Accounting English Paper 1 2015 Questions and Answers Part 5

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Identify THREE over-payments in April. Provide figures to support your answer. Provide a valid reason for each over-payment to support Vukile’s decisions.

Identify THREE over-payments in April. Provide figures to support your answer. Provide a valid reason for each over-payment to support Vukile's decisions

Over-payment with figures Item and figure Π∴Π∴Π

Valid reason Π∴Π∴Π

1

The bonus of the manager in February 2015 (R24 000) was not taken into account.

He has retained the services of a valuable employee

2

Purchase of vehicle (R180 000)

The difference between motor vehicle expenses and delivery expenses is R5 200 per month

3

Cash purchase of merchandise (R28 000) was significantly higher than the budgeted figure (R12 000)

Possibly to take advantage of bulk discounts on purchases

Explain how this difference of opinion with his wife can be avoided in future.

  • As they are jointly running the business, they should have a specific meeting to determine the budget jointly and Vukile should consult his wife before spending on unbudgeted items. ΠΠ

  • State two other strategies that Vukile and his wife could consider in future to improve the results of the business.

Any two valid points: Π∴∴Π

  • Advertise monthly.

  • Reduce number of shop assistants.

  • Reinstate deliveries to customers.

  • Negotiate longer credit terms with creditors.