FAC1601 Assignment 1 2023 solutions semester 1

100% SOLUTIONS FOR FAC1601 QUESTIONS ANSWERED Which of the following statements is correct: 1. A liability is a future obligation of a reporting entity to transfer an economic resource as a result of a past event. 2. The accounting equation is: Liabilities + Assets = equity 3. The value of a reporting entity lies in the net assets (assets minus liabilities) under its control. 4. Equity is the residual interest in the assets of the entity after deducting all the expenses.Question text The definition of an asset is: 1. A present economic resource controlled by a reporting entity as a result of a future event. 2. A future economic resource controlled by a reporting entity as a result of a past event. 3. A future economic resource controlled by a reporting entity as a result of a future event. 4. A present economic resource controlled by a reporting entity as a result of a past eventWhich of the following measurement bases will often be encountered in a set of financial statements: 1. Present value 2. Historical cost 3. Fair value 4. All of the aboveQuestion text The statement of financial position consists of three elements namely: 1. assets, income and expenses 2. assets, liabilities and equity 3. liabilities, equity and expenses 4. liabilities, income and expensesQuestion text BenMo purchased a MAN printing press for their printing business. Which one of the following expenses should not be included in the cost the machine: 1. Maintenance and repair costs 2. Delivery costs 3. Installation costs 4. Printing press machine costInsurance expenses paid in advance by an entity at the end of its financial year is recorded in the financial statements as: 1. an expense in the statement of changes in equity 2. a prepayment in the current assets section of the statement of financial position 3. a prepayment in the non-current assets section of the statement of financial position. 4. an expense in the statement of profit or loss and other comprehensive income.Question text Which one of the following alternatives is incorrect? 1. The purpose of the Conceptual Framework is to assist in harmonising legislation and reducing the number of alternative accounting treatments. 2. The purpose of the Conceptual Framework is to override any particular disclosure or measurement requirement in any IFRS 3. The purpose of the Conceptual Framework is to assist in developing future standards. 4. The purpose of the Conceptual Framework is to assist users in interpreting the information in interpreting the financial statements when compiled according to IFRS.Telephone expense in arrears (unpaid) at the end of an entity’s financial year will be recorded in the general journal of the entity by: 1. Debiting telephone expense and crediting bank 2. Debiting accrued expense and crediting bank 3. Debiting telephone expense and crediting accrued expense 4. Debiting bank and crediting telephone expenseQuestion text Relevance and faithful representation are the… 1. enhancing qualitative characteristics of financial reporting as stipulated in the Conceptual Framework. 2. fundamental qualitative characteristics of financial reporting as stipulated in IFRS. 3. fundamental qualitative characteristics of financial reporting as stipulated in the Conceptual Framework. 4. enhancing qualitative characteristics of the disclosure requirements as stipulated in IFRS.Question text Which one of the following is an example of a financial asset: 1. Inventory 2. Trade payable 3. Property, Plant and Equipment 4. Loans receivableQuestion text Sisonke Traders, a social media management company, is owned by Mr Singa and has a financial year end of 28 February 2023. Computer equipment was purchased by the business on 01 February 2023 for an amount of R30 000. A delivery charge of R1 000 was incurred by Sisonke Traders to transport the equipment to its premises. Depreciation for equipment is provided for on the diminishing balance method at a rate of 15% per annum. The cost of equipment at year end was R60 000 and the opening balance of accumulated depreciation was R5 250. Which one of the following amounts represents the correct amount that must be disclosed as depreciation expense in the statement of profit or loss and other comprehensive income of Sisonke Traders for the year ended 28 February 2023? 1. R4 100 2. R3 950 3. R6 250 4. R7 000Question text For the financial year ending 28 February 2023, Zac’s stores had revenue and expenses of R250 000 and R100 000 respectively. The capital balance as at 1 March 2022 was R500 000. On 28 February 2023 the owner realized that only R3 000 of the R5 000 credit losses had been accounted for. In addition to this, the owner also withdrew R1 500 for his personal use. The capital balance for Zac’s stores as at 28 February 2023 is 1. R648 000 2. R643 500 3. R646 500 4. R700 000Question text Zwane Wholesalers had a recorded sales amount of R62 000 for the year ending 28 February 2023. In addition to this, on 1 January 2023, Zwane Wholesalers made sales to the value of R2 800 on credit to Mayfield stores subject to a cash settlement discount of 5% if payment is made within 30 days. This sale was also subject to a trade discount of 10%. Mayfield stores subsequently made payment on 29 January 2023. Which one of the following alternatives represents the sales amount Zwane Wholesalers will disclose in its statement of profit or loss and other comprehensive income? 