Accounting English Paper 1 2015 Questions and Answers Part 1

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Question 1

Concepts

Accounting Concepts
1.1. 1	Bank overdraft
1.1. 2	Dishonored cheque
1.1. 3	Debit order
1.1. 4	Stale cheque

Bank Reconciliation

Explain how this loss of R. 24,000 would be treated in the books.

Any one valid response

Expected responses:

Enter in CPJ and describe as loss due to theft.
Apply rule of prudence to reduce Bank and to record a loss.

Explain how Roy can prevent a loss of this nature in the future. Provide two points.

Any two valid responses

Expected responses:

Insist that all cash collected is deposited into the Bank daily.
Division of duties where one person collects cash and another deposits the cash.
Check documentation daily; receipts must equal deposits.

Calculate the correct bank account balance on 31 October 2014.

16,160 – 2,710 – 1,650 + 450 - 24,000 = overdraft of 11,750 one part corrects

Give a suitable reason for the entry from the Bank Reconciliation Statement of the amount incorrectly debited, R 2500.

Any suitable reason

Possible reasons:

The bank had in error shown a cheque of another client in the current banking account of the business.
The bank duplicated an entry (example bank charges, debit order) on the debit side of the bank statement.

The office assistant of Manto Traders takes money from the cash register to make payments for business expenses.

Explain why this is bad accounting practice.

Any valid explanation

Expected responses:

All cash must be deposited intact to ensure that internal control is not compromised.
This will lead to abuse and the possibility of fraud because there will be no authorization or documentation.

Provide one point of advice to Roy.

Any one valid point

Expected responses:

Stop this practice immediately and use the petty-cash system for daily expenses.

Creditors՚ Reconciliation

Creditors՚ Ledger of Nkomazi Traders Malelane Suppliers (CL7)

Creditors՚ Ledger of Nkomazi Traders Malelane Suppliers
Balance per Ledger Account	47,064
Error corrected on Invoice 346	– 1,512
Adjustment of discount on C207	1000
Correction of error on Invoice 135	6,929
Interest	29
one part correct	39,652

Creditor՚s Reconciliation Statement on 30 September 2014

Creditor՚s Reconciliation Statement on 30 September 2014
Balance as per Creditor՚s Statement		40,271
Credit note incorrectly recorded		(1,632)
Discount not yet recorded		(2,532)
Trade discount omitted		(981)
Invoice issued after statement date		4,526
Balance as per Creditors Ledger	one part correct	39,652

Question 2

Calculate the value of the closing stock of 145 television sets on 28 February 2015 using the FIFO method.

Calculate the Value of the Closing Stock of 145 Television Sets on 28 February 2015 Using the FIFO Method
R. 411	750
= R. 679	875	one part correct

Calculate the cost of sales.

Calculate the Cost of Sales
R. 385,000 + R. 1,765, 500 – R. 14,625 – R. 679,875 = R. 1,456, 000
			one part correct

Calculate the average mark-up % achieved for the year.

Provide a calculation to prove whether the information given by the cleaner is true or not.

Provide a Calculation to Prove Whether the Information Given by the Cleaner is True or Not
	= 151
On hand	= 145
Missing	= 6

Jane is concerned that the final stock of 145 television sets is not appropriate for her business. Provide a calculation or figures to support her opinion and explain.

Calculation/Figures:

Any valid figures:

days

1,456, 000 1

Compare stock on hand (145 units) to total sales (276 units)

Explanation:

Not appropriate as stock will last at least 6 months