Question

1.1 Which of the following statements regarding The Statement of Financial Position is true? A The Statement of Financial Position reflects the financial position of an enterprise for the entire financial period being reported. B The Statement of Financial Position reflects the financial position of an enterprise only on a specific date C The Statement of Financial Position is a measure of the profit or loss that the enterprise has made over a certain period, usually one year D The Statement of Financial Position does not take into account transactions in respect of the owners of the enterprise

1.2 Which of the following statements regarding Equity is false? A Equity is the interest of the owner(s) in the net assets of the enterprise B The Equity of an enterprise is affected by the capital contribution and drawings made by the owner C Equity is affected by changes in income and expense accounts D None of the above (1)

1.3 The monetary columns of an account in the General Ledger are added vertically. This is known as A Summing B Balancing C Casting D Posting (1) 2 JS15

1.4 Which of the following errors will not be revealed by balancing the trial balance? A Inventory to the value of R5 000 was incorrectly posted to the Furniture and Fittings account B The Prepaid Expenses account of R 4 500 was incorrectly entered on the credit side of the trial balance. C The balance on Trade Creditors was incorrectly calculated to be R 56 000 instead of R 54 000 and entered on the Credit side of the trial balance D The balance of Accrued expenses account of R 12 000 was omitted in full. (1)

1.5 Which of the following is a IFRS accepted method used to determine the cost of inventories for financial reporting? A Last–in-Last-Out B Weighted Average C Variable costing D Absorption costing

Answer 1

Solution to 1.1:

The correct answer is Option B, The Statement of Financial Position reflects the financial position of an enterprise only on a specific date. This is the exact definition of the Statement of Financial Position and this statement reflects the company's position on a specific date which is generally the year end date.

Solution to 1.2:

The correct answer is Option D, as the statements given in options A, B and C are all correct.

Solution to 1.3

The correct answer is Option C, as casting is the process of adding up all the data in a given monetary column.

Balancing means to make the debit and credit side of an accounting statement equal.

whereas, Posting means to enter the figures of a single ledger into another say the general ledger.

Solution to 1.4:

The correct answer is Option A, as both inventory and furniture and fixture appears on the debit side of the Trial Balance thus the error in option A shall not be revealed on balancing the Trial Balance.

Thank you.