School of Business & Leisure
PROGRAMME: ACCOUNTING AND
FINANCE
Module: FINANCIAL ACCOUNTING 1
Module code: AAF- 101
PHASE TEST REVISION
DATE: 14 March 2023
TIME ALLOWED: 2 hours
Instructions to Candidates:
The paper contains Section A and Section B. Answer ALL questions in each
section.
Do NOT open this paper until instructed by the supervisor.
This question paper must not be removed from the examination hall.
This examination contains 6 printed pages including cover page.
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ANSWER ALL QUESTIONS
SECTION A (10 MARKS)
QUESTION 1
What does the accrual concept highlight?
A. That transactions are recorded at the cost when they are incurred or occurred.
B. That asset, income is not overstated.
C. That accounts should deal with items to which monetary value can be
attached.
D. That all materials should be included in the financial statement
QUESTION 2
A credit note is a document:
A. Acknowledging purchase on credit
B. Giving a preference from an agency detailing the creditworthiness of a new
customer
C. Issued when a deposit is paid on goods
D. Which cancels out all or part of a sales invoice
QUESTION 3
In which day book, are credit purchases recorded?
A. Sales Returns
B. Purchases daybook
C. Returns outwards
D. Cash book
QUESTION 4
Which from the following represents the Accounting Equation?
A. Assets=Equity+ Liabilities
B. Liabilities + Assets = Equity
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C. Equity + Assets = Liability
D. None of the above
QUESTION 5
A trade receivable is an example of……
A. An Asset
B. A Liability
C. An expense
D. An income
QUESTION 6
A credit balance on a ledger account indicates:
A. an asset or an expense
B. a liability or an expense
C. an amount owing to the organisation
D. a liability or a revenue
QUESTION 7
Which of the following describes the separate entity principle?
A. The non-current assets of a business are a separate entity from the current
assets
B. The drawings of a business are a separate entity from the profit of the
business
C. The business is a separate entity from the owner of the business
D. The owner of the business must be a separate entity from the lender to the
business
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QUESTION 8
Which of the following statements are true regarding Financial Accounting?
i. Generally required by law.
ii. Reflects past performance.
iii. Includes budgets and forecast of future activities.
iv. Prepared normally for external users.
v. Presented in accordance with strict legal and accounting requirements.
A. All statements are correct
B. All except statement (i) are correct
C. All except statement (iii) are correct
D. All except statement (iv) are correct
QUESTION 9
Which of the following best explains the term ‘current asset’?
A. An asset currently in use by a business
B. A resource that a business has or uses, which is likely to be held only for a
short time
C. An amount owed to somebody else which is due for repayment soon
D. Money which the business currently has in its bank account
QUESTION 10
What is the main purpose of an accounting system in a business?
A. To generate the business accounts
B. To calculate the tax payable by a business
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C. To record, summarise and present information from documentation
generated by business transactions
D. To enable the owner to know if the business is trading profitably
SECTION B (40 MARKS)
ANSWER ALL QUESTIONS
QUESTION 1: (20 MARKS)
1. Complete the following table for transactions (a) – (j) below:
Account to debit Account to credit
a
i. Started business by depositing P200 000 in the business bank.
ii. Bought a van on credit P8, 700.
iii. Received a cheque for loan from to F Duff P10, 000.
iv. Goods solds for P1, 400 on credit.
v. The owner puts further P 4,000 cash into the business.
vi. Bought goods on credit P760.
vii. Repaid by cash a loan owed to F Duff P10, 000.
c) Prepare ledgers for the above transactions and balance them.
d) Prepare a trial balance
QUESTION 2 (20 MARKS)
A new trainee made the following errors in the books of Tshepiso Ltd.
i. A sale of goods worth P678 to J Harris had been entered to J. Harts account
ii. The sale of P59 worth of goods to R. Ncube has been completely omitted
from the books.
iii. The purchase of a machine for P200 is debited to purchases account instead
of being debited to machinery account.
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iv. In the cash book, the amount of cash sales transferred to the sales account
was overstated by P20 and the amount transferred to the wages account was
also overstated by P20.
REQUIRED
a) State the type of error made in each of the above transactions. (4
marks)
b) Prepare journal entry to correct each of the above error. (4
marks)
c) Explain why a suspense account should be cleared before final accounts are
prepared. (3 marks)
d) Explain any two (2) limitations of a trial balance. (4
marks)
QUESTION 3
Indicate the journal in which you would record the following transactions:
a. Apple contributed P50,000 to start up a business
b. She paid rent by cheque to JHB letting agents, P2,000
c. Bought shop equipment from EQUIP on credit P10,000
d. Purchased goods on credit from TR wholesalers, P2, 240
QUESTION 4
The following transactions took place in Metsef supermarket.
Show the effect of each transaction on assets, liabilities and capital in the books of
Metsef. Use the following words: No Effect, Increase, Decrease
Liabilities Assets Capital
i. Owner pays capital
into the bank
ii. Pay creditor by
cheque
iii. Debtor pays money
owing by cheque
iv. Owner takes money
out of the business bank
account for own use
v. Paid salaries by
cheque
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vi. Received a cheque
for commission
vii. Bought stationery by
cheque
QUESTION 4
June 1 Balances brought forward: Cash P420; Bank P4,940.
2 The following paid us by cheque, in each case deducting a 5 per cent cash discount:
S Braga P820; L Pine P320; G Hodd P440; M Rae P1,040.
3 Cash sales paid direct into the bank P740.
5 Paid rent by cash P340.
6 We paid the following accounts by cheque, in each case deducting 21/2 per cent cash
discount: M Peters P360; G Graham P960; F Bell P400.
8 Withdrew cash from the bank for business use P400.
10 Cash sales P1,260.
12 B Age paid us their account of P280 by cheque less P4 cash discount.
14 Paid wages by cash P540.
20 Bought fixtures by cheque P4,320.
REQUIRED:
Enter the following in the three-column cash book of an office supply shop. Balance off
the cash book at the end of the month
QUESTION 5
Amantle’s trial balance includes balances for:
i. Discounts allowed
ii. Trade payables (creditors)
iii. Trade receivables (debtors)
iv. Bank overdraft
v. fixtures
Classify the above according to the table below? (5 marks)
Assets Liability Expense
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END OF PAPER
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