1.1 Indicate whether the following statements are TRUE or FALSE - NSC Accounting - Question 1 - 2017 - Paper 1
Question 1
1.1 Indicate whether the following statements are TRUE or FALSE. Choose the answer and write 'true' or 'false' next to the question number (1.1.1-1.1.3) in the ANSWE... show full transcript
Worked Solution & Example Answer:1.1 Indicate whether the following statements are TRUE or FALSE - NSC Accounting - Question 1 - 2017 - Paper 1
Step 1
Indicate whether the following statements are TRUE or FALSE
1.1.1 The balance in the Debtors' Control Account should equal the total of the debtors' list.
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Answer
This statement is TRUE. The balance in the Debtors' Control Account must match the total of all debtors listed, as it represents the total amount owed by customers.
Step 2
Indicate whether the following statements are TRUE or FALSE
1.1.2 Bad debts will be recorded in the Debtors' Allowances Journal.
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Answer
This statement is FALSE. Bad debts are typically written off directly against income rather than recorded in the Debtors' Allowances Journal.
Step 3
Indicate whether the following statements are TRUE or FALSE
1.1.3 A post-dated cheque received from a debtor must be recorded in the CRJ on the date received.
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Answer
This statement is FALSE. A post-dated cheque should not be recorded in the Cash Receipt Journal (CRJ) until the date indicated on the cheque.
Step 4
Errors or omissions to be corrected:
(a) No entry was made for an invoice for R7 440 issued to G Gwen.
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Answer
Correct entry: Add R7 440 to the Debtors' Control Account and Debtors' List.
Step 5
Errors or omissions to be corrected:
(b) A receipt for R9 400 issued to debtor B Crawley was recorded incorrectly.
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Answer
Correct entry: Adjust B Crawley's account by decreasing it by R4 900 and increasing it by R9 400. The net effect is +R4 500.
Step 6
Errors or omissions to be corrected:
(c) An invoice for R1 360 issued to A Naidoo was posted incorrectly.
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Answer
Correct entry: Adjust A Naidoo's account by correcting the posting error, resulting in a +R1 360 adjustment.
Step 7
Errors or omissions to be corrected:
(d) A cheque for R1 350 from D Zulu was recorded correctly.
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Answer
No correction needed, as this entry is correctly posted.
Step 8
Errors or omissions to be corrected:
(e) A credit note for R720 was incorrectly recorded.
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Answer
Correct entry: Adjust the credit note amount to reflect R720 instead of R270.
Step 9
Errors or omissions to be corrected:
(f) No entry was made for a dishonoured cheque of R1 750.
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Answer
Correct entry: Record the dishonoured cheque, deducting R1 750 from the relevant debtor's account.
Step 10
Explain how a debtors' age analysis can assist with internal control over debtors.
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A debtors' age analysis helps identify overdue accounts, allowing the business to take timely action to ensure cash flow. It provides insights into credit risk, helping management enforce credit limits and improve collection efforts.
Step 11
Calculate the percentage of total debts exceeding the credit terms.
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To calculate the percentage exceeding credit terms:
