EZ Learn Acc 10 2012...EZ Learn Books cc Tel/Fax (011) 4623550, Cell 082 322 0005 Website , E-mail...

EZ Learn

Accounting Grade 10

2012 edition

Name: _________________________________

Written by Barbara Williamson

EZ Learn Books cc Tel/Fax (011) 4623550, Cell 082 322 0005

Website www.ezlearn.co.za, E-mail [email protected]

Postnet Suite #100, Private Bag X1, Jukskei Park, 2153

CK 1987/008514/23, Member Barbara Williamson

2012 edition

Barbara Williamson 2008, ISBN 978-0-9802630-6-0

All rights reserved. No part of this book may be reproduced or

transmitted in any form or by any means, electronic or mechanical,

including photocopying, recording, or any information storage or

retrieval system, without permission in writing from EZ Learn Books CC.

http://www.ezlearn.co.za/

mailto:[email protected]

Contents

1. Get a head start! ................................................................. 1

2. Ethics and controls ............................................................... 9

3. Value added tax ............................................................... 31

4. Recording more cash transactions ................................ 43

5. Recording more credit transactions .............................. 81

6. The general journal .......................................................... 129

7. Salaries and wages ......................................................... 151

8. Year-end accounting ...................................................... 173

9. Year-end reporting .......................................................... 233

10. Management accounting ............................................. 275

11. Informal bookkeeping .................................................... 301

www.ezlearn.co.za 5

1. Get a head start!

Accounting is a wonderful subject to study, as it teaches you the life skill of being able

to control your finances, while developing your logical thinking and problem solving

skills. However, learning the “language” of accounting does involve practicing your

skills on a regular basis if you wish to do well. The good news is that if you work

consistently on extra revision exercises throughout the year, studying for tests and

exams will be a breeze!

Find your way around the book This guide has been written especially for you, the learner. I have tried to make sure

that it is easy to understand, and fun to use. To help you find your way around, here

are a few basic guidelines:

Notes on each section are highlighted in boxes for easy reference

Practical examples are in italics, with number references for each part of the

solution to help you understand where the information came form.

Each chapter includes exercises for practice. Icons tell you how difficult the

exercise is:

Crayon: Easy, baby steps.

Pencil: Medium level of difficulty now that you have grasped the basics.

Pen: Challenging, now that you have all the skills you need.

Summative assessments are given at the end of each chapter for you to attempt

when you feel you have mastered that section. Time limits are given for these

tests, and you should try to complete these under mock test conditions.

A blank “My study notes” page is given in each chapter after the exercises and

before the tests. This should be used for you to write your individual problems in

that section to make your revision easier.

Final answers to the exercises and tests can be found in the solutions book

accompanying this guide so that you can check your work as soon as you have

finished it. Your teacher will work through the complete solutions with you in class.

Working throughout the year In a subject like accounting it is very important that you keep up to date at all times.

From my experience teaching both classes and individual private lessons, I have

discovered the following helpful hints that I seriously suggest you try to use:

Make sure that you understand what has been covered in class each day. If there

is anything at all you do not understand, make a point of asking your teacher for

help immediately, either during the lesson, or if you are too shy, at the end of the

lesson. Reread the notes in boxes if you are unsure about anything.

Work through the example given in italics carefully, either in class or on your own

at home.

Attempt the required exercise. Even if you feel you can’t do it, make an attempt

to do as much as you possibly can. The effort made trying (even if it is wrong) is a

very important learning experience, as you will understand the method so much

better when working through the solution in class the next day.

Once you have completed the exercise, check if you arrived at the correct

answers by referring to the solutions booklet. If an answer is incorrect, look at your

solution again to se if you can find your mistake.

When checking your work on your own, and again in class when working through

the complete solution, write down all your mistakes on the study notes page given

at the end of each chapter.

Learn the EZ way! 6

Before completing the next exercise refer back to your study notes to see what

mistakes you should try not to make again. Remember, it does not matter if you

make lots of mistakes, but it does matter if you cannot learn from them!

Revision during the year Because accounting is a skill, you need to practice at least two extra exercises every

week, to keep “fit”. Make sure these cover a range of topics, so that you don’t forget

the concepts covered earlier in the year. If you do this, you will find that when it

comes to a test or exam, all you have to do is practice a past paper to ensure you

know everything you need to, and will not have to spend hours swotting up your work

the day before.

“EZ Revision – Accounting” is ideal to revise from. It includes examination questions for

all the different sections of work (see the order form at the beginning of this book).

More importantly, it includes a carefully designed revision plan, which specifies which

exercises to do during which weeks of the year. This will help you to keep track of your

revision, while ensuring that you regularly cover all the different sections.

Studying for tests and exams Accounting is not like Business Studies or other “swot” subjects. It is more like maths,

where you have to work regularly to keep your mind “fit”. Even the final preparation

for the test or examination involves practising exercises and past papers rather than

intensive studying. If you have worked properly throughout the section / year, this is

much less stressful! Use the following guidelines to help you study correctly:

When studying intensively in preparation for exams, you should find it much easier

if you have followed your revision plan throughout the year.

Be sure to take a short break every 30 to 50 minutes. This will vary from person to

person - experiment to find out what works best for you. During this break, try to

do something active – get up and make yourself a cup of coffee, kick a soccer

ball about etc. This gives your mind a break and helps blood to flow back to your

brain.

Your first step is to read through all your notes in boxes, and make sure you

understand all the concepts well.

If you feel you need to, work through the practical example in italics to ensure

you remember the methods you need to use.

Read through your mistakes page carefully to remind yourself of the errors you

need to avoid.

Work through an exercise or past paper question for which you have a complete

memo. Watch the time limit if given – if you run out of time change the colour of

the pen or pencil you are using, and continue. This will help you to see how much

you could do within the given time, as well as how much you actually know, i.e. it

will identify problems working within the given time, as well as problems in

completing the exercise correctly.

Mark your work very carefully from the complete memo. If items are correct, tick

them. If they are wrong, cross them out and write the correct amounts / details in

above or next to your answer. DO NOT erase your own work, as it is important for

you to be able to figure out what you did wrong.

Try to determine the reason for your mistakes, and add these to your mistakes

page for that section. If you do not understand your error, highlight it, and ask

your teacher to explain it to you as soon as possible. Remember to add it to your

mistakes page.

Work through as many exercise and past paper questions as possible, until you

are no longer making any mistakes. During exams, you should do an exercise a

day, or at worst, every second day. Whatever you do, do NOT ignore accounting

for a week and then focus on it intensively just before your exam – you will find

you need to spend much more time than you otherwise would have.

www.ezlearn.co.za 7

Test / exam technique Be sure to be refreshed and relaxed – have a good night’s sleep, be well

prepared and confident etc.

