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Answer ALL Sections - Junior Cycle Business Studies - Question 2 - 2005
Question 2
Answer ALL Sections. This is a Stocktaking, Document and Bookkeeping Question. (A) (i) State two reasons why a business should carry out stocktaking. (ii) Outline a... show full transcript
Worked Solution & Example Answer:Answer ALL Sections - Junior Cycle Business Studies - Question 2 - 2005
Step 1
State two reasons why a business should carry out stocktaking.
Answer
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Accuracy of Financial Statements: Stocktaking ensures that the inventory reported in the financial statements is accurate. This is essential for stakeholders to assess the financial health of the business.
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Effective Inventory Management: Regular stocktaking helps businesses monitor inventory levels, identify slow-moving items, and make informed purchasing decisions to reduce holding costs.
Step 2
Outline a suitable procedure for carrying out stocktaking.
Answer
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Preparation: Inform staff about the stocktake and allocate specific roles for counting. Ensure that all goods are in their designated locations.
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Counting: Physically count the quantity of each item. This can be done by dividing the inventory into manageable sections.
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Recording: Record the counted quantities on stock sheets or an electronic system. Include details such as product codes, descriptions, and locations.
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Reconciliation: Compare counted quantities to the inventory records. Investigate any discrepancies to identify potential issues.
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Adjustment: Update inventory records to reflect the accurate amounts and note any write-offs if necessary.
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Review: Analyze stocktaking results to improve future practices and identify trends or issues with stock management.
Step 3
Outline how OFFICE SUPPLIES Ltd should treat outgoing Delivery Dockets.
Answer
OFFICE SUPPLIES Ltd should keep a duplicate of each outgoing Delivery Docket for record-keeping purposes. They should ensure that dockets are signed by the receiving party to confirm receipt of goods, and the details of the transaction (including order numbers and quantities) should be accurately reflected in their inventory management system. This maintains accountability and provides traceability for the delivered goods.
Step 4
Complete the Delivery Docket on the blank document sheet supplied with this paper.
Answer
To complete the Delivery Docket:
- Fill in the recipient's details (KELLY Ltd, Nass, Co. Kildare).
- Include the Order No. 23 for reference.
- List the items delivered:
- 12 Four Door Filing Cabinets @ €100 each
- 10 Office Chairs @ €80 each
- Record the date of delivery (10 May 2005).
- Ensure a space for the recipient to sign, confirming receipt.
- Sign the docket on behalf of OFFICE SUPPLIES Ltd.
Step 5
Complete the Invoice No. 47 on the blank document sheet supplied with this paper.
Answer
To complete Invoice No. 47:
- Write the date of issuance (30 May 2005).
- Fill in KELLY Ltd's details in the To: section.
- List the items as follows:
- 12 Four Door Filing Cabinets @ €100 = €1200
- 10 Office Chairs @ €80 = €800
- Calculate the subtotal = €2000.
- Apply the 30% Trade Discount:
- Trade Discount = €2000 x 0.30 = €600.
- Subtotal after discount = €2000 - €600 = €1400.
- Calculate VAT (21% on €1400):
- VAT = €1400 x 0.21 = €294.
- Total Amount = €1400 + €294 = €1694.
- Include 'E & OE' (Errors and Omissions Excepted) statement.
Step 6
Record the Invoice sent in the Sales Book of OFFICE SUPPLIES Ltd, on the separate sheet supplied with this paper.
Answer
When recording the invoice in the Sales Book, include the following details:
- Date: 30 May 2005
- Details: Invoice No. 47
- Invoice No.: 47
- F (Customer Reference): KELLY Ltd
- Net Amount: €1400 (after discount)
- VAT Amount: €294
- Total Amount: €1694 Ensure the record is signed and dated by the person completing the entry to maintain accuracy and accountability.