BN101 - imm
Page 1 of 7
ASSIGNMENT 2ND SEMESTER : BUSINESS NUMERACY 1 (BN101) STUDY UNITS COVERED
: STUDY UNITS 1 - 5
DUE DATE
: 3:00 p.m. 16 AUGUST 2011
TOTAL MARKS
: 100
INSTRUCTIONS TO CANDIDATES FOR COMPLETING AND SUBMITTING ASSIGNMENTS The complete ‘Instructions to Students for Completing and Submitting Assignments’ must be collected from any IMM GSM office, the relevant Student Support Centre or can be downloaded from the IMM GSM website. It is essential that the complete instructions be studied prior to commencing your assignment. The following points highlight only a few important notes. 1. You are required to submit ONE assignment per subject. 2. The assignment will contribute 20% towards the final examination mark, and the other 80% will be made up from the examination, however, the examination papers will count out of 100%. 3. Although your assignment will contribute towards your final examination mark, you do not have to earn credits for admission to the examinations; you are automatically accepted on registering for the exam. 4. Number all the pages of your assignment (e.g. page 1 of 4) and write your name and surname, student number and subject at the top of each page. 5. The IMM GSM requires assignments to be presented in a typed format, on plain A4 paper. Unless otherwise specified, this assignment must be completed within a limit of 1500 words, excluding the bibliography. 6. A separate assignment cover, which is provided by the IMM GSM, must be attached to the front of each assignment. 7. Retain a copy of each assignment before submitting, in case the original does not reach the IMM GSM. 8. The assignment due date refers to the day up to which assignments will be accepted for marking purposes. The deadline is 3:00 p.m. on 16 August 2011. Late assignments will be accepted, but 25 marks will be deducted from the maximum mark, if received after 3:00 p.m. on 16 August 2011 and up to 5:00 p.m. the following day, after which no assignments will be accepted. 9. If you fail to follow these instructions carefully, the IMM Graduate School of Marketing cannot accept responsibility for the return of the assignment. It may even result in your assignment not being marked. Results will be available on the IMM GSM website, www.immgsm.ac.za, on 7 October 2011.
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
Page 2 of 7
Answer ALL the questions
SPECIFIC INSTRUCTIONS Answer ALL questions The use of calculators is permitted. Show ALL calculations. Read all questions carefully to determine exactly what is required before attempting to answer. Number your answers clearly and set them out under appropriate headings and sub-headings. QUESTION 1
[20]
For each question below select the MOST APPROPRIATE answer from the choices given. Mark your answer with an X in the correct block on the ANSWER SHEET provided on page 7. Each question is worth two (2) marks. NB:
Detach the answer sheet from the question paper and insert it in your assignment.
1.1
Which of the following account classifications are uses of cash?
1.2
I. II. III. IV
Increase in accounts receivable Decrease in accounts payable Increase in equity Decrease in fixed assets in excess of the annual depreciation
(a) (b) (c) (d) (e)
I and IV only II and III only I and II only I and III only II, III, and IV only
When you buy inventory with cash, the (a) (b) (c) (d) (e)
1.3
quick ratio increases. current ratio decreases. current ratio increases. quick ratio decreases. debt ratio is unchanged.
Vendors providing trade credit to a firm tend to be most interested in the firm’s (a) (b) (c) (d) (e)
liquidity ratios. profitability ratios. market value. asset utilisation. financial leverage.
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
Page 3 of 7
1.4
Which ONE of the following is a financing activity on a typical statement of cash flows? (a) (b) (c) (d) (e)
1.5
All else equal, return on equity (profitability of own capital) will increase if the (a) (b) (c) (d) (e)
1.6
return on assets fixed asset turnover cash ratio times interest earned ratio profit margin
A firm has sales of R300, costs of goods sold of R150, other costs of R90, depreciation of R35, and taxes of R10. What is the net income margin? (a) (b) (c) (d) (e)
1.8
profit margin decreases. return on assets increases. debt ratio decreases. accounts receivable turnover increases. total asset turnover decreases.
