Academic Year:
Past Paper 1
Summative Assessment 1:
Financial Accounting Principles, Concepts
and Procedures (HFAC131-1)
NQF Level, Credits:
5, 20
Weighting:
60%
Assessment Type:
Examination
Stationery:
Black/blue pen/calculator
Pass requirement:
50%
Examiner:
C Pfister
Educator
C Pfister
Due Date:
N/A
Total:
100 marks
Duration:
3 Hours
Instructions:
1. This examination script consists of 10 pages including the cover sheet. Ensure that you have
all the pages.
2. This examination consists of Essay-Type questions.
3. Answer all questions in the Assessment Answer Book provided.
4. Show all calculations.
5. No answers in pencil will be marked.
6. Ensure that you hand in the entire examination script and the answer book at the end of the
session. This script remains the property of Boston City Campus & Business College (Pty)
Ltd.
7. Good Luck!
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For your convenience, an overview of the Assessment Rules:
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In order to control invigilated assessments in accordance with module specific guidelines, published rules are enforced.
Students must bring a valid identity document (ID or Passport) and means to disclose their
student number to all (formative and summative) invigilated assessments.
Students participating in assessments in the form of invigilated tests or exams must arrive and
be seated in the assessment venue fifteen (15) minutes prior to the start of the assessment.
Students must sign the Assessment Register on arrival and when handing in their assessment
paper before leaving the assessment venue.
Students who arrive fifteen (15) minutes after the start of an assessment will not be allowed to
attempt the assessment under any circumstances.
Students who are late for an assessment, without just cause for an application for deferral, will
not be granted another assessment opportunity and will receive a zero (0) grade for the assessment.
Students are required to complete all the necessary information (name, surname, student number and module code) on the assessment answer sheet.
Students will be required to remain in the assessment venue for forty-five (45) minutes from the
start of the assessment.
Other than what is specified by the particular requirements of a module, no student may make
use of any form of equipment, stationery or any other materials or resources during the assessment session.
Other than what is specified, all electronic devices must be switched OFF for the duration of
the assessment.
Other than what is specified, no materials or equipment nor any other resources may be taken
into the assessment venue but must be left at a designated location, which is in most instances
near the entrance of the assessment venue.
Tippex (correction fluid) may not be used. Any section where Tippex is used will not be marked.
Students are not permitted to talk or communicate whatsoever during an assessment session
or cause any form of disturbance.
Students may not ask the invigilator for assistance in answering questions during an assessment.
Should a student require anything during an assessment they may only communicate this need
to the invigilator on duty usually by raising their hand.
Students may not leave the assessment venue without informing the invigilator and signing out
the exit attendance register.
No materials may be removed from the assessment venue at the end of an assessment. This
includes question papers as they remains the property of Boston City Campus & Business
College.
Learners must leave all personal belongings at the front of the assessment venue. This is done
at the learner’s own risk and neither Boston City Campus & Business College nor the staff will
be held responsible for the loss, theft or damage of belongings.
No student will be permitted extra time to complete an assessment unless the prior permission
granted has been brought under the attention of the invigilator prior to commencement of the
assessment. It is recommended that students do take along a copy of the approved permission
slip to overcome any unforeseen situation.
If an invigilator finds a student in contravention of any rule governing an assessment session,
the assessment script will immediately be confiscated and inform the Academic Committee at
Head Office Orange Grove. The student may be summoned to attend a disciplinary inquiry at
Head Office.
Question 1
(17 marks)
Green Peace (Pty) Ltd is a Cape Town based nursery that sells garden plants and
trees. They have a 31 March year-end.
You have been provided with the following balances/totals on 31 March 2019:
Cash receipts journal: bank column total
Cash payments journal: bank column total
R67 520
R30 790
Additional information
•
The bank balance in the general ledger as at 1 March 2019 amounted to R101 250
(Dr). The bank statement had a credit balance amounting to R125 960 as at 31
March 2019.
•
The following differences were identified between the cash receipts and cash payments journals of Green Peace and the bank statement of Green Peace for the
month of March 2019:
o Bank charged amounted to R425.
o A payment by Green Peace to City of Cape Town to settle debt of R7 900
had been incorrectly accounted for by Green Peace as a payment received
from City Gardens (a debtor of Green Peace).
o A payment of R11 900 received by Green Peace from Mr Reed (a debtor)
on 20 March 2019 had been incorrectly recorded in the bank statement as
R1 900.
o A direct deposit of R5 870 from Mr Green (a debtor) in settlement of his
account was reflected on the bank statement, the date corresponding to this
transaction was 31 March 2019.
o The cash payment journal reflected an amount of R15 790 paid by cheque
to Trees4All to settle their account for trees purchased. The payment was
made on 30 March 2019 however the cheque have not yet been received
by the bank at year-end.
3
o Cash sales made on 30 and 31 March 2019 amounted to R6 520. This
amount had been correctly recorded in the cash receipts journal but did not
appear on the bank statement.
o A debit order of R1 525, for the monthly insurance premium, appeared on
the bank statement.
o Interest to the amount of R590 received on the bank balance.
REQUIRED:
1.1)
Based on the information provided prepare the bank account of Green Peace
as it would appear in the general ledger for the month ended 31 March 2019.
Record all additional information directly into the bank account and not into the
journals.
1.2)
Base on the information provided prepare the bank reconciliation statement of
Green Peace at 31 March 2019.
1.3)
(5 marks)
Briefly explain why it is necessary for a business to prepare a bank reconciliation statement.
