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5.1 CONCEPTS Choose the correct word(s) from those given in brackets - NSC Accounting - Question 5 - 2017 - Paper 1
Question 5
5.1 CONCEPTS Choose the correct word(s) from those given in brackets. Write only the word(s) next to the question number (5.1.1–5.1.4) in the ANSWER BOOK. 5.1.1 The... show full transcript
Worked Solution & Example Answer:5.1 CONCEPTS Choose the correct word(s) from those given in brackets - NSC Accounting - Question 5 - 2017 - Paper 1
Step 1
5.2.1 Calculate the value of the closing stock on 30 September 2017 using the specific identification method.
Answer
To calculate the closing stock, we must use the specific identification method based on the provided figures:
- Motorbike A: 243,000
- Motorbike B: 109,600
- Motorbike C: 252,800
The total closing stock can be calculated as:
Thus, the value of the closing stock is R605,400.
Step 2
5.2.2 Mike requires your advice on the three different models of motorbikes in which he is trading. Explain TWO points of advice.
Answer
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Pricing Strategy: Consider reducing the price of Model AO2 to increase sales. A lower markup will help in selling more units, thus reducing stock levels.
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Stock Assessment: Assess the market trends for Models AO2 and AO3. These models seem to be more popular and in demand, so focus on maintaining adequate stock levels.
Step 3
5.2.3 Calculate the value of the closing stock on 30 September 2017 using the weighted-average method.
Answer
To calculate the closing stock using the weighted-average method, we first compute the total cost and total units:
- Total Cost = .
- Total Units = .
The weighted average cost per unit is calculated as:
ext{Weighted Average Cost} = rac{ ext{Total Cost}}{ ext{Total Units}} = rac{516,675}{105} = 6,201.75
Thus, rounding off gives the closing stock value of R6,201.75.
Step 4
5.2.4 Is the weighted-average method appropriate to value the helmets? Explain ONE point.
Answer
Yes, the weighted-average method is appropriate because the helmets are considered to be of similar value. This method allows for a straightforward and effective way to calculate the value of stock without discrimination among different items.
Step 5
5.2.5 Mike suspects that helmets are being stolen from the shop despite security cameras being installed. Provide a calculation to verify his suspicion.
Answer
To verify the suspicion, consider the total of 30 helmets and 75 sales without discrepancies. Assuming a regular ratio:
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Calculate the missing helmets: Total helmets expected - Total helmets missing = 30 - 5 = 25
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The number of missing helmets can be assessed as:
ext{Missing helmets} = rac{30}{5} imes 12 = 3 Thus, 3 helmets are reported missing.
As for control improvements, Mike could:
- Conduct regular stock audits.
- Secure the storeroom with locks or secure tags.
- Increase staff training on stock handling procedures.