Zig Zag Traders sells ladies clothing on credit - NSC Accounting - Question 1 - 2021 - Paper 2
Question 1
Zig Zag Traders sells ladies clothing on credit. Debtors are allowed a credit term of 30 days to settle their accounts.
1.1 Provide TWO documents that Zig Zag Trade... show full transcript
Worked Solution & Example Answer:Zig Zag Traders sells ladies clothing on credit - NSC Accounting - Question 1 - 2021 - Paper 2
Step 1
Provide TWO documents that Zig Zag Traders will need from potential debtors before they will be allowed to open accounts.
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Answer
An Identity document (ID)
A Proof of residence (municipal bill or statements)
Step 2
The correct closing balance of the Debtors' Control Account on 30 September 2021.
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Answer
Debtors' Control Account: R228,000
The closing balance on 30 September 2021 remains the same with no errors noted, indicated as '0' for no change.
Step 3
The correct amounts owed by the following debtors only:
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A Barnes: R13,500
C Davis: R25,000
E Foley: R18,300
Step 4
Explain THREE different problems highlighted by the debtors' age analysis.
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Not adhering to credit terms: C Davis, who is R25,000 outstanding for over 90 days.
Exceeding credit limits: E Foley has exceeded the credit limit by R18,300, which is problematic as it increases financial risk.
Poor internal controls: A Barnes with R13,500 has not made payments consistently, raising concerns about internal oversight.
Step 5
Provide TWO points to support the internal auditor's concern that Susan's job description could lead to potential fraud.
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Too many related functions performed by one person could compromise efficiency and job control.
Lack of supervision could lead to negligence, allowing for potential theft or mismanagement.
