FAC1502 CORRECT EXAMS ANSWERS AND
QUESTIONS SET A+
✔✔TRADE PAYABLES CONTROL ACCOUNT - ✔✔Represents all the individual
creditor's in the creditors ledger. Reflects a summary of the individual creditor's
transactions and the balance of the trade payables control account must be equal to the
total of the individual creditor's account balance.
✔✔LONG TERM LOANS AND MORTGAGES (BURROWINGS) - ✔✔Must be disclosed
under non-current liabilities on the statement of financial position.
Debenture ---> Annual interest expense on the debentures will be shown in the
Statement of Profit or Loss and Other Comprehensive Income.
✔✔ESTABLISHMENT OF A SOLE PROPRIERTORSHIP - ✔✔A sole propriertor usually
contributes capital in the form of cash; non-current assets in the form of property; plant;
and equipment towards the starting of a business.
✔✔FURTHER CAPITAL CONTRIBUTIONS AND PROFIT - ✔✔The capital account in
the books of the entity (The Capital Section) would reflect an increase.
✔✔DRAWINGS - ✔✔The money taken from the business by the owner(s) for personal
use.
✔✔EQUITY - ✔✔Profit - Drawings = Equity
✔✔NON-PROFIT - ✔✔An organisation can be defined as an economic entity which has
legitiate goal of furthering certain interest of the community. Objectives: Use profits in
order to achieve the stated goal.
✔✔RECEIPS AND PAYMENTS STATEMENT - ✔✔An analysed and classified
summary of the cash transactions. Cash received is debited (Dr) and cash paid out is
credited (Cr).
, Operational revenue/expenses; prepayments; income received in advance; accrued
amounts.
Opening balance of cash on hand and the closing balance of the statement represents
cash on hand at the end of the period.
✔✔INCOME AND EXPENDITURE STATEMENT - ✔✔Intended to determine the
surplus or deficit for an accounting period. The difference between the revenue (credits)
and expenses (debits) represents the surplus/deficit.
✔✔TRADING STATEMENT - ✔✔Closes off with the dtermination of the gross profit.
Then is carried forward to the income and expenditure statement.
✔✔ACCUMULATED FUND - ✔✔Assets - Liabilities. Any initial donations made to begin
the organisation; entrance fees; surplus/deficit; special funds donated for general
expenses.
✔✔SPECIAL FUNDS - ✔✔A non-profit entity often sets money aside for a specific
purpose so not all the cash is spent.
1. Special funds can be established to save or set aside money for a specific purpose.
2. Special funds can be established where only the income earned from the investment
of the capital amount may be applied.
✔✔ENTRANCE FEES - ✔✔Entrance fees are entered on the debit (Dr) side of the
bank, and are on the credit (Cr) entrance fees account.
Non-current, they must be credited directly to the accumulated fund account and are not
shown in the income and expenditure statement as revenue.
✔✔DISADVANTAGES OF USING INCOMPLETE RECORDS - ✔✔1. Incompleteness --
> Impersonal
2. No record of non-current assets ad non-current liabilities
3. No details of profit and/or losses
4. The final results are reliable
✔✔CALCULATION OF PROFIT/LOSS OF IMCOMPLETE RECORDS - ✔✔The
profit/loss for a certain period can be determined by means of comparison of the capital
at the beginning of the period with the capital at the end of the period. An increase in
capital may be regarded as a profit and a decrease as a loss. Provision should be made
for additions to capital or withdrawals by the owner.
✔✔CONVERSION FROM A SINGLE ENTRY INTO A DOUBLE ENTRY SYSTEM:
WHERE SUBSIDIARY JOURNALS ARE KEPT - ✔✔1. Prepare statement of assets and
liabilities at the beginning of the period. The balances as shown in this statement are
then journalised (general) and osted to the various general ledger accounts.
QUESTIONS SET A+
✔✔TRADE PAYABLES CONTROL ACCOUNT - ✔✔Represents all the individual
creditor's in the creditors ledger. Reflects a summary of the individual creditor's
transactions and the balance of the trade payables control account must be equal to the
total of the individual creditor's account balance.
✔✔LONG TERM LOANS AND MORTGAGES (BURROWINGS) - ✔✔Must be disclosed
under non-current liabilities on the statement of financial position.
Debenture ---> Annual interest expense on the debentures will be shown in the
Statement of Profit or Loss and Other Comprehensive Income.
✔✔ESTABLISHMENT OF A SOLE PROPRIERTORSHIP - ✔✔A sole propriertor usually
contributes capital in the form of cash; non-current assets in the form of property; plant;
and equipment towards the starting of a business.
✔✔FURTHER CAPITAL CONTRIBUTIONS AND PROFIT - ✔✔The capital account in
the books of the entity (The Capital Section) would reflect an increase.
✔✔DRAWINGS - ✔✔The money taken from the business by the owner(s) for personal
use.
✔✔EQUITY - ✔✔Profit - Drawings = Equity
✔✔NON-PROFIT - ✔✔An organisation can be defined as an economic entity which has
legitiate goal of furthering certain interest of the community. Objectives: Use profits in
order to achieve the stated goal.
✔✔RECEIPS AND PAYMENTS STATEMENT - ✔✔An analysed and classified
summary of the cash transactions. Cash received is debited (Dr) and cash paid out is
credited (Cr).
, Operational revenue/expenses; prepayments; income received in advance; accrued
amounts.
Opening balance of cash on hand and the closing balance of the statement represents
cash on hand at the end of the period.
✔✔INCOME AND EXPENDITURE STATEMENT - ✔✔Intended to determine the
surplus or deficit for an accounting period. The difference between the revenue (credits)
and expenses (debits) represents the surplus/deficit.
✔✔TRADING STATEMENT - ✔✔Closes off with the dtermination of the gross profit.
Then is carried forward to the income and expenditure statement.
✔✔ACCUMULATED FUND - ✔✔Assets - Liabilities. Any initial donations made to begin
the organisation; entrance fees; surplus/deficit; special funds donated for general
expenses.
✔✔SPECIAL FUNDS - ✔✔A non-profit entity often sets money aside for a specific
purpose so not all the cash is spent.
1. Special funds can be established to save or set aside money for a specific purpose.
2. Special funds can be established where only the income earned from the investment
of the capital amount may be applied.
✔✔ENTRANCE FEES - ✔✔Entrance fees are entered on the debit (Dr) side of the
bank, and are on the credit (Cr) entrance fees account.
Non-current, they must be credited directly to the accumulated fund account and are not
shown in the income and expenditure statement as revenue.
✔✔DISADVANTAGES OF USING INCOMPLETE RECORDS - ✔✔1. Incompleteness --
> Impersonal
2. No record of non-current assets ad non-current liabilities
3. No details of profit and/or losses
4. The final results are reliable
✔✔CALCULATION OF PROFIT/LOSS OF IMCOMPLETE RECORDS - ✔✔The
profit/loss for a certain period can be determined by means of comparison of the capital
at the beginning of the period with the capital at the end of the period. An increase in
capital may be regarded as a profit and a decrease as a loss. Provision should be made
for additions to capital or withdrawals by the owner.
✔✔CONVERSION FROM A SINGLE ENTRY INTO A DOUBLE ENTRY SYSTEM:
WHERE SUBSIDIARY JOURNALS ARE KEPT - ✔✔1. Prepare statement of assets and
liabilities at the beginning of the period. The balances as shown in this statement are
then journalised (general) and osted to the various general ledger accounts.
