FAC1503 Assignment 7 Semester 1 - 2023 (solutions)

FAC1503 Assignment 7 Semester 1 - 2023 (solutions) examples of questions answered: The useful life of an asset is an estimation of the length of time the asset can reasonably be used to generate income (revenue) and therefore be a benefit to the business. The sales account is: On 10 March 2022 Mr Kwazulu purchased goods from a hardware store SA Traders. SA Traders is a registered VAT vendor and the applicable tax rate is 15%. SA Traders makes use of the periodic inventory system, as well as control accounts. The transaction amounts are VAT inclusive where applicable. On 11 March Mr Kwazulu returned the Devall Jigsaw he had purchased on the previous day. The on/off switch of the jigsaw was faulty. Mr Kwazulu produce his original cash till slip as proof for his purchase. The account(s) to be debited and the account(s) to be credited for this transaction in the general ledger will be: Trade payables are classified as a/an in the . Every registered VAT vendor that renders a service or sells products to other entities, is obliged to charge VAT on these supplies, except in cases where the supply is deemed to be zero-rated or exempt of VAT. Debit order payments to service providers will always reflect immediately on the bank statement and will thus not be a one reason why the bank account balance in the general ledger and the bank balance as per the bank statement could differ. On 31 January 2022, the owner of SA Traders withdrew R3 500 cash from his business. Which one of the following entries will be made in the general ledger of SA Traders? Accounting is a process consisting of three activities. Which of the following is not an accounting activity? IFRS stands for… Investors uses the accounting information contained in the financial statements to: Which of the following statements is false? Outstanding deposits or payments that were reflected on the previous month's bank reconciliation statement, will still be reflected in the current month's bank reconciliation statement as long as ….? A receipt is a source document prepared by the buyer at the point of receipt, recording the receipt of goods. The receipt and the purchase order are compared before the buyer makes payment. The South African VAT system allows vendors to deduct input tax from the output tax collected on the supplies made by the vendor. To be able to claim an input tax deduction the vendor must be in possession of which of the following source document(s) in its legal or trading name? A favourable bank balance will be classified as a liability. Which one of the following statements is correct? The periodic inventory system is difficult to maintain. An example of a built-in control measure is only authorised signatories are allowed to sign on behalf of the entity. An example of a built-in control measure is only authorised signatories are allowed to sign on behalf of the entity. A goods received note is a summary of accounting activities/ transactions incurred over a period of time (i.e. a month). Which one of the following statements relating to the different categories of Value Added Tax (VAT) is incorrect? With the periodic inventory system, products that have barcodes are automatically recorded as having been sold at tills in a supermarket when they are ‘swiped.’ Inventory levels are automatically decreased as soon as the invoice has been entered and completed at the till. Which one of the following statements relating to Value Added Tax (VAT) is incorrect? Understandability refers to the fact that the information and disclosure in the financial statements must be such that different knowledgeable and independent observers can reach consensus that it is a faithful representation Which of the following is false regarding property, plant, and equipment? Which of the following statements is not true for Accounting Standards and statements? A comparison of the bank statement of SA Law Practitioners as at 31 January 2022 with the business cash journals for the month ended 31 January 2022, revealed that a client has Marked out of deposited an amount of R6 500 directly into the business bank account on 30 January 2022. The correct accounting procedure in the accounting records of SA Law Practitioners when Mrs A South decided to deposit R50 000 in the entity’s bank account to start the business. Mrs A South made and EFT for R50 000 to deposit into the current bank account of SA Stores. The source document to be used to record this transaction is a/an ... . The statement of profit or loss and other comprehensive income provides information about the economic resources available to the entity to generate future benefits. Which of the following statements, best defines income? A refundable deposit paid to the city council for water and electricity usage is an example of ... Which of the following is not an internal control? The balance of the depreciation account is reported in the statement of profit or loss and other comprehensive income. On 1 March 2022, SA Attorneys received a loan of R200 000 from SA Bank. Interest is charged at 8% per annum and the loan is repayable in monthly instalments of R5 000. The account(s) debited and the account(s) credited in the general ledger will be: A debit card slip is an example of an external source document. Which one of the following statements shows the net worth of an entity at a specific point in time? In the financial statements, accrued expenses will be classified as? Interest paid is an exempt supply for VAT purposes. A duplicate receipt is an example of an internal source document. An amount of R8 550 is VAT inclusive at 15%. What is the VAT portion from this amount? Which one of the following statements regarding the recording of inventory for the perpetual inventory system is correct? The bank statement shows, among other things, the opening balance for the period, bank transactions made during the period and the closing balance for the period. A credit balance on a ledger account indicates: