NTIONL ERTIFITE (VOTIONL) PPLIE OUNTING (First Paper) NQF LEVEL 4 SUPPLEMENTRY 2010 (3011004) 26 February (X-Paper) 09:00 12:00 Non-programmable calculators may be used. This question paper consists of 13 pages and a 14-page answer book.
(3011004) -2- N190(E)(F26)V TIME: 3 HOURS MRKS: 200 INSTRUTIONS N INFORMTION 1. 2. 3. 4. 5. 6. 7. nswer LL the questions. Read LL the questions carefully. nswer LL the questions in the NSWER OOK provided. Show LL your calculations. NO pages may be removed from the NSWER OOK. Use the table below to guide you in how much time to spend answering each question. Write neatly and legibly. QUESTIONS TOPIS MRKS SETION REOMMENE TIME GUIE 1 Multiple-choice questions 30 27 minutes True and False questions 2 Short theoretical questions 20 18 minutes 3 alculations 30 27 minutes SETION 4 djustments 40 36 minutes 5 Profit and loss calculation 30 27 minutes 6 Income Statement and alance Sheet 50 45 minutes TOTL 200 180 minutes
(3011004) -3- N190(E)(F26)V SETION QUESTION 1 1.1 Various options are given as possible answers to the following questions. hoose the answer and write only the letter ( ) next to the question number (1.1.1 1.1.20) in the NSWER OOK, for example 1.1.21. 1.1.1 How will you record bad debts in the General Ledger? ebit ad ebts ccount and credit ebtors' ontrol ccount ebit ebtors' ontrol ccount and credit ad ebts ccount ebit ad ebts ccount and credit ank ccount ebit Provision For ad ebts ccount and credit ad ebts ccount (1) 1.1.2 Interest on an investment is a/an to a business. expense asset liability income (1) 1.1.3 ccording to the fixed price method, depreciation is calculated at a fixed rate on the of that asset. cost price accumulated depreciation book value net carrying value (1) 1.1.4 The difference between the closing balance of Trading Stock and the value of the physical stocktaking at the end of the financial year is known as a/an. asset income deficit/surplus liability (1) 1.1.5 The effect of an accrued income on the accounting equation is owners equity increases and assets increase. owners equity increases and income decreases. owners equity decreases and assets increase. income increases and owners equity decreases. (1)
(3011004) -4- N190(E)(F26)V 1.1.6 Rent expense, paid for the first month of the next financial period, is a/an to the business. liability asset expense loss (1) 1.1.7 t the end of the financial year, the ebtors' llowances ccount is closed off the ccount. ebtors' ontrol Sales ost of Sales Profit and Loss (1) 1.1.8 Post-djustment Trial alance contains accounts. nominal balance sheet and nominal balance sheet None of the above-mentioned (1) 1.1.9 epreciation on vehicles is calculated at 15% per annum according to the diminished balance method. The following balances appeared in the books of the business at the end of their financial year: Vehicles R280 000,00 ccumulated depreciation: Vehicles R42 000,00 What is the depreciation for the current financial year? R42 000,00 R84 000,00 R35 700,00 R71 200,00 (1) 1.1.10 The entry in the General Journal to transfer gross profit from the Trading ccount to the Profit and Loss is debit Profit and Loss and credit Trading ccount. debit Trading ccount and credit Profit and Loss. debit ebtors' ontrol and credit Sales. debit Sales and credit Trading Stock. (1)
