2.1 Choose the correct word from those given in brackets - NSC Accounting - Question 2 - 2022 - Paper 1
Question 2
2.1 Choose the correct word from those given in brackets. Write only the word next to the question numbers (2.1.1 to 2.1.3) in the ANSWER BOOK.
2.1.1 (Solvency/Liqu... show full transcript
Worked Solution & Example Answer:2.1 Choose the correct word from those given in brackets - NSC Accounting - Question 2 - 2022 - Paper 1
Step 1
2.1.1 (Solvency/Liquidity)
96%
114 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
The correct term is Solvency. Solvency refers to the ability of a business to meet its long-term financial obligations, ensuring that it can pay off all debts using its existing assets.
Step 2
2.1.2 Effective control of income and expenses is a reflection of the (risk/profitability)
99%
104 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
The correct term is profitability. Profitability reflects how effectively a company can utilize its resources to generate profit and manage its income and expenses.
Step 3
2.1.3 The use of loans to finance a company is known as (returns/gearing)
96%
101 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
The correct term is gearing. Gearing refers to the ratio of a company's debt to its equity, indicating the extent to which its operations are financed by borrowed money.
Step 4
2.2.1 Prepare the Retained Income Note on 28 February 2022
98%
120 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
The Retained Income Note on 28 February 2022 can be calculated as follows:
Balance on 1 March 2021: R516,000
Net profit after tax: R-168,000
Ordinary share dividends: R-873,000
Interim dividends: R-140,700
Final dividends: R-163,200
Final balance on 28 February 2022 will be: Balance = 516,000 - 168,000 - 873,000 - 140,700 - 163,200 = R382,800.
Step 5
2.2.2 Calculate the following amounts for the Cash Flow Statement:
97%
117 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
Income tax paid:
Income tax paid can be calculated with the provided figures yielding an amount of R353,600.
Funds used to repurchase shares:
The total for funds used will be R1,224,000.
Net change in cash and cash equivalents:
This is calculated as R169,700.
Step 6
2.2.3 Calculate the following financial indicators on 28 February 2022:
97%
121 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
Debt-equity ratio:
The debt-equity ratio is calculated as 0.2:1.
% return on average capital employed:
This yields a percentage of 11.3%.
Dividends per share:
Calculated to be 60c per share.
