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FAC511S-FINANCIAL ACCOUNTING 101-2ND OPP-JULY 2022 |
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nAm I BIA unlVERS ITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENTOF ECONOMICS,ACCOUNTINGAND FINANCE
QUALIFICATION: BACHELOROF ACCOUNTINGAND BACHELOROF LOGISTICSAND SUPPLYCHAIN
MANAGEMENT
QUALIFICATIONCODE: 07BOAC AND 07BLSC LEVEL:5
COURSE: FINANCIALACCOUNTING101
COURSECODE: FAC511s
SESSION:JULY2022
PAPER:THEORY& CALCULATIONS
DURATION: 3 Hours
MARKS: 100
EXAMINERS:
MODERATOR:
SECOND OPPORTUNITY EXAMINATION
Ms Y Andrew, Mr G Jansen, Ms H Kangala, Ms M Amakali and Mr R
Kampungu
Mr C Mahindi
INSTRUCTIONSTO 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).
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QUESTION 1
Each question is worth 1 mark unless indicated otherwise.
MULTIPLE CHOICE QUESTIONS
(60 marks)
1. Which of the following is not a branch of accounting?
A. Auditing.
B. Cost Accounting.
C. Human Resource Accounting.
D. Management Accounting.
2. The fundamental qualitative characteristics of useful financial information are:
A. Relevance and reliability.
B. Relevance, reliability and comparability.
C. Relevance and faithful representation.
D. Comparability, relevance and faithful representation.
3. All of these are common features of business entities, EXCEPT
A. Profitability.
B. Goals.
C. Social Limitations.
D. Controlled Performance.
4. A sole-trader is a person who _____
?
A. Sets up the safest form of business entities.
B. Has exclusive responsibility towards the owner.
C. Is legally liable for any debts of the business.
D. Forms a business with another single person.
5. The right to receive money in the future is called?
A. Account payable.
B. Liability.
C. Account receivable.
D. Revenue.
6. Accounting provides which of the following information?
A. Qualitative information.
B. Quantitative information.
C. Financial information.
D. All of the above.
7. Which does not form part of the general definition of accounting?
A. Provides information.
B. Useful in decision making.
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C. Processes transactions of financial character.
D. Primarily concerned with historical data.
ANSWER QUESTIONS 8-11 USING THE BELOW INFORMATION
Easy Pots Enterprises is a local business that sells plastic, glass, and ceramic plant pots. The
following events outline the operations of Easy Pots for the month of March 2022. Easy Pots uses
a periodic inventory system and has a financial year end of March 31, 2022.
• 01/03/2022 The Assistant Accountant made a call to Crazy Ceramics, to enquire about
and ask for an offer for 10 ceramic pots. The 2 entities have a credit agreement.
• 03/03/2022 The assistant accountant placed an order for 10 ceramic pots with Crazy
Ceramics. The total amount for the order is N$5,000.
• 05/03/2022 Crazy Ceramics delivered all the goods ordered and issued Easy Pots a 10%
discounted invoice.
• 06/03/2022 Returned one ceramic pot worth N$300 to Crazy Ceramics
• 07/03/2022 Made an EFT payment of N$1500 to Crazy Ceramics to settle 2 of 4
outstanding invoices
• 08/03/2022 Wrote off N$500 worth of accounts receivable due to a struggling Mrs. Smith.
• 10/03/2022 Deposited N$2,000 into a fixed deposit account with FNB.
• 15/03/2022 Owner took N$200 worth of office stationery for his children's school supplies.
8. In which book of original entry should Easy Pots record the transaction of 05/03/2022?
A. Cash book journal.
B. Sales journal.
C. General journal.
D. Purchases journal.
9. In which book of original entry should Easy Pots record the transaction of 08/03/2022?
A. Cashbook journal.
B. Petty cashbook.
C. Sales journal.
D. General journal.
10. Which of the following represent the effects of the transaction on 10/03/2022 on the
accounting equation? Use the equation: A= OE+ L.
