FAC1601 Assignment 3 (QUALITY ANSWERS) Semester 1 2024

This document contains workings, explanations and solutions to the FAC1601 Assignment 3 (QUALITY ANSWERS) Semester 1 2024. For assistance call or us on 0.6.8..8.1.2..0.9.3.4...... Question 1 Not yet answered Marked out of 3.00 QUIZ This information relates to questions 1 - 5 below: A profi table cattle feed production company, Tswelelopele Ltd, was incorporated with an authorised share capital of 900,000 NPV ordinary shares and 600,000 6.5% preference shares. The company's fi nancial year-end is April 30. Below are the share transactions recorded for Tswelelopele Ltd since incorporation: On May 1, 2022, 105,000 ordinary shares were issued to subscribers at R8.5 per share. On June 18, 2022, 225,000 ordinary shares and 260,000 6.5% preference shares were issued to the public at R10.50 each and R11.20 each, respectively. On July 31, 2023, 102,000 6.5% preference shares were issued at R20.20 each. On March 25, 2024, the share capital for ordinary shares increased by R1,820,500. These shares were issued at R12.50 each. On April 15, 2024, the directors of Tswelelopele Ltd approved a capitalisation issue of 1 share for every 4 ordinary shares held at R15.9 per share. On April 30, 2024, the board of Tswelelopele Ltd declared an ordinary dividend of R0.45 per share, payable during May 2024. The company met the liquidity and solvency requirements. Which one of the following alternatives represents the correct total number of ordinary shares issued by Tswelelopele Ltd as at 31 March 2024? a. 330,000 b. 245,000 c. 300,000 d. 475,640 e.2,150,500 Clear my choice Time left 1:57:13 S - The study-notes marketplace S - The study-notes marketplace Question 5 Not yet answered Marked out of 5.00 Which one of the following alternatives represents the correct amount of preference share dividend by Tswelelopele Ltd on 30 April 2024? a. R 189,000 b. R 323,206 c. R 289,725 d. R 189,280 e.R 320,000 Clear my choice S - The study-notes marketplace Question 8 Not yet answered Marked out of 1.50 Which statement accurately describes the taxation of close corporations? a. A close corporation is taxed separately from its members. b. Members of a close corporation are taxed on the CC's income. c. Taxation of a close corporation is at a fi xed rate irrespective of income. d. Close corporations pay double the tax rate compared to companies. e.Close corporations are exempt from all forms of taxation. Clear my choice S - The study-notes marketplace FAC1601-24-S1  Welcome Message  Assessment 3 Question 9 Not yet answered Marked out of 1.50 Question 10 Not yet answered Marked out of 1.50 QUIZ How many natural persons are allowed to be members of a close corporation? a. No limit as long as all are natural persons. b. 20 c. 15 d. 10 e.5 Clear my choice When accounting for the payment of provisional tax by a close corporation, what are the correct journal entries? a. Debit SARS (income tax) and Credit Bank. b. Debit Bank and credit income tax expense. c. Debit income tax expense and credit Bank. d. Debit Bank and credit SARS (income tax). e.Debit income tax payable and credit Bank. Clear my choice Time left 1:54:10 S - The study-notes marketplace Question 11 Not yet answered Marked out of 1.50 Which Act primarily governs companies in South Africa? a. The Companies Act 69 of 1965. S - The study-notes marketplace b. The Financial Management Act of 1999. c. The Companies Act 71 of 2008. d. The Corporate Act of 2001. e.The Business Act 71 of 1991. Clear my choice S - The study-notes marketplace FAC1601-24-S1  Welcome Message  Assessment 3 Question 12 Not yet answered Marked out of 1.50 Question 13 Not yet answered Marked out of 1.50 QUIZ Which body is responsible for registering companies in South Africa? a. South African Revenue Service (SARS) b. Companies and Intellectual Property Commission (CIPC) c. Financial Sector Conduct Authority (FSCA) d. South African Reserve Bank (SARB) e.Johannesburg Stock Exchange (JSE) Clear my choice What type of company is formed for the fi nancial gain of the shareholders without restricting the transfer of ownership in South Africa? a. Non-profi t company b. State-owned company c. Personal liability company d. Public company e.Private company Clear my choice Time left 1:53:09 S - The study-notes marketplace Question 14 Not yet answered Marked out of 1.50 Question 15 Not yet answered Marked out of 1.50 In South Africa, which document must a profi t company adopt when incorporating to protect the interests of the shareholders? a. Business Plan b. Articles of Association c. Certifi cate of Incorporation d. Memorandum of Incorporation (MoI) e.Shareholders' Agreement Clear my choice Which of the following statements about dividends is true? a. Dividends can be declared