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DIFFERENT

Given the following information for questions 1 – 6:

Gill and Zaahir are in the business of supplying and installing solar panels in the form of a
partnership trading as Solar Installations. Gill and Zaahir share profits and losses in the ratio
1:2 respectively. On 31 May 2023 the following information was extracted from the
accounting records of the partnership:
EXTRACT OF GIVEN INFORMATION FOR SOLAR
INSTALLATIONS
R
Current account - Gill (Dr) 7,200
Current account - Zaahir (Dr) 6,500
Capital - Gill 96,500
Capital - Zaahir 108,600

• Additional information Gill and Zaahir agreed to admit Brian as a new partner from 1
June 2023.
• Brain will contribute the following to acquire a third of the net asset share of the
partnership:

Cash…........................................................................R23 200
Solar Installation Equipment…...................................R130 000

• Gill and Zaahir agreed to relinquish the 1/3 share equally.

• All other assets were revalued before admitting Brian to the partnership.
• A valuation profit was correctly calculated at R68 400
Which one of the following alternatives represents the new profit-sharing ratio after the
admission of Brian into the new partnership?

A.
2:1:2

B.
2:3:1

C.
1:3:2
Current profit ratio as fractions
1 1
Gill = (1+2) = 3

1 2
Zaahir = (1+2) = 3

New Profit sharing ratio:

1 1 1 1 1 2 1 1
Gill = 3 - 3 x 2 = 3 − =6-6=6
6

2 1 1 2 1 4 1 3
Zaahir = 3 - 3 x 2 = 3 − =6-6=6
6

1 2
Brian = 3 = 6

Therefore new profit sharing ratio = 1:3:2

D.
3:2:1
 Clear my choice

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Assuming Gill and Zaahir agree to relinquish the 1/3rd share in terms of their existing profit-
sharing ratio, which one of the following alternatives represent the new profit-sharing
ratio after the admission of Brian into the new partnership?

A.
2:4:3

B.
3:2:1

C.
1:3:2

D.
2:3:1

Clear my choice

Current profit ratio as fractions

1 1
Gill = =
(1+2) 3
 1 2
Zaahir = (1+2) = 3

New Profit sharing ratio:

1 1 1 1 1 3 1 2
Gill = 3 - 3 x 3 = 3 − =9-9=9
9

2 2 1 2 2 6 2 4
Zaahir = 3 - 3 x 3 = 3 − =9-9=9
9

1 3
Brian = 3 = 9

Therefore new profit sharing ratio = 2:4:3

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Which one of the following alternatives represents the correct balance in the capital
account of Gill after the valuation of assets and prior to the admission of Brian?

A.
R148 600

B.
R68 500
C.
R112 100

D.
R167 450

Clear my choice
Capital: Gill
Current account 7,200 Balance b/d 96,500

Valuation (68 400 x 1/3) 22,800

Balance c/d *** balancing figure 112,100
119,300 119,300

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Which one of the following alternatives represents the correct balance in the capital
account of Zaahir after the valuation of assets and prior to the admission of Brian?

A.
R147 700

B.
R71 700

C.
R122 350

D.
R 140 150
Clear my choice

Capital: Zaahir
Current account 6,500 Balance b/d 108,600

Valuation (68 400 x 2/3) 45,600

Balance c/d *** balancing figure 147,700
154,200 154,200

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Which one of the following alternatives represents the correct amount of goodwill in the
accounting records of Solar Installations after the admission of Brian?

A.
R 459 600

B.
R 153 200

C.
R 46 600

D.
R 273 000

Clear my choice
 1 3
Goodwill is calculated as inverse of new partners profit sharing ratio (inverse of 3 = 1) x new partners
contribution less contribution of new partner less balances of capital accounts of old partners

Therefore goodwill = 3 x (23 200 + 130 000) – 112 100 – 147 700 - (23 200 + 130 000) = R46 600

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Which of the following journal entries is correct for recording the capital contribution of
Brian on the 1st June 2023:

A.
Debit – Bank R153 200; Credit Capital: Brian R153 200

B.
Debit – Bank R23 200; Debit – Equipment R130 000; Credit Capital: Brian R153 200

C.
Debit Capital: Brian R153 200; Credit – Bank R23 200; Credit – Equipment R130 000

D.
Debit Capital: Brian R153 200; Credit – Equipment R153200

Clear my choice

Given the following information:

Jono and Karabo are in a partnership and own a restaurant trading as The Sitting Duck. They
have an equal interest in the partnership and distribute profits accordingly.

The following information was extracted from the accounting records of the partnership as at 31
May 2023:
Additional information:

1. The closing inventory amounted to R92 300.

2. HBS Bank granted a loan to The Sitting Duck on 1 August 2022. The terms of the loan
provide for interest on the loan to be charged at a rate of 11.5% per annum.

3. Mr Impofu was declared insolvent and management decided to write off his debt amounting
to R1 350.

4. Rental income includes an amount in respect of June 2023. Rental income was earned
evenly throughout the year.

5. Each partner receives a monthly salary of R25 000 paid in cash. Jono, the managing partner
of The Sitting Duck, is entitled to a bonus of 10% of his yearly salary payable on 31 May 2023.
These amounts were debited to the salaries and wages account as at 31 May 2023.
6. Karabo withdrew cash amounting to R15 000 in order to hire a car while he was on holiday
in Cape Town during December 2022. Jono withdrew R7 150 to pay for a holiday flight to
Durban on 1 March 2023. These amounts were recognized under other general expenses.

