WALTER SISULU UNIVERSITY
WALTER SISULU UNIVERSITY
FINANCIAL ACCOUNTING
ACC15W0
INTRODUCTION TO ACCOUNTING
TUTORIAL PACK
Question
Material Handed in by… Due Date
Number
Tutorial 1 All students Monday, 11 March 2024
Objective of Monday, 11 March 2024
Tutorial Tutorial 2 All students Monday, 11 March 2024
Week 1 Tutorial 3 All students Monday, 11 March 2024
Tutorial 4 All students Monday, 11 March 2024
TUTORIAL 1
Derick Morris (DM) owns a spaza shop in East Mall, Mthatha. The transactions for the first
month are recorded below:
2022:
July 1
DM deposited R20 000 of his own savings into his new business’ bank account.
The business borrowed R10 000 from the bank. The money was deposited directly into
the business’ bank account.
The business purchased a furniture and fittings for R10 000 on credit from DM’s
brother.
The business purchased prepaid electricity amounting to R150, paid cash.
The business purchased inventory costing R15 000, paid via an EFT.
July 7
The business sold inventory for R6 500 cash (cost R2 300).
The business sold inventory for R3 500 on credit (cost R1 300).
DM withdrew R800 cash from the business’ bank account for private living costs.
July 14
The business cashed a cheque to pay wages for the period 1 – 14 July, R600.
July 21
The business paid R1 100 to Guardian National for insurance for July. R800 was for
business insurance and R300 was for DM’s personal car insurance.
The business purchased a computer on credit from Unlimited Access, R8 000.
The business paid for a newspaper advert for the week ended 21 July, R400.
The business cashed a cheque to pay wages for the period 15 – 21 July, R1 400.
July 31
The client that had purchased on credit in the week ended 7 July paid half of the amount
owing.
R50 worth of electricity purchased on 7 July had not yet been used.
The business paid interest amounting to R100.
You are required to:
1. Show how the above transactions affect the business’ financial position as denoted by A
= E + L. Use (+) to denote an increase, (-) to denote a decrease and (0) to denote no
effect. You should also show the respective amounts of the changes in the assets,
liabilities and/or equity. You are also required to show the names of the assets,
liabilities and/or equity that are affected. (15 marks)
2. Calculate the profit/loss that the business generated for the month of July 2022.
(9 marks)
3. Prepare the statement of financial position of the business as at 31 July 2022.
4. Calculate the change in total assets for the month of July 2022.
5. How have the total assets as at 31 July 2022 been funded?
6. Calculate the net asset value of the business as at 31 July 2022.
7. Why would DM be interested in the change in the net asset value?
TUTORIAL 2
1. What do you understand by the “entity concept”? (1 mark)
2. Show how the following transactions affect the financial position of the business as
represented by A = E + L. You need to clearly indicate whether the element has
increased or decreased and provide the relevant amount and account that would be
affected. (6 marks)
Assets = Equity + Liabilities
Shoe Laces had the following transactions in January 2023:
1 Jan: Purchased 40 pairs of shoes on credit from a supplier in Tsolo for R200 each.
12 Jan: Sold 10 pairs of shoes for R350 each to a customer for cash.
3.
Explain whether the transaction on 12 January above has changed the wealth of the owner.
(2 marks)
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TUTORIAL 3:
Beacon Bay Kites had the following transactions in January 2024:
1 Jan: Owner contributed R10 000 into the business bank account as his initial capital
contribution.
2 Jan: Purchased 20 hand-painted kites for cash from a small supplier in East London for
R250 each.
6 Jan: Purchased a sander (which will be used to smooth the kite frames) for R4 000 on
credit from Mica Hardware.
18 Jan: Sold 3 kites on credit to Total Sports for R450 each.
25 Jan: Sold 2 kites for R480 cash each and deposited the money into the business’s bank
account.
27 Jan: Purchased prepaid electricity for cash amounting to R1 000. The electricity will only
be used in February 2024.
30 Jan: The owner, who had forgotten that it was her niece’s birthday, took a kite from the
shop as a birthday present.
31 Jan: Paid wages for January 2024 amounting to R1 500.
You are required to:
1. Show how all the transactions affect the financial position of the business as represented by A =
E + L. You need to clearly indicate whether the element has increased or decreased and
provide the relevant amount and account that would be affected.
Assets = Equity + Liabilities
2.
Assume that Beacon Bay Kites paid R3 400 in cash for advertising that had been used.
Discuss, with reference to the definitions of income and/or expense, what effect this transaction
would have on the net asset value of the business.
3.
What does the “equity” section of the statement of financial position represent?
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TUTORIAL 4:
You decide to start a business that buys and sells second hand televisions.
1. To start the business you contribute R30 000 of your own money and deposit this into the
business’ bank account.
2. The business still requires further funds so you borrow R10 000 cash from your parents
(interest free) and deposit this into the business bank account.
3. The business purchases 5 second hand televisions for R2 000 cash each.
4. The business sells 3 of the second hand televisions for R3 400 cash each.
5. You withdraw R1 500 cash from the business bank account and celebrate your first sale by
taking a holiday trip to Port St Johns.
1.
Show how the transactions effect the financial position of the business as represented
by A = E + L.
You need to clearly indicate whether the element has increased or decreased and provide the
relevant amount and account that would be affected.
ASSETS = EQUITY (NAV) + LIABILITIES
1. = +
2. = +
3. = +
4. = +
= +
5. = +
2.
Answer the following questions:
1. What is the total amount of assets the business has at the end of the five transactions
mentioned above?
2. How have these assets been funded?
3. Which of the above transactions have made the owner wealthier? Briefly explain WHY
these transactions have made the owner wealthier.
4. What do you understand by the term “profit”?
5. Do you think transaction 5 has made the owner poorer?
1. required.
1.1. 30 June 2011
1.2. 2 August 2011
1.3. 3 August 2011
1.4. 10 August 2011 (10½marks)
2. Prepare any general journal entries that Tsomo Green would process on the following
dates. If no journal entry is required clearly indicate “no entry required” and give a
short explanation. Dates AND narrations are required
2.1. 3 August 2011 (3½ marks)
3. Indicate the date on which “Atlanta Here We Come” will recognise the tables and
chairs as an asset. Explain, with reference to definition and recognition criteria in the
Conceptual Framework, why the tables and chairs would be recognised as an asset
on this date.
(8 marks)
4. Indicate the date on which Tsomo Green will recognise sales income with respect to
the tables and chairs. Explain in full, with reference to the Conceptual Framework,
why income is recognised on this date. You are not expected to provide full
asset/liability definitions in your answer.
(3 marks)
PART B (5 marks)
1. Briefly explain how a liability can lead to an outflow of future economic benefits.(2
marks)
2. Name the underlying assumption under which financial statements are prepared and
briefly explain the concept. (2
marks)
3. Briefly explain the term “distributing decision” (1
mark)
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