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BAC611C- BUSINESS ACCOUNTING 1B- 1ST OPP- NOV 2023 |
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nAmlBIA
unrVERSITY
0 F SCIEnCE Ano
TECHnOLOGY
HAROLDPUPKEWITZ
GraduateSchoool f Business
FACULTY OF COMMERCE, HUMAN SCIENCESAND EDUCATION
HAROLD PUPKEWITZGRADUATESCHOOLOF BUSINESS
QUALIFICATION: DIPLOMA IN BUSINESSPROCESSMANAGEMENT
QUALIFICATIONCODE:06DBPM LEVEL:6
COURSECODE: BAC611C
COURSENAME: BUSINESSACCOUNTING 2A
SESSION:NOVEMBER 2023
PAPER:PAPER1
DURATION: 3 HOURS
MARKS: 100
EXAMINER
FIRST OPPORTUNITY EXAMINATION QUESTION PAPER
Lameck Odada
MODERATOR Gerhardt Sheehama
INSTRUCTIONS
1. This question paper is made up of four (4) questions.
2. Answer ALLthe questions in blue or black ink only. NO pencil
3. Start each question on a new page in your answer booklet and show all workings.
4. Work with four (4) decimal places in all your calculations and only round off only final
answers to two (2) decimal places unless otherwise stated.
5. Questions relating to this examination may be raised in the initial 30 minutes after the
start of the paper. Thereafter, candidates must use their initiative to deal with any
perceived error or ambiguities & any assumption made by the candidate should be
clearly stated.
PERMISSIBLEMATERIALS
Silent, non-programmable calculators
THIS QUESTION PAPERCONSISTSOF 7 PAGES(excluding this front page)
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QUESTION 1
[20 MARKS]
For questions, 1.1-1.10, write the answer only (the correct letter chosen) in your answer sheet/answer
book and not on the question paper.
1.1 The statement of cash flow clarifies cash flows according to
a) Operating and Non-operating Flows
b) Inflow and Outflow
c) Investing and Non-operating Flows
d) Operating, Investing, and Financing Activities
1.2 Cashflow example from a financing activity is
a) Payment of Dividends
b) Receipt of Dividend on Investment
c) ash Received from Customers
d) Purchase of Fixed Asset
1.3 Cashflow example from an investing activity is
a) Issue of Debenture
b) Repayment of Long-term Loan
c) Purchase of Raw Materials for Cash
d) Sale of Investment by Non-Financial Enterprise
1.4 Cash flow example from an operating activity is
a) Purchase of Own Debenture
b) Sale of Fixed Assets
c) Interest Paid on Term-deposits by a Bank
d) Issue of Equity Share Capital
1.5 A soundly developed conceptual framework of concepts and objectives should
a) increase financial statement users' understanding of and confidence in financial
reporting.
b) enhance comparability among companies' financial statements.
c) allow new and emerging practical problems to be more quickly solved.
d) all the above
1.6 The underlying theme of the conceptual framework is
a) decision usefulness.
b) understandability.
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c) reliability.
d) comparability.
1.7 Which of the following is not among the ingredients of the fundamental quality of faithful
representation?
a) freedom from error.
b) neutrality.
c) materiality.
d) completeness.
1.8 Enhancing qualities of accounting information include:
a) comparability and verifiability.
b) relevance and consistency.
c) comparability and materiality.
d) relevance and faithful representation.
1.9 Enhancing qualities of accounting information include all the following except:
a) comparability.
b) understandability.
c) neutrality.
d) timeliness.
1.10 An ingredient of relevance is:
a) freedom from error.
b) neutrality.
c) comparability.
d) materiality.
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QUESTION 2
[25 MARKS]
The following information was extracted from the books of the IWATA Entity for the year ended 31
January 2023. During the year the following transactions took place (VAT included where applicable):
Sales (Credit)
Sales (Cash)
Returns inwards (all on credit)
Credit purchases
Returns outwards (50% credit, 50% cash)
Cash payments made by receivables
Cash paid to payables
Discounts received
Discounts allowed
Interest charged on overdue accounts by payables
Dishonoured cheque (included in cash receipts above)
Bad debts
Irrecoverable debts recovered (original write-off included in bad debts above)
Contra entry between receivables and payables
Refunds from payables
Refund to receivables
N$
575 000
5 500
37100
471 035
40 300
492 600
444 205
11800
9 850
2 735
1085
12 430
1 710
4 875
1095
1665
Prior year balances were as follows:
Payables balances
Receivables balances
Debit (N$)
2 075
71380
Credit (N$)
81225
5 600
The following additional information as at 31 January 2023 is available:
• The total debit balance in the payables ledger is N$1 660.
• The total credit balance in the receivable ledger is N$4 550.
REQUIRED:
MARKS
Prepare the payables control account and receivables control account for DRAB Entity, for
25
the year ended 31 January 2023.