if a company has adequate cash resources as verifi ed by a solvency and liquidity test. b. Ordinary shareholders always receive dividends before preference shareholders. c. Dividends are guaranteed returns on investment. d. Dividends are only payable to preference shareholders. e.Dividends can be declared only if the company is publicly listed. Clear my choice S - The study-notes marketplace FAC1601-24-S1  Welcome Message  Assessment 3 Question 16 Not yet answered Marked out of 1.50 Question 17 Not yet answered Marked out of 1.50 QUIZ A close corporation is a legal entity, which implies that it is not liable to pay for obligations and can acquire assets in its own name. a. True b. False Clear my choice Which of the following alternatives is correct regarding the characteristics of a listed company in South Africa? a. Listed companies have less stringent reporting requirements than unlisted companies. b. A listed company is not required to publish its fi nancial results. c. Shares are not available to the general public. d. All of the above are incorrect. e.Shares can be bought and sold on the Johannesburg Stock Exchange (JSE). Clear my choice Time left 1:51:57 S - The study-notes marketplace Question 18 Not yet answered Marked out of 1.50 Question 19 Not yet answered Marked out of 1.50 Question 20 Not yet answered Marked out of 1.50 Which of the following alternatives is incorrect about unlisted companies in South Africa? a. They may have fewer shareholders compared to a listed company. b. They can still raise capital through private investments or loans. c. Their shares are not traded on the Johannesburg Stock Exchange (JSE). d. They often have more relaxed corporate governance standards. e.They do not have any reporting obligations. Clear my choice True or False: The fi nancial statements of listed companies in South Africa are typically subject to more rigorous audit standards than those of unlisted companies. a. False b. True c. None of the above, as audit standards are dependent on company size, not listing status. d. False, as audit standards are uniform across all companies. e.True, but only in certain jurisdictions. Clear my choice Which of the following is a requirement for a company to maintain its status as listed on the Johannesburg Stock Exchange? a. The company must hold an annual picnic for its shareholders. b. The company must have a minimum number of employees. c. The company must adhere to the exchange's listing standards, including fi nancial and governance requirements. d. The company must issue new shares every fi scal year. e.The company must maintain a certain level of market capitalization. Clear my choice S - The study-notes marketplace FAC1601-24-S1  Welcome Message  Assessment 3 Question 21 Not yet answered Marked out of 1.50 Question 22 Not yet answered Marked out of 1.50 QUIZ In the context of company operations in South Africa, which of the following statements is correct? a. Unlisted companies are not allowed to have international shareholders. b. Listed companies are not required to hold annual general meetings (AGMs). c. A listed company's shares can be bought by the general public through the Johannesburg Stock Exchange (JSE). d. Unlisted companies are always smaller than listed companies. e.Listed companies are privately held and do not trade their shares on a stock exchange. Clear my choice True or False: A listed company's share price on the Johannesburg Stock Exchange is affected only by its fi nancial performance and not by market speculation. a. None of the above, since share prices are determined solely by regulatory authorities. b. True, except in cases of market manipulation. c. False d. False, as the share price is not related to fi nancial performance. e.True Clear my choice Time left 1:49:58 S - The study-notes marketplace Question 23 Not yet answered Marked out of 1.50 Question 24 Not yet answered Marked out of 1.50 Which one of the following alternatives is correct? a. A close corporation is not taxed separately from its members as members are liable for the entity’s tax in their individual capacity based on the balance of individual loans they owe to the entity b. A close corporation is taxed separately from its members c. A close corporation is taxed 50% of the profi ts separately from its members and the other half is taxed directly on the members in their personal capacity d. A close corporation is taxed separately from its members only during its last year of operation Clear my choice Which one of the following alternatives is incorrect? a. A close corporation continues to exist under its registered name irrespective of a change in its membership. b. A close corporation can enter into contracts and cannot be sued as a legal person in its own right. c. A