A. Asset; -2 000 = Equity; -2 000 + Liability; nil.
B. Asset; -2 000 = Equity; nil + Liability; -2 000.
C. Asset; +2 000 = Equity; +2 000 + Liability; nil.
D. Asset; +2 000 = Equity; nil + Liability; nil.
Asset; -2 000.
E. Asset; +2 000 = Equity; nil + Liability; -2 000.
F. Asset; +2 000 = Equity; nil + Liability; nil.
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Asset; +2000.
11. How does the transaction on 15/03/2022 affect Easy Pots' accounting equation? Use
the equation: A= OE+ L.
A. Asset; -200 = Equity; -200 + Liability; nil.
B. Asset; nil = Equity; -200 + Liability; nil.
Equity; +200.
C. Asset; +200 = Equity; -200 + Liability; nil.
D. Asset; nil= Equity; -200 + Liability; nil.
Equity; -200.
12. You are the accountant of CompuTec CC. A cash sale to Solly amounted to N$13 800
(including VAT at 15%). How will you record the transaction in the accounting records of
CompuTec CC?
A DR Sales 13 800; CR Cash 13 800.
B. DR Cash 12 000; CR Output VAT 1 800; CR Sales 12 000.
C. DR Cash 12 000; CR Input VAT 1800; Sales 12 000.
D. DR Cash 13 800; CR Sales 13 800.
13. Which one of the following is an example of an exempt supply?
A Fuel.
B. Residential Electricity and water.
C. Fresh milk.
D. International transport.
14. Speedy Ltd is a registered VAT vendor. Speedy Ltd's total sales of goods and services
amounted to N$57 500 (including VAT at 15%) for the two-month VAT period ending 30 April
2022. Speedy Ltd has the following expenses including VAT at 15% (where applicable) for
the same period: Bank charges N$2 300; Fuel costs N$5 750; Printing and stationery N$3
450; Salaries and wages N$18 400; and Rent N$25 300. Calculate Speedy Ltd's Net VAT
payable to or refundable from Namibia Revenue Agency for its two-month VAT period ending
30 April 2022.
A Payable N$300.
B. Payable N$3 450.
C. Refundable N$950.
D. Payable N$3 968.
15. Wear&T CC purchased machinery on 02 January 2018 for N$97 750 (including VAT at 15%).
The machine was installed and readily available for use on the 31 May 2018. At the time of
purchase, the useful life of the machine was 5 years, with a residual value of N$5 000 at the
end of December 2022. The machine was disposed on 31 March 2022. When should Wear&T
de-recognize this machine?
A 02 January 2018.
B. 31 March 2022.
C. 31 March 2018.
D. 31 December 2022.
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16. Which of the following will not form part of the initial cost of an item of property, plant and
equipment?
A Refundable taxes.
B. Import duties.
C. Costs of bringing the asset to its intended location.
D. Installation costs.
17. Which of the following items does not form part of a set of financial statements?
A Trial Balance.
B. Statement of profit or loss and other comprehensive income.
C. Statement of financial position.
D. Statement of cash flows.
18. Which of the following items is classified as a non-current asset?
A Long- term Investments.
B. Cash and Bank.
C. Accrued Income.
D. Prepaid expense.
19. Liverpool FC, has a 31 December financial year-end, the entity receives rental income of N$4
000 per month, as at 31 December 2021 the rental income account reflected a credit balance
of N$44,000 on the Trial Balance. What adjustment would you make to correct the rental
income balance on the post-adjustment trial balance?
A Dr - Accrued income N$4 000; Cr - Rental income N$4 000.
B. Dr - Bank N$4 000; Cr - Rental income N$4 000.
C. Dr - Bank N$4 000; Cr - Rental Expense N$4 000.
D. Dr - Rental income N$4 000; Cr - Accrued income N$4 000.
20. Sales Invoices are first entered in which book of first entry:
A The Sales journal.
