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FAC511S- FINANCIAL ACCOUNTING 102- 2ND OPP- JUNE 2023 |
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n Am I BI A u n IV ERs ITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOR OF ACCOUNTING AND BACHELOR OF LOGISTICSAND
SUPPLYCHAIN MANAGEMENT
QUALIFICATION CODE: 07BOAC AND
07BLSC
LEVEL: 5
COURSE: FINANCIAL ACCOUNTING 101 COURSE CODE: FACSllS
SESSION: JUNE/JULY 2023
PAPER: THEORY & CALCULATIONS
DURATION: 3 Hours
MARKS: 100
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINERS:
Ms Y Andrew, Ms H Kangala, Mr L Odada, Mr Chikambi and Mr C
Simasiku
MODERATOR:
Mr C Mahindi
INSTRUCTIONS TO CANDIDATES
1. Answer all questions in blue or black ink.
2. Round off all amounts to the nearest Namibian Dollar (N$), where applicable.
3. A silent, non-programmable calculator is permissible.
4. Show all your workings (where applicable).
This paper consists of 5 pages, excluding the cover page.
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QUESTION 1
a) Match the terms to the appropriate defining details in the table below:
20 Marks
(6)
Write down the number and the corresponding letter in your answer booklet, e.g. 1. A
Term
1. Verifiability
2. Going Concern
3. Accounting Cycle
4. Statement of financial
position
5. Materiality
6. Liability
Defining Details
A. Reports the entity's Assets, Equity
and Liabilities
B. Income received in advance
C. Relevant information that, if
omitted could influence the user's
decision
D. Assumes that the entity will operate
in the foreseeable future
E. Allows different independent users
to reach the same conclusion using
the same information
F. The steps that complete the process
of recording financial transactions
up to their inclusion in the financial
statements.
b) To keep track of inventory, a business can either make use of the perpetual or the periodic
inventory management systems. Briefly explain these different systems.
(4)
c) Financial information is useful when it is relevant and faithfully represents what it purports
to represent. Explain the characteristics of faithful representation.
(6)
d) On 30 January 2023, the owner of Maxi Traders transferred N$15 000 to Woke
Wholesalers to settle their debts of N$10 000. The extra N$5 000 is for inventory that they
are planning to purchase later on in February. Explain why the N$5 000 paid in advance
should not be recorded as a liability.
(3)
e) The accounting equation is based on the principle of duality. What does this mean?(l)
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QUESTION 2
30 Marks
You are the accountant of TMU Entity and have been provided the following Trial balance as at
31 October 2022.
Land & buildings
Furniture
Accumulated depreciation: furniture
Vehicles
Accumulated depreciation: vehicles
Sales
Purchases
Inventories (1 November 2021)
Sales Returns
Commission on purchases
Credit losses
Drawings
Interest expense
Loan
Interest income
Rent received
Salaries & wages
Sundry expenses
Accounts receivables
Accounts payables
Bank
Capital
Debit
N$
150,000.00
30,000.00
45,000.00
450,000.00
180,000.00
7,500.00
15,000.00
3,000.00
45,000.00
4,500.00
27,000.00
16,500.00
76,500.00
12,000.00
1,062,000.00
Credit
N$
7,500.00
12,000.00
750,000.00
90,000.00
3,000.00
30,000.00
54,000.00
115,500.00
1,062,000.00
Additional information:
1. Inventories on 31 October 2022 amount to N$195 000.
2. Interest on loan is calculated at 5% per year. The loan is repayable on 31 December
2023.
3. Property, plant and equipment:
3.1 The buildings are occupied for the purposes of the activities of the entity and are
accounted for in terms of the cost model. The value of the buildings is N$45,000 and
the land N$105,000 at the date of purchase, 1 November 2021.
3.2 Depreciation for the year has to be provided for as follows:
• Buildings at 3% on per year on cost
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• Furniture at 6% per year on cost
• Vehicles at 10% per year on the diminishing balance method.
4. N$7 500 of receivables must be written off as irrecoverable.
5. The rental contract stipulates a monthly rental amount N$3 000.
REQUIRED
a} Prepare the Statement of profit or loss of TMU Entity for the year ended 31 October
2022.
