Q: A company sells goods for R125 000, with a cost price of R75 000. Calculate the mark-up percentage.

$$\text{Mark-up} = \frac{\text{Selling Price} - \text{Cost Price}}{\text{Cost Price}} \times 100 = \frac{125\ 000 - 75\ 000}{75\ 000} \times 100 = 66.67\%$$

Q: A business has the following balances at year-end: Sales R1 000 000, Cost of Sales R800 000, Operating Expenses R100 000, Finance Costs R50 000, Tax R20 000. Calculate the Net Profit After Tax (NPAT).

$$\text{NPAT} = \text{Sales} - \text{Cost of Sales} - \text{Operating Expenses} - \text{Finance Costs} - \text{Tax} = 1\ 000\ 000 - 800\ 000 - 100\ 000 - 50\ 000 - 20\ 000 = 30\ 000$$

Q: A company’s statement of financial position shows: Total Assets R2 800 000, Total Liabilities R1 800 000, Total Equity R1 000 000. Calculate the debt/equity ratio.

$$\text{Debt/Equity Ratio} = \frac{\text{Total Liabilities}}{\text{Total Equity}} = \frac{1\ 800\ 000}{1\ 000\ 000} = 1.8$$

Q: A business purchased a machine for R350 000 on credit and incurred installation costs of R15 000. What is the total cost to be capitalized for the machine?

$$\text{Total Cost} = R350\ 000 + R15\ 000 = R365\ 000$$

Q: A company has the following balances: Inventory R298 000, Accounts Receivable R430 000, Cash R80 000, Trade Payables R284 000. Calculate the current ratio.

$$\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} = \frac{298\ 000 + 430\ 000 + 80\ 000}{284\ 000} = \frac{808\ 000}{284\ 000} = 2.85$$

Q: A company’s cash receipts from customers for the year are R3 400 000. Sales are R3 500 000, and trade receivables decreased by R100 000. What is the formula used to calculate cash receipts from customers?

$$\text{Cash Receipts from Customers} = \text{Sales} + \text{Decrease in Trade Receivables}$$

Question 1

Which of the following statements best describes Value Added Tax (VAT)?

Accepted Answer

VAT is a consumption-based tax levied on most goods and services at a rate of 15%, with some items zero-rated or exempt.

Question 2

A retailer purchases inventory from a supplier who is a VAT vendor. The goods have a cost of R50 250, and the amount includes VAT. What is the exclusive amount of the inventory purchased?

Accepted Answer

R43 695

Question 3

Which of the following is NOT a criterion for recognizing an asset according to the definition and recognition criteria?

Accepted Answer

The asset is owned by the government.

Question 4

A company sells goods for R125 000, with a cost price of R75 000. Calculate the mark-up percentage.

Accepted Answer

$$	ext{Mark-up} = \frac{	ext{Selling Price} - 	ext{Cost Price}}{	ext{Cost Price}} 	imes 100 = \frac{125\ 000 - 75\ 000}{75\ 000} 	imes 100 = 66.67\%$$

Question 5

Which of the following items is zero-rated for VAT purposes in South Africa?

Accepted Answer

Brown bread

Question 6

A business has the following balances at year-end: Sales R1 000 000, Cost of Sales R800 000, Operating Expenses R100 000, Finance Costs R50 000, Tax R20 000. Calculate the Net Profit After Tax (NPAT).

Accepted Answer

$$	ext{NPAT} = 	ext{Sales} - 	ext{Cost of Sales} - 	ext{Operating Expenses} - 	ext{Finance Costs} - 	ext{Tax} = 1\ 000\ 000 - 800\ 000 - 100\ 000 - 50\ 000 - 20\ 000 = 30\ 000$$

Question 7

Which journal entry correctly records the purchase of equipment for R500 000 (VAT exclusive) on credit?

Accepted Answer

Debit Equipment R500 000; Credit Accounts Payable R500 000

Question 8

A company’s statement of financial position shows: Total Assets R2 800 000, Total Liabilities R1 800 000, Total Equity R1 000 000. Calculate the debt/equity ratio.

Accepted Answer

$$	ext{Debt/Equity Ratio} = \frac{	ext{Total Liabilities}}{	ext{Total Equity}} = \frac{1\ 800\ 000}{1\ 000\ 000} = 1.8$$

Question 9

Which of the following is an example of a financing activity in the statement of cash flows?

Accepted Answer

Proceeds from issue of share capital

Question 10

A business purchased a machine for R350 000 on credit and incurred installation costs of R15 000. What is the total cost to be capitalized for the machine?

Accepted Answer

$$	ext{Total Cost} = R350\ 000 + R15\ 000 = R365\ 000$$

Question 11

Which account is credited when a business receives cash from a customer for a previous credit sale?

Accepted Answer

Accounts Receivable

Question 12

A company has the following balances: Inventory R298 000, Accounts Receivable R430 000, Cash R80 000, Trade Payables R284 000. Calculate the current ratio.

Accepted Answer

$$	ext{Current Ratio} = \frac{	ext{Current Assets}}{	ext{Current Liabilities}} = \frac{298\ 000 + 430\ 000 + 80\ 000}{284\ 000} = \frac{808\ 000}{284\ 000} = 2.85$$

Question 13

Which of the following is NOT a basic food item that is zero-rated for VAT purposes?

Accepted Answer

Soft drinks

Question 14

A company’s cash receipts from customers for the year are R3 400 000. Sales are R3 500 000, and trade receivables decreased by R100 000. What is the formula used to calculate cash receipts from customers?

Accepted Answer

$$	ext{Cash Receipts from Customers} = 	ext{Sales} + 	ext{Decrease in Trade Receivables}$$

Question 15

A business has the following: Opening Inventory R200 000, Purchases R770 000, Closing Inventory R180 000. Calculate the cost of goods sold (COGS).

Accepted Answer

$$	ext{COGS} = 	ext{Opening Inventory} + 	ext{Purchases} - 	ext{Closing Inventory} = 200\ 000 + 770\ 000 - 180\ 000 = 790\ 000$$

Question 16

Which of the following is the correct formula to calculate Return on Investment (ROI)?

Accepted Answer

$$	ext{ROI} = \frac{	ext{Net Profit After Tax}}{	ext{Total Assets}} 	imes 100$$

Question 17

A company’s trade receivables at year-end are R200 000, and credit sales for the year are R1 000 000. Calculate the debtors’ collection period (in days), assuming a 365-day year.

Accepted Answer

$$	ext{Debtors' Collection Period} = \frac{	ext{Trade Receivables}}{	ext{Credit Sales}} 	imes 365 = \frac{200\ 000}{1\ 000\ 000} 	imes 365 = 73	ext{ days}$$

Question 18

Which of the following is NOT a component of the statement of cash flows?

Accepted Answer

Profit and loss activities

Question 19

A partnership has the following equity accounts at year-end: Capital: Mr G R324 000, Capital: Ms H R154 000, Ms H (Credit) R50 000, Mr G (Debit) R23 300. What is the total equity?

Accepted Answer

$$	ext{Total Equity} = 324\ 000 + 154\ 000 + 50\ 000 - 23\ 000 = 505\ 000$$

Comprehensive Study Notes: Financial Accounting Exam Topics (ACC262)

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