3.1
CONCEPTS
Choose the correct term to complete each of the following statements - NSC Accounting - Question 3 - 2016 - Paper 1
Question 3
3.1
CONCEPTS
Choose the correct term to complete each of the following statements. Write only the term next to the question number (3.1.1–3.1.4) in the ANSWER BOOK.
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Worked Solution & Example Answer:3.1
CONCEPTS
Choose the correct term to complete each of the following statements - NSC Accounting - Question 3 - 2016 - Paper 1
Step 1
3.1.1 Interest on a bank overdraft is a/an …
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Answer
Interest on a bank overdraft is classified as an expense. This is because it represents a cost incurred for borrowing funds.
Step 2
3.1.2 Consumable stores on hand are a/an …
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Answer
Consumable stores on hand are classified as current assets. They are assets that are expected to be consumed or used up within the financial year.
Step 3
3.1.3 The portion of a loan to be paid during the next financial year is regarded as a/an … in the Balance Sheet.
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Answer
The portion of a loan to be paid during the next financial year is regarded as a current liability in the Balance Sheet, as it represents an obligation that is due within the short term.
Step 4
3.1.4 The difference between current assets and current liabilities is known as …
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The difference between current assets and current liabilities is known as net working capital. This measure indicates the short-term financial health and operational efficiency of a company.
Step 5
3.2.1 To whom is the audit report addressed?
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The audit report is addressed to the Shareholders. This is standard practice as shareholders have a vested interest in the financial health of the company.
Step 6
3.2.2 Who has to ensure that the financial statements are prepared and presented at the annual general meeting?
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Answer
The responsibility for preparing and presenting the financial statements at the annual general meeting falls to the Directors or Management of the company.
Step 7
3.2.3 Choose the correct word from those in brackets. Write the answer next to the question number (3.2.3) and explain your choice.
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Answer
Fralezi Ltd received a/an unqualified audit report. This indicates that the financial statements present a true and fair view without any reservations.
Step 8
3.2.4 Explain why the independent auditors referred to pages 11–29 in the report.
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The independent auditors referred to pages 11–29 in the report because these pages contain the detailed financial statements that were subject to examination. They ensure that these statements are free from significant misstatements and adhere to the relevant accounting standards.
