BASIC ACCOUNTING CONCEPTS QUESTIONS AND ANSWERS GRADE 12

More in this category: « FIXED ASSETS GRADE 12 NOTES - ACCOUNTING STUDY GUIDES COMPANIES QUESTIONS AND ANSWERS GRADE 12 »
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Activity 1: Matching items
Choose a definition from COLUMN B that matches the type of account in COLUMN A.
Draw a line from COLUMN A to COLUMN B to match the definitions.

Column A  Column B 
  1. Fixed/tangible assets
  2. Current assets 
  3. Non-current liabilities
  4. Current liabilities
  5. Income 
  6. Expenses 
  7. Owner’s equity 
  1. This increases profit and therefore increases owner’s equity.
  2. This decreases profit and therefore decreases owner’s equity.
  3. Amounts owing that will take longer than 12 months to pay off.
  4. Assets which are expected to be kept for a long period of time, usually longer than a year. Without them the business will not exist or earn a profit.
  5. The value (net worth) of the business at any point in time (total assets – total liabilities)
  6. Amounts owing that will be paid back within 12 months.
  7. Assets which are expected to be converted into cash in a short period of time (i.e. less than a year). 

[7]

Answers to activity 1

Column A  Column B 
  1.  
  2.  
  3.  
  4.  
  5.  
  6.  
  7.  
 D
G
C
F
A
B
E


Activity 2: Multiple-choice questions
Three options are provided as possible answers to the following questions.
Circle the correct answer.

1. Bank overdraft is classified as a...   2. Consumable stores on hand is classified as... 
 A Non-current liability  A Owner’s equity
 B Current asset  B Current asset
 C Current liability  C An expense

[2]

Answers to activity 2

 1 C  This is a current liability because it will be paid back within 1 year (short-term). 
 2 B This is a current asset because the business will use them within the next 12 months.

[2]

Activity 3: Accounting equation
Refer to Steps to recording transactions 1–4 above.
Record the transactions in the Table below assuming bank is favourable (Dr) at all times.
(When a bank is favourable it means it is an asset of the business and remains in a debit balance.)

  1. Wrote off a debtor’s account of R500 as a bad debt.
  2. Sent a cheque to a creditor to settle our account of R2 000.
  3. Received rent of R5 000 from a tenant.
  4. Bought trading stock on credit for R1 800.
  5. Bought equipment for R600 and paid by cheque.
      Account debit  Account credit  A = O +  L 
    1          
     2          
     3          
     4          
     5          

[5]

Answers to activity 3

  Account debit  Account credit  A = O +  L 
1 Bad debts (expense increasing)  Debtors control (asset decreasing)  -500 -500   0
 2  Creditors control (liability decreasing)  Bank (asset decreasing) -2000 0 -2000
 3 Bank (asset increasing) Rent income (income increasing) +5000 +5000 0
 4 Trading stock (asset increasing) Creditors control (liability increasing)  +1800 0 +1800
 5 Equipment (asset increasing)  Bank (asset decreasing)  ±600  0 0
Published in Accounting Study Guide and Notes Grade 12

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More in this category: « FIXED ASSETS GRADE 12 NOTES - ACCOUNTING STUDY GUIDES COMPANIES QUESTIONS AND ANSWERS GRADE 12 »
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