(3011004) -5- N190(E)(F26)V 1.1.11 Which of the following items is a current asset? Equipment Vehicles ash float and (1) 1.1.12 is NOT recorded in the alance sheet. Interest on loan paid in advance Rent income received in advance ccrued salaries onsumable stores (1) 1.1.13 If a business's water and electricity account has been received but not paid, the journal entry on the last day of the accounting period to record this is debit Water and Electricity and credit ank. debit ccrued Expenses and credit Water and Electricity. debit ank and credit Water and Electricity. debit Water and Electricity and credit ccrued Expenses. (1) 1.1.14 Which ONE of the following groups includes only nominal accounts? epreciation, Vehicles and Interest on Overdraft Stationery, Rent Received and Wages apital, rawings and Vehicles Equipment, ebtors' ontrol and ank (1) 1.1.15 The entry in the General Ledger to close off ommission Received at the end of the financial year, is debit Profit and Loss and credit ommission Received. debit Trading ccount and credit ommission Received. debit ommission Received and credit Profit and Loss. debit ommission Received and credit Trading ccount. (1) 1.1.16 On 1 ugust 2009, a business invested R50 000,00 in a fixed deposit at S ank at an interest rate of 12% per annum. The interest will be paid half yearly. The interest received on 1 February 2010 will be R6 000,00 R12 000,00 R3 000,00 R5 000,00 (1)
(3011004) -6- N190(E)(F26)V 1.1.17 The amount for advertising in the Pre-djustment Trial alance is R5 000,00. dvertising space costs R100,00 per week and is payable for 52 weeks. The amount for advertising in the Income Statement is R5 000,00 R200,00 R52,00 R5 200,00 (1) 1.1.18 The entry in the alance Sheet for QUESTION 1.1.17 is accrued expenses R200,00. prepaid expenses R200,00. accrued expenses R5 200,00. prepaid expenses R5 200,00. (1) 1.1.19 Sales ost of goods sold = Net Sales. Net Profit. Gross Profit. ost of Sales. (1) 1.1.20 The closing transfer journal entry for ost of Sales is debit ost of Sales credit Trading ccount. credit ost of Sales debit Trading ccount. debit ost of Sales credit Sales ccount. credit ost of Sales debit Sales ccount. (1) 1.2. Indicate whether the following statements are TRUE or FLSE. hoose the answer and write only 'true' or 'false' next to the question number (1.2.1 1.2.10) in the NSWER OOK. 1.2.1 t year-end, the prepaid expense amount is deducted from the relevant expense account. (1) 1.2.2 Income received in advance is an asset to the business. (1) 1.2.3 The epreciation ccount will appear in the alance Sheet. (1) 1.2.4 ad debts Recovered is regarded as an expense. (1) 1.2.5 ost price less accumulated depreciation = book value. (1) 1.2.6 If the ank account is in overdraft, it will be recorded under noncurrent liabilities in the alance Sheet. (1)
(3011004) -7- N190(E)(F26)V 1.2.7 The Provision for ad ebts djustment ccount appears in the alance Sheet section of the General Ledger. (1) 1.2.8 leaning material on hand is regarded as an asset account. (1) 1.2.9 On the first day of the new accounting period the accrued expense amount is added to the relevant expense account. (1) 1.2.10 Fixed deposit is regarded as a current asset. (1) [30] QUESTION 2 2.1 omplete the following sentences/paragraph(s) by filling the missing word(s). Write only the word(s) next to the question number (2.1.1 2.1.8) in the NSWER OOK. 2.1.1 epreciation Owners' Equity. (2) 2.1.2 t the end of the financial year the rawings ccount is closed off to the ccount. (2) 2.1.3 When you increase provision for ad ebts, you have to provision for ad ebt adjustment. (2) 2.1.4 Rent Income is recorded on the side of the Profit and Loss ccount. (2) 2.1.5 ccumulated epreciation is when epreciation is recorded. (2) 2.1.6 The djustment Trial alance is drawn up before adjustments take place. (2) 2.1.7 Stationery on hand is a/an account. (2) 2.1.8 The final profit calculated in the Profit and Loss ccount is the profit. (2) 2.2 Why are there no nominal accounts in the Post-losing Trial alance? (2) 2.3 Which final account is used for calculating gross profit? (2) [20]