1. R64 394 2. R64 548 3. R64 520 4. R64 50Question text Which one of the following should not be included in the cost of sales calculation for Zimi Traders. 1. Import duty on purchases 2. Carriage on sales 3. Carriage on purchases 4. Insurance on purchasesQuestion text Mbali’s Catering received a statement from their landlord as at 31 December 2022, the financial year end, showing an overpayment of rent by 2 months. Mbali’s Catering started renting these premises on 1 August 2022 and pays a rental amount of R4 500 every month. In addition to this, Mbali’s Catering entered into a new insurance contract for its catering equipment on 1 December 2022 with an annual insurance amount of R14 000 payable in advance. What is the prepayment amount that must be shown in the statement of financial position of Mbali’s Catering for the year ending 31 December 2022Question text Which of the following should not be included in the calculation of the sales amount for Pearl’s Luxury Goods for the year ending 31 December 2022? 1. sales 2. sales returns 3. purchases 4. settlement discount grantedQuestion 17 Not yet answered Marked out of 1.00 Flag question Question text For the year ending 31 December 2022, Hilton Mathonzi Traders had a trade and other payables balance of R16 250. Mr Mathonzi, the owner, realized just before finalising his financial statements, that interest on the long-term loan of R120 000 obtained from Gaza Bank on 1 September 2022 had not been accounted for. Interest is payable biannually at a rate of 12.5%. The water and electricity account for December 2022 of R369 had also not been settled. What is the trade and other payables amount that must be shown in the statement of financial position of Hilton Mathonzi Traders for the year ending 31 December 2022? 1. R21 619 2. R22 000 3. R19 250 4. R19 790Question text Given information relates to questions 18 – 24: The following information relates Techno Traders, a partnership established on 1 January 2022 by S Robert and Z Xaba: 1. Balances as at 31 December 2022: TECHNO TRADERS Extract OF BALANCES AS AT 31 December 2022 Trade receivables control R18,250 Inventory (1 January 2022) R8,000 Current Account: S Robert R8,000 Current Account: Z Xaba R12,000 Petty Cash R300 Long-term loan (Ngabantu Bank) R76,000 Trade payables control R3,080 Purchases R628 Capital: S Robert (1 January 2022) R33,000 Capital: Z Xaba (1 January 2022) R22,000 Equipment at cost R73,450 Accumulated depreciation: Equipment R9,018 Bank (Dr) R220,000 Depreciation R9,018 Water and electricity R14,850 Salaries and wages R204,250 Maintenance expense R2,520 Entertainment expense R6,000 Insurance expenses R17,800 Commission expense R2,800 2. Additional information: 2.1 Partnership agreement: 2.1.1 The partners share profit and losses in the ratio of their respective capital contributions. 2.1.2 Interest at 6% per annum is to be allowed on the opening balances of the capital account. 2.2 Year-end adjustments: 2.2.1 At 31 December 2022, the value of closing inventory amounted to R3 220. 2.2.2 S Robert and Z Xaba received R1 800 and R1 200 from Techno Traders respectively of which Z Xaba used R700 to entertain potential clients for the business. 2.2.3 In order for Techno Traders to finance the purchase of a drone, a long-term loan was acquired from Ngabantu Bank 01 October 2022. Interest is charged at a rate of 11.5% per annum. The drone was purchased on 01 November 2022 for R70 000 and is depreciated at 15% per annum using the straight-line method. The drone has a residual value of R25 000. 2.2.4 On 15 December 2022, a stock take was conducted and Inventory to the value of R1 500 was discovered as being damaged. The net realisable value for this damaged inventory was estimated at R700. In order to replace the damaged stock, Techno Traders purchased additional stock of R900, which was delivered to the premises on 29 December 2022, and made payment to the supplier on 31 December 2022. This transaction has not yet been recorded in the accounting records of Techno Traders as at 31 December 2022. 2.2.5 Both partners are entitled to a salary of R8 000 per month. Due to cash flow constraints affecting Techno Traders, S Robert agreed to accept a salary payment of R5 000 per month. The salaries paid to the partners were incorrectly included under salaries and wages. Question 18 Which one of the following alternatives represents the correct amount that must be disclosed as finance costs in the statement of profit or loss and other comprehensive income of Techno Traders for the year ended 31 December 2022? 1. R2 185 2. R2 000 3. R2 090 4. R2 180Which one of the following alternatives represents the correct amount that must be disclosed as cash and cash equivalents or bank overdraft in the statement of financial position of Techno Traders for the year ended 31 December 2022? 