RICHFIELD GRADUATE INSTITUTE OF TECHNOLOGY (PTY) LTD

FACULTY OF COMMERCE

ACCOUNTING 511

1ST SEMESTER NATIONAL SUPPLEMENTARY EXAM PAPER

DURATION: 2 HOURS MARKS: 100 DATE: 21 AUGUST 2019
EXAMINER: MZWANDILE SIBIYA INTERNAL MODERATOR: CARL VELUSAMY
This paper consists of 5 questions and 11 pages including this page.

PLEASE NOTE THE FOLLOWING:

1. Ensure that you are writing the correct EXAM paper, and that there are no missing pages.
2. You are obliged to enter your learner details on the answer booklet. The answer booklets provided are
the property of the PC Training & Business College and all extra booklets must be handed to the invigilator
before you leave the examination room.
3. If you are found copying or if there are any documents / study material in your possession, or writing on
parts of your body, tissue, pencil case, desk etc., your answer booklet will be taken away from you and
endorsed accordingly. Appropriate disciplinary measures will be taken against you for violating the code
of conduct of PC Training & Business College Examinations Board. Therefore, if any of these materials are
in your possession you are requested to hand these over to the invigilator before the official
commencement of this paper.
4. This question paper consists of three (3) sections.
a. Section A and B are compulsory.
b. Section C comprises of 3 questions; you are required to answer any 2 questions.
SUGGESTED TIME REQUIRED TO ANSWER THIS QUESTION PAPER
NUMBERS QUESTIONS MARKS TIME IN MINUTES
SECTION A: COMPULSORY
1 Question One 30 36
SECTION B: COMPULSORY
2 Question Two 20 24
SECTION C: ANSWER ANY TWO QUESTIONS
3 Question Three 25 30
4 Question Four 25 30
5 Question Five 25 30
TOTAL 100 120

Initiated By Academic Director Dr Muni Kooblal Document No SUPP /07/2019

Authorised By Group Chief Executive Officer Mr J Ramnundlall Revision No 01/2014
Issuing Office Head Office – Main Campus CONTROLLED COPY Revision Date 01/07/2019
Document ACC 511 Issue Date 01/07/2019

Page 1 of 11
SECTION A (COMPULSORY) (30 MARKS)

QUESTION 1 (30 MARKS)

MULTIPLE CHOICE QUESTIONS

Four alternatives are provided for each of the following questions. Choose the correct alternative for each
of the questions/statements. Write down the question number in your answer book and the alphabet
corresponding to your choice next to the question number.

1.1 Which of the following options is a disadvantage of the sole proprietorship? (1)

A. Limited sources of funds

B. Profit is shared

C. Limited liability

D. Limited government regulation

1.2 Which of the following options requires owners to be generalist managers with many
diverse skills? (1)

A. Sole Proprietorship

B. Partnership

C. Corporation

D. Holding Company

1.3 Which of the following options is not an advantage of the sole proprietorship form of
business organization? (1)

A. Ease of formation

B. Shares are freely transferable

C. Limited government regulation

D. Control of business

Initiated By Academic Director Dr Muni Kooblal Document No SUPP /07/2019

Authorised By Group Chief Executive Officer Mr J Ramnundlall Revision No 01/2014
Issuing Office Head Office – Main Campus CONTROLLED COPY Revision Date 01/07/2019
Document ACC 511 Issue Date 01/07/2019

Page 2 of 11
1.4 Identify the option that is not an advantage of a partnership. (1)

A. Profit is always shared equally among partners

B. Ease of organizing business

C. Specialization of partners

D. Relatively fast decision-making

1.5 Bookkeeping focusses on which part of the accounting process? (1)

A. Analysing

B. Preparing financial statements

C. Recording financial information

D. Auditing the books of accounts

1.6 Which of the following options is not an external user of financial information? (1)

A. Government agencies

B. Investors

C. Creditors

D. Managers

1.7 Which of the following options is an external user of financial statements? (1)

A. Manager of the business

B. CEO of the business

C. Creditor of the business

D. Controller of the business

Initiated By Academic Director Dr Muni Kooblal Document No SUPP /07/2019

Authorised By Group Chief Executive Officer Mr J Ramnundlall Revision No 01/2014
Issuing Office Head Office – Main Campus CONTROLLED COPY Revision Date 01/07/2019
Document ACC 511 Issue Date 01/07/2019