(3011004) -8- N190(E)(F26)V QUESTION 3 3.1 You apply for a loan of R60 000,00 at Poor ank and pay the loan back in six equal yearly instalments at an interest rate of 10% per annum. 3.1.1 3.1.2 alculate the amount for each instalment. alculate the amount of the second payment to the bank, interest included. (3) (5) 3.2 T Louw, a debtor, has a balance of R1 250,00. Louw is declared insolvent and the business received a dividend of 30 cents in the rand from his insolvent estate. The rest of his debt is written off as irrecoverable. 3.2.1 3.2.2 alculate the amount that the business receives. alculate the bad debt amount. (3) (3) 3.3 alculate the missing figures in the following Income Statement. Write the answer next to the question number (3.3.1 3.3.4) in the NSWER OOK. Income statement of Traders for the year ended 28 February 2009 Sales 730 000 00 ost of sales (mark-up is 100% on cost) (3.3.1) Gross profit (3.3.2) Other operating income 45 000 00 Gross operating income (3.3.3) Operating expenses 640 000 00 Net profit/loss for the year (3.3.4) (8) 3.4 alculate the assets if liabilities are R43 703,00 and owners' equity is R298 791,00. (3) 3.5 On 28 February 2009, the end of the financial year, the totals that appeared in the Post-djustment Trial alance of K Khumalo included Fixed eposit: FN of R40 000,00, and Interest on Fixed eposit of R3 200,00. ll interest has been received and recorded. alculate the interest rate earned on fixed deposit. (5) [30] TOTL SETION : 80
(3011004) -9- N190(E)(F26)V SETION QUESTION 4 The following Pre-djustment Trial alance appeared in the books of NV Traders on 31 ecember 2009. Pre-adjustment Trial alance of NV Traders on 31 ecember 2009 FOL EIT REIT alance Sheet Section apital 1 211 300 00 rawings 2 35 000 00 Land and uildings 3 180 000 00 Equipment 4 16 000 00 Vehicles 5 170 000 00 ccumulated epreciation: Equipment 6 6 000 00 ccumulated epreciation: Vehicles 7 38 000 00 Savings ccount: SVIT 8 8 000 00 Loan: PYIT 9 90 000 00 Trading Stock 10 70 200 00 ebtors' ontrol 11 31 000 00 reditors' ontrol 12 30 700 00 urrent ccount: FN 13 9 200 00 ash Float 14 750 00 Nominal Section Sales N1 690 000 00 ost of Sales N2 420 000 00 ebtors' llowances N3 7 000 00 dvertisements N4 24 100 00 ad ebts N5 5 900 00 ank harges N6 1 050 00 Repairs N7 8 700 00 Insurance N8 2 200 00 Interest on Loan N9 21 000 00 Interest on Savings ccount N10 800 00 Water and Electricity N11 10 200 00 Rent Received N12 25 200 00 onations N13 500 00 Salaries and Wages N14 66 000 00 onsumable stores N15 5 200 00 1 092 000 00 1 092 000 00
