INTRODUCTION TO ACCOUNTING – NQF LEVEL 3
PRACTICE ASSIGNMENT
Dear Student,
Your studies are important to us at Fernwood Business College (FBC) and to assist you, we include an
assignment for each subject of the IBS Professional Qualification: Business Administration. Many of
the questions in each assignment appeared in previous examination papers and were sourced from
the official ICSA website. After completing the various assignments, you should be quite familiar
with the nature, level and format of the examination question papers. NOTE: The assignment is to
be used as an examination preparation tool and does not guarantee your success in the formal
examination. DO NOT SPOT!
Though not a formal requirement, you may complete each assignment and return it to the Academic
Support Team at FBC for review and comment. After reviewing the marked assignments, we will
return your script, together with a possible solution. Note: you will not receive a formal mark for
your assignment but an Academic Consultant will comment where appropriate. Once you have
received your reviewed scripts back from FBC, refer to the identified problem areas and comments.
Alternatively, you are can visit the ICSA website (www.icsa.co.za) to access past exam papers.
Before sending us your assignment, you must complete the Assignment Cover Page (at the back of
this assignment) and attach it to the front of each submitted assignment. Assignments must be
posted to: Academic Support, Fernwood Business College, Private Bag X6, Tecoma, 5214 or e-mailed
to ibssupport@fbc.edu.za.
Academic Support is also available Monday to Thursday from 8:00am to 5:00pm and on Fridays from
8:00 to 4:00pm. You may phone us on 0861887771 and/or e-mail us with your academic questions
on ibssupport@fbc.edu.za
All the best for your studies.
Academic Support Team
FERNWOOD BUSINESS COLLEGE – INTRODUCTION TO ACCOUNTING
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INSTITUTE OF BUSINESS STUDIES (IBS) EXAMINATION INSTRUCTIONS:
Below are standard instructions that appear on all the Institute’s examination papers. We suggest
that you refer to them when completing the assignments.
 When receiving your examination paper, make sure it is for the correct subject.
 Only BLACK BALL-POINT INK must be used to write the examination.
 Do not use your own name or that of your company in any of your answers.
 Start each answer on a fresh page, clearly numbering it at the top.
 Check that all answers are correctly numbered.
 The examination will be closed-book. Students are not allowed to consult any notes.
 Answer all questions.
SPECIFIC OUTCOME 1
MODULE 1 - 4
DEMONSTRATE KNOWLEDGE, UNDERSTANDING AND THE APPLICATION OF FINANCIAL
INFORMATION ACCORDING TO GENERALLY ACCEPTED ACCOUNTING PRACTICE AND CONCEPTS
RANGE: SOLE TRADERS, PARTNERSHIPS AND CLUBS
QUESTION 1
The following list of assets and liabilities appeared in the books of Kiara Enterprises on 28 February
2011, the last day of the financial year:
Equipment
Debtors control
Petty Cash
Bank (unfavourable)
Vehicles
Creditors control
Land and buildings
Mortgage loan
Cash float
Trading inventory
Loan from Plewman’s Bank
(R24 000 redeemable by 28/02/2012)
1.1
Define the following concepts:
a)
Assets
b)
Owner’s equity
c)
Liabilities
d)
Income
e)
Expenses
FERNWOOD BUSINESS COLLEGE – INTRODUCTION TO ACCOUNTING
R120 000
24 000
4 000
2 000
180 000
30 000
400 000
250 000
1 000
15 000
124 000
(5)
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1.2
Calculate the following values of Kiara Enterprises as at 28 February 2011:
a)
The total of the non-current assets
b)
The total of the current assets
c)
The total of the non-current liabilities
d)
The total of the current liabilities
e)
The owner’s wealth (equity)
(20)
QUESTION 2
2.1
For each of the following independent scenarios (i – ii), calculate the following (assume a
VAT rate of 14%):
(a)
Total VAT input that may be claimed from SARS by the VAT vendor
(b)
Total VAT output payable to SARS by the VAT vendor
(c)
Net amount payable to, or refundable from, SARS
Required:
(i)
(ii)
The VAT vendor bought trading stock/inventory from another VAT vendor for
R11 400 (including VAT). The goods were sold to a customer for R18 560 (including
VAT).