Page 3 of 11
1.8 _________ is the first phase of the accounting cycle. (1)

A. Identifying an economic event or transaction

B. Preparing journals

C. Posting entries to ledger accounts

D. Making decisions about business

1.9 Identify the type of business ownership that is a separate legal entity. (1)

A. Partnership

B. Sole proprietorship

C. Company

D. Sole trader

1.10 Identify the features of asset. (1)

A. Future economic benefits for the business

B. All kind of benefits for the business

C. Expenses for the business

D. Merits and Demerits for the business

1.11 Liabilities are __________ of an entity. (1)

A. resources

B. obligations

C. future benefits

D. expenses

Initiated By Academic Director Dr Muni Kooblal Document No SUPP /07/2019

Authorised By Group Chief Executive Officer Mr J Ramnundlall Revision No 01/2014
Issuing Office Head Office – Main Campus CONTROLLED COPY Revision Date 01/07/2019
Document ACC 511 Issue Date 01/07/2019

Page 4 of 11
1.12 ________ is the gross inflow of economic benefits. (1)

A. Assets

B. Liabilities

C. Income

D. Expenses

1.13 Identify the option that is defined as a gross decrease in economic benefits for the
business. (1)
A. Expenses

B. Obligations

C. Creditors

D. Income or gain

1.14 An asset must be _______ by the business to be shown as an asset in its "balance sheet".

(1)

A. possessed

B. owned

C. controlled

D. used

1.15 Identify the option that is the best description of 'reliability' in relation to information in
financial statements? (2)

A. Including a degree of caution

B. Comprehensibility to users

C. Influence on the economic decisions of users

D. Freedom from material error

Initiated By Academic Director Dr Muni Kooblal Document No SUPP /07/2019

Authorised By Group Chief Executive Officer Mr J Ramnundlall Revision No 01/2014
Issuing Office Head Office – Main Campus CONTROLLED COPY Revision Date 01/07/2019
Document ACC 511 Issue Date 01/07/2019

Page 5 of 11
1.16 Which of the following terms best describes information that influences the economic
decisions of users? (1)

A. Reliable

B. Prospective

C. Relevant

D. Understandable

1.17 Identify the statement that is listed in the IASB Framework as 'underlying assumptions'
regarding financial statements? (1)

A. Any changes of accounting policy are neutral.

B. The financial statements are prepared under the accrual basis.

C. The financial statements are reliable.

D. The financial statements are relevant.

1.18 Which of the following statements best describes the term 'going concern'? (1)

A. The potential to contribute to the flow of cash and cash equivalents to the entity

B. The ability of the entity to continue in operation for the foreseeable future

C. The income less expenses of an entity are negative

D. When current assets less current liabilities become negative

1.19 Identify the term that best describes information in financial statements that is
neutral? (2)

A. Reliable

B. Understandable

C. Relevant

D. Unbiased

Initiated By Academic Director Dr Muni Kooblal Document No SUPP /07/2019

Authorised By Group Chief Executive Officer Mr J Ramnundlall Revision No 01/2014
Issuing Office Head Office – Main Campus CONTROLLED COPY Revision Date 01/07/2019
Document ACC 511 Issue Date 01/07/2019

Page 6 of 11
1.20 Which of the following terms best describes financial statements whose basis of
accounting recognizes transactions and other events when they occur? (1)

A. Going concern basis of accounting

B. Accrual basis of accounting

C. Cash basis of accounting

D. Invoice basis of accounting

1.21 The elements of financial statements which relate to financial position are___________.

(1)

