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FAC511S- FINANCIAL ACCOUNTING 101- 2ND OPP- NOV 2023 |
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n Am I BIA u n IVER s ITY
OF SCIEnCE Ano TECHnOLOGY
FACULTYOF COMMERCE, HUMAN SCIENCESAND EDUCATION
DEPARTMENTOF ECONOMICS,ACCOUNTING AND FINANCE
QUALIFICATION: BACHELOROF ACCOUNTING
QUALIFICATIONCODE: 07BOAC
COURSE:FINANCIALACCOUNTING 101
DATE: NOVEMBER 2023
DURATION: 3 HOURS
LEVEL:5
COURSECODE: FACSllS
SESSION:THEORY& CALCULATIONS
MARKS: 100
EXAMINER (S}:
MODERATOR:
SECONDOPPORTUNITYQUESTION PAPER
Mr G Jansen, Mr P Mbangula, and Mrs. El Garas
Ms G Kafula
INSTRUCTIONSTO CANDIDATES
1. This paper consists of 9 pages (excluding cover page).
2. Answer all the questions and in black or blue ink only.
3. Round off all amounts to the nearest Namibian Dollar.
4. The marks shown against the requirement(s) for every question should be regarded as an indication of the
expected length and depth of your answer.
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QUESTION 1
(60 MARKS)
MULTIPLECHOICEQUESTIONS
Each question will carry 2 marks. Write down the number of the question with your correct
answer on your answer sheet, e.g.
1.C.
1. If the current cost measurement basis is used, assets are measured at
(a) Replacement cost
(b) The amount which could be obtained by selling them
(c) The amount paid to acquire them
(d) Present value
2. Which of the following characteristics are not fundamental qualitative characteristic according to the IASB
conceptual framework of financial reporting?
(a) Relevance
(b) Reliability
(c) Faithful representation
3. Which of the below is not a likely an advantage of the global harmonization of accounting standards?
(a) Greater comparability between firms
(b) Greater ease of preparing consolidated financial statements
(c) Greater comparability with legal systems
(d) Easier for large international accounting firms
4. Which description does not define information that is relevant to users of financial information?
(a) Information that is free from error, bias and is a faithful representation of events
(b) Information that has been prudently prepared
(c) Information that is comparable from one period to the next
(d) Information that influences the decision of users
5. Which of the following explains the value that relevant information contains?
(a) Confirmatory value
(b) Instructive value
(c) Fair value
(d) Approximate value
6. The fundamental qualitative characteristics of financial information are
(a) Relevance and comparability
{b) Relevance and faithful representation
(c) Faithful representation and comparability
(d) Verifiability and understandability
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7. A receivables ledger control account had a closing balance of N$8,500. It contained an error with a debit for the
purchase ledger of N$400, but this had been entered in the receivables control account.
The correct balance on the control account should be:
a) N$7,700 debit
b} N$8,400 debit
c) N$8,100 debit
d) N$8,900 debit
8. Epandulo CC, a VAT registered vendor sells air conditioners. The following information relates to their
inventory for the financial year-ended on 28 February 2020:
Inventory at 01 March 2019 - 100 air conditioners; Purchasesfor the year - 250 air conditioners; Salesfor
the year- 300 Air conditioners; Salesreturned - 5 air conditioners. In December 2019, their delivery truck
was in an accident which damaged some inventory items. 3 air conditioners that were damaged from the
accident could not be recovered from insurance. Due to cheaper prices at Cactus air conditions, Epandulo
CC'management decided to submit an order for 50 air conditioners on March 10th, 2020.
