Dennis Raymond Walker is accused of engaging in sexual acts with a child aged around seven, and then threatening to "shoot her family" if the girl told her parents about the alleged abuse.

During his District Court trial on Tuesday, the court heard the 67-year-old engaged in sexual acts on two occasions with the young girl, at one point showing her a pornographic DVD and urging her to "copy" it.

Walker has pleaded not guilty to four counts of sexual intercourse with a child under the age of 10 and one count of indecent assault.

The allegations stemmed from 2008 or 2009.

In a video recording of the child's police interview played to the court, she told police that Walker had threatened her at the time of the alleged attack: "If you tell your parents, I will shoot your family."

He also told her to "do as I say", forced her to undress and later kiss him on the lips, she said.

In the recording, the girl said Walker had a job "where he takes money from the school and takes it to the bank" and carried a gun for that reason.

She said she had seen him with a gun in a "holder", but admitted she "wasn't sure" about it on cross-examination.

The girl's mother gave evidence she had seen Walker with a "handgun" on more than one occasion, believing it to be a necessary part of his "security" work.

She told the court that during the time she knew Walker he was part-owner of a massage parlour in Sylvester Ave, Unanderra, and worked at a second massage parlour in Wollongong, Studio 55 - both of which offered sexual services.

During cross-examination, barrister Peter Pearsall suggested to the girl the complaint against Walker was false.

The court heard the girl had a "strained" relationship with her mother, who the defence alleged called the girl an "effing idiot" at times.

The girl agreed she was sometimes scared of her mother, who was occasionally moody, but she denied ever being punched, kicked or bitten by her.

This was contradicted by evidence from her father, who recalled the girl telling her school counsellor she had been punched in the bottom and kicked in the groin by her mother.

Mr Pearsall suggested the girl had seen sexually explicit images on TV at her mother's work or a sexually explicit animation that a sibling had downloaded to a home computer, which she denied.

In his opening address earlier in the day, Mr Pearsall told the jury "not to jump to any conclusions" until all the evidence was heard.

He told them Walker had no criminal record and had co-operated with police.