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4.1 Choose a term in COLUMN B that matches an explanation in COLUMN A - NSC Accounting - Question 4 - 2019 - Paper 1
Question 4
4.1 Choose a term in COLUMN B that matches an explanation in COLUMN A. Write only the letters (A–E) next to the question numbers (4.1.1 to 4.1.4) in the ANSWER BOOK.... show full transcript
Worked Solution & Example Answer:4.1 Choose a term in COLUMN B that matches an explanation in COLUMN A - NSC Accounting - Question 4 - 2019 - Paper 1
Step 1
Step 2
Step 3
4.1.3 Provides details about the movement of funds with regard to operating, investing and financing activities
Answer
This explanation aligns with B: Cash Flow Statement. The Cash Flow Statement details the inflows and outflows of cash in a business, illustrating how cash is generated and used during the financial period.
Step 4
4.1.4 Provides an unbiased opinion on the reliability of the financial statements of a business
Answer
The appropriate term for this is A: Audit Report. An Audit Report provides an independent assessment of the financial statements, evaluating their fairness and compliance with accounting standards.
Step 5
4.2.1 Give ONE reason why the Companies Act requires public companies to be audited by an independent auditor.
Answer
The Companies Act mandates independent audits to ensure that an unbiased view of the financial statements is presented, enhancing transparency and fostering trust among shareholders and investors.
Step 6
4.2.2 Give ONE reason for the audit opinion (qualified/unqualified/disclaimer or other).
Answer
The reason for the audit opinion is that the financial statements are deemed to fairly present the financial position and performance of the company, indicating no problems were encountered during the audit.
Step 7
4.2.3 Explain how this may influence shareholders of Everest Ltd. State TWO points.
Answer
- Shareholders may lose confidence in the integrity of the financial statements if the auditors have been found guilty of misconduct, leading to diminished trust in reported figures.
- This situation may prompt shareholders to demand a re-audit or change auditors in future periods to ensure a more reliable assessment of the company's financial health.
Step 8
4.3.1 Complete the Statement of Comprehensive Income (Income Statement) for the year ended 31 March 2019.
Answer
The Statement of Comprehensive Income would include the following key components:
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Gross Profit: Calculated as Sales Revenue less Cost of Sales. The break-up would be:
- Sales Revenue: R10 563 280 (including the trade invoice of R36 720)
- Cost of Sales: R6 236 000 + R24 000 (for bad debts adjustment)
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Operating Profit: Calculated by deducting operating expenses from the Gross Profit, including items like Salaries, Bad debts, and Depreciation.
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Net Profit Before Tax and Net Profit After Tax would then be determined based on the calculations of Interest Income and Income Tax, leading to the final figures reflected in the income statement.
Step 9
4.3.2 Complete the following notes to the Balance Sheet: - Fixed/Tangible Asset Note
Answer
In the Fixed Assets Note, include:
- Cost: The cost remains as per the recorded value: R12 500 000.
- Accumulated Depreciation: This would include the appropriate depreciation calculated for vehicles and any additional assets that might need adjustments.
Step 10
4.3.2 Complete the following notes to the Balance Sheet: - Ordinary share capital
Answer
The note for Ordinary Share Capital will show:
- Authorised Share Capital: 8 000 000 shares.
- Issued Share Capital: Including the initial shares, re-purchased shares, and additional shares issued, leading to an ultimately clarified total shares in issue.