FAC 1601
OCTOBER /NOVEMBER
2020 EXAM
CONSISTS OF EXAM PAPER OF
OCT / NOV 2020
INCLUDING MAY/JUNE 2020
EXAMINATION PAPER
,Duration : 85 Minutes 65 Marks
This paper comprises 11 pages
PLEASE NOTE:
1 This examination is made up of 20 multiple-choice questions only
3 The questions have different mark allocations
2 Ensure that you answer ALL the questions
3 Read the given information carefully and apply to the correct questions as indicated
4 There is only one correct answer for each question.
TURN OVER
, 2 FAC1601/RFA1601
MAY/JUNE 2020
QUESTION 1 (1 mark)
Which one of the following statements is incorrect?
1. When Generally accepted accounting practice (GAAP) applies to a specific country, the reference
to this country is included in the name of the GAAP.
2. In South Africa the International Financial Reporting Standards (IFRS) is an ultimate financial
reporting standard for state owned entities like Eskom.
3. In instances where a Standard is in conflict with the Conceptual Framework, the requirements of
the standard must be adhered to.
4. International Financial Reporting Standards (IFRS) deal with the recognition, measurement,
presentation and disclosure requirements of financial statements, and the standards are based on
the IFRS Conceptual Framework for Financial Reporting.
QUESTION 2 (1 mark)
The two most important fundemantal qualitative characteristics which financial information must have to
make it useful are the following:
1. Relevance and materiality
2. Relevance and detail representation
3. Relevance and faithful representation
4. Relevance and reliability
QUESTION 3 (1 mark)
Which one of the following is classified as an adjustment?
1. Recording the payment of accrued expenses
2. Recording the depreciation for the year
3. Recording the credit losses recovered
4. Writing off additional credit loss
QUESTION 4 (1 mark)
A subsistence allowance paid to a partner is recorded by
1. debiting the subsistence (salaries) account and disclosing the transaction as an accrued expense
in the statement of financial position.
2. debiting the subsistence (salaries) to partners’ account and crediting the partner’s current account.
3. debiting the statement of profit or loss and other comprehensive income and crediting the statement
of changes in equity.
4. debiting the drawings account of the partner and crediting the bank account.
TURN OVER
, 3 FAC1601/RFA1601
MAY/JUNE 2020
QUESTION 5 (4 marks)
COVIVI SUPPLIES
EXTRACT OF BALANCES AS AT 28 FEBRUARY 2020
R
Inventory (1 March 2019) ................................................................................ 43 000
Trade receivables control ................................................................................ 150 000
Trade payables control ................................................................................... 65 000
Purchases ....................................................................................................... 741 000
Purchases returns ........................................................................................... 4 100
Settlement discount granted ........................................................................... 3 715
Freight on sales .............................................................................................. 14 100
Sales returns................................................................................................... 2 300
Insurance expense.......................................................................................... 48 160
Settlement discount received .......................................................................... 1 000
Allowance for credit losses.............................................................................. 1 900
Carriage on purchases .................................................................................... 200
Gross profit ..................................................................................................... 550 500
Bank ............................................................................................................... 112 580
Additional information:
(a) On 28 February 2020 the inventory on hand amounted to R65 000.
(b) The allowance for credit losses must be adjusted to R1 500.
(c) Covivi Supplies were offered a discount of 10% on an amount of R9 500 owing to a supplier
provided the supplier is paid before 28 February 2020. Covivi Supplies intends taking the
advantage of the discount offered. This transaction is yet to be recorded.
(d) The terms of the mortgage loan provide for interest on the loan to be calculated at a rate of 9%
per annum on the outstanding amount of the loan at the end of the financial year.
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 Covivi Supplies for the
year ended 28 February 2020?
1. R712 950
2. R713 150
3. R713 900
4. R714 900
TURN OVER
OCTOBER /NOVEMBER
2020 EXAM
CONSISTS OF EXAM PAPER OF
OCT / NOV 2020
INCLUDING MAY/JUNE 2020
EXAMINATION PAPER
,Duration : 85 Minutes 65 Marks
This paper comprises 11 pages
PLEASE NOTE:
1 This examination is made up of 20 multiple-choice questions only
3 The questions have different mark allocations
2 Ensure that you answer ALL the questions
3 Read the given information carefully and apply to the correct questions as indicated
4 There is only one correct answer for each question.
TURN OVER
, 2 FAC1601/RFA1601
MAY/JUNE 2020
QUESTION 1 (1 mark)
Which one of the following statements is incorrect?
1. When Generally accepted accounting practice (GAAP) applies to a specific country, the reference
to this country is included in the name of the GAAP.
2. In South Africa the International Financial Reporting Standards (IFRS) is an ultimate financial
reporting standard for state owned entities like Eskom.
3. In instances where a Standard is in conflict with the Conceptual Framework, the requirements of
the standard must be adhered to.
4. International Financial Reporting Standards (IFRS) deal with the recognition, measurement,
presentation and disclosure requirements of financial statements, and the standards are based on
the IFRS Conceptual Framework for Financial Reporting.
QUESTION 2 (1 mark)
The two most important fundemantal qualitative characteristics which financial information must have to
make it useful are the following:
1. Relevance and materiality
2. Relevance and detail representation
3. Relevance and faithful representation
4. Relevance and reliability
QUESTION 3 (1 mark)
Which one of the following is classified as an adjustment?
1. Recording the payment of accrued expenses
2. Recording the depreciation for the year
3. Recording the credit losses recovered
4. Writing off additional credit loss
QUESTION 4 (1 mark)
A subsistence allowance paid to a partner is recorded by
1. debiting the subsistence (salaries) account and disclosing the transaction as an accrued expense
in the statement of financial position.
2. debiting the subsistence (salaries) to partners’ account and crediting the partner’s current account.
3. debiting the statement of profit or loss and other comprehensive income and crediting the statement
of changes in equity.
4. debiting the drawings account of the partner and crediting the bank account.
TURN OVER
, 3 FAC1601/RFA1601
MAY/JUNE 2020
QUESTION 5 (4 marks)
COVIVI SUPPLIES
EXTRACT OF BALANCES AS AT 28 FEBRUARY 2020
R
Inventory (1 March 2019) ................................................................................ 43 000
Trade receivables control ................................................................................ 150 000
Trade payables control ................................................................................... 65 000
Purchases ....................................................................................................... 741 000
Purchases returns ........................................................................................... 4 100
Settlement discount granted ........................................................................... 3 715
Freight on sales .............................................................................................. 14 100
Sales returns................................................................................................... 2 300
Insurance expense.......................................................................................... 48 160
Settlement discount received .......................................................................... 1 000
Allowance for credit losses.............................................................................. 1 900
Carriage on purchases .................................................................................... 200
Gross profit ..................................................................................................... 550 500
Bank ............................................................................................................... 112 580
Additional information:
(a) On 28 February 2020 the inventory on hand amounted to R65 000.
(b) The allowance for credit losses must be adjusted to R1 500.
(c) Covivi Supplies were offered a discount of 10% on an amount of R9 500 owing to a supplier
provided the supplier is paid before 28 February 2020. Covivi Supplies intends taking the
advantage of the discount offered. This transaction is yet to be recorded.
(d) The terms of the mortgage loan provide for interest on the loan to be calculated at a rate of 9%
per annum on the outstanding amount of the loan at the end of the financial year.
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 Covivi Supplies for the
year ended 28 February 2020?
1. R712 950
2. R713 150
3. R713 900
4. R714 900
TURN OVER
