Indicate whether the following statements are TRUE or FALSE - NSC Accounting - Question 1 - 2019 - Paper 1
Question 1
Indicate whether the following statements are TRUE or FALSE. Write only 'true' or 'false' next to the question numbers (1.1.1 to 1.1.4) in the ANSWER BOOK.
1.1.1 Ou... show full transcript
Worked Solution & Example Answer:Indicate whether the following statements are TRUE or FALSE - NSC Accounting - Question 1 - 2019 - Paper 1
Step 1
1.1.1 Output VAT is collected by a business when goods are sold.
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Answer
True. Output VAT is indeed collected by a business at the point of sale, reflecting the tax on the sales value.
Step 2
1.1.2 The calculation of salaries does not take VAT into account.
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True. Salary calculations are typically not affected by VAT, as VAT is related to sales transactions and does not play a role in payroll calculations.
Step 3
1.1.3 A credit balance on the Bank Statement indicates an unfavourable balance.
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Answer
False. A credit balance on the Bank Statement normally indicates a favourable position, meaning the account has funds available.
Step 4
1.1.4 Recording bank charges separately from interest on an overdraft is an application of the materiality concept.
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True. This separation is significant for accurate financial reporting and adheres to the materiality concept.
Step 5
Calculate the amount receivable from or payable to SARS for VAT on 30 April 2019.
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Answer
To find the amount receivable or payable for VAT:
Starting with the amount owed: R15 890
Adjustments for transactions in April:
Returns by debtors: 1 470
Drawings by owner (VAT included): 3 075
Debtors' accounts written off: 8 700
Total purchases including VAT = R224,000, therefore VAT = R224,000 * 15% = R33,600
Total VAT calculations yield:
R15 890 - 1 470 + 3 075 - 33 600 = R34 340 payable to SARS.
Thus, the final amount is R34 340 payable.
Step 6
1.3.1 Calculate the correct Bank Account balance on 31 May 2019. Indicate whether this is favourable or unfavourable.
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Answer
Provisional Bank balance: R19 400
Adjustments:
Outstanding deposit: R2 350
Cheque issues and theft of cash adjustments lead to a final correct bank balance of R9 657.
This balance is unfavourable as it reflects a shortage of funds.
Step 7
1.3.2 Prepare the Bank Reconciliation Statement on 31 May 2019.
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Answer
The Bank Reconciliation Statement should account for:
Starting balance as per bank statement.
Outstanding deposits and cheques, leading to balances that must be reconciled to confirm accuracy.
Step 8
1.3.3 State TWO internal control measures that the business can use to ensure that this will not happen in the future.
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Encourage departments to use EFTs and interdiscipline to monitor fund flows.
Conduct regular audits of bank transactions and cash receipts to ensure accuracy and transparency.
