2015 ACCOUNTING OLYMPIAD
QUESTION 1 - 7 ACCOUNTING EQUATION
Choose the most correct answer from each of the following statements:
1 / Profit is measured in a business by:A / Looking at the cash balance in the bank account
B / Subtracting the expenses from the income
C / By determining the net worth of a business
D / Calculating assets - liabilities
2 / The net worth of a sole trader is calculated by:
A / Assets + expenses – liabilities – income
B / Capital – drawings
C / Capital + income – drawings - expenses
D / Capital + profit
3 / If a business increases a loan the effect on the net worth of the business is:
A / Increase the net worth of the business
B / Decrease the net worth of the business
C / Increase the profit of the business
D / No effect
4 / The interest charged on the loan will have the following effect on the business:
A / Increase the net worth of the business
B / Decrease the net worth of the business
C / Increase the profit of the business
D / No effect
5 / Equipment worth R5000 is stolen from the business. The insurance company will pay out 80% of the claim. The effect on the net worth is:
A / Net worth will decrease by R5 000
B / Net worth will increase by R1 000
C / Net worth will decrease by R1 000
D / Net worth will increase by R4 000
6 / Goods are sold on credit for R8000. The cost price of the goods was R3600. The overall effect on the assets is:
A / Assets will increase by R8 000
B / Assets will decrease by R3 600
C / Assets will increase by R4 400
D / Assets will decrease by R4 400
7 / Using the same information in No 6. The overall effect on Net worth is:
A / Net worth increases by R8 000
B / Net worth increased by R4 200
C / Net worth decreases by R8 000
D / Net worth decreases by R3 600
8 / A debtor returned unwanted goods originally sold on credit for R5 600. The original mark-up was 60% on cost. The net effect on the accounting equation is:
A / A - 5 600; OE - 5 600; L 0
B / A + 2 100; OE + 2 100; L 0
C / A – 5 600; OE - 3500; L 0
D / A - 2 100; OE – 2 100; L 0
QUESTIONS 9 - 21 ADJUSTMENTS
Each question is independent of each other
9 / The rent income figures in the Pre-adjustment Trial Balance on 30 April 2015 is R62 580. The rent was increased by 15% p.a. on 1 January 2015. The tenant has been in the premises the whole year and has paid rent up to the end of 30 June 2015.The correct journal entry to record this adjustment is:
A / Dr Rent income; Cr income received in advance/deferred income
B / Dr Income receivable; Cr rent income
C / Dr Rent income; Cr Income receivable
D / Dr Income received in advance/ deferred income; Cr rent income
10 / Refer to information No 9. The adjustment figure is:
A / R4 650
B / R4 470
C / R8 940
D / R9 660
11 / The following figures appeared in the Pre-adjustment Trial Balance on 30 April 2015: Debtors control R25600. Provision for bad debts R2400. The following adjustments still need to be recorded:
· A debtor who owes R6000 has been declared insolvent. His estate has paid out 25 cents in the Rand.
· A debtor whose account of R1500 was written off in February 2015 has paid R800 towards his account.
The provision for bad debts must be adjusted to 6% of the good book debts.
The amount to be shown in the Income Statement for Provision for bad debts is:
A / R1224 as an expense
B / R1224 as an income
C / R1314 as an expense
D / R1314 as an income
12 / Refer to No 11 above. The net debtors to be shown in the Balance Sheet is:
A / R19 600
B / R18 424
C / R18 100
D / R17 014
13 / The Pre-adjustment Trial Balance on 30 April 2015 shows insurance as R45 800. Further information relating to Insurance which has not been recorded:
· A debit order on the bank statement shows insurance of R1600 which covers the period 1 April 2015 to 31 July 2015. This has been recorded.
The amount shown in the Income Statement for insurance is:
A / R44 600
B / R35 000
C / R51 800
D / R37 400
14 / The amount shown in the Balance Sheet to record the adjustment for insurance is:
A / R1 200
B / R6 000
C / R1600
D / R8 400
15 / The fixed deposit statement received from SAS Bank showed the following:
Balance on 1 March 2014 R56000
Extra funds invested 24000
Interest ?