7. The allowance for credit losses must be increased to R5 600.

8. An invoice relating to water and electricity for May 2023 amounting to R3 250 was received
on 03 June 2023.

9. Depreciation is provided for as follows:

1. Vehicles: 20% per annum according to the diminishing balance method. A new vehicle with a
cost of R450 000 and a residual value of R55 000 was purchased and brought into use on 1
January 2023.
2. Equipment: 10% per annum according to the straight-line method. On the 1st of May 2023,
equipment with a cost price of R63 000 originally purchased on 01 June 2018, was sold for
R39 500.

10. The partners of The Sitting Duck decided to take out additional insurance on 1 January 2023.
The monthly premium is R2 500 payable in advance on the 1st of every month. This has not yet
been accounted for in the records of the entity.

Which one of the following alternatives represents the correct amount for other general expenses in the
statement of profit or loss and other comprehensive income of The Sitting Duck for the year ended 31
May 2023?

a.

R61 880

b.

R86 500

c.

R72 350

d.
R64 350

Given 86,500
Less: drawings by partners included (should be accounted for in appropriation
account):
- Karabo (15,000)
- Jono (7,150)
64,350

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Which one of the following alternatives represents the correct amount for rental income in the
statement of profit or loss and other comprehensive income of The Sitting Duck for the year
ended 31 May 2023?

a.

R19 500

b.

R17 600
c.

R18 000

d.

R22 300

Given (for 13 months, includes amount for June 2023) 19,500

Less: prepaid rental income (19 500/13) (1,500)
18,000

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Which one of the following alternatives represents the correct amount for revenue in the
statement of profit or loss and other comprehensive income of The Sitting Duck for the year
ended 31 May 2023?

a.

R3 234 200

b.
R3 221 900

c.

R3 139 400

d.

R3 127 100

Sales 3,234,200
Less: sales returns (94,800)
Less: settlement discount granted (12,300)
3,127,100

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Which one of the following alternatives represents the correct amount for purchases in the
statement of profit or loss and other comprehensive income of The Sitting Duck for the year
ended 31 May 2023?

a.

R968 700
b.

R1 050 100

c.

R1 069 700

d.

R1 096 100

Purchases 1,014,700
Add: carriage on purchases 81,400
Less: purchases returns (26,400)
Less: settlement discount received (19,600)
1,050,100

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Assuming a purchases amount of R960 000, which one of the following alternatives represents
the correct amount for cost of sales in the statement of profit or loss and other comprehensive
income of The Sitting Duck for the year ended 31 May 2023?
a.

R873 450

b.

R939 500

c.

R776 000

d.

R964 200

Opening inventory 71,800

Add purchases 960,000
1,031,800
Less: closing inventory (92,300)
939,500

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Which one of the following alternatives represents the correct treatment of an increase in
allowance for credit losses in the statement of profit or loss and other comprehensive income of
The Sitting Duck for the year ended 31 May 2023?

a.

Added to revenue

b.

Added to other general expenses

c.

Deducted from credit losses

d.

Added to credit losses

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Which one of the following alternatives represents the correct amount for salaries and wages in
the statement of profit or loss and other comprehensive income of The Sitting Duck for the year
ended 31 May 2023?
a.

R408 000

b.

R378 000

c.

R728 000

d.

R678 000

Given 1,008,000
Less: patners' salaries (should be accounted for in appropriation account (25
000 x 2 x 12) (600,000)
Less: bonus for Jono (12 x 25 000 x 10%) (30,000)
378,000

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Which one of the following alternatives represents the correct treatment of carriage on
purchases in the statement of profit or loss and other comprehensive income of The Sitting
Duck for the year ended 31 May 2023?

a.

Deducted from credit losses

b.

Added to other general expenses

c.

Deducted from cost of sales amount

d.

Added to the cost of sales amount

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Which one of the following alternatives represents the correct treatment of settlement discount
given in the statement of profit or loss and other comprehensive income of The Sitting Duck for
the year ended 31 May 2023?
a.

Added to cost of sales

b.

Deducted from credit losses

c.

Added to revenue

d.

Deducted from revenue

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Which one of the following alternatives represents the correct amount for finance costs in the
statement of profit or loss and other comprehensive income of The Sitting Duck for the year
ended 31 May 2023?

a.
R9 108

b.

R7 590

c.

R7 200

d.

R6 300

Interent on loan (79 200 x 11,5% x 10/12) 7,590

Question 17

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Which alternative represents the correct accounting treatment of settlement discount

received in the statement of profit or loss and other comprehensive income of The Sitting Duck
for the year ended 31 May 2023?

a.
Deducted from revenue amount

b.

Added to other general expenses

c.

Added to credit losses

d.

Deducted from purchases

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Which one of the following alternatives represents the correct amount for credit losses in the
statement of profit or loss and other comprehensive income of The Sitting Duck for the year
ended 31 May 2023?

a.

R5 950
b.

R5 600

c.

R5 300

d.

R5 250

Credit losses - given (amounts already written off!!!) 2,200

Additional credit loss: Mr Impofu (additional info 3) 1,350
Increase in allowance for credit losses (5 600 - 3 200) - additional info 7 2,400
5,950

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Which one of the following alternatives represents the correct amount for water and
electricity in the statement of profit or loss and other comprehensive income of The Sitting Duck
for the year ended 31 May 2023?

a.
R65 200

b.

R65 750

c.

R62 500

d.