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QUESTION 3
[30 MARKS]
Financial analysis is the process of examining a company's performance in the context of its industry and
economic environment in order to arrive at a decision or recommendation. Often, the decisions and
recommendations addressed by financial analysts pertain to providing capital to companies-specifically,
whether to invest in the company's debt or equity securities and at what price. An investor in debt
securities is concerned about the company's ability to pay interest and to repay the principal lent. An
investor in equity securities is an owner with a residual interest in the company and is concerned about
the company's ability to pay dividends and the likelihood that its share price will increase.
Overall, a central focus of financial analysis is evaluating the company's ability to earn a return on its
capital that is at least equal to the cost of that capital, to profitably grow its operations, and to generate
enough cash to meet obligations and pursue opportunities.
Below are the financial statements of Shoprite Ltd for the year ended 31 December 2022.
Statement of financial position as at 31 December 2022
ASSETS
2022
Non-current assets
9 450 000
Property, plant, and equipment
Investments
9 450 000
-
Current assets
36 045 000
Inventories
20 925 000
Receivables
12150 000
Cash assets
2 970 000
TOTAL ASSETS
45 495 000
EQUITY AND LIABILITIES
Share capital and reserves
16 335 000
Share capital
7 000 000
Other reserves
-250 000
Retained earnings
9 585 000
2021
8 640 000
8 640 000
-
29 632 500
14 850 000
9 990 000
4 792 500
38 272 500
15 120 000
7 000 000
-250 000
8 370 000
Redeemable -preference shares
Non-current liabilities
Long term borrowings
Current liabilities
Trade and other payables
Short term borrowings
TOTAL EQUITY AND LIABILITIES
2 700 000
7 425 000
19 035 000
4 860 000
14175 000
45 495 000
2 700 000
7 425 000
13 027 500
4 320 000
8 707 500
38 272 500
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Statement of profit or lossfor the year ended 31 December 2022
2022
Sales revenue (100% credit sales)
85 320 000
Cost of sales
63 990 000
Gross profit
21330 000
Operating expenses
12 636 000
Depreciation
810 000
Profit before interest and tax
7 884 000
Finance costs
2 430 000
Profit before tax
5 454 000
Income tax expense
2 430 000
Profit from continuing operations
3 024 000
loss on discontinued operations
1080 000
Profit for the year
1944 000
2021
74 250 000
54 945 000
19 305 000
11070 000
675 000
7 560 000
1485 000
6 075 000
2 160 000
3 915 000
-
3 915 000
Statement of changes in equity for the year ended 31 December 2022
2022
(N$)
Balance on 31 December
8 370 000
Comprehensive income for the year
1944 000
10 314 000
Dividends-preference shares
-324 000
Dividends-ordinary shares
-405 000
Balance on 31 December
9 585 000
2021
(N$)
5 184 000
3 915 000
9 099 000
-324 000
-405 000
8 370 000
REQUIREMENT: Assume a 365-day year, compute the following ratios for 2021 and 2022
a) Current ratio
b) Quick/ Acid test ratio
c) Debtors' collection period
d) Creditors settlement period
e) Debt ratio
f) Identify and briefly describe any five (5) limitations of ratio analysis
MARKS
4
4
4
4
4
10
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QUESTION 4
[25 MARKS]
Reid and Benson are in partnership as lecturers and tutors. Interest is to be allowed on capital and on the
opening balances on the current accounts at a rate of 5% per annum and Reid is to be given a salary of
N$18 000 per annum. Interest is to be charged on drawings at 5% per annum and the profits and losses
are to be shared by Reid 60% and Benson 40%.
The following trial balance was extracted from the books of the partnership at 31 December 2022.
Capital account- Benson
Capital account- Reid
Current account- Benson
Current account- Reid
Drawings- Reid
Drawings- Benson
Sales-goods and services
Purchases of textbooks for distribution
Returns inwards and outwards
Carriage inwards
Staff salaries
Rent
Insurance-general
Insurance- Public indemnity
Compensation paid due to Benson's error
General expenses
Bad debts written-off
Fixtures and fittings-cost
Fixtures and fittings-depreciation
Accounts receivable and accounts payable
Cash
Total
N$
17 000
20 000
291830
800
3 150
141150
2 500
1000
1500
10000
9 500
1150
74000
137 500
400
711480
N$
50 000
75 000
4000
5 000
541 750
330
12 000
23 400
711480
Additional information
• An allowance for doubtful debts is to be created of N$1 500
• Insurances paid in advance at 31 December 2021 were general N$50; professional indemnity
N$100.
• Fixtures and fittings are to be depreciated at 10% on cost.
• Interest on drawings: Benson N$550, Reid N$1050.
• Inventory of books at 31 December 2022 was N$1 500.
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REQUIREMENT:
MARKS
a) Prepare the partnership statement of profit and loss
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b) Prepare the partnership profit and loss appropriation account at 31 December 11
2022
END OF EXAMINATION QUESTION PAPER
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