Be sure to follow the recommended time guidelines given on your exam paper.

If you find you are running out of time, leave any difficult adjustments and

adding and balancing for later, and move on to the next question. If you have

time at the end of the paper, come back to finish that question. This will mean

that you don’t waste time on areas in which you may not earn enough marks to

justify the time taken, and instead will focus on areas in which you can earn

marks more quickly and easily.

Don’t get stressed if your Statement of Financial Position (for example) does not

balance! Only look for your mistake if you have time at the end, as you will

probably spend ages looking for a mistake that would only cost you a few

marks.

1.1. Diagnostic assessment (55 marks, 35 minutes)

The bookkeeper of Ali’s Toffee Apples has been taken ill, and has not been able to

complete the records for January 2007. Ali tried to do this herself, but is unsure of

some things. You have been employed to ensure the records for January 2007 are

properly completed, and to answer a few questions Ali has.

Question 1 Journals (25 marks, 15 minutes)

Information: The business uses a mark-up of 150% on cost.

Receipt No. 234 was for R750.

Cheque 328 includes a partial payment for invoice 86, and additional stationery

purchased.

Cheque 330 was made out to R Damant.

A duplicate invoice from Ali’s Toffee Apples to N Atkins for R1 000 was not

recorded.

Required: Consider the journals given below.

1.1. Complete the missing information (*) (20)

Cash receipts journal of Ali’s Toffee Apples – January 2007 CRJ3

Doc D Details Analysis of

receipts Bank Sales

Cost of

sales

Debtors

control

* 5 A Bullock 500 500 *

CRR 7 Sales * * * 1 200

CRR 14 * 2 700 2 700 *

234 N Braby * * *

CRR 28 Sales 5 000 5 000 5 000 *

11 950 10 700 4 280 1 250

Cash payments journal of Ali’s Toffee Apples – January 2007 CPJ3

Doc D Name of payee Bank Trading

stock

Creditors

control Stationery

327 2 Tatenda Toffee Supplies * 2 000 2 700

328 17 Kelsey Stationers 1 600 900 *

* 25 Tutu Toffee Specialists 5 900 5 900

330 30 * 3 000 3 000

15 200 7 900 3 600 3 700

Learn the EZ way! 8

3. Value added tax

By the end of this chapter you should be able to1

Differentiate between standard rate of 14%, zero rated items and VAT exempt

supplies.

Explain how VAT works.

Differentiate between input and output VAT.

Recognise what a VAT control account looks like.

3.1. Introductory activity (baseline assessment)

In preparation for the lesson 1. Try to go shopping with your parents. Look at the prices for all the products

available for sale.

1.1. Which items have had VAT charged, and which do not attract VAT?

VAT products Non-VAT products

1.2. What can you deduce about the non-VAT items you found?

2. Find an invoice or till slip for any product or service, and stick it in here. Look at

your invoice. Can you identify an amount for VAT? Highlight it if you can find it.

3. What is VAT?

1 LO1: Financial information

AS 10.1.5. Explain basic VAT concepts

www.ezlearn.co.za 9

In class 4. Compare your invoice to those of your classmates.

4.1. Are all the invoices showing VAT for products, or are some for services?

4.2. You may find that not all the invoices show VAT. What products or services are

these for?

What is VAT? Value added tax (VAT) is added to the price of goods that are sold, as a way of

generating income for the government. The rate of VAT is currently 14% on items

subject to VAT. This tax is known as value added tax because VAT is charged on the

value added at each stage of the production and distribution process s products

move along the channel from producer to consumer.

Zero-rated products and services Some products attract VAT of 0%. Input VAT can be claimed by the vendor, but no

output VAT is charged. Products or services may be zero rated if

They are basic foodstuffs milk, milk powders and blends

eggs

brown bread

lentils, dried beans and legumes

rice

maize products

vegetables

fruit

canned pilchards

They are basic fuels (already subject

to a fuel levy) paraffin

petrol

diesel

They involve another country Products for export

Transport to or from another country

VAT exempt products and services Some products are exempt from VAT, and VAT is not charged on outputs, nor can

VAT be claimed on inputs as VAT does not apply at all. Examples of VAT exempt

supplies are

Salaries and wages and union membership fees

Educational services provided by schools, and service of caring for children by a

crèche or an after-school care centre

Certain financial services e.g. interest on loans, transactions by cheque payment

(service fees are VATable)

Private sales of personal or domestic items

Residential rentals, or the sale or rental of land outside South Africa

Shareblock and body corporate levies (but not homeowner’s associations)

Passenger transport by road or rail (air travel within South Africa is VATable)

Supply by a charitable organisation of any donated goods

Learn the EZ way! 10

3.2. Word search

Search for as many examples of goods for the different VAT rates as you can find. –

you should find 10 examples of each type of VAT rating. Words may appear

horizontally, vertically or diagonally, in any direction.

Highlight them as follows:

Standard rate 14%: Blue

Zero rated: Green

VAT exempt: Orange

E L E C T R I C I T Y A C B K D E G H F

K B O D Y C O R P O R A T E L E V Y J I

L R M Q N P O I A D V E R T I S I N G S

F M E P D A L C P B K A Z R M V X U Y T

I E G A H C I B J U M B L E S A L E B A

M A L R H I N T E R N E T S R K Z J R C

H T N A O Z T S E R E T N I P S C Q O C

G U R F T Y S C B O O K S D Q R H A W O

V D W F X P I H S R E B M E M N O I N U

S J E I D X C O F B S L A N P Z C Y B N

T F Q N G W H O I E J A K T L T O M R T

A D I E S E L L E G G S L I C N L B E I

T O P R P V Q F R G S M T A U U A V A N

I K A A R Z E E E Y J X R L R W T C D G

O B O C C U D E D E I R F R G Y E H H F

N L M R Q U L S T R O P X E K V J D I E

E N N E O T C L O T H E S N P W Q E R E

R U H T E K C I T N I A R T O T Y S G S

Y C V F C E L L P H O N E A W X X F Y I

F M E A D S C C B H A N Z L E N T I L S

Who should register for VAT? If you are supplying goods to which VAT can be charged and have an annual

turnover (total sales) of R1 milllion or more you must register for VAT. However, if you

have a lower turnover you can voluntarily register for VAT at any time.