close corporation can have up to ten natural persons as members. d. A close corporation may give fi nancial assistance to a person to acquire an interest in the close corporation. Clear my choice S - The study-notes marketplace FAC1601-24-S1  Welcome Message  Assessment 3 Question 25 Not yet answered Marked out of 1.50 Question 26 Not yet answered Marked out of 1.50 QUIZ Which one of the following alternatives is correct? a. The liability of a member for the obligations of the close corporation is limited to the extent of the member's contribution of the least active members in the close corporation. b. The liability of a member for the obligations of the close corporation is limited to the extent of the member's contribution to the close corporation less distributions already paid to the members. c. The liability of a member for the obligations of the close corporation is limited to the extent of the member's contribution to the close corporation and members’ loans advanced to the business. d. The liability of a member for the obligations of the close corporation is limited to the extent of the member's contribution to the close corporation. Clear my choice Which one of the following alternatives is correct journal entry to record income tax expense for a close corporation? a. Debit “Income tax expense” profi t or loss and Credit “SARS (income tax)” liability b. Credit “Bank” asset and Debit “SARS (income tax)” liability c. Debit “Bank” asset and Credit “SARS (income tax)” liability d. Credit “Income tax expense” profi t or loss and Debit “SARS (income tax)” liability Clear my choice Time left 1:47:27 S - The study-notes marketplace Question 27 Not yet answered Marked out of 1.50 Which one of the following alternatives is false regarding the loans advanced to the members of the close corporation? a. Loans to members of the close corporation are recorded as current assets unless clearly indicated that they are repayable in less than 12 months. b. If the terms of the loan is that interest is capitalised, the interest correctly calculated should be added to the loan capital to increase the balance owing to the close corporation. c. Loans to members of the close corporation are recorded as current assets and interest may be charged on the amount owing to the close corporation. d. Interest on loans to members of the close corporation’s may not be charged if the loan is advanced 1 month before the close corporation’s fi nancial year end. Clear my choice S - The study-notes marketplace FAC1601-24-S1  Welcome Message  Assessment 3 Question 28 Answer saved Marked out of 1.50 Question 29 Answer saved Marked out of 1.50 QUIZ Profi t companies, are incorporated for the fi nancial gain of the shareholders without restricting the transfer of ownership. a. True b. False Clear my choice Non-profi t companies, are incorporated for public benefi t. All assets and liabilities must be applied to advance this objective. a. True b. False Clear my choice Time left 1:45:09 S - The study-notes marketplace Question 30 Answer saved Marked out of 1.50 Which one of the following alternatives is incorrect abbreviation regarding different forms of companies? a. Public company “Ltd” b. Private company “(Pty) Ltd” c. State-owned company “SOE Ltd” d. Non-profi t company “Inc” Clear my choice S - The study-notes marketplace FAC1601-24-S1  Welcome Message  Assessment 3 QUIZ Time left 1:35:50 S - The study-notes marketplace Question 31 Not yet answered Marked out of 2.00 This information relates to 23 questions below: Myoli and Maduna, leveraging their passion for craftsmanship and home aesthetics, established a close corporation known as Qubulashe WoodGuys. This company is dedicated to the preservation and beautifi cation of wooden decks, serving the homeowners of the Eastern Cape with exceptional maintenance services. With a keen eye for detail and a commitment to quality, Qubulashe WoodGuys has quickly become synonymous with the protection and restoration of these outdoor spaces. The company prides itself on using locally sourced materials and employing local artisans to deliver services that not only enhance the longevity of wooden decks but also refl ect the unique character of the Eastern Cape. The information below refl ects their business activities for the fi nancial year ending 29 February 2024 encapsulating their journey of growth and the trust they have earned from their community in the province. 