LU 1 & LU 2: ACBP5121

Organise these options into the right categories

Groups:

(a) Financial accounting

,

(b) Management accounting

• Precision of information is required

• Detailed segment reports about departments, products, customers and employees are prepared

• Data must be objective and verifiable

• Emphasis is on decisions affecting the future of the organisation

• Need not follow an accounting framework

• Data must be relevant and flexible

• Reports to stakeholders outside the organisation:

  Owners, lenders, SARS, regulators, etc.

• Must follow an accounting framework: IFRS

What order does the accounting cycle follow?

• Source Documents

• Journal entries

• Post to general ledger

• Trial balance

• Transaction

Which of these are NOT a fundamental qualitative characteristics?

• Faithful representation

• Consistency

• Timelessness

• Relavance

• Reliability

According to this principle, the books of accounts should not reflect the personal affairs of wealth of the owner/owners outside of the business.

The business takes out a loan from ABC Bank to the value of R40 000

Groups:

(a) Debit

,

(b) Credit

• Creditor: ABC Bank

• Bank

• R40 00

• R40 000

The owner sold trading inventory with a cost of R30 000 on credit for R70 000

Groups:

(a) Debtors Control

,

(b) Trading inventory

,

(c) Sales

,

(d) Cost of sales

• credit

• debit

• Trading Inventory R30 000

• Sales R70 000

• Credit

• Debtors R70 000

• Cost of sales R30 000

• Debit

The owner of the business contributed a car to the value of R500 000 to the business.

Groups:

(a) Credit

,

(b) Debit

• R500000

• Capital

• R500 000

• Vehicles

The owner took R10 000 cash for personal use.

Groups:

(a) Bank

,

(b) Drawing

• Bank R10 000

• Debit

• Credit

• Drawings R10 000

The business invested R20 000 for three months at a 5% rate. How much interest will the business receive when the investment matures?

Mathematical Equivalence

ON

Answer explanation

R20 000 x 3/12 x 5/100 = 250

Using the "Tut 1" worksheet, identify the correct debits and credits for transaction(s) that took place on day 1.

• Debit: trading inventory

• Credit: trading inventory

• Debit: drawings

• Credit: drawings

• Credit: bank