FAC1503 - EXAM TIPS

TIPS FOR FAC1503
This little tip, is something I was taught by a high school accounting student, I wrote it at the top of every single page and
needless to say it did actually help.



AEdrOLIcr
(Pronounced like “idolic”, which makes it easier to remember)
The theory behind this little gem is as follows:

A = Assets; E = Expenses
+++Assets and Expenses INCREASE on the DEBT SIDE(dr)+++


O = Owners Equity; L = Liabilities; I = Incomes
+++Owners Equity, Liabilities, Incomes INCREASE on the CREDIT SIDE (cr)+++

USEFUL FORMULAS
UNISA will often throw the use of these simple formula into other questions, for example the questions on the accounting
equation { A=OE+L }. Knowing them will always be to your benefit because you simply have to learn the formula and the
“plug-in” the relevant information.


TO CALCULATE INTEREST:

Amount Invested x Interest Rate(%) x [Period(months)/12]
Eg. In the month of February 2011, Heine Jones charged Fast Sales an interest of 12% per annum on the outstanding
account of R8 600 for 4 months

Amount = R 8 600
Rate = 12%
Period = 4 months

(8 600 x 12%) x 4/12 OR (8 600 x 12/100) x 4/12

= 1032 x 4/12
= 344

They may give the period, in a slightly more complex way, I found it always helped to draw out a little time-line. Using th
above example say they give the period as the following

Period = 1 May 2010 – 31 Dec 2011
8months 1 year

1 May 2010 31 Dec 2010 31 Dec 2011

(8 600 x 12%) x 20/12 {Note: 1yr 8months = 20 months}
=1720

, TO CALCULATE PROFITS & DISCOUNTS:

1. PROFITS

*Calculate SELLING PRICE given Cost Price;

Cost Price + (Cost Price x Profit on Cost Price) = Selling Price

*Calculate COST PRICE given Selling Price;

Selling Price – (Selling Price x Profit on Selling Price) = Cost Price


2. DISCOUNTS

*Calculate NET SELLING PRICE give Trade Discount on Sale;

Selling Price – (Selling Price x Discount on Selling Price) = Net Selling Price

*Calculate NET AMOUNT TO BE PAYED given Settlement Discount on Payment of Account;

Amount Outstanding – (Amount Outstanding x Discount on payment) = Net Amount


TO CALCULATE MARK-UP ON COST: {I always found making out this small table helped}
(What you want to figure out on top, over s.p % x what you have)

Cost Price = 100% = ?
Mark-up = 20% = ?
Selling Price = 120% = R1 500

Cost Price x Selling Price(R)
Selling Price% 1 = Mark-up on Cost

100 x 1500
120 1 = R1 250

TO CALCULATE MARK-UP ON SELLING:
(Gross profit % on Cost of Sales = Mark-up)

Selling Price = 100% = R1 500
Mark-up = 20%
Cost = ? = 80% (cost%= s.p% – m.u%)

Cost Price% x Selling Price(R)
Selling Price% 1 = Mark-up on Selling

80 x 1500
100 1 = R1 200