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BAC1100S- BUSINESS ACCOUNTING 1A- 2ND OPP- JUNE 2023 |
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n Am I BI A u n IVE Rs ITY
OF SCIEnCE Ano TECHnOLOGY
FACULTY OF COMMERCE, HUMAN SCIENCES AND EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
COURSE CODE: BAC1100S
COURSE NAME: BUSINESSACCOUNTING lA
SESSION: JUNE 2023/ JULY2023
PAPER: THEORYAND CALCULATIONS
DURATION: 2 HOURS
MARKS: 80
SUPPLEMENTARY EXAMINATION QUESTION PAPER
EXAMINER
MRS Z. VAN DER WALT
MODERATOR: MRS Y. ANDREW
INSTRUCTIONS
1. Answer ALL the questions on the answer sheet at the back of the
test pack
2. Read all the questions carefully before answering.
3. The paper consists of 55 questions.
4. The use of a non-programmable calculator is allowed.
5. All questions count for one mark unless otherwise indicated
6. There is only one correct option, the shading of more than one
option will be marked as incorrect
7. Make sure to shade your student number correctly
THIS QUESTION PAPER CONSISTS OF 15 PAGES
{Including this front page and the answer sheet at the back)
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Section A: Accounting Theory and equation (11 Marks)
1. External users of financial accounting information include all of the
following except?
a. Lenders such as bankers
b. Governmental agencies such as NamRA
c. Employees of a business
d. Potential investors
2. Financial accounting information ....
a. Should be incomplete in order to confuse competitors
b. Should be prepared differently by each company
c. Provides investors guarantees ab.out the future
d. Summarizes what has already occurred
3. Which of the following persons can be an owner of a close corporation?
a. Silver Works {Pty) Ltd
b. Jack and Jill CC
c. Gold Rush Ltd
d. Mary Douglas
4. Which of the following is not an example of a retailer?
a. Electronics store
b. Grocery store
c. Car dealership
d. Computer manufacturer
5. Which of the following is a fundamental characteristic of financial
statements
a. Relevance
b. Comparability
c. Timeliness
d. Verifiability
6. The Concept "Timeliness" means
a. To have information available to decision makers in time for them to be
capable of influencing the decisions
b. To prepare the financial statements within a month after the financial year
end.
c. Only items related to the financial year should be included in the financial
statements.
d. Transactions and events should be recognized in the financial period in
which they occur and not when cash or cash equivalents are received or
paid.
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7. The Business Entity Concept states that:
a. When goods are sold on credit, the amount on the invoice is recorded in the
books as income for that day, even though no money has been received yet.
b. The business factory has a market value of N$700 000, yet the accountant
still has it listed in the books as N$150 000, the price that it was bought for
twenty years ago.
c. In their storeroom, Nam Fudge Manufacturers have 40 000 plastic fudge
containers that have been specifically molded as packaging for their
fudge. These containers are valued at N$12 000 in their books.
d. Even though the owner pays her personal Telkom Telephone account with
a Business EFT(cheque), she does not record this amount as an expense to
the business
8. The Historical Cost Concept means
a. When goods are sold on credit, the amount on the invoice is recorded in the
books as income for that day, even though no money has been received yet.
b. In order to make their financial statements more readable, some business
round off their figures to the nearest dollar, as they feel that the cents are
insignificant.
c. The business factory has a market value of N$700 000, yet the accountant
still has it listed in the books as N$150 000, the price that it was bought for
twenty years ago.
d. A client has undertaken to pay a N$30 000 bonus to Karibib Builders (Pty)
Ltd if the client is satisfied with the house, they are building for
him. However, the accountant for Karibib builders (Pty) Ltd will not enter
this amount in the book until it is received.
9. A sole trader increased the business' number of motor vehicles by adding his
own car to the fleet. Which elements of the accounting equation will change
due to this transaction?
a. Assets only
b. Capital only
c. Assets and capital
d. Assets and liabilities
10. Which of the following accounts will be affected by a transaction where the
company receives cash from a debtor?
a. Owner's equity and cash
b. Owner's equity and debtors
c. Debtors and cash
d. None of the above
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11. Purchase of machinery for cash has the following effect on the accounting
equation?
