Question 1 (Marks: 5)
Complete the table below by correctly classify the account by putting an X in the correct column.
Duplicate this table in your answer and then add a X in the correct columns.
| Name of Account | Non‐ Current Asset | Current Asset | Non‐ Current Liability | Current Liability | Expense | Income | Proprietary accounts |
| Capital | |||||||
| Bank | |||||||
| Equipment | |||||||
| Long Term Loan | |||||||
| Staff refreshments | |||||||
| Creditors Control | |||||||
| Consumables stores | |||||||
| Sales | |||||||
| Rent received | |||||||
| Water and electricity |
Question 2 (Marks: 20)
A friend from school wants to open a business and has approached you for some help as he has
no accounting experience.
Q.2.1 Your friend has a wealthy aunt, and he wants to ask her for money to start the business.
The Aunt can either be an investor in the business or make a loan to the business.
In your own words explain to your friend how his aunt will use the financial information of the business if she is:
• An investor
• A lender (6)
Q.2.2 Your friend is not sure which business form to adopt for his new business. He is aware that his choice in business form will determine his exposure to risk and access to capital amongst others.
Briefly explain to your friend how each of the following five factors will impact his choice of business form.
• Legal personality
• Starting procedures
• Obtaining capital
• Ownership and management
• Distribution of profits (6)
Q.2.3 Which ownership form would you recommend for your friend and why? (2)
Q.2.4 Your friend has heard that there are two branches of accounting.
Name the two branches and briefly explain the differences between the two branches. (4)
Q.2.5 Explain to your friend the difference between a journal and a general ledger. (2)
Question 3
Calculate the profit or loss made by Jeff Wilson Wholesalers during December 2022 using the
below information:
| 1 December 2022 | 1 December 2022 | |
| Total assets | R326 906.00 | R256 756.00 |
| Total liabilities | R228 327.00 | R165 000.00 |
| Owner’s equity | ? | ? |
| ? |
Assume that no capital was added to the business during the year, and no drawings were made.
Your answer must indicate clearly if it is a profit or loss, and all workings must be shown.
Question 4 (Marks:40)
Houtbay Surfing Shop trades in surfboards and beach apparel. The business started trading on 1 January 2023. The following balances appeared in their books on 1 March 2023:
Debit balances: Bank R75 000
Inventory R35 000
Credit balances: Capital 110 000
The following transactions took place during March 2023. Houtbay Surfing Shop uses the perpetual inventory system. (Ignore VAT).
| Date | Transactions |
| 1 March | The owner obtained a loan of R100 000 for his uncle, to be repaid without interest in 5 years’ time. |
| 4 March | Purchased computer (Office equipment) to the value of R20 000 on credit from Computers-R-US |
| 5 March | Purchased trading inventory to the value of R32 000 in cash. |
| 7 March | Sold inventory on credit for R17 000. The cost of sales was R5 000. |
| 12 March | Paid the monthly internet fee of R700 in cash. |
| 17 March | Purchased stationery on credit for R600 |
| 21 March | Interest received of R200 is indicated on the bank statement. |
| 25 March | The owner took a surfboard with a selling price of R8 000 and a cost price of R5 000 for personal use. |
| 29 March | The debtor from 7 March paid the full amount. |
| 30 March | Paid weekly wages R2 500 from petty cash. |
| 31 March | Made a part payment to Computers-R-US of R8 000. See the transaction on 4 March. |
Required:
Calculate the owner’s equity in the business on 31 March 2023 by showing the effect of each transaction on the accounting equation.
For each transaction, show how the transactions will affect the accounting equation and enter how the accounts in the general ledger will be affected (Ignore VAT). Clearly indicating increases (+) and decreases (-).
Set your answer out as per the example given on the next page.
| Date | Account Debit | Account Credit | Assets | = | Owner’s Equity | Liabilities |
| Example | Loan | Bank | – 25 000 | -25 000 |
Question 5 (Marks: 30)
The following balances appeared in the books of Saxby Plastics as of 31 January 2023, the last day
of the financial year of the business:
| R | |
| Capital – 1 February 2022 | 260 450.00 |
| Drawings | 1 302.25 |
| Land and Buildings | 390 675.00 |
| Motor vehicles | 208 360.00 |
| Equipment | 315 144.50 |
| Financial asset: Fixed deposit (matures on 31 December 2025) | 31 254.00 |
| Bank | 6 771.70 |
| Debtors control | 11 720.25 |
| Petty cash | 1 432.48 |
| Trading inventory | 7 162.38 |
| Mortgage loan (matures on 31 December 2038) | 531 812.88 |
| Creditors control | 13 803.85 |
| Cash float | 3 516.08 |
| Credit Card account | 37 374.58 |
| SARS (Taxes due) | 9 506.43 |
| Sales | 390 675.00 |
| Sales returns | 31 254.00 |
| Cost of sales | 156 270.00 |
| Service Income | 31 254.00 |
| Dividend income | 14 585.20 |
| Rent income | 91 157.50 |
| Telephone and fax | 23 180.05 |
| Credit losses (bad debts) | 3 177.49 |
| Delivery expense | 8 464.63 |
| Packing Material | 5 573.63 |
| Postage and stationery | 6 276.85 |
| Insurance | 6 094.53 |
| Repairs and maintenance | 6 381.03 |
| Advertising | 6 667.52 |
| Bank charges | 3 151.45 |
| Rates and amenities | 6 146.62 |
| Wages and salaries | 140 643.00 |
Required:
Show all your workings.
Q.5.1 Calculate total income and total expenses. (10½)
Q.5.2 Calculate total current assets as at 31 January 2023. (3½)
Q.5.3 Calculate total non-current assets as at 31 January 2023. (3)
Q.5.4 Calculate total current liabilities as at 31 January 2023. (2½)
Q.5.5 Calculate total non-current liabilities as at 31 January 2023. (½)
Q.5.6 Calculate the net profit or loss for the year ended 31 January 2023. Indicate
clearly if it is a profit or a loss. (3½)
Q.5.7 Calculate the owner’s equity. (3½)
Q.5.8 The owner of Saxby Plastics wants to grow the business during 2023. Name
three things the owner can do to increase sales in 2023. (3)
Get Completed Answers on Accounting Questions from Experts
Answer 1:
| Name of Account | Non‐ Current Asset | Current Asset | Non‐ Current Liability | Current Liability | Expense | Income | Proprietary accounts |
| Capital | X | ||||||
| Bank | X | ||||||
| Equipment | X | ||||||
| Long Term Loan | X | ||||||
| Staff refreshments | X | ||||||
| Creditors Control | X | ||||||
| Consumables stores | X | ||||||
| Sales | X | ||||||
| Rent received | X | ||||||
| Water and electricity | X |
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