The Independent Institute of Education 2017

MODULE NAME: MODULE CODE:

ACCOUNTING 1A ACBP5111
ACCOUNTING 1A ACBP5111d
ACCOUNTING 1A ACBP5111e
ACCOUNTING 1A ACBP5111f
ACCOUNTING 1A ACBP5111p

ASSESSMENT TYPE: TEST (PAPER ONLY)

TOTAL MARK ALLOCATION: 60 MARKS
TOTAL HOURS: 1 HOUR (+5 minutes reading time)
INSTRUCTIONS:
1. Please adhere to all instructions in the assessment booklet.
2. Independent work is required.
3. Five minutes per hour of the assessment to a maximum of 15 minutes is dedicated to
reading time before the start of the assessment. You may make notes on your question
paper, but not in your answer sheet. Calculators may not be used during reading time.
4. You may not leave the assessment venue during reading time, or during the first hour or
during the last 15 minutes of the assessment.
5. Ensure that your name is on all pieces of paper or books that you will be submitting. Submit
all the pages of this assessment’s question paper as well as your answer script.
6. Answer all the questions on the answer sheets or in answer booklets provided. The phrase
‘END OF PAPER’ will appear after the final set question of this assessment.
7. Remember to work at a steady pace so that you are able to complete the assessment within
the allocated time. Use the mark allocation as a guideline as to how much time to spend on
each section.
Additional instructions:
1. This is a CLOSED BOOK assessment.
2. Calculators are allowed.
3. Answer all questions.
4. Ensure that you have received a special answer booklet (with forms drawn up) for entering
your answers. If you have not received an answer booklet, request one from the invigilator
before starting the assessment. Answer all questions in the answer booklet provided.
5. Show all calculations, where applicable (marks may be awarded for this).

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Question 1 (Marks:5)
Complete the following table by marking the appropriate column with an X in your answer book to indicate the type of account each of the following are,
and indicate if the specific account will have a debit (DR) or credit (CR) balance in the general ledger.

Name of account Debit (DR) or Type of account

Credit (CR) Non-current Current Non-current Current Income Expense Proprietary
balance asset asset liability liability account
Example: Petty cash DR X
Long–term loan
Traffic fines
Commission received
Drawings
Bank (favourable)

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Question 2 (Marks:20)
Q.2.1 Calculate the profit or loss made by Masisi Wholesalers during January 2017 (5)
assuming that:

1 January 2017 31 January 2017

Total assets R233 415 R347 187
Total liabilities R150 000 R207 570
Owner’s equity R83 415 ?

Assume that the owner contributed capital of R50 000 to the business during
January 2017, and that no drawings were made.

Your answer must indicate clearly if it is a profit or loss, and all workings must be
shown.

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Q.2.2 Jones Wholesalers entered into the following transactions during February 2017. (15)
They make use of the perpetual inventory system.

Date Details
1 The owner contributes computer equipment worth R15 000 to the business.
2 The business acquired a loan from Capitec bank R30 000.
11 Purchase trading inventory for R15 500 and pay cash.
18 Sell goods on credit for R9 300. Goods were sold at a mark-up of 20% on cost price.
22 The owner draws money from the business’s bank account and pays his private water and
electricity account R635.
27 Receives R4 650 from a debtor, refer to the transaction on the 18th.

Required:
Calculate Ms Jones’s equity in her business on 28 February 2017, by showing the effect of each
individual transaction on the accounting equation (A=OE+L). IGNORE VAT.
For each transaction show:
 If the assets, equity or liabilities will increase (+) or decrease (-); and
 By what amount.

Hint: Ensure that after each transaction your accounting equation A=OE+L is true, and remember
to total the effect of the transactions in order to arrive at the amount of owners equity.
Round all amounts to nearest rand.

Example:

Pay bank charges of R75.

No. Assets = Owner’s Equity + Liabilities
E.g. -75 -75

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Question 3 (Marks:20)
Required:
Read the paragraphs below carefully and then answer each of the questions that follow. Make
sure that your answers are applicable to the scenario described in the paragraphs.

Your sister runs a business as a sole trader. She has recently been offered the opportunity to
grow her business and expand it into other areas. To date she has kept no journals or general
ledgers and her accounting system consists of three shoe boxes. One containing duplicate
invoices issued by your sister to customers, one containing original invoices received from
suppliers and others, and one containing the business’s bank statements reflecting all cash
received and paid by her business.

She wants to approach your wealthy uncle to provide additional capital to help her grow her
business. She has realised that she needs to improve on her accounting systems and record
keeping, and she has asked you to help her with each of the following issues:

Q.3.1 Explain to her why investors would be interested in her financial information. (3)

Q.3.2 Explain to her what the difference is between relevant information in financial (4)
statements, and reliable information in financial statements.

Q.3.3 Name one (1) other qualitative characteristic of financial statements prepared in (1)
accordance with IFRS.

Q.3.4 She needs to implement a basic bookkeeping and accounting cycle to ensure the (4)
proper recording of her business’s transactions.

List the four (4) steps in the monthly bookkeeping cycle preceding the trial balance
summarising the general ledger, which she needs to implement on a monthly
basis.

Q.3.5 Explain to her how to calculate her business’s “worth.” (2)

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Q.3.6 She has heard both the terms mark-up and gross margin. Calculate what both the (2)
mark-up and gross margin will be if inventory with a cost price of R900 is sold for
R1 125.

Q.3.7 At the moment her annual turnover of taxable supplies are R750 000, but she is (4)
hoping to grow that substantially over the next year.

 Is it compulsory for her to register for VAT? Substantiate your answer.

 And state the two (2) bases upon which a business can register for VAT.

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Question 4 (Marks:15)
Carefully study the till slip below, obtained from the “we-stock-everything” store, and then
answer the questions that follow.

we-stock-everything
Welcome to our store
Bordeaux branch
VAT REG NO. 7405019261
CASHIER – Bertha Viljoen
Potatoes R34.67
A4 exam pads R32.97
Bananas R22.99
Milk chocolate R13.95
Toilet paper R21.95
Pencils R12.98
White bread R16.99
Coke regular 2L R16.35
Sugary breakfast cereal R28.95
Milk 2L R21.65
TAX INVOICE (Valid VAT Invoice)
Total including VAT @ 14% R223.45
14 February 2017 12:15

Q.4.1 What is the VAT registration number of the “we-stock-everything” store? (1)

Q.4.2 Name two (2) things that would need to be added to the till slip for it to qualify as an (1)
unabridged tax invoice.

Q.4.3 List any two (2) items on the till slip that qualifies as zero rated supplies? (1)

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Q.4.4 How much input VAT could be claimed by a registered VAT vendor based on the (4)
purchases made at the “we-stock-everything” store?
Round your answer to 2 decimal places.

Q.4.5 What would the VAT exclusive amount be if all the amounts purchased were (2)
standard rated?
Round your answer to 2 decimal places.

Q.4.6 If the “we-stock-everything” store marks-up the sugary breakfast cereal at 15% on (3)
the cost price, what was the original cost price of the cereal?
Round your answer to 2 decimal places.

Q.4.7 If the “we-stock-everything” store marks-up the pencils at 40% on the selling price, (3)
what was the original cost price of the pencils?
Round your answer to 2 decimal places.

END OF PAPER

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