a. Increases total assets
b. Decreases total assets
c. Keeps total assets unchanged
d. Increases assets and liabilities
Section B: Source Documents and Journals (12 marks)
12. The document issued with a sale is ____
_
a. Recorded by the seller as a purchase invoice
b. Recorded by the seller as a return
c. Recorded by the seller as a sales invoice
d. Not recorded by the seller
13.A source document is:
a. The origin of the information that is recorded into the accounting books
b. The origin of the information that is taken from the accounting books
c. Not the origin of information that is recorded into the accounting books
d. All ofthe above
14. Who retains a duplicate invoice?
a. The business issuing the document
b. The business receiving the document
c. Usually both businesses involved in the transaction
d. No option mention is correct
15. The Sales Journal is also known as the?
a. Debtors Ledger
b. Return Inward Book
c. Sales Day Book
d. General Journal
16. The following transaction took place. Which source document was issued
and in which journal is the transaction recorded? "Sold goods for cash". (2
marks)
a. Duplicate invoice and sales journal
b. Original invoice and sales journal
c. Duplicate invoice and cash book
d. Original invoice and cash book
17.A customer returns goods to your business, which source document is issued
and in which journal do you record the transaction? (2 marks)
a. Credit note recorded in the sales return journal
b. Debit note recorded in the return inward journal
c. Invoice recorded in the sales return journal
d. Cash receipt recorded in the cash book
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18.Johns' Bakery purchased ingredients on credit from Crown Ltd. Choose the
correct statement:
a. Johns' Bakery will receive the original invoice from Crown Ltd.
b. Crown Ltd will issue an invoice and keep the original copy.
c. Crown Ltd will issue a cash receipt and keep the duplicate
d. None of the options are correct
19. In accounting, pieces of paper that prove that a transaction occurred are
called?
a. Ledgers
b. Journals
c. Source Documents
d. Balance Sheets
20. Mary, the office administrator took cash to buy coffee and sugar for the
employees. Which one of the following statements are correct {2 marks)
a. Mary issues a petty cash voucher and enter the transaction the cashbook
b. Mary issues a petty cash voucher and enter the transaction in the petty
cash journal
c. Mary received a cash receipt and enter the transaction in the cashbook.
d. Mary will not record the transaction, as it does not relate to the business.
Section C: Trial Balance (7 marks)
21. Which of the following errors in the journal entry will not be detected by trial
balance:
a. The debit entry is overstated but the credit entry is correctly recorded
b. The debit entry is correctly recorded but the credit entry is overstated
c. Both the debit and credit entries are overstated by the same amount
d. The debit entry is correctly recorded but the credit entry is understated
22. Due to the following reasons, there can be a difference between the cashbook
and bank statement:
a. Time differences
b. Transactions
C. Errors
d. All of the above
23. Which of the following is the correct sequence of the accounting cycle:
a. Journal> Trial balance> Ledger> Transaction
b. Transaction> Journal> Ledger> Trial Balance
c. Purchases> Journal> Ledger> Trial Balance
d. None of the above
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24. Which of the following is placed in the credit column of the trial balance:
a. Sales
b. Purchases
c. Rent Paid
d. Furniture
25. Which of the following is placed in the debit column of the trial balance:
a. Sales
b. Accrued expenses
c. Allowance for credit losses
d. Credit losses
26. What could be the possible description of a trial balance among the following?
a. Shows the entries in the balance sheet
b. Shows the totals/balances of all accounts
c. It is a special system
d. Showcases the financial position of a company
27. Which of the following is not a balance sheet account?
a. Furniture at cost
b. Accumulated depreciation: Furniture
c. Depreciation
d. Land and Buildings at cost
Section D: Bank Reconciliation (5 marks)
The following questions assume that the bank reconciliation commences with the
closing balance on the bank statement.
28. Which of the following statements is incorrect?
a. A credit balance in the bank statement indicates more deposits than
withdrawals
b. Bank charges increase a debit balance on the bank statement
c. A bank reconciliation is not part of the bank statement
d. A bank statement is prepared by the business
29.A payment made in respect of stationery was incorrectly entered in the bank
account as N$250, instead of N$520. The error will be corrected as follows:
a. N$270 will be recorded on the debit side of the bank account
b. N$270 will be recorded on the credit side of the bank account
c. N$270 will be recorded on the debit column of the bank reconciliation
d. N$270 will be recorded on the credit column of the bank reconciliation
30. Bank Charges on the bank statement should be recorded as follows:
a. Debit the bank account
b. Credit the bank account
c. On the debit column of the bank reconciliation
d. On the credit column of the bank reconciliation
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31.A deposit that appears in the cashbook, but still not on the bank statement
will be recorded as follows:
a. Debit the bank account
b. Credit the bank account
c. On the debit column of the bank reconciliation
d. On the credit column of the bank reconciliation
32.A payment received from a debtor appears on the bank statement but not in
the cashbook. The following entry should be made:
a. Debit the bank account
b. Credit the bank account
c. On the debit column of the bank reconciliation
d. On the credit column of the bank reconciliation
Section E: Ratio Analysis (6 marks)