(9)
The VAT vendor bought the following from registered VAT vendors:
 Trading stock/inventory for R30 000, plus VAT
 Stationery for R2 280, including VAT
 Equipment for R45 600, including VAT
The VAT vendor sold all the stock/inventory mentioned above for R51 300, including
VAT.
(11)
2.2
Assume that all parties involved are registered VAT vendors, that the product involved is
standard-rated throughout, and that the VAT rate is 14%. Complete the following table:
Manufacturer
Wholesaler
Retailer
Cost of the
Selling Price of
Product in
the Product in
Rand Value
Rand Value
(Including
(Including
VAT)
VAT)
2 508.00
3 511.20
3 511.20
?
?
?
Gross Profit Earned
per Product Sold in
Rand Value (Rand
Value)
?
1 026.67
?
Mark-Up
%
Attained
Gross
Margin
Attained
(as a %)
?
?
?
?
?
16.66%
(10)
FERNWOOD BUSINESS COLLEGE – INTRODUCTION TO ACCOUNTING
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QUESTION 3
September 2011: List of original credit invoices received from suppliers
Day
Supplier
4 Purity Wholesalers
10
12
19
21
30
Enron Computers
Fabulous Plastics CC
Purity Wholesalers
Wynn's Product
Purist's Hypermarket
Description
Trading stock/inventory
Computer printer, including an ink
cartridge of R258
Stationery for the business
Merchandise
Trading goods
Staff refreshments
Total (Inclusive
of VAT)
7 700
8 258
456
2 280
6 424
880
From the above, you are required to prepare a creditors’ journal with additional analysis columns for
VAT, trading inventory and sundries. Clearly mark how the different amounts or totals will be posted
to the general ledger at the end of the month.
(25)
SPECIFIC OUTCOME 2
MODULE 5 AND 6
DEMONSTRATE AN UNDERSTANDING OF THE DEPRECIATION OF ASSETS. DEMONSTRATE AN
UNDERSTANDING OF FINAL YEAR-END PROCEDURES AND STATEMENTS
QUESTION 4
A firm buys a machine for R10 000. The firm estimates that the asset will be used for 5 years. After
exactly 2.5 years, however, the asset is suddenly sold for R5 000. The firm always provides a full
year’s depreciation in the year of purchase and no depreciation in the year of disposal.
Required:
Write up the relevant accounts (including disposal account but not depreciation expense account)
for each of Year 1, 2 and 3:
4.1
4.2
Using the straight-line depreciation method (assume 20% p.a.)
Using the reducing balance depreciation method (assume 40% p.a.)
FERNWOOD BUSINESS COLLEGE – INTRODUCTION TO ACCOUNTING
(7)
(8)
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QUESTION 5
The following information was taken from the books of Banda Stores on 28 February 2009, the last
day of the financial year of the business:
Account
Capital
Drawings
Sales returns
Equipment
Interest on fixed deposit
Fixed deposit: Winners' Investment Bank
Bad debts
Interest income
Bank overdraft
Cash float
Wages and salaries
Vehicles
Debtors control
Furniture
Mortgage loan: Hill Investments
VAT control
Sales
Land and building
Cost of Sales
Trading stock/inventory
Rates and taxes
Interest on mortgage loan
Telephone
Consumable stores
Office refreshments
Repairs and maintenance
Fuel
Insurance
Creditors control
Bad debts recovered
General expenses
Amount
820 550
43 440
15 360
90 000
468
45 000
12 300
4 500
7 236
1 050
106 314
192 000
50 526
240 000
287 400
600
429 360
420 000
276 600
23 100
2 882
3 156
8 928
2 940
3 408
5 520
13 164
13 320
25 188
2 100
7 194
Required:
5.1
5.2
Prepare an income statement for the year ended 28 February 2009.
