

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Question 5 (a) Identifying Limiting factor J 150 2 300 1 150 K 150 1 150 0.5 75 L 200 1.5 300 1.5 300 M 100 2.5 250 1 100 TOTAL

Sales Possible Labour Hours per Item Total Labour Hours Machine Hours per item Total Machine Hours

1000 Not >1000 so Not LF > 500 625 so LF 4 marks

(b) Product Selling Price Variable Costs Contribution per unit Machine hours Contribution per machine hour Rank Order Sales Possible Machine hours required Optimum production hours Optimum production Contribution J 19 10 9 1 9 2 150 150 150 150 1350 K 9 5 4 0.5 8 3 150 75 50 100 400 L 24 9 15 1.5 10 1 200 300 300 200 3000 M 15 12 3 1 3 4 100 100 0 0 0 6 marks o/f

(c) Total contribution = 4 750

- Fixed Costs 2 500 =

Profit for week 2250

Also accept: (Sales Variable Costs) Fixed Costs = Profit (8 550 - 3800) - 2 500 = 2 250 2 marks (d) Total labour hours needed for optimum production J K L Lab Hours 300 100 300

M 0

Total 700

Therefore only 700 = 14 direct labour workers required 50 Therefore 6 direct labour workers not required could be laid off. Or, each worker may have to work less hours (ie 35) hours per week If workers are skilled they may have to be carried until production increases If a way can be found to increase production in the long run the 6 workers could be reinstated hours increased 4 marks (Total 16 marks)

or

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Question 6 (a) Jupiter Neptune Saturn Total Sales Budget for 6 months July to December July Aug Sept Oct Nov 3 3 3 3 6 2 2 2 2 4 4 4 4 4 6 9 9 9 9 16

Dec 12 8 9 29 o/f 4 marks

(b) Jupiter Neptune Saturn Total Production Budget for 6 months July to December July Aug Sept Oct Nov 3 6 6 6 6 2 2 4 5 5 4 5 6 6 6 9 13 16 17 17 Dec 3 2 4 9 o/f

Apply pro rata for Neptune and Saturn ie need 3 correct for one 6 marks (c) Total Stock Budget for Chocolate Crumb for 6 months July to December July Aug Sept Oct Nov Dec 18 26 32 34 34 18 o/f Apply o/f rule 2 marks (d) Evaluation of holding minimum stock policy. For Reduces costs of holding stock. Eg rent, security, electricity, insurance for 2 examples. Helps cash flow situation as little cash tied up in stock. Unwanted stock may deteriorate or go past sell by date etc or stays fresh Against Possibility of running out of stock which may mean sales are lost and profit. and / or production has to stop if part/component. Increases in demand may mean firm does not have enough stock to meet demand Maximum of 2 marks if argument applies only one side. Conclusion / Evaluation Should relate to points made above 4 marks Total 16 marks

Apply pro rata ie need 3 correct for one

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Question 7 (a) Production Direct Materials Direct Labour Fixed Overheads Total Cost of Production Budget 6 600 21 120 54 780 2 300 78 200

o/f

3 marks (b) (i) Materials Price variance = (Standard Price - Actual price ) x Actual Quantity = (0.80 - 0.78) x 26 400 = 528 Fav 3 marks (ii) Labour Rate variance = (Standard Rate - Actual Rate) x Actual Hours = (4.15 - 4.24) x 13 200 = 1 188 Adverse 3 marks (c) Possible causes of material price variance favourable (o/f) Purchasing dept/buyers negotiated strongly World price of material/cotton was lower than expected after budget prepared Supplier offered us unexpected discount as part of sales drive New supplier in market offered low price to gain customers Supply in market high due to good harvest / weather / new firm etc Poor quality materials supplied 3 marks (d) Evaluate how well the budget has been set : Answers could include the following: Well Set Overall variance is only 660 Adverse out of total of 78 200 ie accurate - Less than 1% error rate. Variance of only 528 favourable on materials ie accurate - 3% error rate Variance of only 1 188 adverse on labour ie accurate - 2.6% error rate No variance on fixed overheads, material usage, or labour efficiency (need any 2) Poorly Set Production was 20% more than planned so not well set. Before flexing the budget, the variances are large. This could impact seriously on cash flow future production etc If argue only one side then maximum of 2 marks for argument Overall evaluation / Conclusion Should relate to points above 4 marks Total 16 marks

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