QUESTION ONE [20]
Show how the below transactions affect the financial position of the business as represented by A = E + L. You need to clearly indicate whether the element has increased or decreased and provide the relevant amount and account that would be affected.
EG. The business pays R6 333 per month for the rental of some business premises. All rentals were paid in cash during the year.
| No. | A | = | E | + | L |
| EG. | -75996Bank
(6333x 12) |
-75996Rent Expense |
Please use format of table above for the below transactions
The following transactions occurred in the business during the year ended 31 December 2024:
1. The owner deposited R105 000 cash into the business’s bank account on 1 January
2022.
2. The business bought R450 000 worth of inventory from various suppliers during the year. 80% of these purchases were on credit and the remaining 20% were paid for in cash.
3. During the year the business paid R96 900 cash in operating costs. These costs related to goods and services that had all been used during the year.
4. The employees earned R104 000 in salaries and wages during the year. These were paid in cash by the end of the year.
5. During the year the business paid creditors R400 000.
6. The business received R1 010 000 in payments from debtors during the year.
7. The business made cash sales of R410 400 and credit sales of R957 600 during the year.
8. The cost of the inventory sold during the year was R480 000.
9. A customer had returned goods on the 15 December 2024, selling price of R2 280.
The cost price was R912. The original sale had been for cash, and so the customer was refunded R2 280 in cash. The item was returned to inventory.
10. The business rents the land out. The rental is R15 200 per month. All rentals owing by tenants had been received by year-end and no amounts had been paid in advance for 2025.
QUESTION TWO [30]
The following transactions during October 2024 relate to Powerless Electricians:
| 2024
Oct1
3 9 12 13 17 24
27 30 |
D.Globe,theowner,depositedasopeningcapital Obtained loan from LL Bank BoughtequipmentoncreditfromAADealers Issuedachequeforanadvertisementinalocalnewspaper Paid the telephone account by cheque ReceivedachequefromL.Lamesforservicesrendered Drew a cheque for private use AsanadditionalcapitalcontributionD.Globetransferred her motor vehicle to the business Paidsalariesbycheque IssuedachequetoLLBankasarepaymentontheloan |
R
10 000 6 000 1 000 200 75 500 2 000
9 000 2 000 1 500 |
Required: Prepare the following in the books of Powerless Electricians:
2.1 The appropriate ledger accounts which reflect the above transactions, properly balanced / closed off on 31 October 2024. (20) NB: Indicate the correct contra ledger account.
2.2 The trial balance on 31 October 2024. (10)
QUESTION THREE [20]
Choose a statement from COLUMN B that matches the GAAP principle listed in COLUMN A.
1.2 List and explain the two (2) key fundamental assumptions when preparing financial statements. (6)
1.3 List four (4) elements of financial statements (4)
Answers to Above Questions on Financial Accounting
Answer 1: The ways in which the the financial position of the business is affected from the transactions given are analysed in the table below:
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