ACCOUNTING 1A – LU 1- LU 3 – Practice test - MEMORANDUM
Question 1: Indicate if each of the following statements are true or false. If false give the correct answer.
(LU 1 – 15 marks)
Statement True of false If false give the correct answer
Example Leonardo da Vinci is known as the ‘Father of False Luca Pacioli
Accounting’.
Q.1.1 Investors are primarily interested in the False (½) Customers ([Link]) (1)
continuation of the enterprise. or Suppliers and other trade creditors
([Link]) (1)
Q.1.2 Lenders uses financial information to determine True (½)
if the interest on their loans will be paid when
due.
Q.1.3 Materiality is a component of relevance. True (½)
Q.1.4 Verifiability is achieved by ensuring False (½) Faithful representation (1)
completeness of financial information and
information that is free from error.
Q.1.5 Comparability and relevance are fundamental False (½) Relevance and faithful representation
qualitative characteristics of financial (1)
statements.
Q.1.6 Financial and management accounting are the True (½)
two main branches of accounting.
Q.1.7 Financial accounting must follow an accounting True (½)
framework (IFRS).
Q.1.8 Management accounting reports to False (½) Financial accounting (1)
stakeholders outside the organisation in the Or stakeholders inside the
form of financial statements. organisation and voluntary reporting
(1)
Q.1.9 The bookkeeping and accounting cycles are False (½) The accounting cycle is a yearly cycle
both monthly cycles. (1).
Q.1.10 The general ledger summarises the source False (½) Journals (1)
documents.
Q.1.11 Source documents are paper-based or True (½)
electronic records
Q.1.12 A trial balance is a collection of accounts per se False (½) General ledger (1)
the bookkeeping system. Or List of balances or totals on all
accounts in the general ledger (1)
Q.1.13 Planning, organising, leading and controlling are True (½)
essential functions management
Q.1.14 Partnerships are the oldest form of ownership. False (½) Sole trader (1)
Or Sole proprietorship (1)
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ACCOUNTING 1A – LU 1- LU 3 – Practice test - MEMORANDUM
Question 2.1: What are the two ways in which owner’s equity can be calculated. (LU 2 – 5 marks)
OE = Assets (1) minus liabilities (1)
OE = Capital (1) minus drawings (1) plus income (½) minus expenses (½)
Question 2.2: Calculate the owner Ms VC’s equity in her business VC-Traders on 29 February 2024. Show the impact
of each transaction on the accounting equation by completing the table given below. IGNORE VAT. (LU 2 – 10 marks)
Day Transactions for February
1 Ms VC contributes R50 000 cash and a laptop worth R15 000 to the business.
10 Ms VC buys inventory amounting to R8 900 and pays via EFT. (Assume perpetual inventory.)
15 The business sells inventory with a cost price of R4 500 on credit. A mark-up of 20% on cost was used.
(Assume perpetual inventory).
20 The business pays casual wages out of petty cash R1 500.
25 The business buys office furniture on credit R12 500.
29 The business pays the Ms VC’s private cell phone account R1 250 via EFT.
Day Assets Owner’s equity Liabilities
1 +50 000 (½) +50 000 (½)
+15 000 (½) +15 000 (½)
10 +8 900 (½)
-8 900 (½)
15 -4 500 (½) -4 500 (½)
+5 400 (½) +5 400 (½M)
(4 500 (½) X 1.2 (½)) (4 500 X 1.2)
20 -1 500 (½) -1 500 (½)
25 +12 500 (½) +12 500 (½)
29 -1 250 (½) -1 250 (½)
63 150 (1)
Question 2.3: Using the information in Question 2.2 above calculate the profit or loss that VC-Traders made during
February 2024. Indicate clearly if it is a profit or a loss. IGNORE VAT. (LU 2 – 3 marks)
5 400 (½) – 4 500 (½) – 1 500 (½) = 600 (½M) Loss (1)
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ACCOUNTING 1A – LU 1- LU 3 – Practice test - MEMORANDUM
Question 2.4: Record the following transactions in the general ledger of VC-Traders. You must add the correct general
ledger account names to each account before you start the double entry. (LU 2 – 7 marks)
Day Transaction
1 Ms VC contributes R50 000 cash and a laptop (office equipment) worth R15 000 to the business.
Capital (1)
Details Fol Amount Details Fol Amount
Bank (½) 50 000 (½)
Office equipment (½) 15 000 (½)
Bank (1)
Details Fol Amount Details Fol Amount
Capital (½) 50 000 (½)
Office equipment (1)
Details Fol Amount Details Fol Amount
Capital (½) 15 000 (½)
Question 3: Select the correct answer for each of the following questions. Each question has only one correct answer.
