The 2023 VCE Accounting examination was not an unusually difficult paper, but it was an unusually revealing one. The structure of the exam, the distribution of marks, and the patterns reported in the Examiner’s Report all point to the same conclusion. Students who understood Accounting conceptually were able to score strongly across the paper. Students who relied on routine procedures, memorised formats, or instinctive calculation lost marks steadily, often without realising why.
The paper consisted of eight compulsory questions worth a total of 100 marks, covering the full range of Unit 3 and 4 content, with an emphasis on interpretation, justification, and disciplined use of accounting terminology .
Question 1: inventory cards and General Journal entries
Question 1 tested students’ ability to interpret an inventory card using FIFO and then translate that information into General Journal entries for a sales return and a purchase return. This question appears straightforward on the surface, yet the Examiner’s Report shows that it was highly discriminating.
Students who scored well correctly identified the nature of each transaction and adjusted both revenue-related and inventory-related accounts appropriately. For the sales return on 23 January, marks were awarded for recognising that the return affected Sales Returns, GST Clearing, Accounts Receivable, Inventory, and Cost of Sales, reflecting both the revenue side and the cost side of the transaction.
Common errors included recording the sales return as a purchase return, reversing Inventory and Cost of Sales, or misnaming Sales Returns as Sales. These errors indicate that students were reading the inventory card mechanically rather than interpreting the underlying transaction. The Examiner’s Report emphasised that recording journal entries from source documents requires a detailed understanding of the transaction itself, not just familiarity with account names .
The second part of the question asked students to describe one strategy to improve inventory turnover. This was generally well handled, but weaker responses confused inventory turnover with receivables collection or suggested increasing inventory levels to increase sales, which would worsen turnover rather than improve it. This revealed confusion between different efficiency measures.
Question 2: establishing a double entry system
Question 2a required students to prepare a General Journal entry to establish a double entry accounting system. Despite being a foundational task, more than 30 per cent of students scored zero marks on this question.
The most common errors were recording a bank overdraft as an asset, omitting the capital account, or incorrectly handling accumulated depreciation and allowance for doubtful debts. These errors suggest that many students can operate within an established system but struggle when asked to construct the system itself.
The Examiner’s Report made it clear that this was a basic accounting entry that all students should have been familiar with. The poor performance was attributed largely to inattention to detail and misreading of the information provided rather than to difficulty of content .
Question 2b further exposed conceptual weakness. Students were asked to explain one reason for using a double entry accounting system. High-scoring responses focused on how double entry supports the preparation of reliable accounting reports for decision making. Lower-scoring responses described how the system works rather than why it is used, showing a procedural understanding without conceptual clarity.
Question 3: profitability analysis
Question 3 required students to explain why Net Profit had declined over a three-year period using both financial data and contextual information. This question rewarded integration rather than calculation.
High-scoring responses linked declining gross profit margins, rising expenses, and the employment of a part-time salesperson whose cost may have exceeded the additional gross profit generated. Strong students also distinguished clearly between gross profit and gross profit margin, and between net profit and net profit margin.
Lower-scoring responses simply restated figures from the graphs without explaining relationships. The Examiner’s Report noted that students were not required to quote numbers, but to show understanding of how the figures related to each other. This distinction is critical and is repeatedly emphasised in VCAA feedback .
Question 4: cost price, mark-up, and inventory write-downs
Question 4 tested students’ understanding of product costs versus period costs. Students were asked to determine the cost price of a coffee machine and justify their calculation.
High-scoring students correctly included the purchase price and allocated freight as a direct cost of getting the inventory ready for sale, while excluding insurance as a period cost that could not be directly attributed to individual units. Lower-scoring students either omitted freight entirely or provided theoretical explanations without applying them to the scenario.
The inventory write-down later in the question caused significant mark loss. Common errors included reversing debit and credit entries, failing to include the date, or recording the write-down as an inventory loss. The Examiner’s Report noted that one mark was available simply for including the correct date, yet many students missed it by not reading the question carefully .
Question 5: Cash Flow Statement and cash versus profit
Question 5 was one of the most substantial in the paper and tested students’ ability to move between the Income Statement, ledger accounts, and the Cash Flow Statement.
Parts a and b were generally handled well by students who were comfortable with ledger accounts and cash flow structure, although errors in cross-referencing and GST Clearing persisted. These errors were minor individually but accumulated across the question.
Part c was far more discriminating. Students were asked to explain why net cash from operating activities often provides more important information than net profit, using an example from the information provided. Over 25 per cent of students scored zero marks.
High-scoring responses explained the accrual basis of profit, the impact of non-cash items such as depreciation and inventory write-downs, and the importance of cash generation for business survival. Lower-scoring responses provided definitions without explanation or failed to apply the concept to the scenario. This reinforced the Examiner’s repeated message that explanation requires application, not description .
Question 6: balance day adjustments and ledger accounts
Question 6 offered many opportunities for marks, but also many opportunities for small errors. Students were required to post, balance, and close multiple ledger accounts based on balance day adjustments.
Most students gained marks across this question, but few achieved full marks. Errors included incorrect cross-references, failure to close accounts properly, reversal of entries, and imprecise account titles. The Examiner’s Report noted that students who read the question thoroughly and followed instructions closely performed significantly better.
Part b required students to explain the treatment of one balance day adjustment with reference to an accounting assumption. This was generally well handled when students clearly identified the adjustment, named the accrual or period assumption, and explained the effect on the accounts.
Questions 7 and 8: discussion and evaluation
The final questions required discussion of liquidity and evaluation of financial and ethical considerations. These questions were among the better-performed sections of the exam.
High-scoring responses considered both sides of the discussion, used information selectively, and avoided absolute conclusions. Lower-scoring responses failed to provide balance or ignored key contextual constraints such as the owner’s inability to inject further capital.
Question 8c, which asked students to explain what a carrying value represented, was poorly handled. Only 18 per cent of students achieved full marks. Many could identify the figure but could not explain what it represented conceptually. This again highlights the difference between calculation and understanding .
What the 2023 exam tells us overall
The 2023 VCE Accounting exam consistently rewarded students who read carefully, interpreted transactions accurately, and used accounting terminology precisely. It penalised rote procedures, misreading, and shallow explanations.
Most marks were not lost on difficult content. They were lost on basic interpretation, incomplete explanations, and small technical oversights that accumulated across the paper.
How ATAR STAR uses the 2023 exam in preparation
ATAR STAR uses detailed exam analysis like this to help students understand not just what went wrong, but why. We work with students who are already performing well and students who are struggling, because the issues exposed by the 2023 exam affect the entire cohort.
Our focus is on interpretation, decision-making, and alignment with VCAA expectations so that effort across the year translates into exam results.