QUESTION ONE (40 MARKS)

Provide a comprehensive discussion on each of the following terms with applicable examples. (40)
I. Assets
II. Equity
III. Liabilities
IV. Income
V. Expense

QUESTION TWO (50 MARKS)
You are provided with information relating to SS Ltd for the year ended 31 December 2023.

Trial balance as at 31 December 2023 Debit Credit
Capital   4 720 340
Drawings 400 000  
Land and buildings 3 200 000  
Vehicles 1 600 000  
Accumulated depreciation on vehicles   200 000
Stock 1 534 000  
Accounts receivable 521 900  
Allowance for credit losses   22 000
Accounts payable   786 800
Loan: C Bank @ 12% p.a.   630 000
Bank 389 400  
Fixed deposit @ 6% p.a. 450 000  
Sales   10 000 000
Cost of sales 5 200 000  
Salaries and wages 788 000  
Directors’ fees 1 840 000  
Audit fees 88 000  
Employer’s contribution (Pension and UIF) 68 000  
Bank charges 31 000  
Sundry expenses 90 000  
Credit losses 12 000  
Rent income   69 160
Interest on fixed deposit   27 000
Interest on overdraft 13 000  
Interest on loan 70 000  
Repairs and maintenance 125 000  
Packing material 35 000  
  16 455 300 16 455 300

Additional information
1. Packing material to the value of R31 000 was used for the year ended 31 December 2023.
2. The allowance for credit losses must be adjusted to 4% of outstanding debtors.
3. Aldridge Builders was paid R105 000 for:
• The construction of a storeroom: R80 000
• Repairs to paving: R25 000
The entire amount was debited to Land and buildings in error.
4. Rent income with an amount of R5 720 for January 2024 has already been received.
5. Interest on a loan of R5 600 is yet to be paid for the 2023 financial year.
6. Depreciation
• Depreciation on vehicles is at 10% per annum on diminishing balance.
Note: A new vehicle was acquired at a cost of R600 000 on 2 June 2023. This purchase has already been recorded.

You are required to:
a) Prepare the Statement of profit or loss and other comprehensive income of SS Ltd for the year ended 31 December 2023. (25)
b) Prepare the Statement of financial position of SS Ltd as at 31 December 2023. (25)
– Notes are required

Answers to Above Questions on Business and Management Sciences

Answer 1: Assets are defined as the resources owned by an organisation. They can be tangible or intangible such as building, machinery, goodwill etc.
Equity is defined as the ownership interest in an organisation. It is the residual interest in the assets of an entity after deducting its liabilities.

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