Indicate whether the following statements are TRUE or FALSE - NSC Accounting - Question 1 - 2019 - Paper 1

True. VAT is typically not considered in the calculation of salaries as salaries are viewed as costs unrelated to sales transactions.

False. A credit balance generally indicates a favourable balance as it suggests the account has money available.

True. The materiality concept allows businesses to separate significant items like bank charges to better reflect their financial position.

To find the amount payable to SARS for VAT:

1. Calculate VAT from sales: Total Sales = R396,750 VAT (15%) = $396,750 imes 0.15 = R59,512.50

2. Calculate VAT from Purchases: Total Purchases = R224,000 VAT (15%) = $224,000 imes 0.15 = R33,600

3. Calculate the VAT Due: VAT Due = Output VAT - Input VAT = R59,512.50 - R33,600 = R25,912.50

4. Total Amount Owed to SARS: Amount Owed on 1 April = R15,890 Payable Amount = R15,890 + R25,912.50 = R41,802.50

Thus, the total amount payable to SARS for VAT on 30 April 2019 is R41,802.50.

To calculate the correct bank account balance:

1. Start with the provisional balance of R19,400.

2. Adjust for outstanding cheques:

   • Cheque 654 = -R2,350
   • Theft of cash = -R31,560
   • Bank charges = -R1,060
   • Interest Income = +R313

3. Adjusted balance calculations:

   Provisional Balance = R19,400 Total adjustments: (-R2,350 - R31,560 - R1,060 + R313)

   Therefore: Correct Bank Balance = R19,400 - R34,657 = -R15,257.

This balance is unfavourable due to being negative.

To prepare the Bank Reconciliation Statement:

• Start with the Balance as per the bank statement:
  • Amount from bank statement = R21,343 (adjusted)
• Add outstanding deposits:
  • Outstanding deposit = R21,343
• Subtract outstanding cheques:
  • Cheques that need to be accounted = R9,450 + R4,500 + R15,067.

The figure will reconcile to account for all items and will ensure the bank balance matches.

1. Encourage departments to use EFTs and internet banking for all transactions. This reduces manual handling and errors. 2. Regular audits and checks should be conducted to align cash transactions with receipts and deposit slips.