1. EXTRACT OF BALANCES AS AT 29 February 2024: R Buildings 3,830,200 Accumulated depreciation: Buildings (1 March 2023) 283,500 Land 1,420,100 Equipment (at cost) 898,200 Accumulated depreciation: Equipment (1 March 2023) 164,500 Vehicles (at cost) 1,115,700 Accumulated depreciation: Vehicles (1 March 2023) 166,800 Investments 560,000 Fixed deposit: EC People’s Bank 174,500 Trade receivables control 570,600 Allowance for credit losses 10,000 Prepaid expenses 21,200 Allowance for settlement discount granted 14,800 Loan to Maduna 96,900 Trade payables control 948,400 Long-term loan: EC People’s Bank 1,888,600 Member's contributions 2,779,700 Retained earnings (1 March 2023) Dr 331,100 Loan from Myoli 593,300 Profi t for the year (before year-end adjustments) 2,157,000 2. Additional information 2.1. The CC’s investment portfolio includes: An investment in MLL Decking (Pty) Ltd valued at R230,000. Ownership of 12,000 shares in Mega Timber Ltd, with a cost of R330,000. These shares had a market value of R29 each as of February 29, 2024. 2.2. All loans extended to members are callable at any time, whereas the loan from Myoli is due in full on November 30, 2025. 2.3. The accountant failed to record the disposal of a company vehicle that originally cost R188,000. The vehicle was sold for R84,000 in cash on November 1, 2023. The accumulated depreciation on this vehicle was R94,000 at the time of sale. 2.4. The depreciation for the fi scal year, still to be accounted for, has been accurately determined as follows: Buildings: R183,000 Equipment: R57,800 Vehicles: R73,500 S - The study-notes marketplace Question 32 Not yet answered Marked out of 2.00 2.5. The fi xed deposit placed by the company with EC People’s Bank is scheduled to mature on December 31, 2028. 2.6. The long-term loan they obtained from EC People’s Bank on December 1, 2023, is secured by a fi rst mortgage on the company's land and buildings. The repayment plan is set over four annual instalments with the fi rst due on December 1, 2024. 2.7. A telephone statement, refl ecting R10,900 amount owing, from Viva Networks for the month of February 2024 was received by the company on March 4, 2024. 2.8. Due to strategic expansion and the need for additional working capital, the following decisions were made by the company: On February 29, 2024, they admitted a new partner, Hlathi, who contributed R210,000 in cash and equipment valued at R70,200 to the company's assets. This transaction has not yet been refl ected in the fi nancial records. Which one of the following alternatives represents the correct carrying amount for land amount that must be disclosed in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 1,420,100 b. R 3,830,200 c. R 3,363,700 d. R 4,783,800 Clear my choice Which one of the following alternatives represents the correct loan to members amount that must be disclosed under current assets in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 96,000 b. R 593,300 c. R 0 d. R 96,900 Clear my choice S - The study-notes marketplace Question 33 Not yet answered Marked out of 2.00 Question 34 Not yet answered Marked out of 2.00 Question 35 Not yet answered Marked out of 2.00 Which one of the following statements represents the correct disclosure of loan from member: Myoli in the statement offi nancial position of of Qubulashe WoodGuys as at 29 February 2024? a. the loan is disclosed separately under current liabilities b. the loan is disclosed as part of trade and other payables c. the loan is deducted from the loans to partners d. the loan is disclosed as part of partner’s current accounts loan is disclosed separately under non-current liabilities Clear my choice Which one of the following alternatives represents the correct unlisted share investment amount that must be disclosed under non-current assets in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 230,000 b. R 300,000 c. R 0 d. R 330,000 Clear my choice Which one of the following alternatives represents the correct listed share investment amount disclosed under non-current assets in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 348,000 b. R 0 c. R 230,000 d. R 330,000 Clear my choice S - The study-notes marketplace Question 36 Not yet answered Marked out of 2.00 Question 37 Not yet answered Marked out of 2.00 Question 38 Not yet answered Marked out of 2.00 Which one of the following alternatives represents the correct long-term loan: EC People’s Bank amount that must be disclosed under current liabilities in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R1,416,450 b. R472,150 c. R1,888,600 d. R0 Clear my choice Which one of the following alternatives represents the correct long-term loan: EC People’s Bank amount that must be disclosed under non-current liabilities in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R1,888,600 b. R1,888,000 c. R1,416,450 d. R0 Clear my choice Which one of the following alternatives represents the correct listed share investment amount disclosed under current assets in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R230,000 b. R348,000 c. R0 d. R330,000 Clear