Given information above, what is their closing inventory (units) at financial year end?
a) 50 air conditioners
b) 100 air conditioners
c) 102 air conditioners
d) 52 air conditioners
9. Kafoi's Nursery uses a perpetual inventory system. They recently sold snake plants at a total sales value of
N$5,000. They base their gross profit on a mark-up of 10%. Which accounts caused an effect the debit side
of their books at recognition of this transaction?
a) Bank and Cost of goods sold
b) Bank
c) Purchases and cost of goods sold
d) Bank and inventory
10. The following transactions relate to the sugar inventory of Hambelela Sweets Ltd for the Month of January
2020. The company uses the First in first out method of valuing inventory.
01/01/2020: Opening inventory
- 20 units at N$22.00
05/01/2020: Purchases
- 20 units at N$25.00
06/01/2020: Sales
- 30 units
The selling price for 1 packet of sugar is N$26.00, but the company allows a 5% discount for payments
within 1 week from purchase.
Given the information above, what is the total cost value of closing inventory?
a) N$247
b) N$250
c) N$220
d) N$235
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11. Kamunu Trading, a company with a 31 December year end had the following balances of property, plant
and equipment at 1 January 2019: Use the information below to answer questions 11 to 13.
Asset Item
Plant
Machinery
Fixtures and fittings
Cost price
N$
1500 000
800 000
1240 000
Accumulated
depreciation
N$
380 000
240 000
248 000
Depreciation policy
15% p.a straight line
10% reducing balance
5% p.a straight line
The following transactions occurred during the year:
1 May 2019
A new machine was purchased costing N$ 126 500 and was paid by electronic funds transfer (EFT),its residual value
is expected to be N$15 000. The same depreciation policy for machinery applies.
30 June 2019
Fixtures and fittings costing N$300 000 and a carrying amount of N$210 000 at January 2019 were sold for
N$250 000
1 November 2019
The following costs paid by bank transfer where applicable, were incurred in respect of an extension to the plant
owned by Kamunu Trading:
N$
Materials
Labour
General administration
Cost of borrowing funds to finance extension
35 200
22 000
32 000
55 000
Calculate the cost of Plant at initial recognition according to IAS 16.
a) 1,500,000
b) 1,712,500
c) 1,612,200
d) 1,555,000
12. Calculate the Fixture and Fittings Accumulated Depreciation balance as at the end of December 2019.
a) 248,000
b) 97,500
c) 255,000
d) 205,000
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13. Calculate the Machinery Accumulated Depreciation balance as at the end of December 2019.
a) 304,333
b) 240,000
c) 300,333
d) 250,000
14. Ernesto Trading CC depreciates Machinery (bought in Question 1 above) using Units of Production Method.
Total Production Capacity was estimated at 150 000 units on acquisition date. During the Current Financial Year
ended 31st December 2019, only 16 895 units were produced. The deprecation recognizable is:
a) N$ 43 912
b) N$ 50 499
c) N$ 42 083
d) N$ 45 836
15. Heinz, Owner of a residential property, decided to get into the hospitality business and turn a subsection of his
property into Rest-a-While AirBnB, accommodating guests. His total annual receipts amount to N$ 137 250 on
average. His rate is N$ 2 200 per night excluding VAT. (VAT@ 15%). Latest guest, Mr John Simms resided at Rest-
a-While for 7 nights and was billed accordingly. According to the VAT ACT of 2000, the VAT consequences of this
transaction are:
a) None, because the business is carried out on a residential property and residential accommodation is
an exempt supply.
b) None, because the business is carried out on a residential property and residential accommodation is
a zero-rated supply.
c) None, because he is not allowed to register as a VAT vendor as his Taxable Supplies are less than the
prescribed amount in one year's period.
d) None, because he is not allowed to register as a VAT vendor as his Taxable Supplies are more than the
prescribed amount in one year's period.