Draft a balance sheet as at 28 February 2009 along with notes for non-current
assets, as well as for capital (owner’s equity)
FERNWOOD BUSINESS COLLEGE – INTRODUCTION TO ACCOUNTING
(16)
(14)
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SPECIFIC OUTCOME 3
MODULE 8 AND 9
DEMONSTRATE KNOWLEDGE AND UNDERSTANDING OF MANAGERIAL ACCOUNTING, AS WELL AS
THE APPLICATION THEREOF
QUESTION 6
In a furniture factory, you are required to state which of the following would be classified as fixed
costs and which would be variable costs. Please tick the relevant columns.
Fixed
Costs per
Month
Variable
Costs per
Month
Wood used in production
Direct labour
Factory foreman's wage
Rental for the factory
Rates and taxes
Sales representatives commission
Advertising cost
Personal Assistant's salary
Wood polish
Glue and nails
Short-term insurance (factory only)
Quality controller
(12)
QUESTION 7
Benji’s Ltd budgeted sales for the first half of 2012 are expected to be as follow:
Month of 2012
January
February
March
April
May
June
Budgeted Total Sales
R 66 000
96 000
132 000
150 000
186 000
210 000
75% of all sales are expected to be on credit. Debtors are expected to pay their debts as follow:
 60% in the month following the month of the sale
 25% in the second month following the month of the sale
 10% in the third month following the month of the sale
 5% is written off as irrecoverable
FERNWOOD BUSINESS COLLEGE – INTRODUCTION TO ACCOUNTING
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Bad debts are written off at the end of the month in which the last instalment is received. Credit
sales for October 2011, November 2011 and December 2011 were R47 400, R48 600 and R58 500
respectively.
Required:
Prepare a schedule showing the budgeted amounts which Benji’s Ltd expects to receive from
debtors each month from 1 January 2012 to June 2012.
(14)
SPECIFIC OUTCOME 4
MODULE 7
DEMONSTRATE KNOWLEDGE AND AN UNDERSTANDING OF THE USE OF DIFFERENT FINANCIAL
AND MANAGERIAL CONTROL TOOLS AND STRATEGIES TO MANAGE RESOURCES IN A RESPONSIBLE
MANNER.
QUESTION 8
The following information relates to the employees of Mbeki Dealers for the month of April 2010.
The work week comprises 40 hours of normal time. Employees contribute 6% of their basic salaries
to the SureGrow Pension Fund (the entire contribution is tax deductible).
Name
Employee
A Leslie
D Norris
B Lee
Number of
Hours Worked
in April 2010
44
35
51
Rate p/h for
Normal
Time
R 450
R 90
R 280
Rate p/h
for
Overtime
R 650
R 135
R 320
Required:
Complete the following worksheet based on the information provided above.
Calculation of PAYE Remuneration
Name of
Employee
A Leslie
D Norris
B Lee
Totals:
Gross Remuneration
Basic Salary
Overtime
Deductible Pension
Fund Contribution
PAYE Remuneration
(16)
FERNWOOD BUSINESS COLLEGE – INTRODUCTION TO ACCOUNTING
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ASSIGNMENT COVER PAGE
SUBJECT NAME
STUDENT INFORMATION:
FIRST NAME
SURNAME
STUDENT NUMBER
CELL PHONE NUMBER
E-MAIL ADDRESS
POSTAL ADDRESS:
HOUSE NUMBER AND
STREET NAME
SUBURB
CITY/TOWN
POSTAL CODE
ACADEMIC CONSULTANT’S COMMENTS
FERNWOOD BUSINESS COLLEGE – INTRODUCTION TO ACCOUNTING
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