Choose the correct option for each of the following. Write only the question number and your chosen answer. For instance, If you think that the correct answer for number 1 is (a), then write it as 1. (a). 1. The person or entity to whom money is owed is called a (a) debtor (b) creditor (c) trustee (d) contingent 2. AC 000 states that there are two assumptions that are fundamental to the financial statements. These are the: (a) actual concept and the going concern (b) going concern and the consistency (c) accrual concept and the going concem concept (d) actual and the consistency concepts 3. According to the concept value, when does an item have value? (a) when it can be used to generate further value (b) when it can be invested (c) when it comes through business operations (d) when the item is donated 4. What is the main reason for cash discounts? (a) to provide customers with lower prices without the cost of advertising (b) to avoid bad debt write-offs (c) to improve the level of sale within an organisation (d) to encourage early payment of accounts 5. Which system best describes the manner in which the petty cash float is managed? (a) accrual system (b) matching system (c) imprest system (d) electronic accounting system 6. The method of valuing called base inventory is most suited to which type of industry? (a) large manufacturing companies (b) large retail companies (c) larger sole traders (d) is unsuitable for South African companies 7. If the number of vehicles decreases through a sale, then the vehicle account in the balance sheet must be: (a) debited (b) credited (c) debited and bank debited (d) credited and the creditors account debited. 8. On the debit side of the general ledger one records: (a) monies received by customers (b) monies paid for salaries (c) payments made to a supplier (d) debtors discounts allowed 9. In the general ledger, the: (a) asset and expense accounts have credit balances (b) liability and income accounts have debit balances (c) asset and expense accounts have debit balances (d) income and expense accounts have credit balances 10. In January 2019, the bank account of Jo Slow showed an opening debit balance of R500. Capital received, R10 000; Loan repayment R5 000; Incoming cash R8 000; Expenses 12 000; Cash purchase of new equipment R2 500. What is the opening bank balance as at 1 February 2019? (a) R9000 (b) R1000 (c) R4000 (d) R500 [10] (ii) TRUE OR FALSE QUESTIONS Indicate whether the following statements are True or False. 1. Net profit is the difference between sales and cost of sales. 2. The assets and liabilities of a business measure the financial position. 3. The debtors ledger is posted monthly in a computerised system and daily in a manual accounting system. 4. The perpetual inventory system requires that an inventory ledger be kept. 5. Depreciation is the allocation of the depreciable amount of a depreciable asset over its useful life 6. The primary objective of accounting is to provide financial information to various users regarding the activities of a business 7. Assets are everything owned by the business that they bought with cash 8. The basic accounting equation expresses the equality of assets and interests and its formula is as follows: ASSETS = OWNER'S EQUITY - LIABILITIES 9. A trading concern operates by buying merchandise that is sold at a loss 10. A discount allowed by a business to a customer for prompt payment affects the amount of output tax charged on the sales invoice, since it reduces the price at which the goods were sold. Match the statements in Column B to the terms in Column A. Write down the answers only, for example 1. (a). [101=10] (a) Statement AC 123, requires certain information to be disclosed in the financial statements regarding the depreciation of property, plant and equipment. You are required to list these requirements. (4) (b) Provide the formula for calculating the diminishing balance method. net Rock value (4) dopiriation (c) What is the major difference between these two methods of calculating depreciation? (2) [10] QUESTION 2 (a) What is the difference between input tax and output tax in terms of Value Added Tax? (2) (b) Several business transactions do not attract Value Added Tax. List any five such transactions. (5) (c) An item with a selling price of R234.50 ex VAT was sold. Calculate both the selling price and the VAT portion of the sale. (3) [10] You have been recently appointed as the new intern at HGV Consulting. Your manager has provided you with the following extract from a client's records to assist in interpreting the data. Required: (a) You are required to calculate and comment on