UNIVERSITY OF THE FREE STATE

SCHOOL OF ACCOUNTANCY

EACC1614/EFCC2614

TEST 2 – 26 April 2023

TIME: 90 minutes MARKS: 60

This paper comprises of 3 questions, set on 4 numbered pages as well as an answer sheet for question
2(a) on page number 6
Please check whether your paper is complete.
_____________________________________________________________

INSTRUCTIONS
1. Answer each new question on a new page in the answer book and clearly number each
question.
2. Answers may not be written in pencil or erasable pen.
3. The marks shown against the requirement(s) for each question should be taken as an
indication of the expected length and the required depth of the answer.
4. Even if it is not explicitly required, you should show workings and cross-reference them to
your answer.
5. Marks are awarded for appropriate arrangement and layout, clarity of explanation, logical
argument and clear and concise language.
6. Working papers must be handed in with scripts.
7. Tippex may not be used.

Disclaimer: All names of persons, places and business entities mentioned in this test paper are
fictitious and any resemblance to real persons, living or dead, places and business entities are
purely coincidental.

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QUESTION 1 (4 marks; 6 minutes)
Accounting is the process of collecting, processing and presenting finanacial information in a
specific format to assist various decision makers in making financial decisions. Answer the
following questions regarding the background of Accounting:

QUESTION 1: REQUIRED Marks

a) Who published the first document source of double-entry bookkeeping? 1

Who is responsible for the development of International Accounting

b) 1
Standards?
What consists of practices and principles that govern the recognition,
c) 1
measurement and reporting of financial events of an Entity?
What assists the International Standards Board to develop IFRS
d) 1
Standards that are based on consistent concepts?
TOTAL MARKS 4
Do not use abbreviations

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Question 2 (15 Marks; 23 Minutes)

The information below was extracted from the accounting records of Dispel Stores on
28 February 20.23, the end of the financial year. The periodic inventory system is in operation. A
mark-up percentage of is 80% on the cost of inventory (before customs duty) is applied.
Summary of information for the period ended 28 February 20.23
R
Opening inventory (1 March 20.22) 46 000
Closing inventory (28 February 20.23) 56 700
Cash sales 250 000
Credit sales 150 000
Sales (returns) 2 400
Cash purchases 100 240
Credit purchases 120 650
Customs duty 13 950

Additional transactions:
The following have not yet been recorded:
a) The proprietor took merchandise with a cost of R2 700 for his personal use during the financial
year.
b) The business donated inventory with a selling price of R1 350 to charity.
c) An invoice for the amount of R589 was received from Spiderman Speed Freight for the
transporting of merchandise to Dispel Stores.

QUESTION 2: REQUIRED Marks

a) Make use of the attached answer sheet and indicate the accounts to be
debited or credited as well as the effect of the above transactions on the
Accounting Equation. Remember to indicate increases with a "+" as well as 9
the amount and decrease with a "-" as well as the amount. Indicate no
influence with a “0”. Do not put a space between the “+” or “-“ and the amount.

b) Prepare a trading statement for the year ending 28 February 20.23 6

TOTAL MARKS 15
Answers are to comply with (IFRS). Round all amounts to the nearest Rand. Assume that
all items and amounts are material except where the information indicates otherwise.

2
Question 3 (41 Marks; 61 Minutes)

Beamers Traders (‘Beamers’) is a gym equipment retailer and applies a gross profit percentage
of 50% on the sales price. The following is a list of balances that appeared in the records of
Beamers on 31 December 20.22, the end of the reporting period:
R
Capital 5 274 190
Drawings 150 000
Land and buildings (at cost) 3 600 000
Vehicles (at cost) 500 000
Equipment (at cost) 220 000
Accumulated depreciation: Vehicles (1 January 20.22) 100 000
Accumulated depreciation: Equipment (1 January 20.22) 33 000
Loan: XYZ Bank Ltd (1 July 20.22) 1 150 000
Fixed deposit: NBC Bank Ltd @12% (1 August 20.22) 500 000
Accrued expenses (1 January 20.22) 3 000
Inventory 610 000
Trade receivables control 91 445
Bank 1 345 000
Trade payables control 100 000
Sales 2 948 800
Cost of sales ?
Salaries and Wages 1 070 000
Credit losses 15 500
Water and electricity 162 295
Interest on Long-term loans 28 750
Rent income 158 400

The following adjustments must still be accounted for:

1. The balance of the accrued expenses of R3 000 on 1 January 20.22 was for a wage that
was still due on 31 December 20.21.

2. According to the long-term borrowing agreement with XYZ Bank, interest is payable at a
rate of 20% per annum. The loan is repayable in monthly installments of R2 300 as from
1 January 20.24

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 3. The rent income was received for 13 months. There was an increase of R300 per month
since 1 June 20.22.

4. An amount of interest on the fixed deposit is still receivable for the current financial year.

5. Water and electricity to the amount of R2 345 is still due for December 20.22

6. Credit sales to Chetty Traders amounting to R8 500 has not yet been recorded for
December 20.22

7. Depreciation must be provided as follows:

 Vehicles: 20% per annum on the straight-line method.

 Equipment: 15% per annum on the diminishing balance method.

8. A debtor, Freeby Traders, who owes the entity R500, must be written off as
irrecoverable.

QUESTION 3: REQUIRED Marks

a) Journalise all the necessary closing transfers in the records of Beamers
Traders for the year ending 31 December 20.22. 29
Journal narrations are not required
b) The Asset section of the Statement of Financial Position of Beamers
12
Traders as at 31 December 20.22

TOTAL MARKS 41
Answers are to comply with (IFRS). Round all amounts to the nearest Rand. Show all
calculations clearly. Assume that all items and amounts are material except where the
information clearly indicates otherwise.

END OF PAPER

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ANSWER SHEET
Student
number:________________________
Question 2 _

No
. Account debited Account credited Assets= Equity + Liabilities
a)

b)

c)