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 AccountNon‐

Current Asset

Current AssetNon‐

Current Liability

Current LiabilityExpenseIncomeProprietary accounts
Long Term








Rent received       
Water and



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 20221 December 2022
Total assetsR326 906.00R256 756.00
Total liabilitiesR228 327.00R165 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).

1 MarchThe owner obtained a loan of R100 000 for his uncle, to be repaid without interest in

5 years’ time.

4 MarchPurchased computer (Office equipment) to the value of R20 000 on credit from


5 MarchPurchased trading inventory to the value of R32 000 in cash.
7 MarchSold inventory on credit for R17 000. The cost of sales was R5 000.
12 MarchPaid the monthly internet fee of R700 in cash.
17 MarchPurchased stationery on credit for R600
21 MarchInterest received of R200 is indicated on the bank statement.
25 MarchThe owner took a surfboard with a selling price of R8 000 and a cost price of R5 000

for personal use.

29 MarchThe debtor from 7 March paid the full amount.
30 MarchPaid weekly wages R2 500 from petty cash.
31 MarchMade a part payment to Computers-R-US of R8 000. See the transaction on 4 March.

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.







ExampleLoanBank– 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:

Capital – 1 February 2022260 450.00
Drawings1 302.25
Land and Buildings390 675.00
Motor vehicles208 360.00
Equipment315 144.50
Financial asset: Fixed deposit (matures on 31 December 2025)31 254.00
Bank6 771.70
Debtors control11 720.25
Petty cash1 432.48
Trading inventory7 162.38
Mortgage loan (matures on 31 December 2038)531 812.88
Creditors control13 803.85
Cash float3 516.08
Credit Card account37 374.58
SARS (Taxes due)9 506.43
Sales390 675.00
Sales returns31 254.00
Cost of sales156 270.00
Service Income31 254.00
Dividend income14 585.20
Rent income91 157.50
Telephone and fax23 180.05
Credit losses (bad debts)3 177.49
Delivery expense8 464.63
Packing Material5 573.63
Postage and stationery6 276.85
Insurance6 094.53
Repairs and maintenance6 381.03
Advertising6 667.52
Bank charges3 151.45
Rates and amenities6 146.62
Wages and salaries140 643.00

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 AccountNon‐

Current Asset

Current AssetNon‐

Current Liability

Current LiabilityExpenseIncomeProprietary accounts
Capital      X
Bank X     
Long Term








Sales X     
Rent received     X 
Water and



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