The _____ is a liquidity ratio. (a) (b) (c) (d) (e)
1.7
Change in long-term debt Change in accounts payable (creditors) Change in accounts receivable (debtors) Change in net fixed assets Net income
3 percent 5 percent 8 percent 10 percent 15 percent
Butch Ltd. has an average collection period of 36.5 days. Sales are 300 000. What is the average accounts receivable balance (debtors)? (Use a 365 day year.) (a) (b) (c) (d) (e)
R4,441 R8,219 R10,000 R30,000 R36,500
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
Page 4 of 7
1.9
Which ONE of the following is a financing activity on a typical statement of cash flows? (a) (b) (c) (d) (e)
1.10
Depreciation Change in net fixed assets Change in inventory Change in accounts payable Dividends paid
Which ONE of the following factors will not be experienced by a high growth firm? (a) (b) (c) (d) (e)
An urgent need for trained staff An urgent need for facilities More proactive management More consumer complaints An urgent need for more production capacity
QUESTION 2
[15]
On 1 March 2011 Ronnie commenced trading as a sole trader, selling ice-cream from a van which he drove around the streets of his town. (a) (b) (c) (d)
(e)
(f)
(g)
(h) (I)
He rented a van at a cost of R1 000 for three months. Running expenses for the van average R300 per month. He employed a part time assistant at a cost of R100 per month. He borrowed R2 000 from a local bank and the interest cost of the loan was R25 per month. His main business was to sell ice-cream to customers in the street, but he also did some special catering arrangements for business customers, supplying ice-cream for office parties. Sales to these customers were usually on credit. For the three months to 31 May 2011 his total sales were: (1) Cash sales R8 900 (2) Credit sales R1 100 Ronnie purchased his ice-cream form Dairy Products. The cost of purchases for the three months to 31 May 2011 was R6 200 and at 31 May he had sold every item of stock. He still owed R700 to Dairy Products for unpaid purchases on credit. One of his credit sale customers has gone bankrupt owing Ronnie R250. Ronnie has decided to write off the debt in full, with no prospect of getting the money back. Ronnie used his own home for the office work. Telephone and postage expenses for the three months to 31 May were R150. During the period he paid himself R300 per month.
Required: Prepare a comprehensive income statement for the three months 1 March – 31 May 2011.
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
Page 5 of 7
QUESTION 3
[10]
Explain the dual effects of each of the following transactions on the accounting equation (a) (b) (d) (e) (f)
A business receives a loan of R5 000 from a bank. A business pays R800 cash to purchase goods for resale. The owner of a business removes R50 from the cash till to buy a personal present for his son. A business sells goods costing R300 at a profit of R140. A business repays a R5 000 bank loan plus interest of R270.
Hint: Make use of the accounting equation where A = E + L. QUESTION 4
[30]
You are required to prepare a statement of financial position for Tina’s Shoes as at 31 December 2010, given the following information below: R Capital as at 1 January 2010 Profit for the year to 31 December 2010 Freehold premises, net book value at 31 December 2010 Motor vehicles, net book value 31 December 2010 Furniture, net book value at 31 December 2010 Long-term loan Bank overdraft Goods in stock for resale Debtors Cash in hand Creditors Tax payable Drawings Arrear expenses of rent Prepaid insurance
Assignment: 2nd Semester 2011
47,600 8,000 50,000 9,000 8,000 25,000 2,000 16,000 500 100 1,200 3,500 4,000 600 300
© IMM Graduate School of Marketing BN101
Page 6 of 7
QUESTION 5
[25]
The statement of financial position of Cats International at 30 June 2011 is set out below: 2011 Property Plant and machinery Cost at 1 July 2010 Acquisition at cost Disposal at cost Depreciation Current Assets Inventory Debtors Balance at bank Total Assets Share capital Revaluation reserve Share premium Retained income Current Liabilities Bank overdraft Loan Creditors Total Liabilities
2010 R 30000 7500
8000 4500 -2200 10300 -2800
R 16000 6100 8000 0 0 0 -1900
19600 12000 7600 0
14550 7800 5900 850
57100
36650
10000 14000 1000 23350 8750
8500 0 0 22150 6000
3500 0 5250
0 1000 5000 57100
36650
The machinery disposed of had a net book value of R550 and was sold for R800. Required: Prepare a cash flow statement for the year ended 30 June 2011.
ASSIGNMENT TOTAL: 100
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
Page 7 of 7
ANSWER SHEET (DETACH THE ANSWER SHEET AND INCLUDE IT IN YOUR ASSIGNMENT)
BUSINESS NUMERACY 1 (BN101)
EXAMINATION: DATE:
16 AUGUST 2011 ONE (1)
QUESTION: STUDENT NUMBER:
S
QUESTION NO. 1.1
a
b
c
d
e
1.2
a
b
c
d
e
1.3
a
b
c
d
e
1.4
a
b
c
d
e
1.5
a
b
c
d
e
1.6
a
b
c
d
e
1.7
a
b
c
d
e
1.8
a
b
c
d
e
1.9
a
b
c
d
e
1.10
a
b
c
d
e
SELECTED ANSWER
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
ASSIGNMENT 2ND SEMESTER : BUSINESS NUMERACY 1 (BN101) STUDY UNITS COVERED
: STUDY UNITS 1 - 5
DUE DATE
: 3:00 p.m. 16 AUGUST 2011
TOTAL MARKS
: 100
INSTRUCTIONS TO CANDIDATES FOR COMPLETING AND SUBMITTING ASSIGNMENTS The complete ‘Instructions to Students for Completing and Submitting Assignments’ must be collected from any IMM GSM office, the relevant Student Support Centre or can be downloaded from the IMM GSM website. It is essential that the complete instructions be studied prior to commencing your assignment. The following points highlight only a few important notes. 1. You are required to submit ONE assignment per subject. 2. The assignment will contribute 20% towards the final examination mark, and the other 80% will be made up from the examination, however, the examination papers will count out of 100%. 3. Although your assignment will contribute towards your final examination mark, you do not have to earn credits for admission to the examinations; you are automatically accepted on registering for the exam. 4. Number all the pages of your assignment (e.g. page 1 of 4) and write your name and surname, student number and subject at the top of each page. 5. The IMM GSM requires assignments to be presented in a typed format, on plain A4 paper. Unless otherwise specified, this assignment must be completed within a limit of 1500 words, excluding the bibliography. 6. A separate assignment cover, which is provided by the IMM GSM, must be attached to the front of each assignment. 7. Retain a copy of each assignment before submitting, in case the original does not reach the IMM GSM. 8. The assignment due date refers to the day up to which assignments will be accepted for marking purposes. The deadline is 3:00 p.m. on 16 August 2011. Late assignments will be accepted, but 25 marks will be deducted from the maximum mark, if received after 3:00 p.m. on 16 August 2011 and up to 5:00 p.m. the following day, after which no assignments will be accepted. 9. If you fail to follow these instructions carefully, the IMM Graduate School of Marketing cannot accept responsibility for the return of the assignment. It may even result in your assignment not being marked. Results will be available on the IMM GSM website, www.immgsm.ac.za, on 7 October 2011.
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
Page 2 of 7
Answer ALL the questions
SPECIFIC INSTRUCTIONS Answer ALL questions The use of calculators is permitted. Show ALL calculations. Read all questions carefully to determine exactly what is required before attempting to answer. Number your answers clearly and set them out under appropriate headings and sub-headings. QUESTION 1
[20]
For each question below select the MOST APPROPRIATE answer from the choices given. Mark your answer with an X in the correct block on the ANSWER SHEET provided on page 7. Each question is worth two (2) marks. NB:
Detach the answer sheet from the question paper and insert it in your assignment.
1.1
Which of the following account classifications are uses of cash?
1.2
I. II. III. IV
Increase in accounts receivable Decrease in accounts payable Increase in equity Decrease in fixed assets in excess of the annual depreciation
(a) (b) (c) (d) (e)
I and IV only II and III only I and II only I and III only II, III, and IV only
When you buy inventory with cash, the (a) (b) (c) (d) (e)
1.3
quick ratio increases. current ratio decreases. current ratio increases. quick ratio decreases. debt ratio is unchanged.
Vendors providing trade credit to a firm tend to be most interested in the firm’s (a) (b) (c) (d) (e)
liquidity ratios. profitability ratios. market value. asset utilisation. financial leverage.
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
Page 3 of 7
1.4
Which ONE of the following is a financing activity on a typical statement of cash flows? (a) (b) (c) (d) (e)
1.5
All else equal, return on equity (profitability of own capital) will increase if the (a) (b) (c) (d) (e)
1.6
return on assets fixed asset turnover cash ratio times interest earned ratio profit margin
A firm has sales of R300, costs of goods sold of R150, other costs of R90, depreciation of R35, and taxes of R10. What is the net income margin? (a) (b) (c) (d) (e)
1.8
profit margin decreases. return on assets increases. debt ratio decreases. accounts receivable turnover increases. total asset turnover decreases.
The _____ is a liquidity ratio. (a) (b) (c) (d) (e)
1.7
Change in long-term debt Change in accounts payable (creditors) Change in accounts receivable (debtors) Change in net fixed assets Net income
3 percent 5 percent 8 percent 10 percent 15 percent
Butch Ltd. has an average collection period of 36.5 days. Sales are 300 000. What is the average accounts receivable balance (debtors)? (Use a 365 day year.) (a) (b) (c) (d) (e)
R4,441 R8,219 R10,000 R30,000 R36,500
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
Page 4 of 7
1.9
Which ONE of the following is a financing activity on a typical statement of cash flows? (a) (b) (c) (d) (e)
1.10
Depreciation Change in net fixed assets Change in inventory Change in accounts payable Dividends paid
Which ONE of the following factors will not be experienced by a high growth firm? (a) (b) (c) (d) (e)
An urgent need for trained staff An urgent need for facilities More proactive management More consumer complaints An urgent need for more production capacity
QUESTION 2
[15]
On 1 March 2011 Ronnie commenced trading as a sole trader, selling ice-cream from a van which he drove around the streets of his town. (a) (b) (c) (d)
(e)
(f)
(g)
(h) (I)
He rented a van at a cost of R1 000 for three months. Running expenses for the van average R300 per month. He employed a part time assistant at a cost of R100 per month. He borrowed R2 000 from a local bank and the interest cost of the loan was R25 per month. His main business was to sell ice-cream to customers in the street, but he also did some special catering arrangements for business customers, supplying ice-cream for office parties. Sales to these customers were usually on credit. For the three months to 31 May 2011 his total sales were: (1) Cash sales R8 900 (2) Credit sales R1 100 Ronnie purchased his ice-cream form Dairy Products. The cost of purchases for the three months to 31 May 2011 was R6 200 and at 31 May he had sold every item of stock. He still owed R700 to Dairy Products for unpaid purchases on credit. One of his credit sale customers has gone bankrupt owing Ronnie R250. Ronnie has decided to write off the debt in full, with no prospect of getting the money back. Ronnie used his own home for the office work. Telephone and postage expenses for the three months to 31 May were R150. During the period he paid himself R300 per month.
Required: Prepare a comprehensive income statement for the three months 1 March – 31 May 2011.
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
Page 5 of 7
QUESTION 3
[10]
Explain the dual effects of each of the following transactions on the accounting equation (a) (b) (d) (e) (f)
A business receives a loan of R5 000 from a bank. A business pays R800 cash to purchase goods for resale. The owner of a business removes R50 from the cash till to buy a personal present for his son. A business sells goods costing R300 at a profit of R140. A business repays a R5 000 bank loan plus interest of R270.
Hint: Make use of the accounting equation where A = E + L. QUESTION 4
[30]
You are required to prepare a statement of financial position for Tina’s Shoes as at 31 December 2010, given the following information below: R Capital as at 1 January 2010 Profit for the year to 31 December 2010 Freehold premises, net book value at 31 December 2010 Motor vehicles, net book value 31 December 2010 Furniture, net book value at 31 December 2010 Long-term loan Bank overdraft Goods in stock for resale Debtors Cash in hand Creditors Tax payable Drawings Arrear expenses of rent Prepaid insurance
Assignment: 2nd Semester 2011
47,600 8,000 50,000 9,000 8,000 25,000 2,000 16,000 500 100 1,200 3,500 4,000 600 300
© IMM Graduate School of Marketing BN101
Page 6 of 7
QUESTION 5
[25]
The statement of financial position of Cats International at 30 June 2011 is set out below: 2011 Property Plant and machinery Cost at 1 July 2010 Acquisition at cost Disposal at cost Depreciation Current Assets Inventory Debtors Balance at bank Total Assets Share capital Revaluation reserve Share premium Retained income Current Liabilities Bank overdraft Loan Creditors Total Liabilities
2010 R 30000 7500
8000 4500 -2200 10300 -2800
R 16000 6100 8000 0 0 0 -1900
19600 12000 7600 0
14550 7800 5900 850
57100
36650
10000 14000 1000 23350 8750
8500 0 0 22150 6000
3500 0 5250
0 1000 5000 57100
36650
The machinery disposed of had a net book value of R550 and was sold for R800. Required: Prepare a cash flow statement for the year ended 30 June 2011.
ASSIGNMENT TOTAL: 100
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
Page 7 of 7
ANSWER SHEET (DETACH THE ANSWER SHEET AND INCLUDE IT IN YOUR ASSIGNMENT)
BUSINESS NUMERACY 1 (BN101)
EXAMINATION: DATE:
16 AUGUST 2011 ONE (1)
QUESTION: STUDENT NUMBER:
S
QUESTION NO. 1.1
a
b
c
d
e
1.2
a
b
c
d
e
1.3
a
b
c
d
e
1.4
a
b
c
d
e
1.5
a
b
c
d
e
1.6
a
b
c
d
e
1.7
a
b
c
d
e
1.8
a
b
c
d
e
1.9
a
b
c
d
e
1.10
a
b
c
d
e
SELECTED ANSWER
Assignment: 2nd Semester 2011
© IMM Graduate School of Marketing BN101
