5.1 Choose a method in COLUMN B that matches the description in COLUMN A - NSC Accounting - Question 5 - 2018 - Paper 1

E

A

C

To calculate the closing stock value using FIFO, we start with the opening stock and add purchases. The calculation is:

• Opening Stock: 420 units at R2,175 = R913,500
• Purchases (first in):
  • 850 units at R2,250 = R1,912,500
  • 980 units at R2,660 = R2,606,800
• Removing sales:
  • Sales: 3,050 units sold (from purchases: 420 + 850 + 980 = 2,250 units; 796 units left from the next batch)

Final Closing Stock = Total of remaining units: 496 units at R2,930 = R1,500,030

To support Charles's concern, we can compare the total units:

• Total Stock Available: 420 + 1,350 - 3,050 = 496 units
• Actual Remaining: 396 units This indicates a discrepancy of 100 units which suggests theft or loss.

To determine how long the closing stock will last, we can use the formula:

ext{Stock Duration} = rac{	ext{Closing Stock}}{	ext{Average Daily Sales}}

Using the figures: Average Sales per day = rac{3,050 ext{ units}}{ ext{(365/12)}} ext{. Number of days = } 70.2 ext{ days}

Keeping too much stock can lead to obsolescence, resulting in wasted resources and financial losses.

Insufficient stock may lead to lost sales as customers may choose to buy from competitors if their needs can't be met.

For each missing figure, the following calculations can be inferred:

(i) R610,000 (ii) R12,997 (iii) R130,750 (iv) R42,400 (v) R922,400

The internal auditor should conduct regular and random physical inspections and compare them against the fixed asset register to ensure integrity.

Provide guidance on GAAP principles, emphasizing proper asset recording and adhering to disposal guidelines to avoid misrepresentation.