How often Accounting equation is asked

Where it was asked

• Oct/Nov 201321 marks
• May/Jun 201221 marks
• May/Jun 201120 marks

The questions

1. Oct/Nov 2013, Q221 marks

   SV Traders is the entity under review. It is not registered as a VAT vendor, and it applies the periodic inventory system. During October 2012 the following transactions were entered into by SV Traders: on the 7th, inventory worth R7 000 less a 15% trade discount was bought on credit, with the creditor offering a 5% settlement discount if payment is made within 30 days, and SV Traders plans to settle the account in December 2012; on the 15th, SV Traders issued a credit note to Ms T Talkative to correct a R576 pricing error on goods she had previously bought; on the 19th, SV Traders received a donation in the form of an open stand worth R78 000 from the municipality; on the 23rd, the owner, Mr Samuel Vermeulen, used the business debit card to pay R12 000 for his personal golf club membership subscriptions; on the 29th, SV Traders paid R5 000 customs duty on spare parts imported from South Korea; and on the 31st, it was noted that a debtor, T Thokho, has owed the entity R3 500 since 1 April 2012, with interest charged on overdue accounts at 12% per annum still needing to be recorded. Required: Analyse each of the above SV Traders transactions in tabular form, showing for every transaction the date, the account to be debited, the account to be credited, and the effect of the transaction on the basic accounting equation (split into the Assets, Equity and Liabilities columns, each in Rand). An example is provided: on 1 December, the owner deposited R50 000 into the business bank account as a capital contribution, which is shown as Bank +50 000 under Assets and Capital +50 000 under Equity, with a dash under Liabilities. Note that the accounting equation columns must NOT be totalled, every amount must be preceded by a plus sign (+) for an increase or a minus sign (-) for a decrease, and all calculations must be shown.

2. May/Jun 2012, Q121 marks

   AA Supermarket recorded the following transactions during March 2012; the entity uses a periodic inventory system and is not registered as a VAT vendor. On 2 March the owner, R Ngcobo, transferred his personal vehicle, valued at R82 000, into the entity. On 5 March inventory was bought on credit from F Osman for R1 200. On 8 March a debtor, B Gani, who owed R2 000, was declared insolvent by the North Gauteng High Court, so his account must be written off as irrecoverable. On 10 March the owner, R Ngcobo, drew a cash cheque for R4 000 and gave this R4 000 as a gift to his son for obtaining his LLB degree. On 22 March it was discovered that an office chair worth R1 200, purchased on 1 March 2012, had incorrectly been posted by the bookkeeper to the equipment account instead of the office furniture account, and this error must be corrected. On 28 March, R1 100 was received from P Heyns in full settlement of his account of R1 250. You are required to analyse these transactions of AA Supermarket in tabular format, showing for each transaction the date, the account to be debited, the account to be credited, and the effect on the basic accounting equation across the columns Assets, Equity and Liabilities, following the example given (for 1 March: paid the monthly rental by cheque, R2 000, debiting Rent expense and crediting Bank, with Assets –R2 000 and Equity –R2 000). Note that the accounting equation columns must NOT be totalled, every amount must be preceded by a plus sign (+) for an increase or a minus sign (–) for a decrease, and all calculations must be shown.

3. May/Jun 2011, Q120 marks

   PK Traders carried out the following transactions during April 2011. The entity uses a periodic inventory system and is not registered as a VAT vendor. During April 2011 PK Traders recorded the following transactions: on day 1 a business cheque of R2 580 was paid for a printer bought for the owner's son; on day 3 a debtor, B Kenyeza, who owed R1 480, had paid R1 200 on 15 May 2011 in full settlement of his account, but this cheque was returned on 3 April 2011 marked R/D, and no entries had yet been made to record the returned cheque; on day 6 the entity's telephone account of R1 560 was paid by cheque; on day 8 a delivery vehicle was bought on credit from Auto Motors for R85 000, with an immediate deposit of R35 000 paid and the remaining balance still owing to Auto Motors; on day 12 it was discovered that inventory bought from LA Traders for R975 had mistakenly been posted to the repairs account; on day 14 a cheque for R2 375 was received from M Moyo, whose debt had been written off as irrecoverable in December 2010; on day 15 an invoice was received from ST Suppliers for stationery ordered, amounting to R1 450; and on day 18 inventory was sold on credit to M Maluleka for R1 400. You are required to analyse each of these transactions of PK Traders in a tabular format showing, for every transaction, the date, the account to be debited, the account to be credited, and the effect of the transaction on the basic accounting equation under the headings Assets, Equity and Liabilities (an example is given for 1 April, where the owner deposited R50 000 into the business's bank account as his capital contribution, debiting Bank and crediting Capital, with Assets and Equity both increasing by R50 000). Note that the accounting-equation columns must not be totalled, each amount must be preceded by a plus sign for an increase or a minus sign for a decrease, and all calculations must be shown.