INTRODUCTION TO FINANCIAL ACCOUNTING

Transcription

1 INTBUS JUNE 2013 EXAMINATION DATE: 5 JUNE 2013 TIME: 09H00 11H00 TOTAL: 100 MARKS DURATION: 2 HOURS PASS MARK: 40% (IFA-01) INTRODUCTION TO FINANCIAL ACCOUNTING THIS EXAMINATION PAPER CONSISTS OF 3 SECTIONS: SECTION A: CONSISTS OF: (i) 10 MULTIPLE-CHOICE QUESTIONS (10 MARKS) (ii) 5 TRUE OR FALSE QUESTIONS (10 MARKS) (iii) 10 MATCHING-STATEMENT QUESTIONS (10 MARKS) ANSWER ALL THE QUESTIONS SECTION B: SECTION C: CONSISTS OF 1 SHORT QUESTION ANSWER THE QUESTION CONSISTS OF 2 LONG ANSWER QUESTIONS ANSWER BOTH QUESTIONS (30 MARKS) (40 MARKS) INSTRUCTIONS: 1. Read the following instructions carefully before answering the paper, as failure to act upon them will result in a loss of marks. 2. Write your answers in your answer book, which is provided in the exam. 3. Ensure that your name and student number are clearly indicated on your answer book. 4. Write your answers in either blue or black ink in your answer book. 5. Read each question very carefully before you answer it and number your answers exactly as the questions are numbered. 6. Begin with the question for which you think you will get the best marks. 7. Note the mark allocations for each question give enough facts to earn the marks allocated. Don't waste time by giving more information than required. 8. You are welcome to use diagrams to illustrate your answers. 9. Please write neatly we cannot mark illegible handwriting. 10. Any student caught cheating will have his or her examination paper and notes confiscated. The College will take disciplinary measures to protect the integrity of these examinations. 11. If there is something wrong with or missing from your exam paper or your answer book, please inform your invigilator immediately. If you do not inform your invigilator about a problem, the College will not be able to rectify it afterwards, and your marks cannot be adjusted to allow for the problem. 12. This paper may be removed from the examination hall after the examination has taken place. NOTE: YOU MAY USE A NON-PROGRAMMABLE CALCULATOR. DAMELIN CORRESPONDENCE COLLEGE JUNE 2013 PAGE 1 OF 7

2 SECTION A (30 MARKS) ANSWER ALL THE QUESTIONS (i) MULTIPLE-CHOICE QUESTIONS Choose the correct option for each of the following. Write only the question number and your chosen answer. For instance, if you think that the correct answer for number 1 is, then write it as Long-term liabilities: are not repaid. do not fall due within the current financial year. fall due for payment within the current financial year. are only applicable to Close Corporations. 2. A transaction caused a R9 000 decrease in both assets and liabilities. This transaction could have been the: purchase of a delivery truck for R collection of R9 000 accounts receivable. repayment of a R9 000 bank loan. purchase of Stock worth R Examples of intangible, non-current assets are: land and buildings. patents. franchises. and. 4. If the assets of a business are R and the liabilities are R55 000, then the equity of the business is: R R R R Which of the following is not a basic Credit account? Creditors Capital Expenses Income 6. Petty cash is a(n): liability account. asset account. monies for a rainy day. only for use by the owners. DAMELIN CORRESPONDENCE COLLEGE JUNE 2013 PAGE 2 OF 7

3 7. The following is an example of a long-term liability account: Depreciation expense Accumulated depreciation Mortgage Owners equity 8. Interest on fixed deposits is referred to as: income. bank charges. an expense. return on investment. 9. Vat is charged at: 10%. 14%. 12%. different rates, dependent on the industry. 10. Which of the following is not a method of calculating the value of inventory? First in First out [FIFO] Weighted average cost [WAC] Last in First out [LIFO] Perpetual inventory [10] (ii) TRUE OR FALSE QUESTIONS Indicate whether the following statements are True or False. Motivate all your answers. 1. A balance sheet is a summary of the income and expenditure of a business. 2. Net profit is the difference between sales and cost of sales. 3. The double entry system is a bookkeeping system that records every transaction twice to the same account once as a debit and once as a credit. 4. All businesses are required by law to pay a Skills Development Levy. 5. A sole proprietor is an example of a business with a separate legal identity to that of the owner. [5 2 = 10] DAMELIN CORRESPONDENCE COLLEGE JUNE 2013 PAGE 3 OF 7