B. The Cash Book.
C. The Purchases Journal.
D. The Sales Account.
21. What is the guiding accounting principle in revenue recognition?
A Net realizable value.
B. Prudence concept.
C. Accrual basis.
D. Perpetual inventory system.
22. Which of the following is not a step in recognizing revenue from contracts?
A Identify performance obligations in the contract.
B. Recognize revenue after satisfaction of performance obligation.
C. Identify the customer in the contract.
D. Determine the transaction price.
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23. Which from the following steps in revenue recognition determines measurement?
A Step 1.
B. Step 2.
C. Step 3.
D. Step 5.
24. Which is not required to recognize a contract in accordance with IFRS 15?
A Each party's rights regarding the goods/services transferred can be identified.
B. Identifiable payment terms.
C. Contract should be in writing.
D. Expectation of a change in the entity's future cash flow.
25. Which of the following does not determine the cost of inventory?
A Non-refundable import duties.
B. Delivery cost.
C. Inventory storage cost.
D. Inventory design fees.
26. What does step 4 of the IFRS 15 revenue recognition process entail?
A Deducting VAT from selling price.
B. Determining the performance obligation.
C. Assigning transaction price to performance obligation.
D. Determining the transaction price.
27. Which type of inventory is presented in the statement of financial position?
A Cost of sales.
B. Opening inventory.
C. Whichever is lower between cost and Net realizable value.
D. Closing inventory.
28. Refurbishing costs are revenue in nature and should be capitalised to the asset? Indicate
whether this statement is True or False?
29. Land is a depreciable asset. Indicate whether this statement is True or False?
30. Accrued expenses are expenses paid in current period, which relate to the current period.
Indicate whether this statement is True or False?
31. The total assets of Brown Limited amounts to N$300 000. Because of the current state of the
economy, the entity is heavily dependent on debt, which caused its total equity to be three
quarters (¾) of total liabilities.
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Calculate the value of Brown's total owner's equity rounded off to the nearest whole number.
(2 marks)
A N$128 571.
B. N$171 429.
C. N$225 000.
D. N$75 000.
32. Brown Limited has the following liabilities and equities: Bank overdraft N$4 500, income
received in advance N$1 200, Payables N$5 000, Capital contribution N$6 000, Net Loss N$2
000 and Drawings N$700.
Calculate the value of assets? (2 marks)
A N$14 000.
B. N$19 400.
C. N$18 000.
D. N$16 800.
E. N$12 800.
33. Brown Limited has the following accounts: Inventory N$3 000, accrued income N$1 500,
income received in advance N$1 200, Furniture N$5 000, accrued expenses N$1 000,
Payables N$5 000, Receivables N$6 000 and Loan: Nedbank N$2 000.
What is the capital amount? (2 marks)
A N$6 300.
B. N$35 400.
C. N$13 300.
D. N$5 700.
34. Wear&T CC (registered VAT vendor) purchased machinery on 02 January 2018 for N$97 750
(including VAT at 15%). The machine was installed and readily available for use on 31 March
2018, at the financial year end. At the time of purchase, the useful life of the machine was 5
years, with a residual value of N$5 000. The machine was disposed on 31 March 2022. What
will the accumulated depreciation of the machine be on the date of disposal? (2 marks)
A N$64 000.
B. N$68 000.
C. N$72 250.
35. At the beginning of January 2021 the manager of Nation Building Entity bought a brick
making machine costing N$ 80 000.00 for business purposes. Depreciation is to be
charged for the year on the machine at the rate of 10% on cost, using straight line
method depreciation. The financial period of Nation Building Entity ends on 31
December each year. Ignore VAT.
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In the statement offinancial position as at 31 December 2022 the carrying amount of the brick
making machine will be recorded as. (2 marks)
A N$ 72 000.
