ACOUNTING LAST

PUSH
 HOW TO ANSWER THE PAPER

• Start with the questions you are good in.

• Stick to time management.
• Make sure you read properly.
• Stick to the instructions.
 Cont. FINANCIAL ACCOUNTING (50% TO
60%)
Reconciliations
– (Bank, Debtors, Creditors, Age Analysis&
Internal control)
VAT
– Calculating VAT receivable or payable
– VAT exclusive 15/100
– VAT inclusive 15/115
– Output (grouped together) Input (grouped
together)
 Cont. FINANCIAL ACCOUNTING (50% TO
60%)

Income Statements/Balance sheet

– (Adjustments- working from the bottom (tax)

Balance Sheet and Notes

– (format, pre - adjustment figures)

Cash Flow statement

asked in different ways( full , sections ,
calculations)
 FINANCIAL ACCOUNTING (50% TO 60%)

Analysis and interpretations

– (formulae, calculations and comments)
Audit reports
– Unqualified – “fairly represent in all material”
– Qualified - “except”
– Disclaimer – “cannot express an opinion”
 MANAGERIAL ACCOUNTING(20% TO 25%)

• Manufacturing

• Budgets
 Bank Reconciliations
 Remember to use the information of the previous month
bank reconciliation to get the bank balance in the
beginning.
 Always one outstanding cheque from the previous bank
reconciliation to be recorded in the next month again.
 Cheque is stale if older than 6 months.
 Error in the books of the business must be corrected in the
CRJ/CPJ
 Error on the bank statement must be corrected in the BRS.
 When you total the CRJ and CPJ remember to add the
provincial totals as well.
 The totals of the bank reconciliation must always be the
same total on the debit and credit side. The missing
figure is normally the balancing of the bank statement
 Creditors’ Reconciliations/ Debtors’
Reconciliations
 Identify where the error is.
 If the error is in the control account rectify it in the
control account.
 If the error is on the list correct it on the list.
 If the error is on both places it must be corrected on
the control account as well as the list.
• On the list there will always be a debtor whose
amount was posted on the wrong side of the
account. Remember you must double the figure
when you move it from the debit side to the credit
side or visa versa
 AGE ANALYSIS

Problems on Age analysis

CREDIT TERM
 rectify it by charging the debtor interest
CREDIT LIMIT
 the credit limit should not be exceeded
Continued sales to customers who don’t pay
 rectify it that they must first pay before the
could buy on credit again.
 VALUE ADDED TAX

 Remember it is now 15%

 VAT excluded your calculation must be the
figure x 15/100 and add it to the figure
 VAT included you must be : figure x 15/115.
The formula = unknown% x
Amount
Known%
• Vat Control Account or calculations are key ,
check the next slide
 VALUE ADDED TAX

Items or accounts affecting Output VAT

• Sales ( credit /cash)
• Drawings
• Donations
• Returns to suppliers/creditors
• Bad debts recovered
• Discount allowed by creditors (reduce input
VAT)
• NB-First FOUR bullets –Goods are GOING OUT
 VALUE ADDED TAX

Items or accounts affecting INPUT VAT

• Purchases ( credit /cash)
• Returns to by customers
• Bad debts
• Discount allowed to customers (reduce
output VAT)
• NB-First TWO bullets –Goods are
RECEIVED by business
 INCOME STATEMENT
 You must know the format
 Always start with the pre adjustment figures from Trial
Balance or information extracted when preparing the
income statement.
 Start with Nominal Accounts items
 Show always your workings in brackets to earn part marks.
 Income received in advance and prepaid
expenses are DEDUCTED
 Accrued income and accrued expenses
are ADDED
 Remember to DEDUCT debtors’ allowances
from sales
 If goods are returned ,cost of sales must also REDUCE
 INCOME STATEMENTS
 remember that sales/returns at the end of the year CHANGES the
figure of the closing stock the determine if there is a stock deficit at
the end.
 Depreciation
# Cost price method – Take the cost price x by the %
# Diminishing balance – (Carrying value – Take the cost price –
minus the accumulated depreciation x by the %
 remember the R1 rule
 Interest income/interest expense appear
on the bottom part of the income statement.
 BALANCE SHEET
 Memorize the format
 Always START WITH the pre - adjustment figures in the
balance sheet.
 Always show your workings in brackets to earn part marks.
 Ratios are important when a balance sheet were asked.
 Current ratio is 2:1. the figure of the current liabilities were
R100 000 then the missing figure of the current assets must
be R100 000 x 2 = R200 000.
 Acid test ratio can be used to calculate the stock figure .
 Debt equity ratio can be used to calculate either the
shareholders’ equity or theloan figure.
 Total Capital Employed = Shareholders equity + Long term
liabilities.
 CASH FLOW STATEMENTS
 know the format
 inflow – receive money, no bracket
 outflow – pay money ,figure must be in ( ).
 Dividend Paid -dividends owing the previous year
PLUS interim dividends
 Net change in Cash and cash equivalents -If the
business has the Bank overdraft and the favourable
balance under assets (Petty cash, Cash float etc.) at
the beginning of the year, calculate the difference of
the two opening balances BEFORE the calculations
 RATIOS

 memorize the formulae of the ratios.

Ratios often asked to calculate
• Current ratio / Acid test ratio - must be x:1
• Debt equity ratio – must be x:1.
• ROSHE/ROTCE
• Net asset value per share.
• Dividend pay out rate.
 ANALYSIS AND INTERPRETATION

1.Always asked to comment on liquidity (6 ratios)

#Current ratio /acid test/debtors’ collection/creditors
payment/stock turnover rate and holding period
2. Comment on gearing/loan/risk (2 ratios)
# Debt equity and ROTCE.
compare it with the interest of loan
before you decided to pay back the loan.
3. Buy back of shares if the price were fair.
#Compare it with the NAV and the market price of
share.
 RATIOS

Related Financial indicators that should be compared

NAV Market value of shares
ROSHE Rate of investments
ROTCE Rate of interest on loan
Debt Equity Rate of interest on loan
Earnings per share Dividends per share
Debtors Collection Creditors Payment period
period
 NOTES TO THE FINANCIAL
STATEMENTS
memorize the format
make sure you can do the following notes
– Ordinary share capital (OSC)
– Retained income (RI)
NB: when you buy back shares the average price appears in the
ORDINARY SHARE CAPITAL (OSC) note and the difference must
appear in the RETAINED INCOME (RI) note
In the Cash flow you record amount from OSC + RI note OR Actual
amount paid for shares repurchased

Note for fixed assets

remember to transfer the totals of these notes to the balance
sheet
they always ask the note for fixed assets to calculate:
 a new asset purchased.
asset disposed at carrying value
 AUDIT REPORTS

• Unqualified

• Qualified

• Disclaimer
 MANUFACTURING

Memorize the format of the production cost

statement. Must always start with direct material
and direct labour to get prime cost.
Add factory overhead cost to prime cost to get
cost of production.
Add WIP in the beginning of the year and minus
WIP at the end of the year to get total cost of
manufactory.
When you calculate BEP it is fixed cost / selling
price per unit – variable cost per unit. The answer
must be in units.
 Cont. MANUFACTURING

Always compare the BEP with production of this year

as well as with the BEP of last year to decide if you are
satisfied or not.
If material increases from last year, comment like this:
–Get cheaper supplier / buy in bulk / save on transport
cost / negotiate discount / work more effectively
–If direct labour increase try not to work overtime / less
overtime / better supervision of workers in the work
place /
 BUDGETS
 Know the items not appearing in
A budget (depreciation/discount/
credit transactions)
 Know the items not appearing in a
projected income statement (balance sheet
items )
 From sales you calculate cash and credit sales
 From sales use mark-up % to calculate purchases
 Always ask the increase in an expense i.e. Salaries -this
month = R8 000 and increase to R10 000 next month .
difference is R2 000 DIVIDED by the R8 000. Increase is 25
%
 STOCK
CALCULATING OF CLOSING STOCK
• FIFO (From the bottom to the top)
• Weighed Ave (Value ÷ Numbers)
• Spes. Ident Method (Purchases – Sales x price)
CALCULATING OF COST OF SALES

CALCULATING MISSING STOCK

REFER TO INVENTORY DOCUMENT
 E ND !!!
THE