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FINACIAL ACCOUNTING 101-2ND OPP-JULY 2024 |
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nAmlBIA UnlVERSITY
OF SCIEnCE Ano TECHnOLOGY
FACULTYOF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOROF ACCOUNTING AND BACHELOROF LOGISTICSAND SUPPLY
CHAIN MANAGEMENT
QUALIFICATION CODE: 07BGAC AND
07BLSC
LEVEL: 5
COURSE: FINANCIAL ACCOUNTING 101
COURSE CODE: FAC511S
SESSION: JULY 2024
DURATION: 3 Hours
PAPER: THEORY & CALCULATIONS
MARKS: 100
SECOND OPPORTUNITY EXAMINATION QUESTION PAPER
EXAMINERS:
Ms. H Kangala, Mr. H Namwandi, J Chikambi, Ms Y. Odio & Mr P
Mbangula,
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, where applicable.
3. A non-programmable calculator is permissible.
4. Show all your workings (where applicable).
This Question paper is made up of 8 Pages (Excluding the front page)
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Question 1
Multiple choice questions
15 Marks
Each of the following questions has only one correct answer. On your answer sheet, write
the letter which, in your opinion, represents the correct answer.
1. Which one of the following statements is incorrect?
(1 Mark)
a) According to the matching principle income, and costs incurred in generating that
income, must be brought into account during the same financial period.
b) According to the prudence concept, income should be recognized at the minimum
amount of estimation.
c) The policy of consistency requires that a specific basis, method, procedure or
approach, once chosen, should be maintained.
d) The going-concern principle requires that transactions and occurrences with no
essential bearing upon the nature and scope of the entity's activities should not be
brought into account.
2. The accountant of Golly Ltd ascertained that the returns inward journal had been
overcast by N$100. Which of the following ledger accounts will be affected by this
error?
(1 Mark)
a) Accounts receivable control accounts in the general ledger.
b) Purchases account in the general ledger.
c) Purchases return account in the general ledger.
d) Accounts payable control accounts in the general ledger.
e) None of the above
3. Which one of the following entries will cause the trial balance not to balance?
(1 Mark)
a) A credit purchase invoice was correctly entered as N$325 in the purchases journal, but
was posted as N$235 to the personal account of the accounts payable.
b) A discount of N$ granted by a supplier was credited to the Discount allowed account.
All other related accounts have been entered correctly.
c) The bank overdraft balance appears as a credit balance in the trial balance.
d) A credit sales invoice of N$1 090 was incorrectly entered as N$190 in the sales
journal and posted as such to the personal account of the accounts receivable.
e) None of the above.
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4. During January 2023 Gouws Dealers purchased goods to the value of N$6 000, one
third of which were sold for N$3 500 during January. Rental and electricity for the
month amounted to N$500 and N$80 respectively. Gouws uses a periodic inventory
system.
How much total expenses should Gouws Dealers recognise in their financial statement for
the month of January 20237
(2 Marks)
a) N$6 580
b) N$2 000
c) N$2 580
d) N$580
e) N$6,000
5. Accounting is a systematic process of identifying, measuring, recording, verifying,
summarizing, interpreting, and communicating financial information to users to assist
them in making economic decisions. At which stage in the accounting cycle does the
entity summarize and communicate financial information to users?
(1 Mark)
a) Financial statements.
b) Transaction.
c) Journals.
d) Ledgers.
e) Trial Balance.
6. Which of the following is true about the conceptual framework?
(1 Mark)
a) The framework assists the IASB in the development and review of accounting
standards.
b) The conceptual framework is an accounting standard.
c) In the case of a dispute between the framework and IFRS, the framework takes
precedence.
d) The International Accounting Standards Board (IASB) continually revises the
conceptual framework.
e) The accounting standards assist the IASB in the development and review of the
conceptual framework.
f) None of the above
7. Which of the following characteristics of financial statements are fundamental to the
usefulness of financial statements?
(1 Mark)
a) Relevance and comparability.
b) Understandability and faithful representation.
c) Relevance and faithful representation.
d) Understandability and comparability.
e) None of the above
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8. Which of the following is not a characteristic of faithfully represented financial
statements?
