Question 1

Which of the following is NOT a qualitative characteristic that enhances the presentation of financial information, according to the study materials?

Accepted Answer

Faithful Representation

Question 2

A business sells merchandise for R10,500 (excluding VAT) on credit. What is the output VAT amount payable?

Accepted Answer

R1,575

Question 3

Which user of accounting information is most likely to use financial statements to assess the ability of a business to repay loans?

Accepted Answer

Lenders

Question 4

According to the VAT Act, which of the following expenses is NOT eligible for input VAT deduction, even if incurred in the course of conducting an enterprise?

Accepted Answer

Acquisition of a motor car by a vendor

Question 5

If a vendor sells goods classified as zero-rated supplies, what is the VAT rate applied to the sale, and can the vendor claim input VAT?

Accepted Answer

VAT rate is 0%, and input VAT can be claimed

Question 6

Which step in the bookkeeping and accounting cycle involves summarising the journals?

Accepted Answer

Step 4

Question 7

A business purchases merchandise for R51,750 (inclusive of VAT). What is the VAT exclusive price and the VAT portion? Use the formula $$	ext{VAT Portion} = 	ext{VAT Inclusive Price} 	imes \frac{15}{115}.$$

Accepted Answer

VAT exclusive price: R45,000; VAT portion: R6,750

Question 8

Which of the following statements about VAT is TRUE?

Accepted Answer

VAT is charged only on taxable goods and services supplied by a vendor.

Question 9

A business paid R71 (inclusive of VAT) for tea and coffee for staff. What is the input VAT amount? Use $$	ext{VAT Portion} = 71 	imes \frac{15}{115}.$$

Accepted Answer

R9.26

Question 10

Which of the following is an example of an exempt supply for VAT purposes?

Accepted Answer

Interest on a loan

Question 11

A business receives a credit note for R3,420 (inclusive of VAT) for goods returned. What is the output VAT amount reversed? Use $$	ext{VAT Portion} = 3,420 	imes \frac{15}{115}.$$

Accepted Answer

R445.22

Question 12

Which of the following best describes 'Faithful Representation' in financial statements?

Accepted Answer

Information is complete, neutral, and free from error and bias

Question 13

A business purchases office furniture for R11,895 (excluding VAT). What is the input VAT amount? Use $$	ext{VAT Portion} = 11,895 	imes 0.15.$$

Accepted Answer

R1,784.25

Question 14

Which of the following is NOT a step in the bookkeeping and accounting cycle?

Accepted Answer

The general ledger summarises the statement of profit or loss

Question 15

Which characteristic ensures that financial information can be checked and confirmed by independent parties?

Accepted Answer

Verifiability

Question 16

A business receives a bank statement showing a debit for insurance of R625. Is VAT applicable to this transaction?

Accepted Answer

No, insurance is an exempt supply

Question 17

Which of the following users of financial statements is most interested in the profitability and sustainability of the business for wage negotiations?

Accepted Answer

Employees and Labour Unions

Question 18

A business sells merchandise for R16,000 (excluding VAT) for cash. What is the VAT inclusive price? Use $$	ext{VAT Inclusive Price} = 16,000 	imes \frac{115}{100}.$$

Accepted Answer

R18,400

Question 19

Which of the following is a TRUE statement regarding zero-rated and exempt supplies?

Accepted Answer

Zero-rated supplies are taxable at 0% and exempt supplies are not taxable

Question 20

A business paid R350 for diesel for the delivery vehicle from petty cash. Is input VAT claimable on this expense?

Accepted Answer

Yes, input VAT is claimable

Comprehensive Study Notes: Introduction to Financial Accounting, VAT, and Subsidiary Journals

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