4
(10 marks)
(2 marks)
Question 2
(23 marks)
Assume all parties are VAT vendors, that all amounts are VAT inclusive and that
VAT is charged at 15%.
Wool & All is a company in Pretoria that sells wool to manufactures of wool clothes
and products. The company has a 30 September year-end.
Extract from the trial balance of Wool & All as at 30 September 2019
DR
SARS (VAT) (1 October 2018)
CR
21 500
Additional information
•
All purchases and sales are on credit.
•
The entity uses periodic inventory system.
•
The following purchases and sales took place during the year:
Date
15/10/18 5 000 balls of wool
Purchases
Purchase returns
R575 000
12/11/18 3 500 balls of wool
07/01/19 5 000 balls of wool
R644 000
R690 000
20/04/19 6 000 balls of wool
30/06/19 2 500 balls of wool
01/07/19 500 balls of wool
15/09/19 500 balls of wool
5
Sales
R1 104 000
R316 250
R63 250
R92 000
REQUIRED:
2.1)
2.2)
Prepare the general journal entries to record the following transactions:
•
Sale of inventory on 20 April 2019
•
Purchase of inventory on 7 January 2019
Prepare the SARS (VAT) account as it would appear in the general ledger of
Wool & All for the year ended 30 September 2019.
2.3)
(10 marks)
(9 marks)
Briefly explain how the balance on the SARS (VAT) account as at 30
September 2019 will be recognised on the statement of financial position of
Wool & All. You do not need to discuss any elements as per the Conceptual
Framework in detail.
2.4)
Briefly explain whether VAT is recognised by Wool & All on the statement of
comprehensive income as a business tax.
6
(2 marks)
(2 marks)
Question 3
(14 marks)
You decided to start a small cleaning business. You received a payout of R21 000
from your previous employer and decided to use the money as start-up capital.
1. You deposited the R21 000 into a bank account that will be used solely for
business purpose.
2. Your business borrowed a further R9 000 from the bank to help fund the
business. This was deposited into the business bank account.
3. You donated your personal vehicle to the business to use. The value of the
vehicle R120 000.
4. The business purchase inventory to the value of R11 000 on credit from
Always Clean, cleaning material suppliers.
5. Wages to the amount of R5 500 was paid in cash.
6. Received cleaning service fees of R9 800 in cash. R3 500 worth of cleaning
materials were used to render these services.
REQUIRED:
Show the impact of the above transactions on the assets, liabilities and equity of the
business. For each transaction, show the amount, whether the element increase or
decrease and the relevant account affected.
(14 marks)
E.g. Receive R 2 000 interest on bank balance.
Number
7
ASSETS =
Bank increase
+R2 000
EQUITY +
Equity (interest
income)
increase
+R2 000
LIABILITIES
Question 4
(29 marks)
Cars4All is a vehicle dealership that buys and sells second-hand vehicles. The
financial year-end is 31 March.
During March 2019 Cars4All had the following transactions relating to its vehicles:
1 March
There were 13 vehicles on the showroom floor at a total cost of
R1 105 000.
2 March
Purchased 12 vehicles at a total cost of R960 000 on credit.
10 March
The salesmen sold 10 vehicles as a fleet to a business, at a sales
price of R130 000 per vehicle for cash.
19 March
A further 5 vehicles were purchased at a cost of R90 000 each for
cash.
28 March
Another fleet sales transaction occurred, where a business bought
12 vehicles at a sales price of R125 000 each on credit.
31 March
The owner of Cars4All decided to use 1 of the vehicles on hand
as the sales managers’ vehicle, instead of selling it.
31 March
An inventory count revealed that the correct number of vehicles
were on hand (i.e. no inventory was missing), however 1 of the
vehicles was damaged, and would require repairs costing
R10 000, before it could be sold for R85 000.
It is expected that the vehicle for the sales manager will be used evenly for a period of
4 years, and the residual value is reliably expected to be R30 000.
8
REQUIRED:
4.1)
Refer to the information about the vehicles, and assume that Cars4All uses the
FIFO cost allocation method and periodic method to record inventory:
Prepare ALL the general journal entries required to account for the vehicles for
the month of March 2019 in the accounting records of Cars4All. Include dates
and accounts, but narrations and closing entries can be ignored.
4.2)
(25 marks)
Discuss how the journal entries above would differ if Cars4All used the FIFO
cost allocation method and perpetual method to record inventory. It is not necessary to include any amounts in your discussion.
9
(4 marks)
Question 5
(17 marks)
You have been provided with extracts from the pre-adjustment trial balance of Citrus
Traders (Pty) Ltd as at 30 June 2019.
Debit
Loan: ABBA Bank (12.5%)
Credit
12 000 000
Interest expense
1 122 000
Rent expense
208 000
Additional information:
1. The company entered into a loan agreement with ABBA Bank on 1 June 2018.
The loan is repayable over 6 years in equal annual instalments, starting on 1 June
2019.
2. The business has been renting the business premises for the whole financial year
at an amount of R16 000 per month. The accountant debits the rent expense account when rent payments are made.
3. The accountant debits interest expense when payments are made.
REQUIRED:
5.1)
Prepare the loan account as it would appear in the general ledger for the month
ended 30 June 2019. Close off or balance the ledger accounts as at 30 June
2019.
5.2)
(3 marks)
Prepare any adjusting journal entries that should be processed on 30 June
2019 to process the additional information provided in points 1, 2 and 3 above.
Ignore narrations. State dates and accounts.
5.3)
In terms of the Conceptual Framework identify as what the loan with ABBA
Bank will be classified as in the records of Citrus Trades.
10
(7 marks)
(7 marks)