(1 Mark)
a) Financial statements must disclose all the necessary information.
b) Information should be free from prejudice and opinions.
c) Information should be comparable and verifiable by third parties.
d) Information presented should be accurate.
e) None of the above
9. Green Ltd bought a delivery vehicle from Cars Unlimited on 05 November 2023 for
N$200,000. Green Ltd can buy the same vehicle today at N$222,000 from AutoDealers
& co. Furthermore, Green Ltd can sell the vehicle in the market today for N$230,000
after incurring selling costs of N$5,000.
In which financial statement would Green Ltd recognize the transaction on November
05th, 2023?
(1 Mark)
a) Statement of profit and loss and other comprehensive income.
b) Statement of owner's equity.
c) Statement of financial position.
d) Statement of cash flow.
e) Accounting policies and explanatory notes.
f) None of the above
10. Plants and Things sold a delivery vehicle N$15,000 (15% VAT exclusive) on December
3l5t, 2020. The vehicle cost N$97,750 (15% VAT inclusive) at acquisition. Accumulated
depreciation on the date of delivery was 65,000. Which of the following applies to the
treatment of profit or loss on disposal?
(2 Marks)
a) Dr Profit on disposal; N$5,000
b) Cr profit on disposal; N$5,000
c) Dr Loss on disposal; N$5,000
d) Cr Loss on Disposal N$5,000
11. Plants and Things purchased a piece of machinery on the 02nd of January 2017 for
N$65,000 (VAT inclusive). The machine was installed and readily available for use on
the 31st of March 2017. At the time of purchase, Plants and Things anticipated 5 useful
years for the machine, with a residual value of N$S00 at the end of December 2021.
The asset was disposed on March 3l5t, 2021. When should Plants and Things de-
recognize this machine?
(1 Mark)
a) 02 January 2017
b) 31 March 2017
c) 31 December 2021
d) 31 March 2021
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12. Which of the following is associated with recognition of expenses?
A. An increase in Equity
B. An increase in drawings
C. An Increase in Liabilities or an increase in Assets
D. An Increase in Liabilities or a Decrease in Assets
E. A decrease in capital and an increase in Liabilities
F. An Increase in Assets or a Decrease in Liabilities
G. None of the above
(1 Mark)
13. Accounting is based on the principle of duality. What does this mean?
a) 2 elements are affected by the same transaction.
b) A transaction recorded twice in the income statement.
c) For every transaction, there are 2 debit entries.
d) For every transaction there is a debit and credit entry.
e) For every transaction, there are 2 credit entries.
f) None of the above
(1 Mark)
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Question 2
15 Marks
Ms Beauty Baloyi opens a hairdressing salon, Beauty's Hair, on 1 June 2023. The business uses
a periodic inventory system and entered into the following transactions in June:
1. 1 June 2023, Ms Beauty Baloyi deposited N$10 000 directly into the business's bank
account as a capital contribution.
2. 1 June 2023, She made an EFTpayment to Huurtu, to pay the month's rental of N$1
000.
3. 5 June 2023, Bought N$2 500 worth of equipment and N$845 worth of consumables
inventory from Head Suppliers and paid the amount of N$3 345 with the debit card of
the business.
4. 9 June 2023, Received money for services rendered paid directly into the bank account
of Beauty's Hair, N$350.
5. 10 June 2023, Ms Beauty Baloyi withdrew cash from the business account at an ATM
to pay her assistant's wages of N$200.
6. 15 June 2023, Bought stationery from Office Suppliers, N$80 and paid with a debit card
of the business.
7. 20 June 2023, Ms Beauty Baloyi withdrew N$1 500 cash from the business account at
an ATM. N$1 300 was used for Ms Baloyi's own use and N$200 was for wages.
8. 25 June 2023, Made a direct payment (EFT}to MTC to pay for a telephone account of
N$440.
9. 25 June 2023, Bought shampoo and other accessories from Head Suppliers and made
a direct payment into their bank account for the amount of N$550.
Required:
Use the format below to record the above transactions, to show the effect on the accounting
equation and the source document for each transaction. The illustration below is an example.