16. A Hybrid Production Plant was purchased for N$ 5 203 750 (VAT incl.). The accumulated depreciation is N$ 875
000 as at 1st July 2015 in the books of Sandsia (Pty) Ltd, a VAT registered entity. Depreciation is charged using the
straight line method over 25 years, with a residual value of N$ 150 000. On 1st July 2015 a component part of the
plant was sold, due to slow down in production activity. The component being sold made up 12% of the Hybrid·
plant and was sold for N$ 575 000 (VAT incl). Which of the following is correct?
a) Carrying Value derecognised of component sold in Fixed Asset Account on date of sale is N$ 438 000
(VAT incl.) and profit made on disposal is N$ 137 000.
b) Carrying Value of derecognised component on disposal date is N$ 420 000 (VAT excl.) and profit made
on disposal is N$ 80 000.
c) Carrying Value derecognised of component sold in Fixed Asset Account on date of sale is N$ 519 450
(VAT incl.) and profit made on disposal is N$ 55 550.
d) Carrying Value derecognised of sold component in Fixed Asset Account on date of sale is N$ 438 000
(VAT excl.) and profit on disposal is N$ 62 000.
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17. Posting the cash book transactions in bookkeeping means:
(a) Entering amounts from the cash book into ledger account
(b) Making the first entry of double entry transaction
(c) Entering items in a cash book
(d) Something other than the above
18. Sales Invoices are first entered in which book of first entry:
(a) The Cash Book
(b) The Salesjournal
(c) The Purchases Journal
(d) The Sales Account
19. A ..........is a document issued by a commercial bank to its customers, showing all the transactions that have
taken place on the customer's account during a particular period.
(a) Credit Note
(b) Mortgage Letter
(c) Bank Statement
(d) Invoice
20. 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, your cheques would be made out for:
(a) N$ 280
(b) N$ 260
(c) N$300
(d) N$ 285
21. Namib Mills Pty Ltd is a registered VAT vendor specialising in selling maize meal and related products to the
general public. Namib Mills Pty Ltd makes use of the perpetual inventory system to account for inventory. During
the month of May 2019, the following transactions took place. Assume a standard VAT rate of 15% applies.
• On 01 May 2019, the company purchased a delivery vehicle costing N$150,000 including VAT from
FPTransporters on credit.
• On 05 May 2019, sold maize meal to PicnPayfor N$862,500 including VAT on credit
• On 06 May 2019, paid N$50,000 of the amount owed to FPTransporters.
• On 10 May 2019, purchased Corn from Corny Shop for N$300,000 excluding VAT and paid by
Electronic Fund Transfers (EFT).
• On 15 May 2019, PicnPay returned maize meal to the value of N$50,000 including VAT.
Using the above information, calculate the amount of VAT due to/from the Receiver for the period.
a) N$105 326 VAT Receivable from Receiver
b) N$100 109 VAT Payable to Receiver
c) N$98 804 VAT Receivable from Receiver
d) N$15,000 VAT Payable to Receiver
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22. The Loaf Bakery owns a stove that cost N$20,000 when they bought it on January 1st,2016. The stove is expected
to run a total of 30,000 batches in its lifetime and it has a residual value of N$5,000. As at December 2018,
accumulated depreciation on the stove was N$ 10,000. The owner decided to sell the stove on July 31st 2019 for
N$6,000. The stove ran a total of 5,000 batches between January and July 2019. What is the Gain or (Loss) made at
disposal?
a) 2,500
b) (1,500)
c) 3,500
d) (4,000)
23. How often should a VAT return be submitted to the receiver of revenue?
a) On the 25thof every Month
b) Every three Months
c) Every two months
d) Every five Months
24. Kafoi's Nursery uses a perpetual inventory system. They recently sold snake plants at a total sales value of
N$5,000. They base their gross profit on a mark-up of 10%. Calculate cost of goods sold.