4 (iii) MATCHING-STATEMENT QUESTIONS Match the statements in Column B to the statements in Column A. Write down the answers only, for example 1.. Column A Column B 1. the standard framework of guidelines for financial large supermarkets generally use this accounting 2. the historic cost concept liabilities 3. the accrual or matching concept generally accepted accounting principles (GAAP) 4. the perpetual inventory system drawings a/c 5. salary deduction (e) time frames are important 6. example of a nominal account (f) PAYE 7. monies withdrawn by the owners of a business (g) cheque 8. non-current and current (h) vehicles a/c 9. example of a source document (i) assets should be recorded and reported at cost. 10. example of a real account (j) rent a/c [10] [30] DAMELIN CORRESPONDENCE COLLEGE JUNE 2013 PAGE 4 OF 7

5 SECTION B: SHORT QUESTION (30 MARKS) ANSWER THE QUESTION QUESTION 1 Analyse the following transactions by means of the accounting equation (A = O + L), drawing the following columns: Example: Issued a cheque to Pen Stationers for stationery purchased, R500. Number Account debited Account credited Effect on Assets Owner's equity Example Stationery Bank Liabilities Cheque issued to pay for stationery, R800. (4) Office desk purchased on account, R (4) Cheque issued to pay creditor, R400. (4) Stock with cost price of R3 000 purchased and a trade discount of 10% was allowed. The payment was made immediately by electronic funds transfer (EFT). (The perpetual inventory method is used). (4) (e) A Debtor settled debt of R300 and a discount of 5% was received. (7) (f) The business has an account with the local garage and fuel was bought on account for the three delivery vehicles, R (4) (g) What is the accounting equation? (3) [30] [30] DAMELIN CORRESPONDENCE COLLEGE JUNE 2013 PAGE 5 OF 7

6 SECTION C: LONG ANSWER QUESTIONS (40 MARKS) ANSWER BOTH QUESTIONS QUESTION 1 The following relates to Dynamix Motor Services: Dynamix Motor Services Pty Ltd Trial Balance March R R Capital: L Haney Drawings Vehicles Creditors Debtors Income Wages Telephone Expenses Stationery Expenses Long-term Loan payable Bank [favourable] Additional Information: Receipts from debtors, R5 000 have been credited to drawings. 2. Creditors have been undercast by R An amount of R23 000, in respect of income, has been recorded as R The legal fees account and the entertainment expenses account, with a debit balance of R5 629 and R562 respectively, have inadvertently been omitted from the trial balance. 5. A repayment on the loan, R9 000 has not yet been recorded in the books. 6. The Director L.Haney, invested a further R of his own money into the business. You are required to: Draw up the correct Trial Balance for Dynamix Motor Services at 31 March [20] DAMELIN CORRESPONDENCE COLLEGE JUNE 2013 PAGE 6 OF 7

7 QUESTION 2 The following transactions over a 2-month period pertain to Easy Stationers cc, a vat registered business. Credit Sales for the vat period, R Cash sales for the vat period, R purchase stationery for resale, to the amount of, R motor vehicle oil expense for the vat period, R550 fuel expense for the vat period, for business vehicles, R5 808 bank statement showed the following: bank charges, R235 and interest charged R400. telephone expense for the vat period, R1 200 You are required to: Calculate the input VAT and output VAT and the amount refundable / payable for the 2-month period. (Show all workings: Round off to the nearest Rand where applicable.) [20] [40] Section A: 30 marks Section B: 30 marks Section C: 40 marks TOTAL: 100 MARKS DAMELIN CORRESPONDENCE COLLEGE JUNE 2013 PAGE 7 OF 7