R58 800

Water and electricity - given 62,500

Add: accrued amount for May - additional info 8 3,250
65,750

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Which of the following alternatives represents the correct amount to be recorded

as depreciation amount relating to the vehicles in the Statement of profit or loss and other
comprehensive income of The Sitting Duck for the year ended 31 May 2023?
a.

R39 936

b.

R72 553

c.

R72 853

d.

R46 850

Depreciation on vehicles available from beginning of year (840 000 - 190 320 -
450 000) x 20% 39,936
Depreciation on new vehicle (450 000 - 55 000) x 20% x 5/12 32,917
72,853

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Which of the following alternatives represents the correct amount to be recorded
as depreciation relating to the equipment in the Statement of profit or loss and other
comprehensive income of The Sitting Duck for the year ended 31 May 2023?

a.

R68 450

b.

R54 385

c.

R53 035

d.

R53 560

Depreciation on equipment not sold (535 600 - 63 000) x 10% 47,260

Depreciation on equipment sold (63 000 x 10% x 11/12) 5,775
53,035

Hugo, Candice, and John are partners in an office cleaning service, trading as SaniHygiene, and
they share profits and losses in the ratio 1:3:2 respectively. They have decided to liquidate the
partnership and have agreed to accept the most favourable offers received for the assets of the
partnership. They planned to liquidate the partnership simultaneously on 31 May 2023. Before
the liquidation entries were made, an extract of the trial balance of the partnership was as
follows:
On 31 May 2023 the following transactions regarding the liquidation took place:

3. Equipment was sold to Mr Abiza, an independent third party, for R145 000.
4. Land and buildings were sold for R105 000
5. All outstanding amounts relating to creditors was settled, a settlement discount of 5 cents
on every Rand owed was received.
6. Inventory was sold for R55 000.
7. The liquidation cost relating to the above amounted to R12 000.
8. All debtors settled their balances in full.

Which one of the following alternatives represents the correct amount that must be recorded in
the Liquidation account for the apportionment of profit for Hugo?

a.

R8 625

b.

R25 875

c.

R22 560
d.

R9 780

SOLUTION FOR QUESTIONS 22-23

LIQUIDATION ACCOUNT
Land and buildings 92,500 Accumulated depreciation: equipment 105,000
Debtors 412,500 Trade payables 225,000
Inventory 40,000 Bank: equipment 145,000
Equipment at cost 225,000 Bank: land and buldings 105,000
Bank: Trade payables (225 000 - 225 000 x
0,05) 213,750 Bank: inventory 55,000
Bank: Liquidation costs 12,000 Bank: trade receivables 412,500
Capital: Hugo (51 750 X 1/6) 8,625
Capital: Candice 25,875
Capital: John (51 750 X 2/6) 17,250
1,047,500 1,047,500

Balancing amount: profit on liquidation to

be shared by partners 51,750

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Which one of the following alternatives represents the correct amount that must be recorded in
the Liquidation account for the apportionment of profit for John?
a.

R15 850

b.

R16 550

c.

R19 680

d.

R17 250

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Which of the following alternative represents the amount allocated to the capital account of
Hugo relating to the revaluation amount?

a.

R2 880

b.
R3 500

c.

R2 000

d.

R3 950

Capital: Hugo
Goodwill (85 000 x 1/6) 14,167 Balance b/d 200,000
Current account 55,000
Revaluation (12 000 x 1/6) 2,000
Bank *** balancing figure 251,458 Profit on liquidation 8,625
265,625 265,625

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Which of the following alternatives represents the correct recording of the current account
amount in the capital accounts?

a.

John: Credit R62 000

b.
Hugo: Debit R55 000

c.

Candice: Debit R25 000

d.

None of the above

Capital: Candice
Goodwill (85 000 x 3/6) 42,500 Balance b/d 180,000
Current account 25000
Revaluation (12 000 x 3/6) 6,000
Bank *** balancing figure 144,375 Profit on liquidation 25,875
211,875 211,875

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Which of the following alternative represents the amount allocated to the capital account payable
to John relating to the goodwill amount?

a.

R29 455

b.
R28 333

c.

R27 485

d.

R26 450

Capital: John
Goodwill (85 000 x 2/6) 28,333 Balance b/d 165,000
Current account 62,000
Revaluation (12 000 x 2/6) 4,000
Bank *** balancing figure 87,292 Profit on liquidation 8,625
177,625 177,625

On 1 March 2021 Kamoso Ltd was registered with an authorised share capital of 500 000
ordinary shares and 10% 100 000 preference shares. The founders of the company subscribed to
25% of the ordinary shares at R1,50 per share and paid for it in full. The financial year end of the
company was set as 28 February.

On 15 January 2022 Kamoso Ltd offered 45% of the authorised ordinary shares to the public at
R2,50 per share and 75% of the 10% preference shares at R2,00 per share. The company
appointed Karabo Bank as the underwriter of the share issue of all shares at a commission of 1%.

By 1 March 2022, the closing date for the applications, 125% of the offered ordinary shares and
60 000 10% preference shares were applied for. On 31 March 2022 all the offered shares were
allotted by the board of directors, the cash of the unsuccessful applicants were repaid, and the
underwriter’s account was settled in full.

During a board meeting on 15 February 2023, the directors declared a dividend of R0,20 per
share. The dividends were paid on 2 March 2023.

Which one of the following alternatives represents the correct balance of the ordinary share
account on 15 January 2022?

a.
652,500

b.
187,500

c.
225,000

d.
840,000

Correct balance of ordinary shares issued by Kamoso Ltd as at a 15

January 2022
Issued on 1 March 2021 (500 000 x 25% x 1,50) 187,500
Balance on 16 January 2022 - the new issue has not been capitalised yet 187,500

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Which one of the following alternatives represents the correct amount that was debited in the
bank account of Kamoso Ltd on 1 March 2022?

a.
823,125

b.
510,625

c.
853,125

d.
682,500

Ordinary share applications (500 000 x 45% x 125% x 2,50) 703,125

Preference share applications (60 000 x 2) 120,000
Total debited to the bank account 823,125

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Which one of the following alternatives represents the correct settlement amount on 31 March
2022, on the underwriting agreement between Kamoso Ltd and Karabo Bank?

a.
30,000

b.
52,000

c.
52,875

d.
22,875

Ordinary shares issued (500 000 x 45% x 2,50) 562,500

Preference shares issued (100 000 x 75% x 2) 150,000
712,500
Though 60 000 preference shares were issued, the underwriter has to take the
other 10 000 shares in terms of underwriters agreement

Value of preferences shares taken up by underwriter (75 000 - 60 000) x 2 30,000

Less: Underwriter's commission (712 500 x 1%) (7,125)
 Settlement amount due from underwriter 22,875

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Which one of the following alternatives represents the correct amount that was paid out as
dividends on 2 March 2023?

a.
70,000

b.
73,000

c.
83,000

d.
83,750

Ordinary shares in issue on on 15 February 2023 (500 000 x 45% + 500 000 x
25%) 350,000

Ordinary dividend (350 000 x 0,20) 70,000

Preference dividend (100 000 x 75% x 2 x 10% x 11/12) 13,750
83,750

H&M Pty (Ltd) was incorporated on the 01 April 2021. The Company operates in the hospitality
industry. The information below pertains to the business activities of the company for the year
ended 31 March 2023.
1. EXTRACT OF BALANCES AS AT 31 March 2023:

R
Share Capital : Ordinary Shares 3,001,205
Retained earnings (1 April 2022) (429,900)
Fixed deposit 300,505
Investments ??
Vehicles (at cost) 980,000
Accumulated depreciation: Vehicles (1 April 2022) 217,700
Buildings 3,000,000
Accumulated depreciation: Buildings (1 April 2022) 196,800
Land 1,002,700
Equipment (at cost) 331,400
Accumulated depreciation: Equipment (01 April 2022) 124,300
Trade receivables control 446,200
Allowance for credit losses 7,000
Prepaid expenses 17,500
Allowance for settlement discount granted 9,100
Long-term loan: Time Bank 1,117,400
SARS (current tax paid) 12,500
Trade payables control 669,600
Profit for the year (before year-end adjustments) 1,276,300

2. Additional information

2.1. The fixed deposit in Time bank matures on 31 December 2025.

2.2. During the year the land was revalued upwards by R150 000 by a sworn appraiser because
of the rezoning of the property. This transaction is yet to be recorded.

2.3. The long-term loan from Time Bank was granted on 1 December 2021. The loan is secured
by a first mortgage over land and buildings and is repayable in 6 equal annual instalments
together with interest, with the first instalment on 1 December 2023.

2.4. Investments consist of:

· Long term - Investment in Diana (Pty) valued R110 000

· Short term - 3 000 shares in Elizabeth (Pty) Ltd at R100 000. These shares were trading at
R45,00 on 31 March 2023.

2.5. A vehicle with a cost price of R170 000 was sold for R40 000 cash on 30 November 2022.
The accumulated depreciation on the vehicle amounted to R78 000 on 30 November 2022.
A new Equipment with a cost of R40 500 was purchased on the 31 March 2023.

The accountant of the CC neglected to record the above transactions.

2.6. A telephone statement of R8 300 from Telkom relating to March 2023 was received on 2
April 2023.

2.7. Current tax for the year amounts to R103 500 and must still be provided.

2.8. Depreciation for the year which must still be provided for was correctly calculated as
follows:

· Buildings R134 000

· Equipment R53 600

· Vehicles R61 000

Which one of the following alternatives represents the correct carrying amount for land
amount that must be disclosed in the statement of financial position of H&M Pty (Ltd) as at 31
March 2023?

a.
R 1 007 200

b.
R 1 152 700

c.
R 2 896 100

d.
R 1 002 000

Given 1,002,700
Revaluation 150,000
1,152,700

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Which one of the following alternatives represents the correct current tax payable amount that
must be disclosed under current liabilities in the statement of financial position of H&M Pty
(Ltd) as at 31 March 2023?

a.
R 116 000

b.
R 103 500

c.
R 91 000

d.
R 12 500

Current tax for the year - additional info 2.7 103,500

Less: current tax paid (12,500)
Current tax payable 91,000

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Which one of the following alternatives represents the correct carrying amount for vehicles
that must be disclosed in the statement of financial position of H&M Pty (Ltd) as at 31 March
2023?

a.
R 779 300

b.
R 701 300

c.
R 609 300

d.
R 762 300

Vehicles at cost 980,000

Less: Accumulated depreciation at 1 April 2022 (217,700)
Less: carrying amount of vehicle sold (170 000 - 78 000) (92,000)
Less: depreciation for the year (61,000)
609,300

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Which one of the following alternatives represents the correct long-term loan: Time Bank
amount that must be disclosed under non-current liabilities in the statement of financial position
of H&M Pty (Ltd) as at 31 March 2023?

a.
R 900 000

b.
R 1 117 400
c.
R 1 114 700

d.
R 931 167

Long-term loan 1,117,400

Less: short-term portion, installment payable on 1 December 2023 (1 117
400/6) (186,233)
931,167

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Which one of the following alternatives represents the correct trade receivables amount that
must be disclosed in the statement of financial position in the statement of financial position of
H&M Pty (Ltd) as at 31 March 2023?

a.
R 446 200

b.
R 389 000

c.
R 430 100

d.
R 439 200

Given 446,200
 Less: allowance for credit losses (7,000)
Less: allowance for settlement discount granted (9,100)
430,100

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Which one of the following alternatives represents the correct carrying amount for equipment
that must be disclosed in the statement of financial position of H&M Pty (Ltd )as at 31 March
2023?

a.
R 194 000

b.
R 331 400

c.
R 153 500

d.
R 247 600

Equipment at cost 331,400

Less: Accumulated depreciation at 1 April 2022 (124,300)
Add: equipment purchased during the year 40,500
Less: depreciation for the year (53,600)
194,000

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Which one of the following alternatives represents the correct fixed deposit amount that must be
disclosed under non-current assets section in the statement of financial position of H&M Pty
(Ltd) as at 31 March 2023?

a.
R 130 000

b.
R0

c.
R120 000

d.
R 300 505

Given - it matures in 2025, more than 12 months after year end, therefore non-
current - additional info 2.1 300,505

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Which one of the following alternatives represents the correct Other Components of equity
amount that must be disclosed in the statement of financial position of H&M Pty (Ltd) as at 31
March 2023?

a.
R 100 000

b.
R 150 000

c.
R0

d.
R 125 000

Revaluation 150,000

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Which one of the following alternatives represents the correct share investment amount that
must be disclosed under non-current assets in the statement of financial position of H&M Pty Ltd
as at 31 March 2023?

a.
R0

b.
R 100 000

c.
R 110 000
d.
R 97 000

Financial assets - Inv in Dian (Pty) Ltd 110,000

Long-term investments are under non-current assets, and short-term
investments are under current assets

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Which one of the following alternatives represents the correct retained earnings amount that
must be disclosed in the statement of financial position of H&M Pty (Ltd) as at 31 March 2023?

a.
R 597 800

b.
R 846 400

c.
R545 800

d.
R 572 500

Balance at the beginning of year - negative means it was a retained loss (429,900)
Profit for the year
- given 1,276,300
- add: fair value on investments (Elizabeth - additional info 2.4) held for trading
(3 000 x 45 - 100 000) 35,000
- Less: loss on sale of vehicle (additional info 2.5) (40 000 - (170 000 - 78 000) (52,000)
 - Less: telephone expense accrued (8,300)
- Less : income tax expense (103,500)
- Less: depreciation (134 000 + 53 600 + 61 000) (248,600)
NO ANSWER – PICK ANY 469,000

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Which one of the following alternatives represents the correct trade and other payables amount
that must be disclosed in the statement of financial position of H&M Pty (Ltd)as at 31 March
2023?

a.
R 669 600

b.
R 666 900

c.
R 648 400

d.
R 677 900

Given 669,600
Accrued telephone expense 8,300
677,900

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Which one of the following alternatives represents the correct carrying amount for buildings
that must be disclosed in the statement of financial position of H&M Pty (Ltd) as at 31 March
2023?

a.
R 2 669 200

b.
R 3 000 000

c.
R 2 896 100

d.
R 2 896 000

Cost 3,000,000
Accumulated depreciation at 1 April 2022 (196,800)
Less: depreciation for the year (134,000)
2,669,200

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Which one of the following alternatives represents the correct fixed deposit amount that must be
disclosed under current assets section in the statement of financial position of H&M Pty (Ltd) as
at 31 March 2023?

a.
R0

b.
R 130 000

c.
R 120 000

d.
R 150 100

No fixed deposit redeemable within the next 12 months therefore no fixed

deposit under current assets R0

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Which one of the following alternatives represents the correct share investment amount that
must be disclosed under current assets in the statement of financial position of H&M Pty (Ltd) as
at 31 March 2023?

a.
R0

b.
R 110 000

c.
R 135 000
d.
R100 000

Investment in Elizabeth - for trading (3 000 x 45) 135,000

Ntabazimbili Limited is a company in the business of logistics for dry commodities. The
information below is present to you for the preparation of their statement of cash flows:

Extract of balances from the statement of financial position information as at 28 February:

2023 2022
R R
Share capital 682,300 607,800
Retained earnings 920,700 544,600
Revaluation reserve 154,600 109,600
Listed investment at fair value 270,500 219,000
Bank (Dr) 42,200 29,300
Interest payable 12,300 8,900
Machinery at cost 186,800 231,700
Accumulated depreciation: machinery 40,000 14,100
Land and buildings at cost 788,200 463,000
Trade debtors control 52,200 48,300
Current tax receivable 23,700 8,300
Dividends payable 10,100 16,000
Inventory 67,700 52,500
Loans to director 221,200 237,100
Trade creditors control 31,700 19,600
Interest receivable - 7,100
Long-term borrowing 73,800 199,200
Dividends receivable 20,500 12,500

Extract of items disclosed in the statement of profit or loss and other comprehensive income for
the year ended 28 February 2023:

R
Loss on sale of machinery 14,200
 Interest expense 12,100
Depreciation (machinery) 72,300
Rental income 36,000
Gain on financial assets at fair value through profit or loss 44,400
Investment income: Dividend received 22,500
Income tax expense 361,400

Additional information:

1. Ntabazimbili Limited prepares the statement of cash flows using the indirect method.

2. The only item of property, plant and equipment which was sold for the year is machinery.

3. Loans advanced to the directors are immediately callable.

4. During this year under review, the sale or purchases of property, plant and equipment was in
cash.

5. Dividends paid to the shareholders (in cash) during the year amounted to R72 300.

Which of the following alternatives represents the correct amount that must be disclosed as
profit before tax in the cash generated from operations section according to indirect method in
the statement of cash flows of Ntabazimbili Limited for the year ended 28 February 2023?

a.
442,500

b.
376,100

c.
803,900

d.
309,700

e.
442,000

Retained earnings at the end of the year 920,700

Less: retained earnings at the beginning of year (544,600)
Profit for the year after dividends 376,100
 Add dividends declared for the year (10 100 + 72 300 - 16 000) 66,400
442,500
Add: income tax expense 361,400
Profit before tax 803,900

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Which of the following alternatives represents the correct amount that must be disclosed as loans
advanced to (received from) directors of the company in the cash flows from operating
activities section of the statement of cash flows of Ntabazimbili Limited for the year ended 28
February 2023?

a.
15,900

b.
0

c.
(15,900)

d.
19,500

e.
(19,500)

Balance of loans to directors at beginning of year 237,100

Less: balance of loans to directors at end of year 221,200
Decrease in loan - means directors repaid their loan - cash inflow 15,900 POSITIVE
Question 47

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Which of the following alternatives represents the correct amount that must be disclosed as
acquisition of listed investments in the cash flows from operating activities section of the
statement of cash flows of Ntabazimbili Limited for the year ended 28 February 2023?

a.
51,500

b.
(7,100)

c.
(51,500)

d.
7,100

e.
0

Listed investment at the beginning of the year 219,000

Listed investments at end of year excluding fair value adjustment (270 500 - 44
400) (226,100)
Increase in listed investments - outflow (7,100) NEGATIVE

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Which of the following alternatives represents the correct amount that must be disclosed as
income tax paid in the cash flows from operating activities section of the statement of cash
flows of Ntabazimbili Limited for the year ended 28 February 2023?

a.
(376,800)

b.
361,400

c.
346,000

d.
(361,400)

e.
(346,000)

Balance prepaid at the beginning of year (RECEIVABLE means its an asset- a

prepaid expense) 8,300
income tax expense for the year (361,400)
Balance receivable at the end of the year - means was paid in advance/ paid
more than was payable (23,700)
Income tax paid (376,800)

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Which of the following alternatives represents the correct amount that must be disclosed as
proceeds on sale of property, plant and equipment in the cash flows from investing activities
section according to direct method in the statement cash flows of Ntabazimbili Limited for the
year ended 28 February 2023?

a.
29,900

b.
(29,900)

c.
15,700

d.
0

e.
(15,700)

Carrying amount at beginning of year (231 700 - 14 100) 217,600

Less:Carrying amount at end f year excluding depreciation (186 800 - 40 000 + 72
300 (219,100)

Carrying amount of machinery sold (1,500)

Less: loss on sale of machinery (14,200)
Proceeds on sale of machinery - means company paid for disposal (15,700) Negative

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Which of the following alternatives represents the correct amount of total non-cash items added
to (deducted from) profit before tax as part of the adjustments in the cash generated from
operations section according to indirect method in the statement of cash flows of Ntabazimbili
Limited for the year ended 28 February 2023?

a.
10,400

b.
(10,400)

c.
(42,100)

d.
42,100

e.
86,500

Add: loss on sale of machinery 14,200

Add: depreciation 72,300
Less: gain on financial assets at fair value through profit or loss (44,400)

42,100 Positive

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Which of the following alternatives represents the correct amount that must be disclosed as
loans advanced to (received from) directors of the company in the cash flows from financing
activities section of the statement of cash flows of Ntabazimbili Limited for the year ended 28
February 2023?

a.
(15,900)

b.
15,900

c.
0

d.
19,500

e.
(19,500)

Loans are immediately callable (additional info 3) therefore will be part of

operating activities and not financing activities 0

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Which of the following alternatives represents the correct amount that must be disclosed as
dividend received in the cash flows from operating activities section of the statement of cash
flows of Ntabazimbili Limited for the year ended 28 February 2023?

a.
(14,500)
b.
14,500

c.
22,500

d.
0

e.
(22,500)

Divdends receivable at beginning of year 12,500

Dividend income for the year 22,500
Total dividientd receivable for the year 35,000
Less: dividend receivable at the end of year (20,500)
Dividend received 14,500 Positive

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Which of the following alternatives represents the correct amount that must be disclosed as
proceeds from (repayment of) long-term loans in the cash flows from financing activities
section according to direct method in the statement cash flows of Ntabazimbili Limited for the
year ended 28 February 2023?

a.
(95,000)

b.
125,400
c.
95,000

d.
(125,400)

e.
112,000

Long term loan at the end of year 73,800

Less: long term loans at the beginning of the year (199,200)
Repayment of long-term loan - outflow (125,400) Negative

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Which of the following statements is correct relating to preparation of statement of cash flows?

a.
Statement of cash flows shows only the investing activities of a business.

b.
Statement of cash flows is prepared according to the accrual basis of accounting.

c.
Partnerships are not allowed to prepare a statement of cash flows.

d.
Statement of cash flows must only be prepared using the indirect method.

e.
Statement of cash flows is prepared according to cash basis of accounting.
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Which of the following statements is incorrect relating to preparation of statement of cash

flows?

a.
Interest paid is a separately disclosable item.

b.
Capitalization share issue is regarded as a cash item.

c.
Depreciation is a non-cash item.

d.
Dividends received is a separately disclosable item.

e.
Loss on sale of equipment is a non-cash item

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Which of the following alternatives represents the correct amount that must be disclosed as
proceeds from issue of shares in the cash flows from financing activities section according to
direct method in the statement cash flows of Ntabazimbili Limited for the year ended 28
February 2023?

a.
0

b.
(75,400)

c.
74,500

d.
(74,500)

e.
75,400

Share capital at the end of the year 682,300

Less: share capital at the beginning of year (607,800)
Proceeds from issue of shares - inflow 74,500 Positive

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Which of the following alternatives represents the correct amount that must be disclosed as
dividend received in the cash flows from investing activities section of the statement of cash
flows of Ntabazimbili Limited for the year ended 28 February 2023?

a.
22,500

b.
0

c.
(14,500)

d.
(22,500)

e.
14,500

Dividends revceived are accounted for under operating activities and not under
investing activities 0

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Which of the following alternatives represents the correct amount of total separately disclosable
items added to (deducted from) profit before tax as part of the adjustments in the cash generated
from operations section according to indirect method in the statement of cash flows of
Ntabazimbili Limited for the year ended 28 February 2023?

a.
42,100

b.
(10,400)

c.
86,500

d.
10,400
e.
(42,100)

Add: Interest expense 12,100

Less: dividend received (22,500)
(10,400) Negative

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Which of the following alternatives represents the correct amount that must be disclosed as
interest paid in the cash flows from operating activities section of the statement of cash flows of
Ntabazimbili Limited for the year ended 28 February 2023?

a.
(11,200)

b.
8,700

c.
12,100

d.
(8,700)

e.
(12,100)

Interest payable at beginning of year (8,900)

Interest expense for the year (12,100)
Interest payable at the end of year 12,300
 Interest paid - outflow (8,700) Negative

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Which of the following alternatives represents the correct amount that must be disclosed as
increase (decrease) in trade receivables in the cash generated from operations section of the
statement of cash flows of Ntabazimbili Limited for the year ended 28 February 2023?

a.
(3,200)

b.
3,200

c.
3,900

d.
3,000

e.
(3,900)

Increase in debtors - ouflow, company borrowed out more funds (52 200 - 48
300) (3,900) Negative

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Which of the following alternatives represents the correct amount that must be disclosed as
additions to property, plant and equipment under investment in property plant and equipment
to expand operating capacity in the cash flows from investing activities section according to
direct method in the statement cash flows of Ntabazimbili Limited for the year ended 28
February 2023?

a.
(325,200)

b.
325,200

c.
280,200

d.
0

e.
(280,200)

Land and building at beginning of year 463,000

Land and building at end of year (788,200)
Increase in land and buildings (325,200)
Add: increase due to revaluation (154 600 - 109 600) 45,000
Increase in PPE (280,200) Negative

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Which of the following alternatives represents the correct amount that must be disclosed as
increase (decrease) in trade payables in the cash generated from operations section of the
statement of cash flows of Ntabazimbili Limited for the year ended 28 February 2023?

a.
(12,100)

b.
3,200

c.
12,100

d.
3,000

e.
(3,200)

Increase in creditors control - inflow, the company received more from creditors
(31 700 - 19 600) 12,100 Positive

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Which of the following alternatives represents the correct amount that must be disclosed as
proceeds from issue of shares in the cash flows from operating activities section according to
direct method in the statement cash flows of Ntabazimbili Limited for the year ended 28
February 2023?

a.
(74,500)

b.
(75,400)

c.
74,500

d.
75,400

e.
0

Issue of shares is a financing activitiy and not an operating activity 0

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Which of the following alternatives represents the correct amount that must be disclosed as
additions to property, plant and equipment under investment in property plant and equipment
to maintain operating capacity in the cash flows from investing activities section according to
direct method in the statement cash flows of Ntabazimbili Limited for the year ended 28
February 2023?

a.
(325,200)
b.
325,200

c.
280,200

d.
0

e.
(280,200)

Additions to MAINTAIN operating are when there is REPLACEMENT- no

replacement information in the additional information 0

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Which of the following alternatives represents the correct amount that must be disclosed as
increase (decrease) in inventory in the cash generated from operations section of the statement
of cash flows of Ntabazimbili Limited for the year ended 28 February 2023?

a.
(15,200)

b.
52,500

c.
(52,500)

d.
(67,700)

e.
15,200

Increase in inventory - outflow (more inventory was purchased (67 700 - 52 500) (15,200) Negative

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Which of the following alternatives represents the correct amount that must be disclosed as
acquisition of listed investments in the cash flows from investing activities section of the
statement of cash flows of Ntabazimbili Limited for the year ended 28 February 2023?

a.
(51,500)

b.
51,500

c.
0

d.
(7,100)

e.
7,100

Listed investments are at fair value, which means they are held for trading and
not for long-term purposes, classified under current assets
***ONLY NON-CURRENT ASSETS ARE CONSIDERED UNDER INVESTING ACTIVITIES
0
Nciba CC is a business entity founded and registered as a close corporation by the two
members Odwa and Makhwabe. The CC obtained municipal approval to cook and sell
traditional dishes to the Gcuwa community. The following accounting information is
presented to you for your assistance:

EXTRACT OF BALANCES AS AT 31 DECEMBER 2019

R
Bank (Dr)........................................................................................................ 3 027 400
Long-term loan (Dutywa Bank) ..................................................................... 4 905 000
SARS (income tax) ........................................................................................ 113 500
Retained earnings (1 January 2019) ............................................................. 405 500
Trade receivables control .............................................................................. 170 000
Trade payables control .................................................................................. 167 000
Vehicles at carrying amount .......................................................................... 1 980 000
Office Furniture at carrying amount .............................................................. 54 000
Cooking equipment at cost ............................................................................ 1 320 000
Accumulated depreciation: Cooking equipment ........................................... 910 000
Inventory ....................................................................................................... 1 035 600
Loan to Makhwabe ......................................................................................... 21 100
Member's contribution: Odwa ....................................................................... 172 000
Member's contribution: Makhwabe................................................................ 182 100
Member's contribution: Masonwabe ............................................................. ?
Loan from Odwa ............................................................................................. 99 900
Profit before tax (before taking into account the additional information)...... 2 774 000

Additional information

(a) On 30 June 2019 one of the cooking equipment burst and got damaged beyond
repair. This equipment was acquired at a cost of R92 000 on 1 May 2016 and the
accumulated depreciation of R56 000 was correctly accounted for on 30 June 2019. The
equipment was insured and an insurance payout equal to the carrying amount of the
equipment was paid to the close corporation. The accountant credited the insurance
payout to the SARS (income tax) account.

(b) On 31 August 2019, a profit distribution of R51 000 was made to each member of the
close corporation. These amounts should be regarded as loans from members with
interest charged and capitalised at 18% per annum. This transaction is yet to be
accounted for.
(c) On 2 March 2019, a well-regarded chef from eKomani by the name of Masonwabe
was admitted to the CC to assist in developing a new recipe for one of the dishes. In
addition to the R38 000 cash contribution, Masonwabe further contributed cooking
equipment and an old vehicle to the value of R110 000 and R75 000 respectively.

(d) The loan from Odwa was advanced to the CC in 1 December 2018 and is repayable
on 31 May 2020.

(e) Makhwabe experienced personal financial problems during the year and borrowed
R15 800 from the close corporation. The loan was granted to Makhwabe on
31 December 2019 at an interest rate of 15% per annum. The interest on this loan is
capitalised. This information is still to be recorded.

(f) The income tax assessment, received from SARS on 4 January 2020, indicated that
the income tax for the 2019 financial year amounted to R542 000.

QUESTION 1

Which one of the following alternatives represents the correct member’s contributions
for Odwa to be presented in the statement of changes in net investments of members of
Nciba CC for the year ended 31 December 2019?

Select one:

a.
R 182 100

b.
R 187 000

c.
R 172 000

d.
R 223 100

e.
R 172 700

Given 172,700

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Which one of the following alternatives represents the correct member’s contributions
for Khayisa to be presented in the statement of changes in net investments of
members of Nciba CC for the year ended 31 December 2019?

Select one:

a.
R 223 100

b.
R 172 000

c.
R 182 100

d.
R 142 600

e.
R 149 000

No Khayisa in scenario - assumption is the question means Makhwabe 182,100

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Which one of the following alternatives represents the correct member’s contributions
for Masonwabe to be included in the statement of changes in net investments of
members of Nciba CC for the year ended 31 December 2019?

Select one:

a.
R 209 000

b.
R 223 100

c.
R 223 000

d.
R 182 100

e.
R 172 000

Cash 38,000
Equipment 110,000
Vehicle 75,000
223,000

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Which one of the following alternatives represents the correct total comprehensive
income for the year to be presented in the statement of changes in net investments of
members of Nciba CC for the year ended 31 December 2019?

Select one:

a.
R 2 258 820

b.
R 2 181 500

c.
R 2 268 000

d.
R 2 232 000

e.
R 2 268 100

Profit before tax 2,774,000

Reversal of loss recognized on cooking equipment rwritten off (92 000 - 56 000),
by correcting accounting for the proceeds the loss is reduced to 0 36,000
Interest on loans from members (51 000 x 3 x 18% x 4/12) (9,180)
Income tax expense (542,000)
Total comprehehnsive income for the year 2,258,820

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Assume the correct total comprehensive income for the year is R1 700 000. Which one
of the following alternatives represents the correct retained earnings to be presented in
the statement of changes in net investments of members of Nciba CC for the year
ended 31 December 2019?

Select one:

a.
R 2 105 500

b.
R 2 511 320

c.
R 2 057 900

d.
R 401 900

e.
R 1 952 500

Retained earnings at the beginning of the year 405,500

Add: total comprehensive income for the year 1,700,000
Less: distributions paid to members (51 000 x 3) (153,000)
1,952,500

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Which one of the following alternatives represents the correct loans to members to be
presented in the statement of changes in net investments of members of Nciba CC for
the year ended 31 December 2019?

Select one:
a.
R 18 100

b.
R 36 900

c.
R 36 800

d.
R 36 000

e.
R 21 100

Loan to Makhwabe - given 21,100

Additional loan granted - additional info (e ) 15,800
36,900

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Which one of the following alternatives represents the correct loans from members to
be presented in the statement of changes in net investments of members of Nciba CC
for the year ended 31 December 2019?

Select one:

a.
R 99 900

b.
R 252 900

c.
R 262 080

d.
R 257 600

e.
R 162 180

Loan from Odwa 99,900

Distributions to members converted to loans (51 000 x 3) 153,000
Interest on loans from members capitalised (51 000 x 3 x 18% x 4/12) 9,180
262,080