B. N$ 64 000.
C. N$ 55 000.
D. N$ 62 000.
36. Below find a pre-adjusting trial balance of RUSKRA Entity until 31 March 2022. The
accountant asked for your assistance with the preparation of the financial statements of
RUSKRA Entity for the reporting period ended 31 March 2022:
I
I
!Sales
DR
CR
N$
N$
2 724 000
!Purchases
1 872 000
!Freight in
12 000
!Returns Inwards
50 000
!Return outwards
15 000
!Credit losses/ Bad debts
37 450
!Rent expense
74 450
!Stationery
120 000
!Employee Benefit expenses
245 000
iWater and electricity
58 300
!Depreciation
46 000
IInventory (1 April 2018)
200 000
I
ADDITIONAL INFORMATION:
1. On 3 October 2021 Receivable Shoprite's debt was written off as irrecoverable. (This
write-off has already been appropriately recognised.) On 31 March 2022 the liquidator of
Receivable Shoprite's insolvent estate deposited an amount of N$19 200 directly into
RUSKRA's bank account by means of an EFT. This amount is RUSKRA's portion of a
liquidation distribution made to Receivable Shoprite's payables.
2. An inventory count of Trading Inventory on hand on 31 March 2022 determined that the
cost of Trading Inventory on hand amounted to N$15 000.
3. An inventory count of stationery on hand on 31 March 2022 determined that the cost of
stationery on hand amounted to N$13 000.
4. The water and electricity account for March 2022 to the amount of N$5 300 was
received on 10 April 2022 from Payable City of Windhoek and is payable before 20 April
2022.
5. The March 2022 payroll still needs to be accounted for. The following amounts were
extracted from the payroll for March 2022:
Gross salaries: N$84 000
Net salaries: N$52 000
Calculate the gross profit figure for RUSKRA Entity. (5 marks)
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A. N$2 054 000.
B. N$620 000.
C. N$852 000.
D. N$252 000.
37. Delax (Pty) Ltd made sales of N$90 000, goods returned to suppliers of N$5 500 and goods
returned by customers worth N$6 000. Calculate the net sales. Ignore VAT (3 marks)
Select the correct option:
A. N$84 500.
B. N$84 000.
C. N$90 000.
D. N$95 000.
38. Zeta Ltd has the following balances for the year end 28 February 2022. Opening balances
as at 1 March 2021 were as follow:
Account name
N$
Lonq term loan
25 000
Capital contribution
120 000
Accumulated income/retained income
60 000
Drawinqs
30 000
Net profit for the period ended 28 February 2022 amounted to N$55 600
Calculate the total equity from the balances below: (3 marks)
A. Total equity N$230 600.
B. Total equity N$205 600.
C. Total equity N$265 600.
39. Given a purchase invoice showing 5 items of N$ 80 each, less trade discount of 25 % and
cash discount of 5 %, if paid within the credit period, calculate what your payment would be?
(3 marks)
A. N$ 285.
B. N$ 280.
C. N$ 260.
D. N$300.
40. Easy Baskets Ltd sells custom made baskets at 25% mark-up. They have product 81 which
cost N$1,500 per unit. They currently have 100 units of product 81 on hand.
Calculate the selling price per unit of product 81? (3 marks)
A. N$1 875.
B. N$500.
C. N$375.
D. N$2 000.
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41. Easy Baskets Ltd sells custom made baskets. They have product 82 with a cost/unit of
N$2,000. In the past 2 months they sold this product at a selling price of N$2,500. However,
they received an order to sell the remaining 150 units in stock for N$3,000 next month. For
every sales transaction, the company incurs total sales and transport cost of N$800. At which
total value should Easy Baskets carry product 82 in their books today? (3 marks)
A. N$300 000.
B. N$375 000.
C. N$330 000.
D. N$255 000.
QUESTION 2
(40 marks)
National Entity's current reporting date is 31 December 2021. On 31 December 2021, the
following balances appeared in the accounting records of National Entity: The entity makes use
of a perpetual inventory system.
