ANNEXURE E-FORMATIVE ASSESSMENT 1

HIGHER EDUCATION PROGRAMMES

Academic Year 2023: January-June

Formative Assessment 1: Fundamentals of Accounting
(HFOA100-1)
NQF Level, Credits: 5, 14
Weighting: 40%
Assessment Type: Essay Questions
Educator: G. Toringepi
Examiner: G. Toringepi

Due Date: 31 March

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:

o Font: Arial
o Font size: 12
o Line spacing: 1.5

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ANNEXURE E-FORMATIVE ASSESSMENT 1

The following Learning Outcomes are assessed in this assessment:

• Describe the parties to 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.

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QUESTION 1 (10 MARKS)

a) Explain the conditions under which a trust may face dissolution and also explain
what happens to the assets of the trust upon its dissolution. (3 Marks)

b) Identify the parties under which a trust are typically established for and on behalf
of (7 Marks)

QUESTION 2 (31 MARKS)

Gwede-Zuma Traders is being sued for the violation of the Employment Equity Act of
1998 . The penalty according to the arbitrator is R 44 000.This amount should be paid
within six months from the ruling date and falls within the current financial year.

Required:
a) Determine whether or not Gwede-Zuma Traders should record a liability for the
penalty.Give reasons for your answer with reference to the Conceptual Framework
(10 Marks).

b) You have been presented with the following information for Gwede-Zuma Traders
that transpired during the month of January 2023

Date Transaction
01 January 2023 Purchased inventory amounting to R15 400
03 January 2023 Made a long term investment by acquiring shares worth
R28 560 from Mega Ventures Ltd.
21 January 2023 Cash in the petty cash box amounted to R2 002.
29 January 2023 Goods sold to customers amounted to R13 160. However,
only R3 220 was received from customers by the end of the
month.

Required:

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ANNEXURE E-FORMATIVE ASSESSMENT 1

Identify the asset in each of the above transactions and classify it as either current
or non-current by writing the total amount of the asset in the relevant column.
Answer the question by using the following format: (12 Marks)

Example
Date Asset Current (R) Non-current (R )
01 January 2023
03 January 2023
21 January 2023
29 January 2023

c) You are presented with the following information for Gwede-Zuma Traders for the
year ending 31 January 2023.
Account Amount (R)
Motor Vehicles 140 560
Patents 112 000
Bank overdraft 17 220
Trading inventory 16 100
SARS payables 17 290
Petty cash 12 565
Long term loan 127 225
Financial assets 91 630

Required
Calculate the owner’s equity for Gwede-Zuma Traders for the year ending
31 January 2023. Show all your workings. Ignore questions (a) and (b) when
answering this question.
(9 Marks)

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QUESTION 3 (35 MARKS)

You have been presented with the following information for NobleTraders that
transpired during the month of February 2023.
Date Transaction
1 The owner contributed an amount of R96 666 cash, as well as motor
vehicle valued at R56 666 to the business.
3 NobleTraders purchased trading inventory for R22 666 on credit from
Golden Suppliers.
5 The insurance premium of R5 714 was paid through the electronic funds
transfer (EFT).
9 A cash sale amounting to R45 714 was made, the goods were originally
purchased at a cost of R24 285.
13 Noble Traders settled their account with Golden Suppliers Suppliers in
full by cash.
15 Sold goods on account to a customer, Mr. Bogus for R11 214. The
goods were originally purchased at a cost of R10 142.
18 Purchased trading inventory amounting to R15 714 for cash.
19 Purchased a building in cash for R107 142.
27 Made electronic payments for the workers’ salaries and wages
amounting to R42 000.
30 Received a payment of R11 200 from Mr. Bogus, a debtor.

Required:
a) Show the effects of the transactions incurred by Noble Traders during the
month of February 2023 on the accounting equation. 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 next page.
(26 Marks)

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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 February 2023 will reflect in the ledger
accounts of Noble Traders.
i. Purchased motor vehicle on cash for R33 600.
ii. Paid monthly wages amounting to R17 220cash.
iii. Paid the monthly rent for R3 500 cash (9 marks)

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QUESTION 4 (24 MARKS)

The following transactions for More Traders transpired during the month of February
2023.
Date Details of transactions
1 The owner for More Traders , contributed a delivery vehicle valued at
R 46 200 to the business. Journal voucher JV 012 was issued.
3 The owner, for More Traders took trading inventory with a cost price of
R 400 for personal use. Journal voucher JV 013 was issued.
6 Charged an amount of R 900 to Mr Moyo, a debtor, as interest on his
overdue account. Journal voucher JV 014 was issued.
12 Settlement discount of R 450 was granted to C. Ngcobo, a debtor, for
early settlement of his account. Journal voucher JV 015 was issued.
20 The bookkeeper erroneously recorded the purchases of a motor vehicle
in the office equipment account. The motor vehicle was purchased for
R 34 000 by bank. Journal voucher JV 016 was issued.
26 Mr Peters, a debtor, was declared insolvent. As a result he was not able
to pay the amount owed of R 32 000. 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 More Traders
for the month of February 2023. Ignore VAT and narrations are not required.

(24 Marks)

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