Question 1 (10 marks) Multiple choice questions (1 mark each)

1. Which of the following do not affect the trial balance agreement? a) Sales N$105 to Simsolia entered in Simsons account b) Cash payment of N$134 for Motor expenses entered only in the cashbook. c) Purchases N$440 from C Browne entered in the books accounts as N$404 d) Wages account added up incorrectly, being totalled N$20 too much.

2. What should happen if the balance on the Suspense account is of material amount? a) Show it in the Statement of Financial Position b) Carry forward the balance to the next period c) Find the errors before publishing the financial statements d) Write it off to the Statement of Comprehensive Income

3. Which of the following journal entries indicate that the company is using a periodic inventory? a) Inventory debit; Accounts Payable, credit b) Inventory debit; Cost of goods sold, credit c) Purchases debit; Accounts payable, credit d) Purchases debit; Cost of goods sold, credit

4. When Loise makes out a cheque for N$5000 and sends it to Young, then Loise is known as a) The payee b) The banker c) The drawer d) The creditor 5. What should happen if the balance on the Suspense account is of material amount? e) Show it in the Statement of Financial Position f) Carry forward the balance to the next period g) Find the errors before publishing the financial statements h) Write it off to the Statement of Comprehensive Income

6. Goods sold to Annelie of N$430 was entered in both accounts as N$520. The rectification entry will be: a) Debit: Annelie N$520 Credit: Sales N$520 b) Debit: Sales N$90 Credit: Annelie N$90 c) Debit: Sales N$560 Credit: Annelie N$560 d) Debit: Annelie N$90 Credit: Sales N$90

7. What should happen if the balance on the Suspense account is of material amount? i) Show it in the Statement of Financial Position j) Carry forward the balance to the next period k) Find the errors before publishing the financial statements l) Write it off to the Statement of Comprehensive Income

8. The following item may appear in the cashbook but not on the banks statement. a) Stop Order b) Bank charges c) Outstanding deposit d) Debit order

9. Errors are corrected via the General Journal because: a) It saves the accountants time b) It saves entering them in the ledger c) It is much easier to do d) It provides a good record explaining the double entry records

10. The principle requires that the assets cost be allocated to depreciation expense over the life of the asset. a) Consistency Page 11 of 24 b) Accrual c) Matching d) Accounting period

11. What effect will the overcasting of opening stock with N$ 500 have on the gross profit? a) Increase with N$ 500 b) Decrease with N$ 500 c) Increase with N$ 1000 d) Decrease with N$ 1000

Question 2 (10 marks)

Write short notes on the following: (2 marks each) i. Unpresented cheques

ii. Suspense account

iii. Outstanding deposit

iv. Dishonoured cheque

v. Error of commission

Question 4 (15 marks)

Ackermans Stores compared their cashbook for September 2013 with their bank statement.

The following differences were discovered. a) On 30 September 2013, the cashbook had a favourable balance of N$1 250 and the bank statement showed an overdraft of N$9 013.

b) Storm Stores had not recorded a cheque (previously received from Paula) for N$900 returned by bank marked R/D.

c) A deposit of N$9 780 on 30 September 2013 did not appear on the bank statement.

d) Rent received, N$3 090, had been recorded in the cashbook as N$3 900.

e) The bank had received N$1 500 directly from Faith a debtor. Ackermans Stores had not been advised of this.

f) No entry had been made in the cashbook for N$2 430 paid directly by the bank for insurance.

g) Cheque number 169 payable to Wave Stores for N$2 367 had not been presented for payment.

h) Bank charges N$120 and interest on overdraft N$90 were included on the bank statement, but had not been recorded in the cashbook.

You are required to: a) Write up an updated cashbook for Ackermans Stores and show the new balance on 1 May 2012. (9 marks)

b) Prepare a bank reconciliation statement as at 30 September 2013. (4 marks)

c) Why is it important to prepare a bank reconciliation (2 marks)