a) N$4,500
b) N$5,500
c) N$5,000
d) N$4,545
25. What does step 4 of the IFRS15 revenue recognition process entail?
a) Assigning transaction price to performance obligation
b) Deducting VAT from selling price
c) Determining the performance obligation
d) Determining the transaction price
26. Which type of inventory is presented in the statement of financial position?
a) Cost of sales
b) Closing inventory
c) Opening inventory
d) Whichever is lower between cost and Net realizable value
27. On 1stof March 2019, Ernesto Trading CC, a non-registered VAT Vendor, having considered it's 15-year
output outlook, decided to buy an additional Machinery to the value of N$ 366 000 (excl VAT) for business
use, in hope of getting production to desired levels. Installation and Supervisor training costs in order to
get production going were N$ 27 450 and N$ 13 500 inclusive of VAT, respectively. The Carrying amount of
the Machinery in the Ernesto Trading CC's books is: (2 marks)
a) N$ 406 950
b) N$ 393 450
c) N$ 389 870
d) N$ 448 350
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28. Zero Rated Supplies are
a) goods or services on which VAT of 15% is claimable as Output VAT, but on which VAT of 0% is payable
to receiver as Input VAT.
b) goods or services on which VAT of 0% is claimable as Output VAT, but on which VAT of 15% is payable
to Receiver as Input VAT
c) a and b above
d) goods or services on which VAT of 15% is claimable as Input VAT, but on which VAT of 0% is payable to
Receiver as Output VAT.
29. The following is not an example of Zero-rated Supply
a) Supply of residential accommodation
b) Top Score Maize Meal Porridge
c) Supply of business as a going concern
d) Supply of electricity to residential accounts
30. Which of the following is correct?
a) Output Vat is a VAT on the sales of merchandise.
b) Output VAT is an expense paid to the Receiver.
c) Output VAT is a liability claimable from the Receiver.
d) Output VAT is a VAT on the purchase of merchandise.
QUESTION 2
(25 MARKS)
Thomas Enterprises has been successfully conducting business as a retailer for a number of years.
The following list of account balances appear in the records of Thomas Enterprises on 31 December 2022,
the current reporting date:
Debit
Credit
Delivery vehicles (at cost price)
480 000
Other current assets
64 000
Other income
180 000
Current portion of long-term loans
150 000
Retained earnings - balance 01/01/2022
2 620 000
Fuel and maintenance
420 000
Finance costs
279 000
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Buildings (at cost price)
Land (at cost price)
Trade- and other payables
Trade receivables
Trademarks purchased (at cost price)
Capital
Cash and cash equivalents
Short term loans
Cost of sales
Long term loans
Machinery (at cost price)
Furniture and equipment (at cost price)
Drawings
Salaries and wages
Fixed term deposit - expires 30 September 2023
Sales
Inventories (at cost price)
Water, electricity and property rates
1750000
650 000
1200 000
1450 000
980 000
1900 000
850 000
375 000
600 000
967 000
800 000
898 000
452 000
14115 000
I
i
965 000
4 000 000
250 000
1200 000
4 750 000
14 115 000
Additional information:
On 30 June 2022 the owner increased his capital investment in Thomas Enterprises from N$3 000 000 to
N$4 000 000.
REQUIRED:
Present the statement of profit or loss. and the statement of financial position of Thomas Enterprises for
the reporting period ended 31 December 2022.
(25)
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QUESTION 3
(15 MARKS)
Wolf Ltd purchased a machine on 1 January 2022. The following details are applicable:
Purchase price
Delivery costs
Installation costs
General administrative costs
Costs of testing
Pre-production costs
Initial operating losses
ADDITIONAL INFORMATION:
Note
1
2
3
4
N$
87 719
3 000
6 000
1000
5 000
2 000
10000
114 719
1. The administrative costs are of a general and indirect nature.
2. The costs of testing comprise costs incurred to produce samples while testing whether the
machine is functioning properly. Samples were sold at net proceeds of N$500.
3. The pre-production costs were necessary to bring the machine to the condition necessary to be
able to operate in the manner intended by management.
4. The initial operating losses are attributable to the initial production of small quantities.
5. The asset was ready for use on 3 January 2022 and immediately put into use.
6. The machine will be depreciated using the straight-line method over eight {8) years, taking into
account a residual value of N$7 000.
7. Ignore VAT.
REQUIRED:
a. Calculate the cost at which the asset will be recognised.
{10)
b. Calculate the carrying amount of the asset on 31 December 2015.
{5)
END OF EXAMINATION PAPER
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