(LU 3 – 20 marks)
1. Water and electricity
(a) Standard rated
(b) Zero rated
(c) Exempt supplies
(d) Non-allowable
2. White bread for staff lunches
(a) Standard rated
(b) Zero rated
(c) Exempt supplies
(d) Non-allowable
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ACCOUNTING 1A – LU 1- LU 3 – Practice test - MEMORANDUM
3. White bread flour
(a) Standard rated
(b) Zero rated
(c) Exempt supplies
(d) Non-allowable
4. Passenger transport by taxi
(a) Standard rated
(b) Zero rated
(c) Exempt supplies
(d) Non-allowable
5. Passenger transport by air
(a) Standard rated
(b) Zero rated
(c) Exempt supplies
(d) Non-allowable
6. Passenger vehicles
(a) Standard rated
(b) Zero rated
(c) Exempt supplies
(d) Non-allowable
7. Which one of the following statements is false?
(a) Life assurance and short-term insurance are exempt supplies
(b) The current VAT rate is 15%
(c) Vendors of exempt supplies may not register for VAT
(d) Vendors of exempt supplies may not claim input VAT on purchases
8. Which one of the following statements is false?
(a) There are two bases to register for VAT
(b) The payments basis requires VAT to be recorded on the date of the credit sale
(c) Sole traders whose turnover does not exceed R2.5 million may use the cash basis
(d) The invoice basis records the output VAT in the period the credit sale took place
9. Which one of the followings statements is true?
(a) A full tax invoice is required when the supply total exceeds R5 000
(b) An abridgers tax invoice is needed if the supply total is between R50 and R5 000
(c) The abridged invoice does not need to include the VAT registration number of the buyer
(d) All the above
10. This document can be used in the place of a cash invoice
(a) EFT confirmation slip
(b) Petty cash voucher
(c) Cash deposit slip
(d) Cash slip
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ACCOUNTING 1A – LU 1- LU 3 – Practice test - MEMORANDUM
11. This document is not a valid document for VAT purposes
(a) EFT confirmation slip
(b) Unabridged tax invoice
(c) Credit note
(d) Cash slip
12. This document is an internal source document
(a) EFTCS
(b) Petty cash voucher
(c) Cash receipt
(d) Cash slip
13. What is the price including VAT if the price excluding VAT is R789? Show your workings next
to your selected answer and round to two decimal places.
(a) R686.09
(b) R118.35
(c) R907.35
(d) R899.46
14. What is the price excluding VAT if the price including VAT is R2 710.09? Show your workings
next to your selected answer and round to two decimal places.
(a) R2 356.60
(b) R2 377.27
(c) R2 303.58
(d) R3 116.60
15. What is the VAT amount if the selling price is R951.00 including VAT. Show your workings
next to your selected answer and round to two decimal places.
(a) R142.65
(b) R826.96
(c) R1 093.65
(d) R124.04
16. What is the cost price if the selling price is R867 and a mark-up of 45% on cost is used. Show
your workings next to your selected answer and round to two decimal places. Ignore VAT.
(a) R476.85
(b) R597.93
(c) R390.15
(d) R1 257.15
17. What is the cost price if the selling price is R1 589 and a gross margin of 45% is used. Show
your workings next to your selected answer and round to two decimal places. Ignore VAT.
(a) R1 095.86
(b) R873.95
(c) R715.05
(d) R2 304.05
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ACCOUNTING 1A – LU 1- LU 3 – Practice test - MEMORANDUM
18. What is the selling price if the cost price is R2 867 and a mark-up of 200% on cost is used.
Show your workings next to your selected answer and round to two decimal places. Ignore
VAT.
(a) R8 601.00
(b) R5 734.00
(c) R1 433.50
(d) R955.67
19. What is the selling price INCLUDING VAT if the cost price is R2 867 and a mark-up of 20% on
cost is used. Show your workings next to your selected answer and round to two decimal
places.
(a) R3 440.40
(b) R3 297.05
(c) R2 637.64
(d) R3 956.46
20. If VC Traders buy inventory of R65 489 (including VAT), how much will the VAT be, and will it
be input or output VAT for VC Traders? Show your workings next to your selected answer
and round to two decimal places.
(a) R9 823.35 – Output VAT
(b) R8 468.41 – Output VAT
(c) R8 468.41 – Input VAT
(d) R9 823.35 – Input VAT
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