3.1 Name the source document that is provided for the following transactions:
3.1.1 When goods are sold on credit
3.1.2 Proof of a deposit made into the bank account
3.1.3 To acknowledge that money has been received by the business
3.1.4 Consumables bought for cash at an agricultural convenient store
3.2 The Basic Conditions of Employment Act, 1997 (Act 75 of 1997) prescribes certain conditions which must be respected by the farmer - NSC Agricultural Management Practices - Question 3 - 2018 - Paper 1
Question 3
3.1 Name the source document that is provided for the following transactions:
3.1.1 When goods are sold on credit
3.1.2 Proof of a deposit made into the bank accoun... show full transcript
Worked Solution & Example Answer:3.1 Name the source document that is provided for the following transactions:
3.1.1 When goods are sold on credit
3.1.2 Proof of a deposit made into the bank account
3.1.3 To acknowledge that money has been received by the business
3.1.4 Consumables bought for cash at an agricultural convenient store
3.2 The Basic Conditions of Employment Act, 1997 (Act 75 of 1997) prescribes certain conditions which must be respected by the farmer - NSC Agricultural Management Practices - Question 3 - 2018 - Paper 1
Step 1
When goods are sold on credit
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The source document provided when goods are sold on credit is an invoice.
Step 2
Proof of a deposit made into the bank account
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Answer
The source document for proof of a deposit made into the bank account is a deposit slip.
Step 3
To acknowledge that money has been received by the business
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Answer
The source document used to acknowledge that money has been received by the business is a receipt.
Step 4
Consumables bought for cash at an agricultural convenient store
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The source document for consumables bought for cash is a cash slip/till slip.
Step 5
Working hours per week
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Working hours per week should stipulate the normal working hours for a worker, which is typically 40 hours for a 5-day work week, and should also specify maximum overtime hours allowed.
Step 6
Overtime
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Overtime conditions specify limitations on overtime payments, where work on a normal working day is paid at 1.5 times the daily salary, and payments on Sundays and public holidays are made at double or 2 times the daily salary.
Step 7
State SIX items of information about each farm worker the farmer has to record daily
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SIX items of information the farmer must record daily include:
Starting time
Departing time/knock-off time
Absentees/leave
Reason for absentees
Work done/productivity
Any labour-related problems with the labourer.
Step 8
Briefly describe the term agricultural business plan
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An agricultural business plan is a document that outlines the goals and operational plan for a specific agricultural enterprise or farm, detailing production methods, resources required, and financial aspects, thereby serving as a roadmap for the business.
Step 9
Primary research sources
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The primary research sources include interviews, questionnaires, and observing competitors.
Step 10
Secondary research sources
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The secondary research sources are magazines and newspapers.
Step 11
Describe the aim of a Balance Sheet
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The aim of a Balance Sheet is to determine the financial status, liquidity, and viability of a farming business. It provides a snapshot of the business's assets, liabilities, and net worth at a specific date or time.
Step 12
Use the correct formula and calculate the net worth of this farming enterprise
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The net worth is calculated using the formula:
extNetworth=extTotalassets−extTotalliabilities
Substituting in the values:
extNetworth=930,000−670,000=260,000
Step 13
Briefly discuss the viability of this enterprise
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The enterprise is viable because its assets exceed its liabilities, indicating that the business has enough resources to meet its obligations. Specifically, it has a positive net worth.
Step 14
Compile an Income Statement for this farmer
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Answer
EXPENDITURE
ITEM
AMOUNT
DATE
INCOME
DATE
ITEM
AMOUNT
14/6
Seed
6800,00
21/10
Selling produce
1050,00
22/6
Fertiliser
2280,00
1/7
Pesticide
1200,00
22/10
Transport
720,00
28/10
Labour
16800,00
TOTAL
20,880,00
TOTAL
24,650,00
Step 15
Determine whether the farmer made a profit or a loss
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To determine profit or loss, calculate:
extProfit/Loss=extIncome−extExpenditure
Substituting the values:
extProfit/Loss=24,650−20,880=3,770
Thus, the farmer made a profit of R3,770.
Step 16
Differentiate between a Cash Flow statement and an Income Statement
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A Cash Flow statement indicates the movement of funds in and out of the business over a specific period. It focuses on liquidity. An Income Statement reflects financial performance by summarizing revenues and expenses over a period, indicating profit or loss.
