PART A

The following are extracts from the financial records of ABC Ltd for the year ended 31 August 2021. ABC Ltd

Extract from the Statement of financial statement as at 31 August 2021

1. The dividends declared for the current year is R2 400

Required:

Prepare only the Cash flows from operating activities section of the statement of cash flows for ABC Ltd for the year ended 31 August 2021. Use the indirect method. Show all workings. Where applicable, round off calculations to the nearest Rand. (14)

PART B

A trial balance is a list of all accounts in the general ledger and their balances at a specified point in time or at a given date. All the debit balances are added together to arrive at an amount for Total debits and all the credit balances are added together to arrive at the Total credits. If the value of Total Debits is equal to the value of Total credits then this is commonly referred to as the trial balance balances or the trial balance is in equilibrium.

This would mean that the method of the double entry system has been implemented accurately. However, it would be incorrect to believe that because the trial balance is in equilibrium there are no errors or omissions in that accounting system. There are errors and omissions that will not be identified by a trial balance that is in equilibrium.

Required:

Identify at least four types of errors and /or omissions that would NOT be identified by a trial balance that is in equilibrium. Provide a brief description of each one or present examples of transactions being recorded in a way that will still allow the trial balance to balance. (16)

Bank Inventories - trade goods Trade receivables Trade payables Prepaid expenses: Accrued expenses: interest Accrued expenses; other SARS - income tax payable Dividends payable 31 August 2021 31 August 2020 -R R 50 000 20 000 22 000 30 000 77 000 69 000 44 000 46 000 1 800 1 200 1 000 2 400 5 700 4 400 8 000 3 000 1 500 2 700 ABC Ltd Extract from the Statement of profit or loss and other comprehensive income for the year ended 31 August 2021 R Sales 592 000 Cost of sales (301 000) Gross profit 291 000 Profit on sale of Equipment 9 000 Depreciation 41 000 Interest expense 2 600 Income tax expense 15 200 Profit for the year 110 300 Additional information