Date Assets
30
June
+ N$10 000 Vehicle
Equity
-
Liabilities
+
N$10000
Creditors
Source
document
Debit note
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QUESTION 3
50 marks
The following information relates to Black Ltd for the year ended 31 December 2023.
Bank
Debtors Control
Allowance for credit losses
Inventory 1/12/2022
20% Fixed Deposit X Bank
Capital
Creditors Control
5% Loan with XV Bank
Furniture
Accumulated Depreciation
Land and Buildings
Accumulated Depreciation
Petty Cash
Sales
Purchases
Cash Shortages
Interest Income
Commission Received
Rental Income
Rental Expenses
Bank Costs
Salaries and Wages
Credit Losses
Insurance
Sales returns
Donations
stationery
Purchases returns
Additional information:
Dr
47,023
32,670
10,500
10,200
66,000
500,000
500
45,300
500
16,000
2,820
33,551
1,500
6,660
591
4,100
2,110
780,025
Cr
3,320
339,973
57,000
59,000
29,700
146,400
83,819
2,040
14,460
42,000
2,313
780,025
1. Included in sales is N$300 in respect of a deposit paid by a client. The goods have not
yet been delivered.
2. The owner sublets a storeroom in the building for N$3,000 a month.
3. Received telephone bill of N$1,800 for the year on 30 December 2023
4. Physical stock count on 31 December 2023 revealed the following on hand:
• Inventory
N$15,000
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• Stationery N$1,055
5. S Mhata, an accounts receivable with a balance of N$2,000 was declared as insolvent.
A final amount of N$800 was received from his lawyers towards settling his debts.
Epandulo Ltd must write off the balance as irrecoverable.
6. The long-term loan of 5% was obtained on 01 October 2023.
7. The allowance for doubtful debts needs to be adjusted to 10% of outstanding
receivables.
8. Commission for the last 2 months of the year is still outstanding.
9. Epandulo Ltd purchased land and buildings on 1/1/2020 for a total of N$500,000. The
portion of the value of land was N$200,000 and N$300,000 for buildings. The value of
land is not depreciable. Buildings are depreciated using the diminishing balance
method, at a rate of 20%.
10. Furniture is depreciated at 15% per annum on the straight-line method.
Required:
a) Prepare adjusting journal entries to incorporate all the adjustments above. Ignore
narrations.
(27 Marks)
b) Prepare the statement of profit or loss for the year ended 31 December 2023.
{23 Marks)
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Question 4
The following information was extracted from the books of 55 Supermarket:
1.1 Balance at 1 March 2023:
Vehicle at cost
Equipment at cost
Accumulated depreciation: Vehicles
Accumulated depreciation: Equipment
N$28 000
N$2 800
N$14 268
N$543
20 Marks
1.2 The following transactions took place during the year in respect of non-current assets:
1.2.1 On 31 August 2023 55 Supermarket sold the delivery vehicle for N$7 200 cash to Mrs
Peterson. The proceeds from this sales transaction were used to finance the purchase
of another from Cape Motors Ltd for N$22 000 cash. The cost price of the vehicle sold
was N$12 000 and its accumulated depreciation amounted to N$6 455 on 1 March
2023.
1.2.2 On 28 February 2024 55 Supermarket sold used equipment for N$720 cash to Mr
Moon. The cost price of the equipment sold was N$900 and its accumulated
depreciation amounted to N$164 on 1 March 2023.
1.3 Depreciation must still be provided for as follows:
Vehicles: 20% p.a - Diminishing balance method
Equipment: 10% p.a - Diminishing balance method
Depreciation is calculated on a monthly basis.
1.4 The financial year commences on 1 March 2023.
NB: Where necessary, round off your answers to two decimal places
Required:
Prepare the following ledger accounts, properly balanced/closed off, for the year ended 28
February 2024.
1.1 Vehicle at cost
1.2 Equipment at cost
1.3 Accumulated depreciation: Vehicles
1.4 Accumulated depreciation: Equipment
1.5 Asset disposal accounts (vehicle & equipment)
(3 marks)
(2 marks)
(4 marks)
(3 marks)
(8 marks)
*End of Question Paper*
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