(3011004) -10- N190(E)(F26)V JUSTMENTS: 1. Interest for 2 months at 12% per annum is due from SVIT on the Savings ccount. 2. The following error must to be corrected: Repair work for R2 000,00 has been debited against Land and uildings 3. Mr Maseko, a debtor, has been declared insolvent and cannot pay his account. Write off his account of R500, 00 as irrecoverable. 4. reate a provision for ad ebt at 5% of debtors. 5. physical stock-taking on 31 ecember 2009 shows the following: Trading Stock: R68 800,00 onsumable stores: R440,00 6. Your tenant is on holiday and he paid the rent in advance for January and February 2010. 7. gross salary of R3 400,00 for January 2010, was paid to a worker during ecember 2009. 8. yearly insurance premium of R480,00 was paid on 1 September 2009. 9. Interest on loan has been paid until 31 October 2009, adjust for the outstanding interest on loan. The loan was obtained on 1 January 2009. 10. epreciation on the vehicles and equipment for the year is calculated as follows: 10.1 10.2 Equipment at 10% per annum according to the diminishing balance method. Vehicles at 20% per annum according to the cost price method. Take into account that a new vehicle was bought on 1 November 2009 for R90 000,00. This transaction has been entered in the books already. REQUIRE: Record the adjustments in the General Journal. Narrations are NOT required. [40]
(3011004) -11- N190(E)(F26)V QUESTION 5 The following information was taken from the records of The omputer Shop on 30 September 2009, the last day of the financial year. Post djustment Trial alance of The omputer Shop as at 30 September 2009 FOL EIT REIT alance Sheet Section apital 1 575 000 00 rawings 2 79 050 00 Land and uilding 3 350 000 00 Equipment 4 99 382 00 ccumulated epreciation: Equipment 5 29 814 00 ebtors' ontrol 6 19 000 00 Trading Stock 7 21 192 00 ank 8 9 770 00 ash Float 9 625 00 Petty ash 10 250 00 onsumable Stores on Hand 11 958 00 reditors' ontrol 12 28 000 00 Fixed eposit: Nedbank (16%) 13 18 750 00 VT ontrol 14 4 998 00 Provision for ad ebts 15 975 00 ccrued Income 16 4 600 00 ccrued Expenses 17 5 588 00 Prepaid Expenses 18 1 380 00 Income Received in dvance 19 500 00 Nominal Section Sales N1 530 000 00 ost of Sales N2 465 000 00 ebtors' llowances N3 6 415 00 Water and Electricity N4 6 900 00 Wages N5 23 538 00 Stationery N6 2 660 00 Telephone N7 11 285 00 Rent Income N8 23 000 00 Interest on Fixed eposit N9 2 500 00 iscount llowed N10 4 260 00 iscount Received N11 4 598 00 Insurance N12 18 629 00 onsumable Stores N13 3 970 00 ank harges N14 1 025 00 Salaries N15 40 353 00 ad ebts N16 500 00 Provision for ad ebt djustment N17 150 00 Trading Stock eficit N18 424 00 epreciation N19 14 907 00 1 204 973 00 1 204 973 00
(3011004) -12- N190(E)(F26)V REQUIRE: Open the following accounts in the General Ledger of The omputer Shop on 30 September 2009 and post the closing transfers to these accounts. alance/lose these accounts properly. 5.1 5.2 5.3 5.4 apital Sales Trading ccount Profit and Loss ccount (5) (3) (3) (19) [30] QUESTION 6 Nick Moraitis runs a small grocery shop, which he has owned for a year. His accounting knowledge is rather poor, and as a result he has approached you to help him with some year-end adjustments and financial statements. The financial year ends on 31 July 2009. The following balances and totals were extracted from the Pre- djustment Trial alance of Moraitis Shop: apital 45 876 00 rawings 6 720 00 Equipment 25 000 00 ccumulated epreciation: Equipment 4 000 00 Mortgage ond: S ank 40 000 00 Trading Inventory 39 840 00 ebtors' ontrol 14 100 00 Provision for ad ebts 340 00 reditors' ontrol 12 296 00 ank Overdraft 3 125 00 Petty ash 150 00 ash Float 200 00 Sales 72 352 00 ost of Sales 12 800 00 ebtors' llowances 1 952 00 ad ebts Recovered 660 00 ad ebts 1 420 00 iscount Received 416 00 iscount llowed 560 00 Packing Materials 3 040 00 Repairs 880 00 Insurance 3 840 00 Interest on Loan 2 000 00 Interest on Overdraft 923 00 Water and Electricity 4 340 00 Rent Expense 16 000 00 Salaries and Wages 45 300 00