How often is a VAT return completed and paid? Most business are registered for bi-monthly returns, i.e. every two months a return is

completed and the amount due paid (or refund received) for the transactions

relating to those two months.

www.ezlearn.co.za 11

3.3. Group activity

Each group will need: a set of source documents from your teacher, a highlighter, a

pencil and a calculator

1. Look at all the source documents in front of you. What business are these for?

2. Can you see VAT on them? Highlight the total VAT amount that you find on

each.

3. Who physically receives the VAT in cash?

4. What do they then do with it?

5. This VAT on goods and services going out of the business is known as output VAT.

Calculate the output VAT for this business.

6. Since VAT is supposed to be on the value added, is it right that they have to pay

this full amount? What can they do?

7. Does VAT appear on all the till slips and invoices in front of you? Why not?

8. The VAT that can be claimed back on goods and services coming into the

business is known as input VAT. Can you claim VAT back on all these invoices in

front of you? Why / why not?

9. Calculate the input VAT for this business.

10. The VAT owed to SARS is a liability of the business. How could you show the

calculation of the amount owed to SARS for VAT on these transactions as a

general ledger account?

SARS (VAT)


How VAT works – the big picture VAT is added at every step of the manufacturing and distribution process, as value is

added to the product or service.

Input and output VAT VAT paid on goods and services bought by the business can be claimed back from

SARS. This VAT on goods and services coming into the business is known as input VAT.

VAT charged on goods sold to customers must be paid over to SARS. This VAT on

goods and services going out of the business is known as output VAT.

3.4. Example

Cocoa, milk and sugar (costing R4,56 including 56c VAT) are used by Cadbury’s to make

a slab of chocolate which is then sold to Pick ‘n Pay for R7,98 (including 98c VAT), who

sells the chocolate to you for R11,40 (including R1,40 VAT). How much VAT is paid to SARS

at each step?

Business Farmer Cadbury’s Pick ‘n Pay Value added Makes cocoa, milk & sugar Makes chocolate Sells chocolate Selling price (incl. VAT) R4,56 R7,98 R11,40 VAT charged (output VAT) 56c 98c R1,40 Less VAT paid (input VAT) (0) (56c) (98c) VAT payable to SARS 56c 42c 42c

NOTE: SARS receives 56c + 42c + 42c = R1,40, which is the total VAT paid by you. It is just

received from a combination of businesses along the manufacturing and distribution

channel.

3.5. Exercise

Sappi sells wood pulp made from trees to Typek for R228 (including R28 VAT). Typek

turns the wood pulp into paper and sells it to Postnet for R513 (including R63 VAT).

Postnet uses this paper to print books for EZ Learn at a cost of R684 (including R84

VAT). EZ Learn sells these books to Book Bound for R1 140 (including R140 VAT). Book

Bound sells these books to your school to be distributed to your class for R1 425

(including R175 VAT).

1. Complete the table below to show how much VAT is paid to SARS at each step. Business Sappi Typek Postnet EZ Learn Book Bound

Value added

Selling price

(incl. VAT)

Output VAT Input VAT VAT payable

to SARS

2. How much VAT is paid to SARS in total for these books?


The VAT control account A general ledger account is created to show the total amount due to SARS for VAT. The

amounts for input and output VAT would be recorded in the journals and then posted

to the input VAT and output VAT accounts in the general ledger. These are regularly

closed off to the SARS (VAT) control account which can then be balanced to show the

amount owing. This amount owing is the difference between the VAT that has been

charged to customers and is therefore owed to SARS (output VAT) and the VAT that has

been paid on inputs into the business such as stock, stationery, advertising and other

expenses (input VAT). In other words, VAT is only paid to SARS on the value that has

been added to the products by the business.

Expenses

Creditors XX

Sales

Debtors XX

Creditors

Expenses XX

Input VAT XX

Debtors

Sales XX

Output VAT XX

Input VAT

Creditors XX SARS (VAT) XXX

Output VAT

SARS (VAT) XXX Debtors XX

VAT control Input VAT XXX Output VAT XXX

Balance c/d XXX

XXX XXX

Balance b/d XXX

NOTE: If you spend more VAT than you charge to your customers, i.e. your input VAT

is greater than your output VAT, you will have a debit balance in this account,

indicating that a refund is due to you from SARS.

When can you not claim VAT back? Although VAT is paid on many items, there are times when you pay VAT but cannot

claim it back. Examples of when you cannot claim VAT back include

If you are not registered as a VAT vendor.

If you were not charged VAT i.e. your supplier is not a VAT vendor, or the items are

zero-rated or VAT exempt.

Staff refreshments and entertainment expenses of a business.

A “motor car” i.e. passenger vehicle or double cab. However, VAT on single cab

and delivery vehicles may be claimed.


3.6. Example

Information VAT control

2007

Feb

28 Input VAT 6 000 2007

Feb

28 Output VAT 8 500

Balance c/d 2 500 8 500 8 500 Mar 1 Balance b/d 2 500

Required Look carefully at the VAT control account above and answer the following questions.

1. What does the amount of R8 500 represent? Explain.

2. What was the total input VAT for this VAT period?

3. How much is owed to SARS on 28 February 2007?

Solution: 1. Output VAT i.e. the VAT charged on goods sold or services rendered by the

business.

2. R6 000

3. R 2500

3.7. Exercise

Information VAT control

2007

April

30 Input VAT 15 000 2007

April

30 Output VAT 12 000

Balance c/d 3 000 15 000 15 000 May 1 Balance b/d 3 000

Required Look carefully at the VAT control account above and answer the following questions.

1. What does the amount of R15 000 represent? Explain.

2. What was the total output VAT for this VAT period?

3. Is money owed to SARS, or is a refund due at the end of this period, and of how

much?

4. This business completes VAT returns every two months. For what period has this

control account been drawn up?


3.8. Formative assessment (5 marks, 5 minutes)

Information During the months of January and February 2007, a business charges output VAT to

customers of R3 500, and pays input VAT of R2 000 to suppliers.

Required: Complete the VAT control account to show the amount owed to SARS on

28 February 2007.

VAT control

5 marks

3.9. Check yourself

Tick the block that represents how you feel when faced with the

following questions. Can you …

Differentiate between standard rate of 14%, zero rated items and VAT

exempt supplies?

Explain how VAT works?

Differentiate between input and output VAT?

Recognise what a VAT control account looks like?

If you have ticked mostly happy faces, great! Move on to the summative assessment.

If you are not sure, or have ticked mostly sad faces, it might be wise to ask your

teacher for some extra help before moving on.


