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BAC611C-BUSINESS ACCOUNTING 2A-1ST OPP-NOV 2024 |
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nAmlBIA
UnlVERSITY
OF SCIEnCE
TECHnOLOGY
HAROLD PUPKEWITZ
GraduateSchoolof Business
FACULTYOF COMMERCE,HUMAN SCIENCESAND EDUCATION
HAROLD PUPKEWITZGRADUATESCHOOLOF BUSINESS
QUALIFICATION: DIPLOMA IN BUSINESSPROCESSMANAGEMENT
QUALIFICATION CODE: 0GDBPM LEVEL: 6
COURSECODE: BAC611C
COURSENAME: BUSINESSACCOUNTING 2A
SESSION:NOVEMBER 2024
PAPER:PAPER1
DURATION: 3 HOURS
MARKS: 100
FIRSTOPPORTUNITYEXAMINATION QUESTIONPAPER
EXAMINER
Lameck Odada
MODERATOR Gerhardt Sheehama
INSTRUCTIONS
1. This question paper comprises 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 9 PAGES(including this front page)
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QUESTION 1
[30 MARKS]
For questions 1.1 - 1.15 write the answer only (the correct letter chosen) in your answer
book and not on the question paper.
1.1 The purpose of the Conceptual Framework is:
a) To assist the International Accounting Standards Board in developing IFRS
Standards.
b) To assist preparers of IFRS financial statements to develop consistent accounting
policies when no IFRS Standard applies to a particular transaction or other event,
or when a Standard allows a choice of accounting policy.
c) To assist all parties in understanding and interpreting IFRS Standards.
d) All of the above
1.2 The objective of general-purpose financial reporting, as described in the Conceptual
Framework, is to:
a) Provide information to regulators.
b) Support the entity's tax return.
c) Meet the information needs of an entity's stakeholders.
d) Provide financial information about the reporting entity that is useful to existing and
potential investors, lenders, and other creditors in making decisions relating to
providing resources to the entity.
1.3 Which of the following does the Conceptual Framework identify as the primary users of
general-purpose financial reports?
a) Employees, investors, and trade union representatives.
b) Existing and potential investors, lenders, and other creditors.
c) Lenders and other creditors and customers.
d) Existing and potential investors, government agencies, and the general public
1.4 The fundamental qualitative characteristics of useful financial information are:
a) Comparability and relevance
b) Relevance and reliability
c) Relevance, reliability, and comparability
d) Relevance and faithful representation
1.5 For information to be relevant, it has to possess:
a) Only predictive value
b) Only confirmative value
c) Both predictive and confirmatory value
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d) Either predictive or confirmatory value, or both
1.6 Consolidated financial statements provide information about the assets, liabilities, equity,
income, and expenses of both the parent and its subsidiaries as:
a) Separate reporting entities
b) A partnership
c) A single reporting entity
d) A legal entity
1.7 The Conceptual Framework defines a liability as:
a) A present obligation of the entity to transfer an economic resource as a result of
past events.
b) A present obligation of the entity arising from past events, the settlement of which
is expected to result in an outflow from the entity of resources embodying
economic benefits.
c) An amount the entity may have to pay after the end of the reporting period
d) None of the above
1.8 In explaining the meaning of the term 'obligation' in the definition of a liability,
the Conceptual Framework states:
a) That an obligation is a duty or responsibility that an entity has no practical ability
to avoid
b) That an obligation can arise from a duty or responsibility conditional on a future
action that the entity itself may take if the entity has no practical ability to avoid
taking that action.
c) That an obligation can arise from an entity's customary practices, published
policies or specific statements, if the entity has no practical ability to avoid those
practices, policies or statements.
d) All of the above
1.9 Recognition is the process of:
a) Capturing, for inclusion in the statement offinancial position or the statement(s) of
financial performance, an item that meets the definition of one of the elements of
the financial statements-an asset, a liability, equity, income, or expenses.
b) Determining where an item should be presented in the financial statements.
c) Sorting assets, liabilities, equity, income, or expenses based on shared
characteristics
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d) Adding together of assets, liabilities, equity, income, or expenses that have shared
characteristics.
1.1O What does the Conceptual Framework state about derecognition?
a) For an asset, derecognition normally occurs when the entity loses control of all or
part of the recognised asset.
b) For a liability, derecognition normally occurs when the entity no longer has a
present obligation for all or part of the recognised liability.
c) Derecognition removes all or part of a recognised asset or liability from an entity's
statement of financial position.
d) All of the above
1.11 The Conceptual Framework describes prudence as:
a) The exercise of caution when making judgments under conditions of uncertainty
b) A bias towards understating assets or income and towards overstating liabilities or
expenses
c) A preference towards the earlier recognition of expenses and liabilities than of
income and assets
d) A mechanism for smoothing profits over time (understate profits in good years and
overstate profits in bad years)
e) A form of accounting conservatism
1.12 Which statement is included in the Conceptual Framework?
a) Relevance is a fundamental qualitative characteristic of useful financial
information.
b) Financial information without both relevance and faithful representation is not
useful.
c) Enhancing qualitative characteristics cannot make information useful if that
information is irrelevant or does not provide a faithful representation of what it
purports to represent.
d) All of the above
e) None of the above
1.13 The Conceptual Framework defines an asset as:
a) A resource controlled by the entity due to past events and from which future
economic benefits are expected to flow to the entity.
b) A present economic resource controlled by the entity due to past events.
c) A right to receive income or reduce expenses in the future.