(3011004) -13- N190(E)(F26)V JUSTMENTS: 1. ccording to a physical stocktaking on 31 July 2009, the following were on hand: Trading inventory R38 100,00 Packing materials R704,00 2. The accountant had neglected to make the rent payments for June 2009 and July 2009. 3. n insurance premium of R400,00 has been paid in advance to Relax Insurers. 4. The mortgage loan with S was taken out on 1 ecember 2008 at a interest rate of 12% per annum. Outstanding interest must be taken into account. 5. ebtor M Stewart has disappeared without a trace. His account of R1 000,00 must be written off as bad. 6. Provision for ad ebts must be adjusted to 2% of the book debts. 7. Write off depreciation at 10% per annum, on the cost price of equipment. REQUIRE: 6.1 6.2 Prepare the Income Statement for the year ended 31 July 2009 Prepare the alance Sheet as at 31 July 2009 and show ONLY the notes required in the NSWER OOK. TOTL SETION : GRN TOTL: (24) (26) [50] 120 200
(3011004) -14 - N190(E)(F26)V NSWER OOK EXMINTION NUMER: QUESTION TOPI MRKS MRK HIEVE Section Q1 Q2 Q3 Section Multiple-choice questions True and False questions Short theoretical questions alculations 30 20 30 Q4 Q5 Q6 djustments Profit/Loss calculation 40 30 Income Statement and alance Sheet 50 TOTL 200 PERENTGE HIEVE:
(3011004) -15- N190(E)(F26)V EXMINTION NUMER: SETION QUESTION 1 1.1 1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.1.6 1.1.7 1.1.8 1.1.9 1.1.10 1.1.11 1.1.12 1.1.13 1.1.14 1.1.15 1.1.16 1.1.17 1.1.18 1.1.19 1.1.20 (20)
(3011004) -16- N190(E)(F26)V EXMINTION NUMER: 1.2 1.2.1 1.2.2 1.2.3 1.2.4 1.2.5 1.2.6 1.2.7 1.2.8 1.2.9 1.2.10 (10) [30]
(3011004) -17- N190(E)(F26)V NSWER OOK EXMINTION NUMER: QUESTION 2 2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.1.5 2.1.6 2.1.7 2.1.8 8 x 2 (16) 2.2 2.3 (2) (2) [20]
(3011004) -18- N190(E)(F26)V EXMINTION NUMER: QUESTION 3 3.1 3.1.1 _ 3.1.2 (3) _ (5) 3.2 3.2.1 (3) 3.2.2 _ (3)
(3011004) -19- N190(E)(F26)V EXMINTION NUMER: 3.3 3.3.1 _ 3.3.2 3.3.3 3.3.4 (2) (2) (2) 3.4 3.5 (2) (3) (5) [30] TOTL SETION : 80
(3011004) -20 - N190(E)(F26)V EXMINTION NUMER: SETION QUESTION 4 General Journal of NV Traders 31 ecember 2009 ebtors' ontrol reditors' ontrol etails Fol ebit redit ebit redit ebit redit
(3011004) -21- N190(E)(F26)V EXMINTION NUMER: General Journal of NV Traders 31 ecember 2009 (ontinue) ebtors' ontrol reditors' ontrol etails Fol ebit redit ebit redit ebit redit
(3011004) -22- N190(E)(F26)V EXMINTION NUMER: General Journal of NV Traders 31 ecember 2009 (ontinue) ebtors' ontrol reditors' ontrol etails Fol ebit redit ebit redit ebit redit [40]
3011004) -23- N190(E)(F26)V EXMINTION NUMER: QUESTION 5 General Ledger of The omputer Shop r apital r ate etails Fol mount ate etails Fol mount Sales (5) Trading ccount (3) (3)
(3011004) -24- N190(E)(F26)V EXMINTION NUMER: Profit and Loss ccount (19) [30]
(3011004) -25- N190(E)(F26)V EXMINTION NUMER: QUESTION 6 6.1 Income Statement of Moraitis Shop for the year ending 31 July 2009 (24)
(3011004) -26- N190(E)(F26)V 6.2 alance Sheet of Moraitis Shop as at 31 July 2009 (10)
(3011004) -27- N190(E)(F26)V Notes to the alance Sheet of Moraitis Shop for year ended 31 July 2009 1. Non-current assets 2. Stock/Inventory: 3. Trade and other debtors: 4. Owners' equity 6. Trade and other creditors: (16) [50] TOTL SETION : 120 GRN TOTL: 200