FINANCIAL ACCOUNTING 101 [FAC511S]

Transcription

1 FEEDBACK TUTORIAL LETTER ASSIGNMENT 1 SECOND SEMESTER 2017 [] 1

2 2017, SEMESTER Dear Student Let me congratulate you on reaching this far in your Financial Accounting 101 course. The purpose of this feedback tutorial letter is to highlight certain common mistakes made in answering the assignment. I encourage you to read through the general comments in this tutorial letter and the specific feedback given in your assignments to aid you in preparation for you upcoming exams, after doing so please go through the memo to correct the areas where you may have gone wrong. Where you have any queries, don t hesitate to contact me. Question 1 This section was generally well answered with apart from part c and d. In part c, the majority of you were able to provide the definition of an asset as per the Conceptual Framework; however you were unable to determine whether the Point of Sale (POS) system met this definition. See the analysis below and use it as a template in answering a similar type of question in the future. Remember that, your analysis has to be relevant, concluding that the POS system is an asset because the business can sell it is incorrect, the main reason the business acquired the POS system was to simplify the process of capturing sales transactions. In part d, many of you provided users of financial statements that are not mentioned in the Conceptual Framework. The Conceptual framework only lists three primary users of financial statements. Question 2 This question was not well answered. In order to earn marks full marks in the general ledger both the account name and the amount had to be correct. Some of you provided general ledger accounts that only had amounts with no descriptions; please review your study material for the correct presentation of the general ledger. Another area were many of you went wrong was, missing the fact that SLI uses the perpetual inventory system to account for inventory; in the perpetual system the inventory account is affected each time a sale, purchase or return of inventory is done. Please review this section in your study material. A further issue in this section was that many of you had problems accounting for VAT. I urge you to review this area of your syllabus in your study material. The final area that students struggled with was calculating the profit margin. The profit margin is always calculated on the selling price while mark-up is calculated on the cost price. Review this section in your study material as well Question 3 This question was generally well answered. Please remember to show all workings. Where your final answer in the trial balance was incorrect and no workings were shown, you lost a lot of marks. If you had shown workings, you would have received a mark for each component of the final answer. 1

3 I wish you all the best with your studies. Feel free to contact with any queries Regards Calistus Mahindi T: C: E: MEMO ASSIGNMENT 1 QUESTION 1 (15 marks) a) The accrual concept. The accrual concept states that the effects of transactions are recorded when they occur and not when cash is received or paid. (2) b) An amount is recorded as purchases when goods are acquired for the purpose of resale. An example is a grocery retailer who buys inventory for the purpose of resale (2) c) An asset is a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity. (4) This Point of Sale system is a resource as it was acquired to aid in processing sales transactions the business has control over it as it owns the system, this control was obtained when the system was purchased. The entity will benefit from the Point of Sale system by using the system to make sales. (4) d) Investors, lenders and other creditors (3) 2

4 QUESTION 2 I. 1 I. General Ledger of Shomeya Ligthing Innovations for July 2017 (25 marks) 03-Jul-17 Details Marks Marks Amount N$ Details Amount N$ 0.5 Inventory Obi Light Your World 218, Jul-17 Cost of Sales 20, Jul-17 Cost of sales 10, Jul-17 Cost of Sales 30, Jul-17 Obi Light Your World 34, Jul-17 Balance c/d 143, Aug-17 Balance b/d 178, , ,000 Obi Light Your World 11-Jul-17 Inventory & VAT 40, Jul-17 Inventory and VAT 250, Jul-17 Bank 35, Jul-17 Balance c/d 175, , , Aug-17 Balance b/d 175, Jul Jul-17 VAT control account Obi Light Your World 32, Jul-17 Accounts receivable: Luke Stargazer 5, Accounts receivable: Luke Stargazer 2, Jul-17 Bank 8, Jul-17 Obi Light Your World 5, Jul-17 Balance c/d 16, Aug-17 Balance b/d 16,683 35,400 35,400 3

5 Sales 31-Jul-17 Trading a/c 90, Jul-17 Accounts receivable: Luke Stargazer 36, Jul-17 Bank 54, ,000 90,000 Accounts Receivable: Luke Stargazer 04-Jul-17 Sales and VAT 41, Jul-17 Sales returns & VAT 20, Jul-17 Bank 20, ,400 41,400 Bank 08-Jul-17 Sales and VAT 62, Jul Jul-17 Obi Light Your World 35, Accounts receivable: Luke Stargazer 20, Jul-17 Balance c/d 47, ,800 82,800 Cost of Sales 04-Jul-17 Inventory 20, Jul-17 Inventory 10, Jul-17 Inventory 30, Jul-17 Trading a/c 40, ,000 50, Jul-17 Sales returns Accounts receivable: Luke Stargazer 18, Jul-17 Trading a/c 18, Part A (20 marks) II. An exempt supply is a supply which does not attract Value Added Tax. (1) Total = 20 Marks 4

6 Part B (5 marks) I. Cost Price T-Shirts Mark up (75 x 25%) Selling Price T- shirts II. Cost Price (70%) Profit margin (30%) Selling Price (100%) Working 1 Total = 5 Marks QUESTION 3 (15 marks) Trial Balance of Pastel Traders as at 31 August 2017 Marks DR CR N$ N$ Capital ( ) 46,860 1 Vehicles 27, Furniture and Equipment ( ) 23, % Long term loan 10,800 1 Accounts Receivable ( ) 6, % 32 Day Notice Account 9, Bank ( ) 25, Accounts payable ( ) 33,980 1 Rent 2, Telephone Services rendered 5, Drawings 2, Discount allowed Interest received Interest on long term loan Accrued expenses (Interest Payable) , , One mark for each component in brackets Total 15 Marks 5