3.10. Summative assessment (55 marks, 40 minutes)

In this assessment you are expected to show that you can

explain basic VAT concepts

understand the effect of VAT on prices and demand

evaluate the pros and cons of registering for VAT

solve the problem of how to record VAT transactions

For this assessment, choose a friend to work with. Although you will be allowed to

discuss your answers and come to your conclusions together, you must each write

down your answers in the space provided.

Gloria, the owner of Glorious Gifts is expecting annual turnover (sales) for the next

business year to be close to R300 000, and must therefore register for VAT in the near

future. However, she is debating whether to wait until she has to register so as not to

have to increase her prices for customers when charging VAT, or to register early to

take advantage of the fact that she will be able to claim VAT back on payments

made. She is also unsure if this would affect the amounts owed to her creditors, and

how she would record her receipts and payments in order to calculate the amount

owed to SARS. She has done a little research and can give you the following

information for last two months:

VAT is calculated at 14%.

Cash invoices totalled R42 000, excluding VAT. If she had been registered, she

would have had to add VAT of R5 880 to these invoices.

Invoices received for trading stock totalled R18 240, including VAT of R2 240.

Invoices received for operating expenses totalled R7 928, including VAT that

can be claimed back of R728.

All the stock bought was sold during the month.

Required:

1. What is VAT? (2)

2. Would the following be input or output VAT for Glorious Gifts?

2.1. VAT on cash invoices issued to customers

2.2. VAT on stock bought

2.3. VAT on operating expenses (6)

3. Explain how VAT would work for Glorious Gifts if the business were to register. (6)


4. Differentiate between standard rate VAT of 14%, zero rated items and VAT

exempt supplies, giving an example of each. (9)

5. Apart from being zero rated or VAT exempt, why else might some of the invoices

for operating expenses NOT include VAT that can be claimed back? (3)

6. Calculate the net profit of Glorious Gifts for the last two months (i.e. income

minus expenses), while the business was NOT registered for VAT, i.e. VAT was NOT

charged and could NOT be claimed back. (4)

7. Consider the pros and cons of registering for VAT by answering the following

questions.

7.1. If she were to charge her customers VAT, what would happen to her selling

price? (2)

7.2. Would you suggest she charge her customers more for the products when she

registers for VAT, or should she absorb the cost herself? If you think she should

increase her prices (incl. VAT), by what percentage? Explain your answer

carefully. (4)

0 1 2 3 4

Incorrect

knowledge of

VAT

Choice not

backed up by

suitable reason

Choice only

considers price

or demand

Effect of prices on profit and

demand predicted correctly,

but no percentage

suggested

Choice considers effect of

prices on profit demand

and gives a specific

percentage


8. Based on your answers above …

8.1. What would her total sales receipts (including VAT) have been if she had been

registered? (2)

8.2. What would her total cash expenses have been (including VAT)? (2)

8.3. Complete the VAT control account to determine the amount that would have

been owed to SARS at the end of the month if she had been registered for

VAT. (Dates and folios are not required). (8)

VAT control

8.4. Considering your answers for 8.1., 8.2. and 8.3, what would her net profit have

been after paying SARS the amount due to them? (4)

8.5. Compare your answer to 8.4. to that of 6. Would you recommend she register

now or wait until she is legally obliged to register? Explain. (3)

0 1 2 3

Unsuitable decision

made, no reasoning

given.

Decision is flawed, only

partial information used

in decision making.

Suitable decision made

based on answers

above, Reason given.

Logical decision is made

based on answers given

above. Reasoning (pros

and cons) explained.

55 marks


My study notes


4. Recording more cash

transactions


Discuss the perpetual inventory system and explain the advantages and

disadvantages of this system.

Record the following additional cash transactions:

o Carriage on stock

o Credit card sales

o Loans – interest and instalments

o Fixed Deposit – interest and original sum

o Bank Charges

o Interest on current account and on overdraft

o Petty cash and other cash journals

4.1. Baseline assessment activity

Your teacher will have prepared this activity for you in advance.3

1. Obtain a label from your teacher and attach it to the front of your shirt.

2. If there is another learner of the same account as you, join them. However, you

may find yourself on your own.

3. Make sure you understand what type of account you are, and when you will be

affected by transactions. For example, trading stock is an asset, and will be

debited when stock is bought.

4. As your teacher reads out transactions, think about if you are affected or not. If

you are, put up your hand as quickly as possible to receive your sweet.

5. Balance your account to determine the remaining sweets – one of each colour

cancel each other out.

6. One of you should stand in front of the class with your remaining sweets. Stand

on the correct side of the room (debit or credit) as directed by your teacher.

7. As a class, check that the total debits and credits are equal.

Check yourself

Could you …

Quickly determine when your account was affected, and how?

Balance your account?

Understand why all the debits should have equalled all the credits?

If your ticks are in the sad face column, you need to ask your teacher for help before

starting this section of work. She will provide you with extra exercises in preparation for

the new work.


AS 10.1.1. Define and explain accounting concepts for a sole trader up to financial statements.

AS10.1.2. Within the context of the accounting cycle, identify and complete source documents, record the

information in the subsidiary journals (books of first entry), post to the ledgers and draw up the trial balance

for a sole trader manually and / or by using an accounting package.

AS 10.1.3. Analyse and show the effect of transactions on the accounting equation of sole traders.

3 Full instructions and resources available - E-mail [email protected] for the free electronic version.

mailto:[email protected]


4.2. Baseline assessment 2 (20 marks)

You will need: Monopoly board game, pencil, eraser and calculator.

Lesson 1 Play the game. Normal monopoly rules are followed with the following adaptations:

Property can be purchased during the first round.

Houses and hotels can be bought as soon as ONE property in the set is owned.

Property can be bought and sold between players at any price that is agreed

upon.

Each transaction that takes place is recorded by the players involved, using the

journals on the following pages. Transactions such as paying tax, receiving

birthday presents from other players etc. should be recorded in the accounts

“Sundry Income” and “Sundry Expenses”.

Property can be mortgaged in order to borrow money from the bank, as for

normal Monopoly rules. This would then be recorded in the cash receipts journal,

as cash is being received for a mortgage bond. When the amount is repaid to the

bank, it is recorded in the cash payments journal.

Cash receipts journal of CRJ

Details Bank Capital Current

income (“Begin”)

Rent

income

Sundry

income

Mortgage

bond

Cash payments journal of CPJ

Details Bank Land and

buildings

Rent

expense

Sundry

expenses Mortgage

bond


Lesson 2 1. Total your journals and post to the relevant accounts in the general ledger.

2. Draw up a trial balance is to check for recording errors.

3. Complete an Statement of Income and Statement of Financial Position.

General ledger of

Capital (OE1)

Land and buildings (A1)

Bank (A2)

Mortgage bond (L1)

Current income (I1)

Rent income (I2)

Sundry income (I3)

Rent expense (E1)

Sundry expenses (E2)


Trial balance at the end of the lesson

Debit Credit

Capital OE1

Land and buildings A1

Bank A2

Mortgage bond L1

Current income I1

Rent income I2

Sundry income I3

Rent expense E1

Sundry expenses E2

Statement of Income for the lesson

Current income

Other operating incomes

Rent income

Sundry income

Operating expenses

Rent expense

Sundry expenses

Net profit (loss) for the lesson

Statement of Financial Position at the end of the lesson

ASSETS

Non-current assets

Tangible assets

Current assets

Cash

Total assets

EQUITY AND LIABILITIES

Owner’s equity 1

Non-current liabilities

Mortgage bond

Total equity and liabilities

Notes to the financial statements

1. Owner’s equity

Balance at beginning of lesson

Net profit (loss)

Balance at end of lesson

Self assessment Use the following checklists to ensure that you have recorded everything correctly.

Checklist for journals

Has every amount been entered into two columns?

Have you classified each amount correctly in the appropriate column?

Have you totalled each column?

Have you entered folio references below totals posted to the general ledger?


Checklist for general ledger

Did you post totals to the correct accounts as named by the column heading?

Did you post to the correct side of the account?

Remember:

Assets

+ -

Land and buildings

Bank

Owner’s equity

- +

Expenses

Capital

Income

Liabilities

- +

Mortgage bond

Did you give the correct contra account in the details column?

Remember:

Since all transactions involve cash, “Bank” is usually the contra account. In the bank

account, there are too many other accounts involved, so you can write “Sundry

accounts” instead.

Did you use the correct folios showing the journals you posted amounts from i.e.

CRJ or CPJ?

Did you balance or total the accounts correctly where necessary?

Checklist for trial balance

Did you transfer amounts to the correct side of the trial balance?

Did your trial balance totals balance?

Checklist for Statement of Income

Did you enter the correct amounts from the trial balance?

Did you add the boxes to calculate operating income and expenses?

Did you calculate net profit by adding income and subtracting expenses?

Checklist for note for Statement of Financial Position

Did you enter the correct amounts from the trial balance?

Remember:

Tangible assets includes land and buildings

Cash includes bank

Did you use the owner’s equity end balance from the note?

Did you total assets and owner’s equity correctly and are they are equal?

Checklist for owner’s equity note

Did you use the capital balance as the balance at the beginning?

Did you transfer the net profit (or loss) from the Statement of Income?

Did you correctly calculate the end balance?

TOTAL OUT OF 20

Determine the winner – this is the player with the highest correct net profit (and

therefore the highest owner’s equity) at the end of the game.


Check yourself Could you …

Record transactions in the journals?

Post to the general ledger?

Balance your general ledger accounts?

Draw up a trial balance?

Complete the Statement of Income?

Complete the Statement of Financial Position and note?

If your ticks are in the sad face column, you need to ask your teacher for help before

starting this section of work. She will provide you with extra exercises in preparation for

the new work.

The perpetual inventory system In order to calculate the gross profit achieved by a business, it is important to be able

to calculate what the goods sold actually cost. One of the ways to achieve this is to

record stock as an asset at cost price when it is bought, and then to transfer it to an

expense account (Cost of Sales) as it is sold. This is known as the perpetual inventory

system, and is the system you used last year when learning to record transactions.

The advantage of this system is that careful control can be kept of stock, as the

quantity and value of stock that should be on hand is known at any time. This can

then be compared to a physical stock take to determine theft, wastage or other loss.

It also helps to ensure that the business is able to fulfil orders as if it is known that there

is not enough stock to fill the order, the customer can be informed and / or more

stock ordered from suppliers.

The disadvantage of this system is that it can be more time consuming, as the cost of

goods sold must be recorded every time a sale takes place. Historically, this system

was mostly used by businesses selling larger value items in smaller quantities e.g.

jewellery stores, making it easier to record cost of sales daily. However, as technology

has improved, computerised barcoding systems have been implemented by many

retailers, including those trading in large quantities of small value items e.g. Pick ‘n

Pay’s groceries. A computerised system removes the time consuming administration

involved, allowing for easier control of stock using the perpetual inventory system.

Additional trading stock entries When trading stock is bought it needs to be transported to the business, and other

costs such as import duties may also be incurred. These costs need to be recovered

when the goods are sold, and so are used in calculating the unit cost of each item.

They are therefore recorded in the Trading Stock account, which is later transferred to

Cost of sales when the goods are sold.

Credit card transactions Credit cards are accepted by most businesses as cash, as the amount is owed to the

bank, not them. The card is run through the machine and an automatic credit check

is run. A slip is printed, which the customer signs to acknowledge liability. These slips

are deposited at the bank as cash. The bank charges a 5% levy to the business for the

use of this facility. When the transaction is recorded by the business, it is treated as

cash. The amount charged by the bank will reflect on the bank statement and is

recorded as part of the bank charges expense.


4.3. Example

Required 1. Show the effect of the transactions on the accounting equation.

2. Complete the Cash Receipts and Payments Journals of Vassil’s Vases for

January 2007.

3. Post to the Trading Stock account in the general ledger.

Transactions for January 2007 1. Trading stock balance on 1 January 2007, R5 400.

2. Bought trading stock from Wilson Wholesalers and paid by cheque 237, R3 000.

3. Paid R200 to Damant Deliveries to have the stock couriered to the business.

4. Cash sales, R4 000. A mark-up of 100% is used by the business.

5. Credit card sales, R1 000.

Solution

1. Source

document Journal Account debit Account credit A OE L Amount

1 No effect

2 Cheque counterfoil

CPJ Trading stock Bank +/- R3 000

3 Cheque counterfoil

CPJ Trading stock Bank +/- R200

4 Cash

register roll CRJ

Bank Sales + + R4 000

Cost of sales Trading stock - - R2 000

5 Cash

register roll CRJ

Bank Sales + + R1 000

Cost of sales Trading stock - - R500

2. Cash receipts journal of Vassil’s Vases – January 2007 CRJ3

Doc D Details

Analysis

of

receipts

Bank Sales Cost of

sales

CRR 4 Cash sales 4 000 4 000 4 000 2 000

CRR 5 Cash sales 1 000 1 000 1 000 500

5 000 5 000 2 500

A1

Cash payments journal of Vassil’s Vases – January 2007 CPJ3


stock

237 2 Wilson Wholesalers 3 000 3 000

238 3 Damant Deliveries 200 200

3 200 3 200

A1

3. General ledger of Vassil’s Vases

Trading stock (A1) 2007

Jan

1 Balance b/d 5 400 2007

Jan

31 Cost of sales CRJ3 2 500

31 Bank CPJ3 3 200 Balance c/d 6 100 8 600 8 600 Feb 1 Balance b/d 6 100

A balance is not a transaction,

so has no effect on the

accounting equation.