33. Which one of the following is not a mayor efficiency ratio?
a. Trade creditor payment period
b. Non-Current Asset turnover ratio
c. Trade debtor collection period
d. Dividend Yield
34. Which one of the following is not an example of gearing ratios?
a. Capital gearing ratio
b. Cash flow ratio
c. Creditors ratio
d. Interest cover
STATEMENT
OF COMPREHENSIVE
31/12/2022
Sales
Cost of sales
Gross margin
Income from investments
Gross Income
Less Expenses
Operating
expenses
Selling expenses
Depreciation
Net Operating
Income (EBIT)
Less: Interest
Net income before tax
Taxation
Net profit
INCOME FOR THE YEAR ENDED
I I 31/12/2021
·- ;·,js"016
162 383
32 633
827
33 460
16 939
4 520
3 862
8 557
10 ::>LI
2 290
14 231
9-Q~
8 174
31/12/2022
275 855
230 822
45 033
897
45 930
18 375
5 026
4 216
9 133
L, ::,::,::,
3 900
23 655
9 462
14 193
Additional
Information
1. All sales and purchases
2. 365 days in a year
are on credit.
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Question 35 and 36 relates to the above statement.
35. Which one of the following represents the gross margin percentage for 2021
(2 marks)
a. 16.32%
b. 16.73%
C. 16.65%
d. None of the above
36. Which one of the following represents the net margin percentage for 2022 (2
marks)
a. 5.15%
b. 4.19%
C. 7.29%
d. None of the above
Section F: The effect of VAT on the accounting records (12 marks)
37. Which one of the following statements do not relate to input VAT?
a. Input Vat is the tax paid on services and goods received.
b. Input Vat is an asset as the vendor can claim the amount from Nam RA
c. Input Vat is levied on sales.
d. Input Vat will be shown on the debit side of the general ledger account.
38. Value Added Tax on the purchase of stationery, will have the following effect:
a. Give rise to an asset
b. Give rise to a liability
c. Recorded as an expense
d. Recorded as an income
, 39. Value Added Tax on sales will have the following effect:
a. Give rise to an asset
b. Give rise to a liability
c. Recorded as an expense
d. Recorded as an income
40. Value Added is not accounted for on which one of the following:
a. Sales to farmers
b. Purchases from wholesalers
c. Salaries and wages
d. Motor vehicle oil
41.Assuming VAT is inclusive, then VAT on an amount of N$90,000 will be
calculated as (2 marks)
a. N$90,000 X 15%
b. N$90,000 x 15/115
C. N$90,000 x 115/15
d. None of the above is correct
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42.Assuming the business sells goods for N$8,050 and purchases for N$3450.
Calculate the VAT net effect. VAT is inclusive in this scenario (2 marks)
a. N$600 liability
b. N$600 income
c. N$690 liability
d. N$690 income
43.Assuming the business sells goods for N$9,000 and purchases for N$4,000.
Calculate the VAT net effect. VAT is exclusive in this scenario (2 marks)
a. N$750 expense
b. N$750 liability
c. N$522 asset
d. N$522 expense
44. VAT on N$10,000 interest paid to the bank will be calculated as
a. N$10,000 X 15%
b. N$10,000 x 15/115
C. N$10,000 X 100/115
d. None of the above
45. The VAT percentage on Mahangu is?
a. 10%
b. 12%
c. 15%
d. 0%
Section G: Year-end adjustments and Financial Statements on the next page
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Section G: Year-end adjustments and Financial Statements (17 Marks)
List of balances of ABC Traders as on 28th February 2023
Capital
250,000
Drawings
40,000
Land and Buildings at cost
220,000
Equipment at cost
90,000
Accumulated
depreciation:
18,000
Equipment
Inventory (1/3/2022)
50,000
Accounts Receivable
45,000
Allowance for credit losses
1,000
Accounts Payable
42,000
Bank
25,000
18% Mortgage bond on the land and
120,000
buildings
Sales
367,000
Purchases
210,000
Salaries and wages
90,000
Telephone
1,280
Insurance
4,500
Stationery
720
Advertising
3,500
Rent Received
33,000
Credit losses
1,400
Notes:
• A debtor which owes N$1,000 is insolvent and the account is written off.
• The allowance for credit losses should be adjusted to 3% of the total
outstanding debt.
• The interest on the bond has not been accounted for. The bond was
registered in 2009.
• The telephone account of N$200 was paid in advance.
• Rent received for February 2023 is still outstanding.
• Depreciation on equipment is charged at 10% of cost. A residual value of
N$10,000 is applicable.
• Inventory as per inventory count on year end is presented as N$40,000.