Balance on the 28 February 2015 84650
An amount of R12000 will mature on 31 July 2015
The amount to be shown in the Income Statement is:
A / R4 650
B / R52 650
C / R28 650
D / R84 650
16 / Refer to the information in No 15. The amount to be shown in the Non-Current assets is:
A / R84 650
B / R12 000
C / R72 650
D / R36 000
17 / Refer to information in No 15. The amount of R12000 will be reflected in the Balance Sheet under the following section:
A / Trade and other receivables
B / Fixed Deposit
C / Cash and cash equivalents
D / Income receivable
18 / The Pre-adjustment Trial Balance showed Trading stock with a balance of R60000. Further information relating to Trading stock that still has to be taken into account:
· An invoice was received from Speedy Transporters for delivery of goods to the business of R3200 and delivery to our customers of R1800 (this is not charged to the debtors)
· Trading stock with a selling price of R1200 (mark-up 60% on cost) was donated to the local charity
· The owner took goods for his own use, with a cost price of R600 (mark-up 60% on cost)
The amount to be shown in the Balance Sheet for Trading stock is:
A / R63 650
B / R61 400
C / R61 850
D / R63 200
19 / Refer to No 18. The net effect in the Income Statement is:
A / R1950 expense
B / R5750 expense
C / R2550 expense
D / R750 expense
20 / The business uses the periodic stock system. The following information was taken from the books at the financial year end 30 April 2015:
Trading stock 1 May 2014 / R 12 400
Purchases / 186 000
Purchases returns / 1 550
Carriage on purchases / 4 600
Import duties / 10% of net purchases
Trading stock 30 April 2015 / 16 200
The balance in the Balance Sheet on 30 April 2015 for Trading stock is:
A / R219 895
B / R16 200
C / R203 696
D / R180 650
21 / Refer to No 20 above. The cost of sales figure is:
A / R219 895
B / R16 200
C / R203 695
D / R180 650
WHICH GAAP PRINCIPLE IS USED IN RECORDING THE FOLLOWING ENTRIES IN QUESTIONS 22 - 24?
22 / Recording sales and cost of sales simultaneously:A / Going concern concept
B / Prudence concept
C / Matching concept
D / Concept of materiality
23 / An entry at the year-end for expenses accrued (payable)
A / Going concern concept
B / Prudence concept
C / Matching concept
D / Concept of materiality
24 / The company is not certain whether it will still be able to pay off all its debts in the normal course of business and therefore gave a warning to that effect in its financial statements.
A / Going concern concept
B / Prudence concept
C / Matching concept
D / Concept of materiality
QUESTIONS 25 – 30 are based on the following information.
FIXED/TANGIBLE ASSETS on 30 April 2015
Land and buildings / Vehicles / EquipmentCarrying value at beginning of year / (a) / 40 000
Cost / 280 000
Accumulated depreciation / (560000) / (45000)
Movements
Additions at cost / 240 000 / 60 000
Disposals at carrying value / (c)
Depreciation / (b)
Carrying value at end of year
Cost / 1300 000 / 318 000
Accumulated depreciation
25 / During the year extensions of R140000 and repairs of R24000 were carried out. The amounts have been debited to the repairs account.
The carrying value at the beginning of the year (marked with (a)) in the note above is:
A / R1136 000
B / R1440 000
C / R1464 000
D / R1 160 000
26 / Depreciation on vehicles is 20% on cost. An extra vehicles were bought on 1 October 2014. The amount of depreciation for vehicles (marked with (b)) in the note above is:
A / R67 999
B / R148 000
C / R144 000
D / R63 999
27 / Depreciation on equipment is 15% on diminishing balance method. On the 31 January 2015 a piece of equipment that had a book value of R12000 on 1 May 2014 was sold at a profit of
R400. The disposal amount to be shown in the fixed asset note (marked with (c)) above is:
A / R10 650
B / R12 000
C / R10 200
D / R12 400
28 / The cost price of the equipment sold was:
A / R22 000
B / R38 000
C / R12 000
D / R98 000
29 / Refer to information given in No 27 above. The amount of depreciation written off the new equipment amounted to R5 250. The date on which the equipment was bought was:
A / 1 October 2014
B / 31 August 2014
C / 31 January 2015
D / 1 May 2014
30 / Details of the individual assets is shown in:
A / The general ledger account
B / The fixed asset note
C / The fixed asset register
D / The Balance Sheet
QUESTIONS 31 - 35 ARE BASED ON THE FOLLOWING INFORMATION:
An individual earns a monthly salary of R30000. His salary contract stipulates the following:
· His income tax bracket falls in the following bracket
o R284 101 – R393 200: R59314 + 31% of the amount above R284 100
· As an individual under the age of 65 his rebate is R13257
· The UIF threshold is R1000. The individual and the firm pay 1% towards the UIF
31 / His monthly PAYE amounts to:A / R5798.83
B / R69 587
C / R82 843
D / R9 300
32 / The amount owing to the UIF fund for the month is:
A / R148.72
B / R297.44
C / R20
D / R10
33 / The net salary is credited to which account:
A / Wages and salaries
B / Creditors control
C / Debtors control
D / Creditors for salaries
34 / The tax rate on companies as per the Budget speech in February 2015 is:
A / 50%
B / 28%
C / 40%
D / 30%
35 / The tax threshold for individuals under the age of 65 in the tax year 1 March 2015 – 28 February 2016 is:
A / R73 650
B / R70 700
C / R60 000
D / R114 800
QUESTIONS 36 – 39 ARE BASED ON THE FOLLOWING INFORMATION:
· The financial year end of Kloof Sports Club is 30 April 2015
· Membership fees were R1450 during the year ended 30 April 2014. The membership fees increased by 8% on 1 May 2014.