Don’t forget to show folio numbers

when posting. A = Asset,

1 = number allocated to that account.


4.4. Exercise

Required 1. Show the effect of the transactions on the accounting equation.

2. Complete the journals of Atkins Traders for February 2007.

3. Post to the Trading Stock account in the general ledger.

Transactions for January 2007 1. Trading stock balance on 1 January 2007, R10 600.

2. Bought trading stock from Appelbaum Suppliers and paid by cheque 198,

R7 200.

3. Arranged for Braby Couriers to deliver the stock to the business. The amount of

R300 was charged to the business’s account. Received invoice BC387,

renumbered 38.

4. Cash sales, R9 000. A mark-up of 50% is used by the business.

5. Invoice 245 issued to A Bullock for goods sold, R3 900.

6. Credit card sales, R4 500.

7. Sent cheque for R3 700 to Braby Couriers on account.

8. A Bullock settled her account using her credit card, R3 900. Receipt 84 issued.

1. Source

document Journal Account debit Account credit A OE L Amount

1

2

3

4

5

6

7

8


2. Cash receipts journal of Atkins Traders – February 2007 CRJ5

Doc D Details Analysis

of

receipts Bank Sales

Cost of

sales

Sundry accounts

Amount Details

Cash payments journal of Atkins Traders – February 2007 CPJ5


stock Creditors

control

Sundry accounts

Amount Details

Debtors journal of Atkins Traders – February 2007 DJ5

Doc D Debtor Sales Cost of

sales

Creditors journal of Atkins Traders – February 2007 CJ5

Doc D Creditor Creditors’

control

Trading

stock

Sundry accounts

Amount Details

3. General ledger of Atkins Traders

Trading stock (A1)


6. The general journal


Record the following transactions:

o Bad debts (full or partial amount received)

o Bad debts recovered

o Owner taking stock for own use

o Donations of Stock

o Correction of errors

o Interest on overdue accounts

Prepare and/or interpret the following ledger accounts from given information:

o Debtors Control

o Creditors Control

o Trading Stock

6.1. Baseline assessment

1. Can you determine the journal into which a transaction must

be recorded?

2. Can you identify the accounts to be debited and credited for

a transaction?

3. Can you post from journals to the general ledger?

If you have ticked mostly happy faces, great! You are ready to start this new section.

If you are not sure, or have ticked mostly sad faces, it might be wise to ask your

teacher for some extra help before moving on.

6.2. Group activity

You will need: Scissors, glue, 7 envelopes, pencil

Part 1

1. Cut out the envelope labels and transactions on the following pull-out pages.

2. Glue the envelope labels onto 6 of your envelopes.

3. In groups, discuss each transaction to determine the accounts involved and

which will be debited and credited. Write them in the space provided.

4. Decide which journal you would record each transaction in, and place the slip of

paper in the correct envelope. Your extra envelope is for those transactions for

which you are not sure where to put them.

5. Compare the transactions you placed in your envelopes with those of other

groups.


AS 10.1.1. Define and explain accounting concepts for a sole trader up to financial statements.

AS10.1.2. Within the context of the accounting cycle, identify and complete source documents, record the

information in the subsidiary journals (books of first entry), post to the ledgers and draw up the trial balance

for a sole trader manually and / or by using an accounting package.

AS 10.1.3. Analyse and show the effect of transactions on the accounting equation of sole traders.


Part 2

6. How do you think you could record the transactions for which there was no

suitable journal? Brainstorm with your group to think of possible solutions.

7. Present your suggestion(s) to the class.

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Envelope labels

Cash receipts journal

Cash payments journal

Debtors journal

Debtors allowances

journal

Creditors journal

Creditors allowances

journal

Transactions

1. Cash sales of merchandise R2 400 (cost price R1 800).

Debit Credit

2. Credit sales of merchandise R1 500 (mark up 50% on cost).

Debit Credit

3. Trading stock bought for R3 300, paid by cheque.

Debit Credit

4. Credit purchase of equipment, R404.

Debit Credit

5. Stationery bought on credit R88.

Debit Credit

6. Goods returned by a debtor as they were the wrong size R66.

Debit Credit

7. Damaged goods returned by a debtor, R45.

Debit Credit

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8. Stationery returned to a creditor, R20.

Debit Credit

9. Debtor paid account of R200, 5% discount allowed.

Debit Credit

10. Sent cheque for R1 720 to a creditor, received R80 discount.

Debit Credit

11. Debtors owing R77 insolvent. Received R55.

Debit Credit

12. The remainder of the debt must be written off as irrecoverable (see no. 11)

Debit Credit

13. Owner paid his private telephone account using a business cheque for

R160.

Debit Credit

14. Owner took goods at cost for her own use, R210.

Debit Credit

15. Charged 10% interest on a debtor’s overdue account of R360.

Debit Credit

16. A debtor’s cheque for R105 returned by the bank as he did not have

money in his account.

Debit Credit

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17. Stationery bought for R75 was incorrectly posted to the Trading stock

account – this error must be corrected.

Debit Credit

18. An invoice from a creditor for repairs was entered as R65 instead

of R56.

Debit Credit

19. Paid General Dealers by cheque for stationery R46 and equipment R66.

Debit Credit

20. Goods bought on credit from George Brothers for R300, incorrectly posted

to G. George’s account in the Debtor’s Ledger (credited).

Debit Credit

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The general journal The general journal is a book of first entry for transactions that do not fit into any of the

other journals that the business is using. Authorisation is needed from a senior staff

member for many of these transactions to avoid fraudulent misuse of the journal. A

journal entry shows which account to debit and which to credit, with an explanation

called a “journal narration”.

General Journal of (name of business) – (date) GJ

Doc Day Details F Debit Credit Debtors control Creditors control

Debit Credit Debit Credit

30 (account debited)

(account credited)

XXX

XXX

(explanation of transaction)

If a debtor (or creditor) is involved, the name of the debtor (creditor) would appear in

the details column, and the amount would also appear in the debtors control

(creditors control) column. At the end of the month, the debtors and creditors

columns are totalled and posted to the debtors’ and creditors’ control accounts. All

other amounts are posted individually to the general, debtors’ and creditors’ ledger

accounts involved.

