Under the perpetual stock system carriage on goods bought is debited to the Trading Stock Account.

When the owner of a clothin business takes clothing for personal use at cost price, VAT is levied on these goods.

Under the periodic stock system, when goods are sold, the cost of sales is recorded at the same time.

All businesses in South Africa must charge value-added tax on all goods that they sell and all services that they provide.

The FIFO method of stock valuation is base don the assumption that stock required last is the first merchandise to be sold.

You are provided with information relating to to Quality Building Suppliers for April 2012. They buy boxes of floor tiles and sell them to retailers around Hazyview. They use the weighted-average method for stock valuation and the periodic inventory system. Refer to the table below.

Calculate the total value of the opening stock (A)

Calculate the value of the tiles received on 25 April 2012 (B)

Calculate the value of the closing stock using the weighted-average method.

Your are provided with information relating to Amy's clothing Store. All goods are subjected to 14% VAT. The business is owned by Amy Andrews.

Calculate the amount owed to SARS for VAT

Amy has not yet submitted the VAT return.

John Smith is the internal auditor. He has  CA qualification. He has noticed that an invoice for purchases from KZN Wholesalers amounting to R200 000 has been signed by Amy and recorded by the bookkeeper. On investigation he discovers that KZN Wholesalers does not exist.

What should John Smith do about this? Explain

Complete the following sentences in your own words:

• It is important to prepare a Bank Reconciliation Statement each month because...


• It is important to prepare a Debtors' Age analysis each month because...

You are provided with information relating to Cravenby Traders.

Refer to Information B. The bookkeeper has decided to write off the amount of R40 000.

• Which GAAP principle will the bookkeeper apply in this case? Briefly explain this principle.


• The bookkeeper wants to prevent a problem such as this in future. Give TWO soloutions to improve internal control in this regard.

Prepare the Bank Reconciliation Statemetn on 31 May 2012.

You are provided with the Debtors' Age Analysis of Cravenby Traders on 31 May 2012.

Identify TWO different problems shown by the Age Analysis and quote evidence from the questions to support your answer. In each case suggest an internal control measure to correct the problem.

You are provided with information relating to Cape Chocolates for the financial year ended 30 June 2012. The business is owned by Mary Muller.

Prepare the following for the year ended 30 June 2012:

Factory Overhead Note to the Production Cost Statement.

Prepare the following for the year ended 30 June 2012:

Production Cost Statement (Where notes are not required, show calculations in brackets.)

You are provided with information relating to Belino Manufacturers which consists of two factories producing different products: Belino blankets and Belino towels. The owner of the business, Benny Belino, has compared the profit he has earned over the past two years (2011 and 2012) and has found that it has decreased by more than R3 million. He asks for advice in reversing this disturbing trend. Note that the inflation rate is 7% and that Benny was able to keep the fixed costs unchanged over the past year.

Refer to the accountant's calculations of variable costs per unit:

• Identify the production cost that caused the biggest problem in making the blankets and the towls. Explain and quote figures to support your answer.


• In each case, give a possible practical solution for Benny.

Benny does not know how to calculate the break-even point. Give the workings to prove that the 2012 break-even point of 12 298 units for blankets is in fact correct.

Refer to the number of blankets produced and sold in 2012, and the break-even point for blankets. Explain why these figures should be of concern for Benny. Quote figures to support your answer.

Benny has decided to increase the prices of either blankets or the towels by R15,00 in the next financial year.

• Which product should Benny increase in price by R15,00? Explain and quote figures to support your answer.


• In this case, estimate how much extra net profit he could earn next year assuming that his level of production and sales will remain unchanged. Give a calculation to support your answer.

You are provided with information relating to Master Ltd for the financial year ended 30 June 2012.

Use information 2 to complete the Note for Fixed/Tangible Assets by filling in the missing figures indicated by an *.

Calculate the Retained Income on 30 June 2012. (You may prepare an Appropriation Account in you wish.)