Additional
information
DEBIT
CREDIT
Cost of sales
Salaries
Water and electricity
Office supplies - expense
Insurance expense
Credit losses
Rent expense
Bank charges
Depreciation - machinery
Depreciation - furniture and equipment
Interest-expense on supplier's loan
Sales
Interest-income on favourable bank balance
Land
4140 000
1730000
2
328 000
3
402 000
4
39 000
52 000
6
440 000
48 200
8
0
7
76 000
8
0
9100 000
10 500
720000
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Machinery at cost price
8
900 000
Accumulated depreciation - machinery
8
0
Furniture and equipment at cost price
950 000
Accumulated depreciation - furniture and equipment
7
266 000
Receivables (A to I) - total of individual balances
852 000
Receivable J
5
24 000
Trade inventories
1
829 000
Bank
802 000
Office supplies on hand on 31 Dec 2019
3
32 000
Insurance expense prepaid on 31 Dec 2019
4
17 800
Capital
1500 000
Retained earnings - balance on 1 Jan 2021
810 000
Drawings
560 000
Trade payables (K to P)- total of individual balances
355 500
Payable City of Windhoek
2
0
Supplier's loan
8
900 000
12 942 000 12 942 000
ADDITIONAL INFORMATION:
The following transactions and events still have to be recognised in the records of National
Entity:
1. The perpetual inventory system indicates that the following two events in respect of trade
inventories still have to be recognised:
1.1 Obsolete and damaged inventory items with a cost of N$22 000 on 31 December 2021
have to be written off. The write-off has already been authorised by the owner.
1.2 During December 2021, the owner took inventories with a cost price of N$8 000 for
personal use.
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2. The statement for water and electricity for December 2021, which reflects an amount due
of N$26 500 in respect of the water- and electricity usage for December 2021, was received
on 8 January 2022 from City of Windhoek and still has to be recognised.
3. Office supplies on hand on 31 December 2021 amounts to N$42 000 and still has to be
recognised. The necessary journal entry in respect of office supplies on hand on
31 December 2020 also still has to be recognised.
4. Insurance premiums are paid annually on 1 July. The annual insurance premium, which
was paid on 1 July 2021, amounted to N$39 000. The full premium was debited against the
insurance expense for 2021. The insurance premium prepaid on 31 December 2021 still
has to be recognised. The necessary journal entry in respect of the insurance expense
prepaid on 31 December 2020 also still has to be recognised.
5. After numerous fruitless attempts over a period of eight months, Receivable J could not be
located. It was consequently decided to write-off the amount due by Receivable J as
irrecoverable. The write-off has already been authorised by the owner and still has to be
recognised.
6. Due to an oversight, the lease payment for December 2021 to the amount of N$40 000 was
paid only on 16 January 2022. The necessary journal entry still has to be recognised.
7. The depreciation expense on furniture and equipment for 2021 was calculated and
recognised as N$76 000. The amount should however be N$95 000. The necessary
adjustment still has to be recognised.
8. On 2 January 2021, National Entity utilised a supplier's loan for the purchase of a machine.
The written loan agreement with the supplier inter a/ia stipulates that the interest rate is 10%
per year and that the interest and the primary debt is repayable in one amount on 31
December 2022. At the end of each year, the interest is added to the primary debt. The
interest schedule is as follows:
Date
Detail
Interest at 10% per
year
Amortised cost of the loan
2 Jan 2021
Primary debt
900 000
31 Dec 2021
Interest
90000
990 000
31 Dec 2022
Interest
99 000
1089 000
189 000
The applicable interest-expense for 2021 still has to be recognised.
On 2 January 2021, the machine was received and put into service. The estimated useful life of
the machine is 6 years. The depreciation expense for 2021 still has to be recognised in
accordance with the straight-line method.
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REQUIRED:
a) Prepare the statement of profit or loss and other comprehensive income of National Entity
for the reporting period ended 31 December 2021.
(22)
b) Prepare the statement of financial position of National Entity for the reporting period as at
31 December 2021.
(18)
Note: VAT must not be accounted for.
NB! Round off all amounts to the nearest N$ and show all workings!
END OF SECOND OPPORTUNITY EXAMINATION
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