General journal transactions Bad Debts If a debtor cannot be traced or is declared insolvent, the debt may be written off as

“bad” (irrecoverable). This is a loss for the business. If an estate is insolvent (its liabilities

exceed its assets), the assets are sold for cash and creditors are paid in proportion to

the amount due. “x cents in the rand” means that for every rand due, x cents are

paid out. The actual amount received is recorded in the Cash Receipts Journal as

usual and the remainder (100 – x) is written off as bad.

Bad debts recovered Sometimes a debtor may pay off a debt after it has been written off. A new account

is created to increase owner’s equity (bad debts decreased owner’s equity initially).

Bad Debts Recovered is credited and Bank is debited. Because cash is received, this

is recorded in the Cash Receipts Journal, and does not affect Debtors Control as the

debtor’s account no longer exists.

Drawings of Stock The owner may take stock for his or her own use. This is recorded using a journal entry.

Interest on overdue accounts If the normal credit term (time allowed for the payment of the debt) is exceeded,

debtors are charged interest. This is usually calculated automatically, if computerised,

when the statements are printed. Interest received is an income account.

Correction of errors Mistakes may be made when recording transactions. In order to correct the error, a

general journal entry may be made to adjust the accounts involved. Identify the

correct account, and debit or credit it as should have been done originally. The

incorrect account will then be treated as the other account involved. If you are not

sure exactly how to correct the error, you may find rough T-accounts useful – record

the incorrect entry, as well as how the entry should have been made originally.

Compare the incorrect and correct entries and adjust the accounts to arrive at the

correct result intended.


6.3. Example

Required Record the given transactions in the general journal of Mahomed Traders for

March 2008 and post to the general ledger.

Transactions

1. M Kietzmann’s account of R500 must be written off as irrecoverable.

2. Sohail Mahomed, the owner, took stock with a cost price of R200 for his own use.

3. Charged V Vasseleou’s overdue accountof R1 000 with R10 interest.

4. Trading stock costing R3 000 was incorrectly posted to the Equipment account.

This error must be corrected.

5. R400 was received from M Hudson, a debtor whose account was previously

written off as bad.

Solution

Cash receipts journal of Mahomed Traders - March 2008 CRJ1


receipts Bank Current

income

Sundry accounts

Amt Details F

324 5 M Hudson 400 400 400 Bad debts

recovered

I2

General journal of Mahomed Traders – March 2008 GJ1

D Details F Debit Credit Debtors control Creditors control


1 Bad debts E1 500

M Kietzmann D1 500 500

Account written off as irrecoverable

2 Drawings O1 200

Trading stock A2 200

Owner took goods for own use

3 V Vasseleou D2 10 10

Interest received on

overdue accounts I1 10

Interest charged on overdue account

4 Trading stock A2 3 000

Equipment A1 3 000

Correction of error

10 500

A3 A3


Dr General ledger of Mahomed Traders Cr

Drawings O1 2008

Mar

2 Trading stock GJ 200

Equipment A1 2008

Mar

4 Trading stock GJ 3 000

Trading stock A2 2008

Mar

4 Equipment GJ 3 000 2008

Mar

2 Drawings GJ 200

Debtors’ control A3 2008

Mar

31 Sundry

accounts

GJ 10 2008

Mar

31 Sundry

accounts

GJ 500

Interest received on overdue accounts I1 2008

Mar

3 Debtors control

/ V Vasseleou

GJ 10

Bad debts recovered I2 2008

Mar

5 Bank CRJ 400

Bad debts E1 2008

Mar

1 Debtors’ control

/ M Kietzmann

GJ1 500

Debtors’ ledger of Mahomed Traders

M Kietzmann D1

Date Document F Debit Credit Balance 2008

Mar

1 Balance b/d 500

Journal voucher GJ 500 -

V Vasseleou D2


Mar

1 Balance b/d 1 000

3 Journal voucher GJ 10 1 010


6.4. Exercise (Continuation of Group Activity)

Required 1. Record the following transactions (placed in your extra envelope during your

group activity) in the general journal.

2. Post the general journal entries to the general, debtors’ and creditors’ ledgers.

You need NOT balance the general ledger accounts.

Transactions for June 2008 12. C Chikumbu, a debtor owing R77, is insolvent. Received R55 and recorded this

in CRJ, but the remainder of the debt must be written off as irrecoverable.

15. Owner took goods at cost for her own use, R210.

16. Charged 12% p.a. interest for one month on J Henry’s overdue account of

R3 600.

19. Stationery bought for R75 was incorrectly posted to the Trading stock account –

this error must be corrected.

20. An invoice from Ruttell Repairers for repairs was entered as R65 instead of R56.

22. Goods bought on credit from George Brothers for R300, incorrectly posted to

G. George’s account in the Debtor’s Ledger (credited).

Cash receipts journal of Tanner Traders – June 2008 CRJ1


receipts Bank Sundry accounts

Amt Details F

General journal of Tanner Traders – June 2008 GJ1

D Details F Debit Credit Debtors control Creditors control



Dr General ledger of Tanner Traders Cr

Drawings O1

Trading stock A1

Debtors control A2

Creditors control L1

Interest received on overdue accounts I1

Stationery E1

Repairs E2

Bad debts E3

Debtors’ ledger of Tanner Traders

C Chikumbu D1


June

1 Balance b/d 77

J Henry D2


June

1 Balance b/d 3 600

G George D3


June

1 Balance b/d (300)

Creditors’ ledger of Tanner Traders

George Brothers C1

Date Document F Debit Credit Balance

Ruttel Repairers C2


June

1 Balance b/d 65


6.15. Summative assessment (75 marks, 40 minutes)

Question 1 (27 marks)

Required

Show the effect of the following transactions on the accounting equation.

Transactions

1. 70c in the rand is received from R. Nobbs, a debtor owing R200.

2. The balance of R. Nobbs’ account is written off as bad.

3. Interest is charged on the overdue account of B. Mullany (who owes R600) at

10% pa for 3 months.

4. The owner took goods marked at R450 for his own use (the business uses a mark-

up of 50% on cost).

5. R240 packing material purchased on credit had been incorrectly entered in the

Trading stock column in the Creditors Journal.

6. A cheque for R90 was paid to Saunders Suppliers on account. Although it was

entered correctly in the journals, it was posted to the account of B. Saunders in

the Debtors Ledger by mistake.

7. Received a cheque for R100 from R. Nobbs, who had unexpectedly inherited

some money.