my choice S - The study-notes marketplace Question 39 Not yet answered Marked out of 2.00 Question 40 Not yet answered Marked out of 2.00 Question 41 Not yet answered Marked out of 2.00 Which one of the following alternatives represents the correct carrying amount for buildings amount that must be disclosed in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 3,546,700 b. R 3,830,200 c. R 3,363,700 d. R 4,783,800 Clear my choice Which one of the following alternatives represents the correct loan from members amount that must be disclosed under non- current liabilities in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R593,300 b. R593,000 c. R96,900 d. R96,000 Clear my choice Which one of the following alternatives represents the correct unlisted share investment amount that must be disclosed under current assets in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 230,000 b. R 0 c. R 200,000 d. R 330,000 Clear my choice S - The study-notes marketplace Question 42 Not yet answered Marked out of 2.00 Question 43 Not yet answered Marked out of 2.00 Question 44 Not yet answered Marked out of 3.50 Which one of the following alternatives represents the correct member’s contributions amount that must be disclosed in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R2,849,900 b. R3,059,900 c. R2,779,700 d. R2,989,700 Clear my choice Which one of the following statements represents the correct disclosure of loans to members in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. the loan is disclosed separately under current assets b. the loan is disclosed as part of trade and other receivables c. the loan is deducted from the loans from partners d. the loan is disclosed separately under non-current assets loan is disclosed as part of partner’s current accounts Clear my choice Which one of the following alternatives represents the correct carrying amount for vehicles amount that must be disclosed in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 959,400 b. R 948,900 c. R 875,400 d. R 781,400 Clear my choice S - The study-notes marketplace Question 45 Not yet answered Marked out of 6.00 Question 46 Not yet answered Marked out of 2.00 Question 47 Not yet answered Marked out of 2.00 Which one of the following alternatives represents the correct retained earnings amount that must be disclosed in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R1,508,700 b. R1,490,700 c. R1,825,900 d. R1,519,600 Clear my choice Which one of the following alternatives represents the correct loan to members amount that must be disclosed under non- current assets in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 96,000 b. R 0 c. R 593,300 d. R 96,900 Clear my choice Which one of the following alternatives represents the correct trade and other payables amount that must be disclosed in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 953,900 b. R 984,400 c. R 959,300 d. R 948,400 Clear my choice S - The study-notes marketplace Question 48 Not yet answered Marked out of 2.00 Question 49 Not yet answered Marked out of 2.00 Question 50 Not yet answered Marked out of 2.00 Which one of the following alternatives represents the correct prepayments amount that must be disclosed in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R21,000 b. R22,100 c. R22,000 d. R21,200 Clear my choice Which one of the following alternatives represents the correct fi xed deposit amount that must be disclosed under non-current assets section in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 0 b. R 174,500 c. R 174,000 d. R 1,888,600 Clear my choice Which one of the following alternatives represents the correct carrying amount for equipment amount that must be disclosed in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 898,200 b. R 675,900 c. R 803,900 d. R 746,100 Clear my choice S - The study-notes marketplace Question 51 Not yet answered Marked out of 2.00 Question 52 Not yet answered Marked out of 2.00 Question 53 Not yet answered Marked out of 2.00 Which one of the following alternatives represents the correct loan from members amount that must be disclosed under current liabilities in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 593,300 b. R 593,000 c. R 0 d. R 96,900 Clear my choice Which one of the following alternatives represents the correct fi xed deposit amount that must be disclosed under current assets section in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 174,000 b. R 174,500 c. R 1,888,600 d. R 0 Clear my choice Which one of the following alternatives represents the correct trade and other receivables amount that must be disclosed under current assets in the statement of fi nancial position of Qubulashe WoodGuys as at 29 February 2024? a. R 570,000 b. R 570,600 c. R 545,800 d. R 560,600