1. R73 000 2. R62 300 (Bank overdraft) 3. R28 000 4. R219 400Question text Which one of the following alternatives represents the correct amount that must be disclosed as cost of sales in the statement of profit or loss and other comprehensive income of Techno Traders for the year ended 31 December 2022? 1. R4 608 2. R7 928 3. R9 328 4. R7 200Question text The partners share of total comprehensive income of Techno Traders, after all required adjustments have been made, amounted to R320 000. Which one of the following alternatives represents the correct amount that must be disclosed as the total current account balance in the statement of changes in equity of Techno Traders for the year ended 31 December 2022? 1. R214 300 2. R181 600 3. R217 100 4. R381 600Question text Which one of the following alternatives represents the capital contribution ratio of S Robert and Z Xaba of Techno Traders respectively? 1. 1:5 2. 2:3 3. 3:2 4. 2:5Which one of the following alternatives represents the entertainment expense that must be disclosed in the statement of profit or loss and other comprehensive income of Techno Traders for the year ended 31 December 2022? 1. R7 000 2. R6 000 3. R6 700 4. R8 000Question text Which one of the following alternatives represents the depreciation expense that must be disclosed in the statement of profit or loss and other comprehensive income of Techno Traders for the year ended 31 December 2022? 1. R15 767.50 2. R10 143 3. R9 018 4. R11 080Question text Given information relates to questions 25 – 30: Takalani Traders is a partnership with Pam and Nosisa as partners. The following information pertains to the business activities of the partnership for the year ended 28 February 2023. 1. Balances as at 28 February 2023: TAKALANI TRADERS Extract OF BALANCES AS AT 28 February 2023 Drawings: Pam R11,000 Drawings: Nosisa R8,000 Equipment at cost R328,000 Accumulated depreciation: Equipment R65,600 Trade receivables R13,250 Capital: Pam (1 March 2022) R250,000 Capital: Nosisa (1 March 2022) R625,000 Vehcile at cost R425,000 Accumulated depreciation: Vehcile R170,000 Sales R629,000 Cost of sales R333,000 Carriage on sales R3,500 Allowance for credit losses R900 Salaries and wages R466,000 Water and electricity R6,250 Advertising R4,890 Trade payables R34,980 Current Account: Pam R20,000 Current Account: Nosisa R12,000 2. Additional information: 2.1 Partnership agreement: 2.1.1 The partners Pam and Nosisa share profits and losses in the ratio of 2:5 respectively. 2.1.2 Pam and Nosisa are both entitled to receive a monthly salary in terms of their profit-sharing ratio. Pam receives a monthly salary of R5 000. 2.1.2 Comprehensive income available for distribution as at 28 February 2023 was R128 000 2.1.3 Interest at a rate of 7.5% per annum is to be allowed on the opening balances of the capital and current accounts. 2.2 Year-end adjustments: 2.2.1 The allowance for credit losses must be adjusted to R1 100. 2.2.2 Shaba, a sole proprietor and a debtor of Takalani Traders, was recently declared insolvent. The lawyers of Shaba sent a letter to Takalani Traders confirming that Shaba will not be able to settle any outstanding amounts on his account. Shaba had an outstanding debtor’s balance of R350. 2.2.3 Salaries paid to Pam and Nosisa were recorded in salaries and wages. QUESTION 25 Which one of the following alternatives represents the correct amount that must be disclosed as Property, plant and equipment in the statement of financial position of Takalani Traders as at 28 February 2023? 1. R255 000 2. R517 400 3. R262 400 4. R753 000Question text Which one of the following alternatives represents the correct amount that must be disclosed as Pam’s share of total comprehensive income in the statement of changes in equity of Takalani Traders for the year ended 28 February 2023? 1. R82 500 2. R91 428 3. R51 200 4. R36 571Question 27 Not yet answered Marked out of 1.00 Flag question Question text Which one of the following alternatives represents the correct amount that must be disclosed as the total interest on the current and capital accounts of Nosisa in the statement of changes in equity of Takalani Traders for the year ended 28 February 2023? 1. R48 883 2. R47 775 3. R47 200 4. R48 233Which one of the following alternatives represents the correct amount that must be disclosed as trade and other receivables in the statement of financial position of Takalani Traders as at 28 February 2023? 1. R11 800 2. R12 000 3. R12 350 4. R13 050Question text Which one of the following alternatives represents the correct amount that must be disclosed as drawings in the statement of changes in equity of Takalani Traders for the year ended 28 February 2023? 1. R19 000 2. R139 000 3. R229 000 4. R265 000Question 30 Not yet answered Marked out of 1.00 Flag question Question text Assuming Nosisa receives a monthly salary of R7 000 per month, which one of the following alternatives represents the correct balance in salaries and wages in the statement of profit or loss and other comprehensive income of Takalani Traders for the year ended 28 February 2023? 1. R322 000 2. R320 000 3. R406 000 4. R382 000