Journal Account debit Account credit A OE L Amount

1

2

3

4

5

6

7

(Please turn over for question 2)


Question 2 (48 marks)

Required Draw up the given general ledger accounts in the books of Shanay’s Shop from the

information given below.

Balances on 1 October 2007 Trading stock R5 000, Debtors control R3 500, Creditors control R2 400, and Discount

allowed R190.

Journal totals Cash Receipts Journal of Shanay’s Shop – October 2007 CRJ7

Bank Sales Cost of

sales

Debtors

control

Discount

allowed

Sundry

accounts

11 000 5 680 4 000 5 200 180 300

Sundry accounts include an amount for R100 on the 18th. This was received from A. du

Toit, a debtor written off as bad in August.

Cash Payments Journal of Shanay’s Shop – October 2007 CPJ7

Bank Trading

stock

Creditors

control

Discount

received

Sundry

accounts

10 000 3 000 4 600 300 2 100

Petty Cash Journal of Shanay’s Shop – October 2007 PCJ7

Petty cash Trading

stock

Stationery Postage Wages Sundry

accounts

420 200 70 20 100 30

Sundry accounts include an amount of R10 on the 23rd for postage paid on behalf of

a debtor.

Creditors’ Journal of Shanay’s Shop – October 2007 CJ7

Creditors

control

Trading

stock

Stationery Packing

material

Equipment Sundry

accounts

6 550 2 500 350 400 2800 500

Creditors’ Allowances Journal of Shanay’s Shop – October 2007 CAJ7

Creditors

control

Trading

stock

Stationery Packing

material

Equipment Sundry

accounts

700 450 20 130 60 40

Debtors’ Journal of Shanay’s Shop –

October 2007 DJ7

Sales Cost of

sales

4 550 3 300

Debtors’ Allowances Journal of Shanay’s

Shop – October 2007 DAJ7

Debtors

allowances

Cost of

sales

600 300

General Journal of Shanay’s Shop – October 2007 GJ7

Day Details Debit Credit Debtors’ control Creditors’ control


…

14 Drawings

Trading stock

250

250

…

390 550 500 350


Dr General ledger of Shanay’s Shop Cr

Trading stock A7

Debtors control A8

Creditors control L2

Bad debts recovered I4


My study notes


9. Year-end reporting

9.11. Formative assessment (50 marks, 30 minutes)

Kelsey Clark owns Grotto Traders. Since she is not confident completing the

accounting records she employs a bookkeeper to do this for her. Unfortunately she

suspects that the bookkeeper has been shoddy in completing her work. Since the

bookkeeper also does not understand the importance of taking year end

adjustments into account when completing financial statements, nor how to do so,

you have been employed to report on the business’s financial activities for the year.

Required 1. Draw up the Statement of Income for the year ended 30 September 2007. (19)

2. Complete the Statement of Financial Position at 30 September 2007. Notes are

NOT required, but you should show all your workings in brackets. (19)

3. Answer the questions that follow.

Ledger balances on 30 September 2007 Debit Credit

Capital 1 000 000

Drawings 45 000

Loan: Coetzee2Finance (12% p.a.) 30 000

Vehicles 180 000

Trading stock 129 400

Debtors’ control 23 500

Bank 12 450

Creditors’ control 10 800

Sales 535 500

Debtors’ allowances 5 500

Cost of sales 248 000

Commission received 84 000

Packing material 39 000

Salaries and wages 110 600

Stationery 23 600

Rent expense 60 000

Interest on loan 3 600

The following adjustments must still be taken into account 1. A physical stock take showed that the business has trading stock to the value of

R120 000 in store.

2. Bad debts of R1 700 must be written off.

3. Packing material worth R3 200 is on hand.

4. Rent has been paid for the period 30 June to 31 December 2007.

5. Commission of R7 000 is still owing to us.

6. The last week’s wages of R1 000 have not yet been paid. Deductions are as

follows: PAYE R250, UIF R10. Employer contributions (treated as part of the total

wages expense): UIF R10, SDL R15.

7. The loan is repayable in annual instalments of R10 000 on 30 June each year.

Adjust for outstanding interest of R900.


1. Kelsey Clark

Trading as Grotto Traders

Statement of Income for the year ended 30 September 2007

Sales 530 000

Cost of sales (248 000)

Gross profit

Other operating income

Commission received (84 000

Operating expenses

Packing material (39 000

Salaries and wages (110 600

Rent expense (60 000

Operating profit

Interest expense (3 600

Net profit (loss) for the year 179 975

2. Statement of Financial Position at 30 September 2007

ASSETS

Non-current assets

Tangible assets 981 725

Current assets

Inventory (129 400

Trade and other receivables (23 500

Cash and cash equivalents 12 950

Total assets

EQUITY AND LIABILITIES

Owner’s equity (1 000 000

Non-current liabilities

Current liabilities

Total equity and liabilities

(Please turn over)


Questions

3.1. Write an e-mail to the bookkeeper in which you explain why year end

adjustments are recorded. (5)

0-1 2 3 4 5

An incorrect

explanation of the

role played by

adjustments is

given

A partial but

possibly flawed

explanation of the

role played by

adjustments is

given

Role played by

adjustments in

ensuring fair

presentation

explained

Answer mentions

the IFRS and

explains the role

played by

adjustments

Answer clearly

discusses the IFRS

and the

explanation of the

role played by

adjustments shows

insight


3.2. Write a report for Kelsey in which you

Identify the problem revealed by the Statement of Financial Position

Explain what you could do to solve this problem now

Suggest how she could avoid this problem in the future (6)

Attention: Kelsey Clark

Report on problem with the financial statements

Problem revealed by Statement of Financial Position

Possible solution

Suggested measures to prevent future occurrences of this nature

0 – 1 2 3 4 5 6

Problem

incorrectly

identified.

Unsuitable

solution and /

or measure to

prevent future

occurrences

given.

Problem poorly

identified.

Partially flawed

solution and

measure to

prevent future

occurrences

suggested.

Basic problem

identified.

Acceptable

solution and

measure to

prevent future

occurrences

suggested.

Basic problem

identified.

Suitable

solution and

measure(s) to

prevent future

occurrences

explained.

Problem

correctly

identified.

Good solution

given.

Effective and

realistic

measure(s) to

prevent future

occurrences

explained.

Problem(s)

accurately

identified and

analysed.

Effective

solution given.

Creative,

effective and

realistic

measures to

prevent future

occurrences

discussed.

EZ Learn Acc 10 2012...EZ Learn Books cc Tel/Fax (011) 4623550, Cell 082 322 0005 Website , E-mail...

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