(18}
b) Prepare the Statement of financial position of TMU Entity as at 31 October 2022. (12}
QUESTION 3
15 Marks
Jingle Jangle Ltd is a company that manufactures and sells Christmas lights. Jingle Jangle enters
into contracts with some of their selected customers that, if its early in the year, the customer
can purchase Christmas decor, which would not be delivered immediately to the purchaser's
premises but stored in Jingle Jangle Ltd's warehouse until the day of Christmas Eve, or whenever
the customer prefers to receive their delivery.
On 4 November 2022, Wonderland cc, one of Jingle Jangle Ltd's esteemed customers, placed an
order with Jingle Jangle Ltd for 10, metallic theme decorated 3.7-meter Christmas trees at
N$15,000 (VAT excl} per tree. All 10 Christmas trees were available for delivery on 5 November
2022, but Wonderland cc requested delivery to be done on the 15 December 2022, due to their
limited store floor space.
On 5 November 2022, the 10 Christmas trees were put aside in Jingle Jangle Ltd's warehouse as
sold to Wonderland cc and a sales invoice of N$172,500 (VAT incl} was issued to Wonderland cc
on this date. Wonderland cc has a good credit record, so the invoice is therefore payable on 5
January 2023.
Jingle Jangle Ltd uses the periodic inventory system and are currently reporting transactions for
the reporting period that ended on 31 March 2023.
REQUIRED
a} Discuss whether the revenue (sales} can be recognised by applying the five-step model
of IFRS15 - Revenue with contracts with customers
(10}
b} Record the above transactions in the general journal of Jingle Jangle Ltd.
(5)
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QUESTION 4
20 Marks
PARTA
13 Marks
i. Explain the term 'inventories' as defined by IAS 2, Inventories, also provide the different
categories of inventory items.
(5)
ii. State which costs should be included when measuring the value of inventories. (3)
iii. State which costs should NOT be included when measuring the value of inventories.
(5)
PARTB
7 Marks
A company carried out its stock take at the end of its financial year. Included in its inventories are
the following items:
State the value that each of the above items will be included in the company's year-end inventory,
provide reasons for your answer and show your workings.
i. A table that cost the company N$1 250. This type of table usually sells for N$1 895 but it
was damaged in a flood and will therefore be sold at a significant discount. It is expected
to sell for N$450.
(1)
ii. A wardrobe that cost the company N$720 and normally sells for N$995. The wardrobe has
been damaged and will cost approximately N$120 to repair at which point it can be sold
for N$750.
(2)
iii. A dresser that was made to a customer's own specifications and cost the company N$1
832 to make. Unfortunately, the customer went bankrupt and could not purchase the
item. Due to the unusual design the dresser was not easy to sell. At the year-end, however,
the company sold the dresser for N$2 250 but incurred commission costs on the sale of
N$105 and delivery costs of N$158.
(4)
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QUESTION 5
15 Marks
Below is a pre-adjusted trial balance of Jumpin' Jack Enterprises as at 31 December 2022.
Bank
Trade receivables
Sales
Trade payables
Inventory
General expenses
Stationery expense
Credit losses
Salaries
Repairs and maintenance
Capital
Land and buildings
Drawings
N$
22,200
57,000
181,900
59,340
95,000
27,100
7,200
700
41,600
19,000
365,400
271,700
66,420
It was discovered that the bookkeeper had made a number of errors. These are detailed below:
1. Each of the above balances is a normal balance.
2. Trade receivables were understated by N$ 2700 because of an addition error.
3. The payment of N$3000 for stationery was posted in error to the inventory account.
4. Cash of N$125 paid for inventory was posted as a credit in the bank account and a debit
in the repairs and maintenance account.
5. Bank charges of N$300 had, as yet, been recorded only in the bank account.
6. General expenses of N$910 had been recorded on the credit side of the general expenses
account and on the credit side of the bank account.
7. A Salary of N$ 5340 for 30 November 2022 was paid but it was not recorded anywhere.
REQUIRED
' ; !•
Prepare a corrected Trial balance of Jumpin' Jack Enterprises as at 3f December 2022. (15)
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END OF EXAMINATION PAPER
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