2013 - Unit 3 - SAC 1A

Question 1.1
Explain:

Discount received from creditors is classified as revenue as it is a decrease in the outflow of economic benefit in the form of a
decrease in liabilities (Creditors control account). This discount decreases the creditors control account and owner's equity
increases therefore it is classified as revenue.
1 mark
Question 1.2
Date
Cross-reference
1-Sep Balance
8-Sep Debtors Control

Cash at Bank
Amount $ Date
Cross-reference
4000
12-Sep Stock Control/GST clearing
180
15-Sep Wages
17-Sep Creditors Control

Date
Cross-reference
4-Sep Stock Control
25-Sep Stock Control

Cost of Sales
Amount $ Date
175
600

Date
Cross-reference
1-Sep Balance
4-Sep Sales/GST Clearing
25-Sep Sales/GST Clearing

Debtors Control
Amount $
Date
Cross-reference
1700
8-Sep Bank/Discount Expense
385
1320

Date
Cross-reference
17-Sep Bank/Discount Revenue
30-Sep Balance

Subsidiary Creditor - Flippers Flooring

Amount $
Date
Cross-reference
1500
1-Sep Balance
880
30-Sep Stock Control/GST Clearing

Cross-reference

2380
1-Oct Balance

Amount $
440
200
1425

Amount $

Amount $
200

Amount $
1500
880

2380
880
9 Marks

Question 1.3
Explain:

The effect of the transaction on the 30th of September would be an increase in the assets in the
stock control account by $800. The liabilites would also increase by $880 in the Creditors control
acount as well as decreasing the GST Clearing account by $80. THis is an overall increase by
$800 for the liabilites. Owner's equity would remain unchanged.

3 marks
Question 1.4
Explain:

The benefits of using a system of control and subsidiary ledgers is to improve the reliability of
reports, by having double-checking mechanisms. A double-checking mechanism is that the
balance of the control account (creditors or debtors control) should equal the total of the
individual subsidiaries (totalled as the creditors/debtors schedule). Another benefit relates to the
accounting principle of relevance, where the system of control and subsidiary ledgers allows only
one total that is posted to the BALANCE SHEET. THis makes the information accurate and easier
to post for decision-making. The third benefit is the allocation of responsibility is divided with the
individual subsidiaries. The resposibility can be split amoungst employees, improving the
effieciency

3 marks

Question 1.5
Cash Payments Journal
Date
Details
15-Sep
Wages
17-Sep Flippers Flooring

Chq no
39
40

Bank
200
1425

Disc Rev

Cash Receipts Journal

Date
Details

Rec no

Bank

Disc Exp

Debtor

Inv

Ablett's Rugs

A346

Cost of
Sales
600

Inv
G45

Stock
800

Sales Journal
Date
25-Sep

Ourchases Journal
Date
Creditor
30-Sep
Flippers Flooring

Stock

Wages
200

Sundries

GST

Debtors

Cost of
Sales

Sales

Sundries

GST

Sales

GST

Debtors

1200

120

1320

GST
80

Creditors
880

75

Creditors
1500

4 marks

Question 2.1

Current Assets
Stock Control
Debtors Control
Non-current Assets
Premises
Fixtures and Fittings

Pang Perfect Poisons

$
Current Liabilities
2300
Bank
400
2700 GST Clearing
Loan - WBC
Creditors Control
15000
13000
28000 Non-current Liabilities
Loan- WBC
Owner's Equity
Capital

30700

$
4000
300
4000
1000

9300

11000

11000

10400

30700

Question 2.2
Explain:

Lisa's home loan is not included in the Balance Sheet due to the Accounting Principle of Entity. The business is assumed to be
separate from the owner and other entities and the records of the business are kept on this basis. The home loan is a personal
liability and therefore is not recorded in this business document.
3 marks

Question 2.3
State
Reason 1:

The GST account may have a debit balance if a large amount of stock was purchased and not yet been sold. The debit balance
reveals that more GST on purchases and payments has been made then GST on sales.

Reason 2

Another reason is if the business has recently purchased an expensive non-current asset and therefore has made a large amount of
GST on purchases, therefore the GST is an asset.

2 marks

Question 3.1
Date
Cross-reference
1-Dec Balance
31-Jan Cash Receipts

Cash at Bank
Amount $
Date
Cross-reference
4000
31-Jan Cash Payments
10650

Amount $
5450

Date
Cross-reference
1-Dec Balance
31-Jan Bank
Creditors Control

GST Clearing
Amount $
Date
Cross-reference
120
31-Dec Bank
350
Debtors Control
330

Amount $
750
660

Date
Cross-reference
31-Dec Bank/Discount Revenue
31-Dec Balance

Creditors Control
Amount $
Date
Cross-reference
1400
1-Dec Balance
3430
31-Dec Stock Control/GST Clearing

Amount $
1200
3630

4830

4830
3430

1-Jan Balance

Date
Cross-reference
1-Dec Balance
9-Dec Sales/GST Clearing
21-Dec Sales/GST Clearing

Subsidiary Debtor - Rachel

Amount $
Date
Cross-reference
750
10-Dec Bank/Discount Expense
3300
7260

Amount $
2500

9 marks

Question 3.2
Explain:

There is no effect on the valuation of stock of GST charged by a supplier. This is because
REVISE THIS

2 marks
Question 3.3
Explain:

The benefits of a Creditors Schedule is that the individual transactions can be totalled and
should equal the balance of the Creditors Ledger. This improves the internal control and the
accuracy of the accounting reports which makes it more reliable.

2 marks
Question 3.4
Explain:
Recording transations in special journals can increase effiency as similar transactions can be
grouped together. Each journal contains these transactions which can then be recorded in the
General Ledger more easier as the special journals decrease the amount of entries required. This
improves the efficiency of the accounting process.

2 marks
Question 3.5
Explain:

Shona should not treat the receipt of cash from debtors as revenue in the current reporting
period. While it does increase the inflow of economic benefi and also increases assets
(bank); it does not increase owners equity. This is because the debtors control decreases as
well as increases GST CLEARING DUE TO THE GST RECEIVEDAND OWED TO THE ATO. IT IS
NOT RELEVANT AS IT DOES NOT INCREASE THE INFORMATION USED TO MAKE DECISIONS>

3 marks
Question 3.6
State:

Transaction 1:
GST Refund
Transaction 2:
Purchase of Stock ON CREDIT
2 marks