The 2023 VCE Accounting exam contained several questions that looked familiar, even comfortable, to most students. These were not trick questions. They were standard formats drawn directly from the Study Design. Yet the Examiner’s Report shows that performance on these questions varied widely, and that many students lost marks for reasons that were subtle rather than obvious.
What follows is a close unpacking of a few of those questions, focusing on what the question was testing, what strong responses did, and where weaker responses went wrong.
Question 1(a): General Journal entries from an inventory card
This question required students to prepare General Journal entries for a sales return and a purchase return using information from an inventory card applying FIFO.
On the surface, this is a routine task. Students practise inventory cards extensively. The difficulty was not in reading the card. It was in translating that information into the correct accounting treatment.
What the question was really testing
The question was not testing FIFO itself. It was testing whether students understood:
- the difference between a sales return and a purchase return
- that a sales return affects both revenue and cost of sales
- that inventory movements must be valued using FIFO when reversing a sale
Students who approached this as “just journal entries” often defaulted to memorised templates without reinterpreting the transaction.
What high-scoring responses did
High-scoring responses:
- correctly identified the transaction as a sales return, not a purchase return
- debited Sales Returns and credited Accounts Receivable for the selling price including GST
- debited Inventory and credited Cost of Sales using the FIFO cost of the returned goods
Crucially, these students recognised that a sales return reverses both the revenue side and the cost side of the original sale.
Where marks were lost
Common errors included:
- recording the return as a purchase return, showing confusion about who initiated the transaction
- reversing Inventory and Cost of Sales, indicating a lack of understanding of cost flow
- using selling price instead of cost price for inventory adjustments
These errors show that students were following patterns rather than thinking through the transaction.
Question 2(a): Establishing a double entry accounting system
This was one of the most poorly performed questions in the exam, despite being foundational.
Students were given information about a business starting a double entry system and asked to prepare the General Journal entry to establish it.
What the question was really testing
This question tested whether students understood:
- the structure of the accounting equation
- how opening balances are introduced into a system
- the difference between assets, liabilities, and owner’s equity
It was not testing transaction recording. It was testing system construction.
What high-scoring responses did
Strong responses:
- correctly debited assets such as Cash at Bank, Inventory, and Equipment
- credited liabilities such as Bank Overdraft and Accounts Payable
- credited Capital for the balancing figure
These students understood that capital represents the owner’s claim on the business after liabilities are accounted for.
Where marks were lost
The Examiner’s Report noted frequent errors such as:
- recording Bank Overdraft as an asset
- omitting Capital entirely
- incorrectly debiting accumulated depreciation
These errors suggest that many students can operate within a double entry system but do not understand how it is formed.
Question 3(b): Explaining the decline in net profit
This question required students to explain why net profit had declined over three years using provided data.
No calculations were required.
What the question was really testing
This was a test of:
- interpretation rather than computation
- understanding of relationships between revenue, expenses, and profit
- ability to link numerical trends to business decisions
What high-scoring responses did
Strong responses:
- identified increased expenses, particularly wages linked to employing a salesperson
- explained that the increase in sales revenue was insufficient to offset higher expenses
- distinguished clearly between gross profit and net profit
These responses showed that students understood how profit is constructed.
Where marks were lost
Weaker responses:
- restated figures without explaining cause
- confused gross profit with net profit
- focused only on sales revenue without considering expenses
This question revealed whether students could move beyond “what happened” to “why it happened”.
Question 5(c): Net cash from operating activities versus net profit
This was one of the most discriminating questions in the exam.
Students were asked to explain why net cash from operating activities often provides more useful information than net profit, using an example from the question.
What the question was really testing
This question tested:
- understanding of accrual accounting
- distinction between cash and non-cash items
- ability to apply theory to a specific scenario
What high-scoring responses did
Strong responses:
- explained that net profit includes non-cash items such as depreciation
- identified that cash flow shows the business’s ability to generate cash from operations
- used an example such as depreciation or inventory write-downs from the question
These responses integrated concept and application.
Where marks were lost
Many students:
- defined net profit and cash flow without comparison
- failed to use an example from the question
- implied that profit and cash were interchangeable
The Examiner’s Report noted that over a quarter of students scored zero on this question, despite it being heavily practised content.
Question 8(c): Explaining carrying value
Students were asked to explain what a carrying value represented.
This was a short question that produced surprisingly weak results.
What the question was really testing
This was testing whether students understood depreciation conceptually.
What high-scoring responses did
Strong responses explained that:
- carrying value represents the original cost of an asset less accumulated depreciation
- it reflects the unexpired economic benefit of the asset
Where marks were lost
Many students:
- stated the formula without explanation
- described depreciation without linking it to asset value
- confused carrying value with market value
This again showed the difference between knowing how to calculate and knowing what something means.
What these questions collectively reveal
Across these questions, the pattern is consistent. Marks were lost not because content was unfamiliar, but because students:
- misinterpreted transactions
- relied on memorised procedures
- failed to explain effects rather than processes
The 2023 exam rewarded students who slowed down, read carefully, and thought like accountants.
How ATAR STAR uses this analysis
ATAR STAR uses detailed unpacking of real exam questions like these to show students exactly how VCAA differentiates performance. This approach supports students who are already strong and students who feel stuck, because the mistakes exposed here are structural rather than personal.
Understanding how these questions work is one of the most reliable ways to improve exam performance in VCE Accounting.