QUESTION ONE

For the following questions write down corresponding correct letter next to the question number only. Eg. 1.11 A

A paper manufacturer pays R1 000 000 for a paper machine on 1 March 2017. The business will use the machinery to manufacture paper evenly over a period of 7 years, after which the manager believes that they will be able to sell the machine for R100 000.

1.1 The depreciation per year amounts to:

a) R142 857 b) R14 286 c) R128 571 d) R333 333

Information for questions 1.2 and 1.3 Mel?s Beauty Spot is a beauty salon in Durban. Information relating to the beauty supplies for the three month period from 1 January 2016 to 31 March 2016 is provided below: Details R Beauty supplies unused at 1 January 2016 580 Trade payables at 1 January 2016 700 Beauty supplies purchased on credit from 1 January 2016 to 31 March 2016 5 400 Trade payables at 31 March 2016 980 Beauty supplies unused at 31 March 2016 1 240 The trade payables represent the amount owing to the supplier of beauty supplies only.

1.2 The cash paid to the supplier during the three month from 1 January 2016 to 31 March 2016 amounts to: a) R5 400 b) R5 120 c) R580 d) R4 740 e) R980

1.6 A sale is regarded as: a) An income b) An expense c) An asset d) A liability e) An equity

1.7 Income received in advance is: a) An asset, because cash is received in advance b) An asset, because there is a resource controlled by the entity c) A liability, because the entity owes someone money d) A liability, because there is a present obligation to perform services or deliver goods e) Equity

1.8 Sales revenue amounted to R167 000, and cost of sales amounted to R100 000. Other operating income amounted to R13 000, and other operating costs amounted to R25 000. Finance costs were R10 000. The profit for the period was: a) R19 000 b) R32 000 c) R45 000 d) R65 000 e) R89 000

1.9 The owner?s equity on 1 January 2016 amounted to R400 000. Profit for the year was R43 000. During 2016 the owner invested an additional R30 000 in the business. Drawings for the period amounted to R18 000. The amount of equity recognised on 31 December 2016 amounted to: a) R412 000 b) R430 000 c) R442 000 d) R443 000 e) R455 000

1.10 A customer orders R25 000?s worth of goods on 21 December 2015 (cost price: R20 000) The goods are delivered on 27 December 2015, and the customer pays the R25 000 on 4 January 2016.

The business has a financial year-end of 31 December. As a result of this transaction, profit for the year: a) Decreased by R5 000 b) Decreased by R25 000 c) Increased by R5 000 d) Increased by R20 000 e) Increased by R25 000