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1.14
1.15
d) None of the above
Which measurement bases are categorised as current value measurement bases in
the Conceptual Framework?
a) Value in use
b) Fair value
c) Fulfilment value
d) Current cost
e) All of the above
Which of the following factors is (or are) considered in selecting a measurement basis?
a) Variability of cash flows of the asset or liability
b) How the asset or liability contributes to future cash flows, which depends in part
on the nature of an entity's business activities
c) The level of measurement uncertainty associated with a particular measurement
basis
d) All of these
15 X 2 = 30
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QUESTION 2
[25 MARKS]
A partnership is an unincorporated business structure that two or more parties form
and own together. These parties, called partners, may be individuals, corporations, other
partnerships, or other legal entities. Partners may contribute capital, labour, skills,
and experience to the business.
The balance of the partners' capital accounts are as follows:
Partner
L
M
s
Profit for the past year was N$48 000
balance
N$60 000
N$80 000
N$100 000
REQUIRED: Divide the profit among the partners in each of the following unrelated
cases
a) There is no agreement regarding the ratio in which profit is to be divided
b) Partner L gets a salary of N$30 000 per annum. The rest of the profit is
divided equally among the three partners
c) Partner L gets a salary of N$30 000 per annum. The rest of the profit is
divided in relation to the capital
d) Partner L gets a salary of N$30 000 per annum. Each partner is entitled
to 8% interest per year on their capital. The balance is divided among L,
M, and S in the ratio 2:3:5
e) Identify any three (3) most common types of partnerships
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QUESTION 3
[25 MARKS]
The following infqrmation was extracted from the books of the Emilia Entity for the year ended 31
January 2024. During the year the following transactions took place 0/AT included where
applicable):
Sales (Credit)
Sales (Cash)
Returns inwards (all on credit)
Credit purchases
Returns outwards (50% credit, 50% cash)
Cash payments made by receivables
Cash paid to payables
Discounts received
Discounts allowed
Interest chan:ied on overdue accounts by payables
Dishonoured cheque (included in cash receipts above)
Bad debts
Irrecoverable debts recovered (original write-off included in bad debts above)
Contra entry between receivables and payables
Refunds from payables
Refund to receivables
N$
575,000
5,500
37,100
471,035
40,300
492,600
444,205
11,800
9,850
2,735
1,085
12,430
1,710
4,875
1,095
1,665
Prior year balances were as follows:
Payables balances
Receivables balances
Debit (N$)
2,075
71,380
Credit (N$)
81,225
5,600
The following additional information as at 31 January 2024 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:
a) Prepare the payables control account for Emilia Entity for the year ended
31 January 2024.
b) Prepare the receivables control account for Emilia Entity, for the year
ended 31 January 2024.
c) Explain the meaning of a financial instrument
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QUESTION 4
[20 MARKS]
Financial analysis examines a company's performance in the context of its industry and economic
environment 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.
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 2023.
Statement of financial position as at 31 December 2023
ASSETS
Non-current assets
Property, plant, and equipment
Investments
Current assets
Inventories
Receivables
Cash assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Share caoital and reserves
Share capital
Other reserves
Retained earnings
2023
9 450 000
9 450 000
-
36 045 000
20 925 000
12 150 000
2 970 000
45 495 000
16 335 000
7 000 000
-250 000
9 585 000
2022
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
Lonq 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
14 175 000
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 loss for the year ended 31 December 2023
Sales revenue (100% credit sales)
Cost of sales
Gross profit
Operatina expenses
Depreciation
Profit before interest and tax
Finance costs
Profit before tax
Income tax expense
Profit from continuing operations
loss on discontinued operations
Profit for the year
2023
85 320 000
63 990 000
21 330 000
12 636 000
810 000
7 884 000
2 430 000
5 454 000
2 430 000
3 024 000
1 080 000
1944000
2022
74 250 000
54 945 000
19 305 000
11 070 000
675 000
7 560 000
1485000
6 075 000
2 160 000
3 915 000
-
3 915 000
Statement of changes in equity for the year ended 31 December 2023
Balance on 31 December
Comprehensive income for the year
Dividends-preference shares
Dividends-ordinary shares
Balance on 31 December
2023
8 370 000
1 944 000
10 314 000
-324 000
-405 000
9 585 000
2022
5 184 000
3 915 000
9 099 000
-324 000
-405 000
8 370 000
REQUIREMENT: Assume a 365-day year, and compute the following ratios for
2022 and 2023
d) Current ratio
e) Quick/Acid test ratio
f) Debtors' collection period
g) Creditors settlement period
h) Debt ratio
i) Identify and briefly describe any five (5) limitations of ratio analysis
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END OF EXAMINATION QUESTION PAPER
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