A. income and expenses

B. income, expenses and equity

C. assets, liabilities and equity

D. assets, liabilities, income and expenses

1.22 Identify the option that is not a non-current asset. (2)

A. Mortgage Bond

B. Vehicles

C. Buildings

D. Machinery

1.23 Louise introduces her car into her business. Which parts of the business’ accounting
equation will change? (1)

A. Assets and capital

B. Capital and profit

C. Liabilities and assets

D. Capital and liabilities

Initiated By Academic Director Dr Muni Kooblal Document No SUPP /07/2019

Authorised By Group Chief Executive Officer Mr J Ramnundlall Revision No 01/2014
Issuing Office Head Office – Main Campus CONTROLLED COPY Revision Date 01/07/2019
Document ACC 511 Issue Date 01/07/2019

Page 7 of 11
1.24 Freya started in business on 1 September. During September she made cash sales of R6
400 and issued credit sales invoices for R10 200 of which R8 600 had been paid. What would
be the balance of the sales account in the general ledger at the end of September? (2)

A. R6 400

B. R10 200

C. R8 000

D. R16 600

1.25 Which of the following journal entries correctly records the credit purchase of plant and
equipment? (2)

A. Dr Purchase ledger control account Cr Plant and Equipment

B. Dr Cash Cr Plant and Equipment

C. Dr Plant and Equipment Cr Purchase ledger control account

D. Dr Plant and Equipment Cr Cash

QUESTION 2 (20 marks)

XYZ Inc. is a newly established international trading company. It commenced its operation in
2009.

XYZ imports goods from China and sells in the local market. It uses the FIFO method to value
its inventory.

Listed next are the purchases and sales made by the entity during the year 2009:

Purchases: January 2009 10 000 units @ R 25 each March 2009 15 000 units @ R 30 each
September 2009 20 000 units @ R 35 each

Sales: May 2009 15 000 units November 2009 20 000 units

REQUIRED: Based on the FIFO cost flow assumption, compute the value of inventory at May
31, 2009, September 30, 2009.

Initiated By Academic Director Dr Muni Kooblal Document No SUPP /07/2019

Authorised By Group Chief Executive Officer Mr J Ramnundlall Revision No 01/2014
Issuing Office Head Office – Main Campus CONTROLLED COPY Revision Date 01/07/2019
Document ACC 511 Issue Date 01/07/2019

Page 8 of 11
QUESTION 3 (25 Marks)

The following information relates to Titanic Traders at 28 February 20.9

(1) Balances: R Debtors control account 28/02/20.8 55 000 Allowance for credit losses
28/2/20.8 3 240 Credit losses recovered 2 500 Credit sales 305 000 Settlement discount
granted 4 200

(2) Additional information:

During the year R270 000 was collected (received) from debtors in respect of credit sales.
Debtor DJ Walker was declared insolvent and his account of R500 has to be written off. It was
determined that allowance for credit losses account should amount to R4 265 at 28 February
20.9.

Required:
3.1 Prepare general journal for all necessary entries for the year ended 28 February 20.9
for Titanic Traders. (Narrations are required) (10 Marks)
3.2 Prepare a properly balanced debtor control account; credit losses account; and
allowance for credit losses account for the year ended 28 February 20.9 (15 Marks)
Please note: All workings must be show

QUESTION 4 (25 Marks)

4.1

Initiated By Academic Director Dr Muni Kooblal Document No SUPP /07/2019

Authorised By Group Chief Executive Officer Mr J Ramnundlall Revision No 01/2014
Issuing Office Head Office – Main Campus CONTROLLED COPY Revision Date 01/07/2019
Document ACC 511 Issue Date 01/07/2019

Page 9 of 11
4.2

Initiated By Academic Director Dr Muni Kooblal Document No SUPP /07/2019

Authorised By Group Chief Executive Officer Mr J Ramnundlall Revision No 01/2014
Issuing Office Head Office – Main Campus CONTROLLED COPY Revision Date 01/07/2019
Document ACC 511 Issue Date 01/07/2019

Page 10 of 11
Question five (25 Marks)

Initiated By Academic Director Dr Muni Kooblal Document No SUPP /07/2019

Authorised By Group Chief Executive Officer Mr J Ramnundlall Revision No 01/2014
Issuing Office Head Office – Main Campus CONTROLLED COPY Revision Date 01/07/2019
Document ACC 511 Issue Date 01/07/2019

Page 11 of 11