Prepare the Balance Sheet of Master Ltd as on 30 June 2012. Show your working in brackets as notes are NOT required.

Complete the following sentences by using the words in the list below. Write only the world next to the question number (5.1.1-5.1.5) in the ANSWER BOOK

A company with total assets exceeding the total liabilities is...

A company which relies heavily on loans will have high...

A company which controls its income and expenses properly will be ...

The percentage net income on equity indicates the ... earned by shareholders.

A company which is able to settle its immediate debt is...

You are provided with information related to Jankelo Ltd. New shares were issued on the first day of the financial year.

Use infomation below to calcuate the following figures or financial indicators for the financial year ended 30 June 2012. Calculate to ONE decimal place where relevant.

Calculate the Acid-test ratio

Calculate the earning per share (in cents).

Calculate the net asset value per share (in cents).

Cacluate the percentage return on average shareholders' equity.

Calculate the figure that will appear in the Cash Flow Statement for:

• Repayment of loans


• Proceed of issue of ordinary shares


• Fixed assets purchased (Note that fixed assets with a book value of R105 000 were sold at carrying value.)

Your friend James, wants to buy shares in a company which sells running shoes. He asks you for advice and presents you with the following financial indicators of two companies he is considering. Both companies have the same numbers of shares with the same par values.

Explain your answers to the following questions. In each case compare and quote financial indicators of both companies (actual figures, rations or percentages) to support your answer.

James is of the opinion that Pomi Ltd is handling its working capital more effectively and is in a better liquidity situation than Kwela Ltd. Explain and quote THREE financial indicators to support his opinion.

Consider the use of loans by the two companies:

• Which company is making more use of loans? Quote a financial indicator for each company.

• Explain whether or not it was a good idea for that company to make use of loans. Quote ONE financial indicator.

Kwela Ltd has a better percentage return, earnings and dividends than Pomi Ltd. Explain and quote THREE financial indicators for each company.

The existing shareholders of the two companies hold different opinions of the current market value of their shares.

•  Explain why the existing shareholders of Kwela Ltd are happy with this. Quote a financial indicator/figures to support your answer.

•  Explain why the existing shareholders of Pomi Ltd are very disappointed with this. Quote a financial indicator/figures to support your answer.

Your are provided with extracts from the independent audit reports of Kwela Lts and Pomi Ltd.

Consider the audit reports of Kwela Ltd and Pomi Ltd.

How would these audit reports influence James in deciding in which company to buy shares? Explain in respect of each company.

The Happy holiday Shop is owned by Jim Jambo. You are provided with extracts from the Projected Income Statement which Jim prepared for the three months ending 31 December 2012. He has included a column for the actual expenses that he has incurred in October.

Explain why it is important for Jim to prepare a Projected Income Statement.

Calculate the percentage increase in sales he expects in December. Explain why he has budgeted for this increase

Mark-up: During October a competitor opened a shop up in the same area. Jim decided to adjust his mark-up percentage immediately to counter the new competitor.

• Calculate the mark-up percentage he actually achieved in October.

• Explain whether or not it was a good idea to change the mark-up percentage from its original target.

Calculate the following figures in the Projected Income Statement:

• Rent income for November 2012 (Refer to Additional Information 1.)

• Advertising for December 2012 (Refer to Additional Information 2.)

• Interest expense for November 2012 (Refer to Additional Information 1.)

Refer to the actual and budgeted figures for October 2012.

•  Identify the THREE overhead expenses that have been poorly controlled by Jim. Quote figures to support your answer.

•  What advice would you offer Jim to improve his internal control over these overhead expenses? Explain

Refer to Additional Information 3. Jim is of the opinion that he could benefit financially if he accepts Samuel's offer. State THREE points that would have a positive effect on his Projected Income Statement for January 2013 if he accepts the offer. Give figures or information from the question to support your answer.

Jim is also conscious of the fact that there are negative points if he accepts the offer. State TWO points that Jim should consider before finalising his decision to sell the property. Explain.