the following ratios: i. the solvency ratio (4) ii. the current ratio (4) iii. the salary to income ratio (4) iv. the profitability in (4) (b) Calculate the gross profit of the client and the percentage mark up on cost of goods sold. Ignore VAT. (4) [20] Additional information: - Closing inventory at 30 June 2018-R8 000 - Packaging material used for the year - R12 000 - Advertising costs owing on 30 June 2018 - R2 000 Provide for depreciation as follows: - Shop Equipment - 10% pa per annum on net book value - Office equipment 5% per annum on cost Required: After considering the additional information: (a) Prepare an income statement for the year ended 30 June 2018 (b) Prepare a balance sheet as at 30 June 2018 [30] [30] Section A: 30 marks Section B: 20 marks Section C: 20 marks Section D: 30 marks TOTAL: 100 MARKS

6. The method of valuing called base inventory is most suited to which type of industry? (a) large manufacturing companies (b) large retail companies (c) larger sole traders (d) is unsuitable for South African companies 7. If the number of vehicles decreases through a sale, then the vehicle account in the balance sheet must be: (a) debited (b) credited (c) debited and bank debited (d) credited and the creditors account debited. 8. On the debit side of the general ledger one records: (a) monies received by customers (b) monies paid for salaries (c) payments made to a supplier (d) debtors discounts allowed 9. In the general ledger, the: (a) asset and expense accounts have credit balances (b) liability and income accounts have debit balances (c) asset and expense accounts have debit balances (d) income and expense accounts have credit balances 10. In January 2019, the bank account of Jo Slow showed an opening debit balance of R500. Capital received, R10 000; Loan repayment R5 000; Incoming cash R8 000; Expenses 12 000; Cash purchase of new equipment R2 500. What is the opening bank balance as at 1 February 2019? (a) R9000 (b) R1000 (c) R4000 (d) R500 [10] (ii) TRUE OR FALSE QUESTIONS Indicate whether the following statements are True or False. 1. Net profit is the difference between sales and cost of sales. 2. The assets and liabilities of a business measure the financial position. 3. The debtors ledger is posted monthly in a computerised system and daily in a manual accounting system. 4. The perpetual inventory system requires that an inventory ledger be kept. 5. Depreciation is the allocation of the depreciable amount of a depreciable asset over its useful life 6. The primary objective of accounting is to provide financial information to various users regarding the activities of a business 7. Assets are everything owned by the business that they bought with cash 8. The basic accounting equation expresses the equality of assets and interests and its formula is as follows: ASSETS = OWNER'S EQUITY - LIABILITIES 9. A trading concern operates by buying merchandise that is sold at a loss 10. A discount allowed by a business to a customer for prompt payment affects the amount of output tax charged on the sales invoice, since it reduces the price at which the goods were sold. Match the statements in Column B to the terms in Column A. Write down the answers only, for example 1. (a). [101=10] (a) Statement AC 123, requires certain information to be disclosed in the financial statements regarding the depreciation of property, plant and equipment. You are required to list these requirements. (4) (b) Provide the formula for calculating the diminishing balance method. net Rock value (4) dopiriation (c) What is the major difference between these two methods of calculating depreciation? (2) [10] QUESTION 2 (a) What is the difference between input tax and output tax in terms of Value Added Tax? (2) (b) Several business transactions do not attract Value Added Tax. List any five such transactions. (5) (c) An item with a selling price of R234.50 ex VAT was sold. Calculate both the selling price and the VAT portion of the sale. (3) [10] You have been recently appointed as the new intern at HGV Consulting. Your manager has provided you with the following extract from a client's records to assist in interpreting the data. Required: (a) You are required to calculate and comment on the following ratios: i. the solvency ratio (4) ii. the current ratio (4) iii. the salary to income ratio (4) iv. the profitability in (4) (b) Calculate the gross profit of the client and the percentage mark up on cost of goods sold. Ignore VAT. (4) [20] Additional information: - Closing inventory at 30 June 2018-R8 000 - Packaging material used for the year - R12 000 - Advertising costs owing on 30 June 2018 - R2 000 Provide for depreciation as follows: - Shop Equipment - 10% pa per annum on net book value - Office equipment 5% per annum on cost Required: After considering the additional information: (a) Prepare an income statement for the year ended 30 June 2018 (b) Prepare a balance sheet as at 30 June 2018 [30] [30] Section A: 30 marks Section B: 20 marks Section C: 20 marks Section D: 30 marks TOTAL: 100 MARKS 6. The method of valuing called base inventory is most suited to which type of industry? (a) large manufacturing companies (b) large retail companies (c) larger sole traders (d) is unsuitable for South African companies 7. If the number of vehicles decreases through a sale, then the vehicle account in the balance sheet must be: (a) debited (b) credited (c) debited and bank debited (d) credited and the creditors account debited. 8. On the debit side of the general ledger one records: (a) monies received by customers (b) monies paid for salaries (c) payments made to a supplier (d) debtors discounts allowed 9. In the general ledger, the: (a) asset and expense accounts have credit balances (b) liability and income accounts have debit balances (c) asset and expense accounts have debit balances (d) income and expense accounts have credit balances 10. In January 2019, the bank account of Jo Slow showed an opening debit balance of R500. Capital received, R10 000; Loan repayment R5 000; Incoming cash R8 000; Expenses 12 000; Cash purchase of new equipment R2 500. What is the opening bank balance as at 1 February 2019? (a) R9000 (b) R1000 (c) R4000 (d) R500 [10] (ii) TRUE OR FALSE QUESTIONS Indicate whether the following statements are True or False. 1. Net profit is the difference between sales and cost of sales. 2. The assets and liabilities of a business measure the financial position. 3. The debtors ledger is posted monthly in a computerised system and daily in a manual accounting system. 4. The perpetual inventory system requires that an inventory ledger be kept. 5. Depreciation is the allocation of the depreciable amount of a depreciable asset over its useful life 6. The primary objective of accounting is to provide financial information to various users regarding the activities of a business 7. Assets are everything owned by the business that they bought with cash 8. The basic accounting equation expresses the equality of assets and interests and its formula is as follows: ASSETS = OWNER'S EQUITY - LIABILITIES 9. A trading concern operates by buying merchandise that is sold at a loss 10. A discount allowed by a business to a customer for prompt payment affects the amount of output tax charged on the sales invoice, since it reduces the price at which the goods were sold. Match the statements in Column B to the terms in Column A. Write down the answers only, for example 1. (a). [101=10] (a) Statement AC 123, requires certain information to be disclosed in the financial statements regarding the depreciation of property, plant and equipment. You are required to list these requirements. (4) (b) Provide the formula for calculating the diminishing balance method. net Rock value (4) dopiriation (c) What is the major difference between these two methods of calculating depreciation? (2) [10] QUESTION 2 (a) What is the difference between input tax and output tax in terms of Value Added Tax? (2) (b) Several business transactions do not attract Value Added Tax. List any five such transactions. (5) (c) An item with a selling price of R234.50 ex VAT was sold. Calculate both the selling price and the VAT portion of the sale. (3) [10] You have been recently appointed as the new intern at HGV Consulting. Your manager has provided you with the following extract from a client's records to assist in interpreting the data. Required: (a) You are required to calculate and comment on the following ratios: i. the solvency ratio (4) ii. the current ratio (4) iii. the salary to income ratio (4) iv. the profitability in (4) (b) Calculate the gross profit of the client and the percentage mark up on cost of goods sold. Ignore VAT. (4) [20] Additional information: - Closing inventory at 30 June 2018-R8 000 - Packaging material used for the year - R12 000 - Advertising costs owing on 30 June 2018 - R2 000 Provide for depreciation as follows: - Shop Equipment - 10% pa per annum on net book value - Office equipment 5% per annum on cost Required: After considering the additional information: (a) Prepare an income statement for the year ended 30 June 2018 (b) Prepare a balance sheet as at 30 June 2018 [30] [30] Section A: 30 marks Section B: 20 marks Section C: 20 marks Section D: 30 marks TOTAL: 100 MARKS