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46. The telephone account for the year is (2 marks):
a. N$1,080
b. N$1,480
c. N$1,280
d. None of the above
47. The following statement is correct regarding the equipment as at the end of
the book year (3 marks)
a. The depreciation charge on equipment for 2023 is N$8,000, the
accumulated depreciation is N$26,000 and the net book value is
N$56,000.
b. The depreciation charge on equipment for 2023 is N$9,000, the
accumulated depreciation is N$27,000 and the net book value is
N$63,000
c. The depreciation charge on equipment for 2023 is N$8,000, the
accumulated depreciation is N$26,000 and the net book value is
N$54,800
d. None of the above
48. The allowance for credit lossesfor 2023 should be (2 marks)
a. N$1,350
b. N$1,320
c. N$320
d. N$350
49. The accounts receivables in the Statement of Financial position will be
presented as: (3 marks)
a. N$44,000 less N$1,320
b. N$45,000 less N$320
c. N$42,600 less N$1,320
d. N$42,600 less N$320
SO.The total current liabilities will be shown as (2 marks)
a. N$42,000
b. N$63,600
c. N$21,600
d. N$63,800
51. The interest on the mortgage bond will result in the following effect:
a. N$21600 expense and the same amount as an accrued expense
b. N$21,600 income and the same amount as a prepaid expense
c. N$21600 x 3 years expense and the same as an accrued expense
d. N$21600 x 3 years expense and the same as a prepaid expense
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52. The total amount shown as credit losses will be (3 marks):
a. N$2,720
b. N$1,400
c. N$320
d. N$2,400
Section H: The General Ledger (10 Marks)
53. The salaries and wages account is shown below. Carefully consider the year-
end closing of the account and choose the correct option. You can assume
that the amounts posted from the journals are correct (2 marks)
Option a
Date Details
31/3 Bank
Salaries and wages
Fol Amount Date Details
CBl 50,000 31/3 Profit/Loss
Fol Amount
GL 50,000
Option b
Date Details
31/3 Bank
Salaries and wages
Fol Amount Date Details
CBl 50,000 31/3 Balance b/d
Fol Amount
GL 50,000
Option c
Date Details
31/3 Balance b/d
Salaries and wages
Fol Amount Date Details
50,000 31/3 Bank
Fol Amount
CB 50,000
Option d
Date Details
31/3 Profit/loss
Salaries and wages
Fol Amount Date Details
GL 50,000 31/3 Bank
Fol Amount
CB 50,000
54.A Debtors account is shown below. Which of the following options are
correct? You can assume that the amounts posted from the journals are
correct (4 marks)
Option a
Debtors
Date Details
Fol Amount Date Details
Fol Amount
31/3 Sales
SJl 50,000 31/3 Sales
SRJl 10,000
Returns
Balance b/d
10,000
Bank
CB 30,000
50,000
50,000
1/4 Balance c/o
10,000
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Option b
Date Details
31/3 Sales Returns
Balance b/d
Option c
Date Details
31/3 Sales
Debtors
Fol Amount Date Details
SRJl 10,000 31/3 Sales
70,000
Bank
80,000
1/4 Balance c/o
Debtors
Fol Amount Date Details
SJl 50,000 31/3 Sales Returns
Bank
Balance b/d
50,000
1/4 Balance c/o
Fol
SJl
CB
Fol
SRJl
CB
Amount
50,000
30,000
80,000
70,000
Amount
10,000
30,000
10,000
50,000
10,000
Option d
Date Details
31/3 Sales
1/4 Balance c/o
Debtors
Fol Amount Date Details
SJl 50,000 31/3 Sales
Returns
Bank
Balance b/d
50,000
10,000
Fol Amount
SRJl 10,000
CB 30,000
10,000
50,000
55. The following information relates to the cashbook:
Favourable balance on 1st May 2023 - N$9000, Total payments - N$15,000
and Total receipts - N$20,000. The bank account will be presented as (4
marks):
Option a
Bank
Details
Fol Amount Date Details
Fol Amount
1/5 Balance
b/d 9,000 31/5 Total
CBl 15,000
payments
31/5 Total receipts CBl 20,000
Balance c/d
35,000
50,000
50,000
1/6 Balance c/o
35,000
Option b
Details
1/5 Balance
31/5 Total
payments
1/6 Balance c/o
Bank
Fol Amount Date Details
Fol Amount
b/d 9,000 31/5 Total receipts CBl 20,000
CBl 15,000
Balance c/d
4,000
24,000
4,000
24,000
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Option c
Details
31/5 Total
payments
Balance
Option d
Details
1/5 Balance
31/5 Total
payments
Bank
Fol Amount Date Details
CBl 15,000 1/5 Balance
Fol Amount
b/d 9,000
b/f 14,000
Total receipts CBl 20,000
29,000
29,000
1/6 Balance
b/d 14,000
Bank
Fol Amount Date Details
Fol Amount
b/d 9,000 31/5 Total receipts CBl 20,000
CBl 15,000
Profit and
4,000
Loss
24,000
24,000
END OF THE EXAMINATION PAPER
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