ANNEXTURE E-FORMATIVE ASSESSMENT 1

HIGHER EDUCATION PROGRAMMES

Academic Year 2021: July- December

Formative Assessment 1: Accounting Principles (HACP130-1)
NQF Level, Credits: 5, 14
Weighting: 20%
Assessment Type: Essay Questions
Educator: G.Toringepi
Examiner: G. Toringepi

Due Date: 17 September 2021

Total: 100 Marks

Instructions:

• This paper consists of four (4) questions.

• It is based on units 1 - 4 of your prescribed textbook.
• All questions are compulsory.
• SHOW ALL CALCULATIONS
• Your assessment must be typed using:
• Font: Arial
• Font size: 12
• Line spacing: 1.5

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The following Learning Outcomes are assessed in this assessment:

• Briefly explain the factors to consider when choosing a form of business

ownership.
• Outline elements and advantages of a partnership.
• Outline advantages of a trust.
• Correctly identify assets as either current or non-current.
• Correctly identify an item as either a (n) asset, liability, expense or proprietary
accounts.
• Calculate equity using two methods.
• Describe the relationship between the components of the accounting
equation.
• Analyse the effects of simple transactions on the accounting equation.
• Describe the relationship between the components of the accounting
equation.
• Analyse the effects of simple transactions on the accounting equation.
• Match each transaction to the appropriate source document and journal.
• Describe the various journals used to record business transactions.
• Match each transaction to the appropriate source document and journal.
• Define a source document

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QUESTION 1 (11 MARKS)

Esti, who is based in Khayelitsha, Western Cape, Esti, decides to open a car washing
business in the local area. She is entrepreneurial, hardworking, disciplined and
determined to maximise on the opportunity presented by her business idea. She will
be running the business by herself and would wish to enjoy the profits of the business
all by herself. Esti will employ two ladies Tanya and Amanda to assist her on the
operational car washing activities.

Required:
a) Refer to the above case and determine which form of ownership will best suit the
business. Substantiate your answer with a valid reason from the case provided.
(2 Marks)

b) Name the main four (4) forms of business ownership in South Africa. (4 Marks)

c) Identify the elements of financial statements. (5 Marks)

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QUESTION 2 (30 MARKS)

a) Describe the financial position of an entity in terms of the basic elements of the
accounting equation. (3 Marks)

b) You have been presented with the following information for Zanele Traders that
transpired during the month of May 2021.
On 1 May 2021 Owner’ deposited R60 000 cash into the business account.
During the month of May 2021 the following income and expenses were incurred.

(R )
Rent income 360 000
Rates & taxes 200 000
Rent expense 40 000
Repairs and maintenance 20 000
Drawings 11 000

Required:
Calculate the owner’s equity for Zanele Traders for the month of May (11 Marks)
Hint: Start by calculating the profit or loss using formulas provided on pages 45, 48&
49 of the prescribed textbook.
c)List any six types of source documents. (6 Marks)

d)The following transactions for the month of August 2021 relate to Sky Traders.

Date Details
1 Sold trading inventory on account to Dream Traders for R46 250. (Invoice no: IV 200)
4 Bought goods on credit from Swiss Dealers for R 46 250 (Invoice no: S101)
6 Bought stationery from Jazz Stationers for R 1 500. Issued cheque no: CC100
10 Paid the monthly rentals by cheque R 5 875. Issued cheque no: CC 101
11 Credit note no: CN1 for R 2 750 was issued for goods previously sold on credit to Dream
Traders.
15 An amount of R 7 750 was paid by cheque in part payment of amount owed to Swiss
Dealers. (Cheque no: CC102)
21 Cash sales amounting to R 14 375 (CBR10)

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23 Paid salaries by cash R 3 500 (CBP 11)

24 Owner withdrew R 938 cash for own use (Cheque no CC103)
28 Received an amount R21 250 from Locksmith Traders in part payment of their account.
(CBR12)

Required:

Identify the type of transactions and the correct book of original entry in which Sky
Traders’ transactions should be recorded. (10 Marks)

Structure your answer as follows: Example: Paid for trading inventory R 4 500 by cash.

Date Type of transaction Journal in which it is recorded

e.g Cash payment Cash payments journal

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QUESTION 3 (35 MARKS)

You have been presented with the following information for Hi-Lo Traders that
transpired during the month of April 2021.
Date Transaction
On 1 April, the owner decided to start a laundry business. He withdrew
1 R 200 000 from personal savings account and deposited it directly into Hi-
Lo Traders bank account
Hi-Lo Traders obtained a loan of R 30 000 with a repayment period of 12
3 months from Invest Bank. The amount was paid directly into Hi-Lo bank
account
Hi-Lo Traders bought equipment from Blue Furnishers for R 16 000. Hi-
5 Lo made a payment of R 16 000 directly into the bank account of Blue
Furnishers
A cash sale amounting to R45 000 was made, the goods were originally
9
purchased at a cost of R35 000.
Hi-Lo Traders bought equipment on credit from Risk Furnishers for
13
R 9 000.
Hi-Lo Traders made a direct payment into the bank account of Risk
15
Furnisher to pay their account of R 9 000.
The owner withdrew R1 200 from the business to buy his daughter a
18
birthday present.
19 Hi-Lo Traders offered a service worth R 5 000 to Mr Bogus on credit.
Hi-Lo. Traders placed an advertisement in a local newspaper for
27
R 350.Payment was only due in 30 days.
30 Mr. Bogus settled his account in part, R 2 500.

Required:
a) Using the basic accounting equation analyse the above mentioned transactions as
follows:
• Show the effects of the transactions incurred by Hi-Lo Traders during the
month of April 2021 on the basic accounting equation with a plus sign (+) for
an increase and a minus sign (-) for a decrease.

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• Clearly indicate which account needs to be debited or credited. Ignore VAT

and answer this question by using the format of the table provided on the
below. (26 Marks)

Example: Paid for repairs and maintenance amounting to R11 000 cash.
Date Account Debited Account Assets = Equity + Liabilities
Credited
e.g. Repairs and -R11 000✔
maintenance✔

Bank ✔ -R11 000✔

b) Show how the following transactions for April 2021 will reflect in the ledger
accounts of Hi-Lo Traders.
i. Purchased motor vehicle by bank for R94 000.
ii. Paid monthly wages amounting to R17 300 cash.
iii. Paid the monthly rent of R8 500 cash. (9 marks)

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QUESTION 4 (24 MARKS)

The following transactions for King Maponga Traders transpired during the month of
July 2021.
Date Details of transactions
King Maponga, the owner, contributed a delivery vehicle valued at R65 200
1
to the business. Journal voucher JV 012 was issued.
King Maponga, the owner, took trading inventory with a cost price of R1000
3
for personal use. Journal voucher JV 013 was issued.
Charged an amount of R 1800 to Mr Settler, a debtor, as interest on his
6
overdue account. Journal voucher JV 014 was issued.
Settlement discount of R650 was granted to C. Zama, a debtor, for early
12
settlement of his account. Journal voucher JV 015 was issued.
The bookkeeper erroneously recorded the purchases of a motor vehicle in
20 the office equipment account. The motor vehicle was purchased for
R67 000 cash. Journal voucher JV 016 was issued.
Mr Dodger, a debtor, was declared insolvent. As a result, he was not able
26 to pay the amount owed of R16 000. The bookkeeper decided to treat the
amount as being irrecoverable. Journal voucher JV 017 was issued.

Record the transactions (per the table above) in the general journal of King Maponga
Traders for the month of July 2021. Ignore VAT. (24 Marks)

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