· The secretary’s membership fees were offset against her honorarium.
· There were 180 members, including the secretary for the year ended 30 April 2015, after the fees had been written off.
GENERAL LEDGER OF KLOOF SPORTS CLUB
Dr MEMBERSHIPS FEES Cr
2014May / 1 / Income receivable / accrued / 7 250 / 2014
May / 1 / Income received in advance/deferred income / 9 396
2015
April / 30 / Income received in advance / 6 264 / 2015 Apr / 30 / Bank / (b)
Income and expenditure / (a) / Membership fees written off / 2 900
Honorarium / *
Income receivable / 10 962
36 / The number of members who had paid in advance on 30 April 2014 were:
A / 5
B / 6
C / 4
D / 3
37 / The number of members who paid their membership fees owing for the year ended 30 April 2014 during the year ended 2015 were:
A / 2
B / 3
C / 5
D / 6
38 / The Income and Expenditure figure marked with (a) above is:
A / R270 570
B / R258622
C / R286 578
D / R281 880
39 / The bank figures marked with a (b) above is:
A / R270 570
B / R258622
C / R286 578
D / R281 880
QUESTIONS 40 – 46 ARE BASED ON THE FOLLOWING INFORMATION:
BANK RECONCILIATION STATEMENT AS AT 30 APRIL 2015
Dr balance as per bank statement / 14 240Outstanding deposit / 5 600
Outstanding cheques No 121 (dated 10 November 2014) / 3 800
No 201 (dated 21 April 2015) / 9 600
No 234 (dated 2 June 2015) / 7 500
Dr correction of error / 2750
Balance as per bank account / ?
40 / The correct balance as per the bank account above is:
A / R32 290
B / (R26790)
C / R26 790
D / (R32290)
41 / The correct balance as in the financial statement on 30 April 2015 is:
A / R39 790
B / (R19 290)
C / R34 290
D / (R24 790)
42 / Next month (May 2015) if none of the outstanding amounts or the error is shown on the bank statement which one will not be entered in the May 2015 bank reconciliation statement.
A / Cheque No 234
B / Cheque No 201
C / Cheque No 121
D / Correction of incorrect deposit
43 / A possible reason for the entry for R2750 is:
A / The bank statement showed a cheque written by another client of the bank
B / The bank statement showed too much interest earned on the current account
C / The bank statement bank charges were too high
D / The insurance debit order was put through twice
44 / Which of the following are all examples of bank charges:
A / ATM fees, service fees, sundry debits, Interest on overdraft
B / ATM fees, service fees, sundry debits, internet cost
C / Interest of overdraft, service fees, sundry debits, internet cost
D / ATM fees, service fees, Interest on overdraft, internet cost
45 / The statement showed a debit of R1320 while the bank account showed the amount as R1230. An investigation revealed that the bank statement was correct. What entry is needed to correct the error:
A / R100 in the Cash Payments Journal
B / R100 in the Cash Receipts journal
C / R90 in the Cash Payments journal
D / R90 in the Cash Receipts journal
46 / Which one of the following is not a reason for completing the bank reconciliation process:
A / To determine the bank balance
B / To determine outstanding amounts
C / To determine the balance on the loan account
D / As part of internal control
QUESTIONS 47 – 51 ARE BASED ON THE FOLLOWING INFORMATION: