ACC11M1: Accounting 1A Course Notes (South Africa)

Accounting 1A is the foundation of bookkeeping and financial accounting used across South African universities, colleges, and TVETs. ACC11M1 typically introduces the accounting equation, source documents, journal entries, ledgers, trial balances, and the preparation of basic financial statements. It also strengthens your ability to interpret transactions, apply accounting concepts consistently, and follow the double-entry system to produce reports that are understandable to stakeholders.

This study guide is written to help you pass ACC11M1 by combining conceptual explanations with exam-focused practice scenarios. It also keeps South African context in view—especially how courses expect you to handle typical commercial transactions and how students are assessed through problem-solving and structured workings.

1) Accounting Foundations in ACC11M1 (Double-Entry, Transactions, and the Accounting Equation)

The purpose of accounting and the accounting cycle

In ACC11M1, accounting is treated as a controlled process: you start with a business’s transactions and end with financial information for decision-making. The accounting cycle connects every step logically:

Identify and analyse transactions (What happened? Is it an exchange? Does it affect assets, liabilities, or equity?)
Record in journals using the correct debit/credit rules
Post to ledgers (build account balances)
Prepare a trial balance to test arithmetical accuracy
Adjust and correct for accruals, prepayments, and other non-cash timing differences (depending on your course scope)
Prepare financial statements (often an income statement and statement of financial position at this stage)

A common exam approach is to give you information about transactions and ask you to produce journals, ledgers, and sometimes a trial balance. Another common approach is to test whether you understand classification (for example, whether an expense is an operating expense or whether a payment is a capital item).

The accounting equation and how it drives everything

At the heart of ACC11M1 is the accounting equation:

Assets = Liabilities + Equity

You should understand what each term means in plain language:

Assets are resources controlled by the business (cash, accounts receivable, inventory, equipment).
Liabilities are obligations to outsiders (accounts payable, loans).
Equity is the owners’ residual interest in the business after liabilities:
Equity = Assets − Liabilities

When a transaction happens, at least one side of the equation changes in a way that keeps the equation balanced. Double-entry accounting ensures this balance automatically.

The double-entry system: debit and credit logic

For ACC11M1, you must be able to apply debit/credit rules. A reliable memory framework is:

Assets increase with debits, decrease with credits
Liabilities increase with credits, decrease with debits
Equity increases with credits, decrease with debits
Revenue increases equity (so it is usually credited)
Expenses decrease equity (so they are usually debited)

However, the exam will always test your ability to apply these rules to realistic transactions rather than memorising them mechanically. The key is to analyse the transaction first and then apply debit/credit.

Source documents and transaction identification (what to record)

Transactions are recorded based on evidence commonly used in accounting systems. South African college/university courses often expect you to recognise typical documents:

Invoices (sales and purchases)
Receipts (e.g., cash received)
Payment vouchers / supplier statements
Credit notes (returns/allowances)
Bank statements and deposit slips
Contracts or loan agreements for financing transactions

In exam questions, the data may be presented without explicitly naming the document. Your job is to identify the transaction type and its impact.

Worked example: analysing transactions using the accounting equation

Consider a student business setup scenario:

Transaction 1: Owner invests cash of R50 000 into the business.

Cash (asset) increases → debit
Equity (owner’s contribution) increases → credit

Journal entry:

Debit: Cash R50 000
Credit: Owner’s Equity R50 000

Transaction 2: Business buys equipment on credit for R12 000.

Equipment (asset) increases → debit
Accounts payable (liability) increases → credit

Journal entry:

Debit: Equipment R12 000
Credit: Accounts Payable R12 000

Now test the accounting equation:

Assets increased by R50 000 + R12 000 = R62 000
Liabilities increased by R12 000
Equity increased by R50 000
So Assets (62 000) = Liabilities (12 000) + Equity (50 000) → Balanced.

How to avoid common exam mistakes

Using the wrong account: for example, treating a capital investment as revenue.
Confusing asset vs expense: purchasing inventory is an asset at purchase; it becomes an expense (cost of sales) when sold.
Forgetting the “other side”: every journal entry must have equal debits and credits.
Posting errors: ledger balances must match journal totals.

Exam-style practice mini-set (quick self-test)

Analyse and decide the journal accounts for each transaction:

Owner withdraws cash of R3 000 for personal use.
Business pays rent in advance of R2 400.
Sells goods for cash of R8 000 (cost of goods previously recorded separately—assume cost is R5 000 if the exam asks for COGS).
Receives a supplier credit note for R1 000 due to returned goods.
Borrows a bank loan of R20 000 and deposits it into the business bank account.

If you can quickly state debit/credit accounts and how they affect the accounting equation, you are ready for the next steps: journals and ledgers.

2) Journals, Ledgers, and Trial Balances (From Source Entries to Error-Checking)

Journals: the foundation of correct recording

A journal is where transactions are recorded chronologically. The two main types your course will likely emphasise in Accounting 1A are:

General journal entries for various transactions
Cash journals (cash receipts and cash payments) if your course uses them

Your focus in ACC11M1 is usually the ability to create correct journal entries and understand why they are correct.

Format of journal entries

A typical general journal entry includes:

Date
Narration (brief description)
Debit account and amount
Credit account and amount

Example structure:

Date: 01/03/2026
Debit: Cash
Credit: Owner’s Equity
Amount: R50 000

In exams, the narration may not be marked heavily, but it helps you keep entries correct and consistent.

Ledgers: posting and maintaining balances

After entries are in journals, you post them to ledgers. A ledger account often shows:

Opening balance (if any)
Date and journal reference (sometimes)
Debit side and credit side amounts
Closing balance

You must be able to:

Post correctly to the right accounts
Compute closing balances
Recognise whether an account’s balance is debit or credit nature

T-accounts and “accounting direction”

Many ACC11M1 courses teach T-accounts (a simplified ledger). For assets:

Debits increase, credits decrease
For liabilities:
Credits increase, debits decrease

When calculating the balance:

If the total debits exceed credits, the account ends with a debit balance
If credits exceed debits, the account ends with a credit balance

The trial balance: testing arithmetic accuracy

A trial balance lists closing balances from ledgers to check whether total debits equal total credits:

Total debit balances = Total credit balances

Important: a trial balance test confirms arithmetical agreement, not necessarily correctness of concept. It will not detect:

A transaction posted to the wrong account (but still with a debit and credit)
Omissions of one side or misclassification that still balances
Some errors that cancel each other

Nevertheless, in ACC11M1 exams, trial balance accuracy is often a major scoring component.

Worked example: complete journal → ledger → trial balance flow

Assume the following transactions for a period:

Owner invests cash: R60 000
Buys inventory on credit: R18 000
Purchases equipment for cash: R10 000
Makes credit sale: revenue R25 000
Collects part of accounts receivable: cash received R9 000
Pays supplier settlement: cash paid R6 500
Incurs operating expenses: utilities paid in cash R1 200
Owner withdraws cash for personal use: R2 000

Let’s define accounts likely used:

Cash
Owner’s Equity / Capital
Inventory (or Trading stock)
Equipment
Accounts Payable (Creditors)
Accounts Receivable (Debtors)
Sales Revenue
Cost of Sales (if required; assume not required yet unless asked)
Utilities Expense
Drawings (Owner withdrawals)

Journal entries (simplified—COGS excluded unless asked)

Owner invests:

Debit Cash R60 000
Credit Capital R60 000

Inventory on credit:

Debit Inventory R18 000
Credit Accounts Payable R18 000

Equipment for cash:

Debit Equipment R10 000
Credit Cash R10 000

Credit sale:

Debit Accounts Receivable R25 000
Credit Sales Revenue R25 000

Cash received from customers:

Debit Cash R9 000
Credit Accounts Receivable R9 000

Cash paid to suppliers:

Debit Accounts Payable R6 500
Credit Cash R6 500

Utilities paid:

Debit Utilities Expense R1 200
Credit Cash R1 200

Owner withdrawals:

Debit Drawings R2 000
Credit Cash R2 000

Ledger closing balances (conceptual summary)

Now compute ledger balances:

Cash:

Debits: R60 000 (investment) + R9 000 (collection) = R69 000
Credits: R10 000 (equipment) + R6 500 (supplier payment) + R1 200 (utilities) + R2 000 (drawings)
Total credits = R19 700
Closing Cash = R69 000 − R19 700 = R49 300 (debit balance)

Capital:

Credit R60 000 → closing credit 60 000

Inventory:

Debit R18 000 → closing debit 18 000

Equipment:

Debit R10 000 → closing debit 10 000

Accounts Payable:

Credit R18 000 initially
Debit R6 500 settlement
Closing = R18 000 − R6 500 = R11 500 credit balance

Accounts Receivable:

Debit R25 000
Credit R9 000 collection
Closing = R25 000 − R9 000 = R16 000 debit balance

Sales Revenue:

Credit R25 000 → closing credit 25 000

Utilities Expense:

Debit R1 200 → closing debit 1 200

Drawings:

Debit R2 000 → closing debit 2 000

Now prepare trial balance totals:

Account	Debit (R)	Credit (R)
Cash	49 300
Inventory	18 000
Equipment	10 000
Accounts Receivable	16 000
Utilities Expense	1 200
Drawings	2 000
Accounts Payable		11 500
Capital		60 000
Sales Revenue		25 000
Totals	96 500	96 500

Debits equal credits → trial balance passes.

Trial balance exam tips

Ensure you do not forget drawings: in many frameworks drawings are treated as a separate equity reduction account.
Keep track of whether a balance is debit or credit nature.
Re-check sums—trial balances often cost marks if totals don’t agree.

Common exam traps in journals and ledgers

Swapping debtor and creditor: customers owe you (debtors), suppliers you owe (creditors).
Confusing cash receipt with credit sale: cash receipt affects cash; credit sale affects receivables.
Treating drawings as an expense: drawings reduce equity but are not an operating expense.
Incorrect posting sign: trial balance depends on correct side.

Quick practice tasks (for self-grading)

Try to prepare journal entries and then compute the effect on accounts for:

A credit purchase of R7 800
A cash purchase of inventory R3 200
A partial return to supplier on credit note R1 050
A payment to a creditor R2 600 (assume settlement reduces creditor balance)

When you finish, check that the accounting equation holds at every step.

3) Financial Statement Basics (Income Statement, Statement of Financial Position, and Interpretation)

The difference between revenue, expenses, assets, and liabilities

ACC11M1 usually expects you to distinguish:

Revenue: results from selling goods or providing services (increases equity over time)
Expenses: costs incurred to earn revenue (decrease equity over time)
Assets: resources with future economic benefit
Liabilities: obligations

A key conceptual point:

Revenue and expenses affect profit, which ultimately changes equity.
Assets and liabilities affect the financial position at a point in time.

Income statement structure and the link to equity

An income statement typically shows:

Sales revenue
Less: cost of sales (if the course includes inventory costing and COGS)
Gross profit
Less: operating expenses
Net profit (or loss)

If your course is still early in ACC11M1, it may focus more on basic entries, but the logic is still essential. Profit increases capital (equity), while a loss decreases it.

Statement of financial position (balance sheet) essentials

A statement of financial position shows:

Assets (current and non-current)
Liabilities (current and non-current)
Equity (capital and retained profit/drawings effects depending on stage)

The accounting equation must hold:
Assets = Liabilities + Equity

Worked example: basic financial statements from ledger data

Using the earlier scenario, we had:

Cash R49 300
Inventory R18 000
Equipment R10 000
Accounts receivable R16 000
Utilities expense R1 200
Drawings R2 000
Accounts payable R11 500 credit
Capital R60 000 credit
Sales revenue R25 000 credit

To prepare a basic income statement, we need cost of sales. Suppose we now add one more exam assumption:

Assumption for this question: The cost of sales for the credit sales of R25 000 is R14 000. This would normally come from inventory records.

Now:

Sales revenue: R25 000
Less: Cost of sales: R14 000
Gross profit: R11 000
Less: Utilities expense: R1 200
Net profit: R9 800

For the statement of financial position:

Total assets: Cash 49 300 + Inventory 18 000 + Equipment 10 000 + Accounts receivable 16 000
Assets total = R93 300
Total liabilities: Accounts payable = R11 500
Equity should equal assets minus liabilities: 93 300 − 11 500 = R81 800

Now reconcile equity movement:

Opening capital assumed from transaction 1 is R60 000
Net profit adds R9 800
Drawings reduce equity by R2 000

Expected closing equity = 60 000 + 9 800 − 2 000 = R67 800

But this doesn’t match the equity implied by assets minus liabilities (R81 800). What happened? The mismatch indicates that the ledger/trial balance basis earlier did not include the reduction of inventory through cost of sales or recognition of inventory expense. In a full system, when goods are sold, inventory decreases and cost of sales is recognised; without adjusting inventory, the statement becomes inconsistent.

Correcting for cost of sales properly

To make the financial statements consistent, include sale-related inventory movement:

For sales:

Debit Accounts Receivable R25 000
Credit Sales revenue R25 000

For cost of sales:

Debit Cost of sales R14 000
Credit Inventory R14 000

This would change:

Inventory closing: previous 18 000 − 14 000 = R4 000
Add Cost of sales expense R14 000 (debit)
Trial balance totals change accordingly (and remain balanced).

Now recompute total assets:

Cash 49 300
Inventory 4 000
Equipment 10 000
Accounts receivable 16 000
Assets total = 49 300 + 4 000 + 10 000 + 16 000 = R79 300

Liabilities remain R11 500
Equity implied = 79 300 − 11 500 = R67 800

Now equity reconciliation matches:

Closing equity = 60 000 + 9 800 − 2 000 = 67 800

This example shows an important exam skill: you must ensure that revenue recognition and inventory accounting are linked, especially when cost of sales is included.

Why this matters for exams

Many exam scripts fail because students prepare an income statement using cost of sales but forget to reduce inventory. Others reduce inventory but forget to recognise cost of sales. Either way, the statement of financial position and the income statement won’t reconcile with each other.

Interpret the statements: what questions may ask

Even if ACC11M1 is not heavy on ratio analysis, interpretation is often tested:

Profitability: Does revenue exceed expenses?
Liquidity: Can the business pay short-term obligations (current assets vs current liabilities)?
Solvency: Is equity adequately funded relative to liabilities?
Movement of equity: How do profits and drawings affect capital?

Simple interpretation example

If net profit is R9 800, that indicates the business earned more from sales than it spent on utilities and cost of sales (under assumptions). However, liquidity depends on cash and receivables. If much of sales is on credit and cash receipts are low, the business may have profit but still struggle to pay creditors on time.

Prepare statements from a trial balance: a checklist

When asked to prepare basic statements from trial balance information:

Income statement:
- Include revenue accounts (credit balances)
- Include expense accounts (debit balances)
- Determine gross profit if cost of sales is available
Statement of financial position:
- Include asset balances (normally debit balances)
- Include liability balances (normally credit balances)
- Equity is the residual or derived from capital + retained profit − drawings (depending on course approach)
Reconcile:
- Assets = Liabilities + Equity must hold

4) Inventory, Purchases/Sales, Returns, and VAT-Style Considerations (Transaction Mechanics)

Inventory in ACC11M1: the logic of control

Inventory is a typical exam topic because it links transactions to both the income statement and the statement of financial position. Even when ACC11M1 introduces only basic inventory handling, you should understand the flow:

Purchase inventory → increases inventory asset
Sell inventory → increases sales revenue and decreases inventory through cost of sales
Returns/allowances → reverse parts of either purchases or sales

Inventory is not expensed when purchased; it becomes an expense only when sold (unless your course treats certain purchases differently—always follow the given question rules).

Sales mechanics: cash sales vs credit sales

Cash sale:

Debit Cash
Credit Sales Revenue
Sales revenue increases profit immediately, and cost of sales reduces profit when you also record the sale’s cost.

Credit sale:

Debit Accounts Receivable
Credit Sales Revenue
Accounts receivable increases; cash may be received later.

In exam questions, students lose marks when they treat a credit sale as cash, affecting cash and receivable incorrectly.

Purchases mechanics: cash purchases vs credit purchases

Cash purchase:

Debit Inventory
Credit Cash

Credit purchase:

Debit Inventory
Credit Accounts Payable

Returns and credit notes: reversing transactions

Returns are common in ACC11M1 questions:

Customer returns goods (sales return):
- Reduce sales revenue
- Reduce accounts receivable (if credit) or reduce cash (if cash)
Supplier returns goods (purchase return):
- Reduce inventory
- Reduce accounts payable (if credit) or reduce cash (if cash)

A credit note often represents the supplier’s or customer’s adjustment, but in accounting entries you focus on reversing the original transaction impact.

Worked example: sales returns and purchase returns

Assume the following:

A business sold goods on credit for R10 000.
The customer returned goods costing R4 000 and the selling price value returned is R2 000 (the question may specify whether you’re given cost or selling value for returns; here we keep it consistent by stating both).
The supplier later provided a purchase return credit note for R1 200, and the inventory cost returned is R1 200 (assume inventory valued at purchase cost).

Sales return entry (customer returns)

Original sale:

Debit Accounts Receivable R10 000
Credit Sales Revenue R10 000

Sales return:

Debit Sales Returns (or Sales Revenue control reduction) R2 000 (sometimes shown as a debit to sales return account)
Credit Accounts Receivable R2 000

Cost of sales on return (if your course requires it):

Debit Inventory control return (or credit cost of sales depending on method)
Credit Cost of Sales R800? (This depends on how you treat returns in your marking scheme.)

Because the numbers in returns questions must be consistent, your course typically expects one of these approaches:

Approach A: Use given cost figure to reverse cost of sales directly.
Approach B: If only selling price is given, it may assume a gross margin and you calculate cost.

To avoid confusion in study, your key skill is: returns must reduce both revenue and inventory/cost of sales. If only one side is adjusted, statements will not reconcile.

Inventory valuation approaches (what ACC11M1 commonly covers)

Depending on course scope, ACC11M1 may include simple inventory valuation methods:

FIFO
Weighted Average
Sometimes periodic vs perpetual systems

However, many early modules emphasise mechanics rather than full-depth inventory valuation formulas. If your exam focuses on entries and inventory control, you will be given inventory quantities and prices and asked to compute cost of inventory sold.

Perpetual vs periodic: transaction frequency and exam expectations

Perpetual inventory: every sale updates inventory and cost of sales immediately.
Periodic inventory: inventory adjustments are made at period-end through stocktaking; purchases are recorded into purchase accounts, and cost of sales is calculated at the end.

ACC11M1 may touch on periodic methods conceptually even if not fully applied. In exams, follow the question wording:

If the question provides “perpetual inventory records,” expect cost-of-sales entries at each sale.
If it says “periodic system,” expect a closing stock calculation and cost of sales via:
Cost of sales = Opening stock + Purchases − Closing stock

Worked example: periodic cost of sales using stocktake

Suppose:

Opening inventory: R30 000
Purchases during the year: R120 000
Closing inventory (based on physical count): R45 000

Then:
Cost of sales = 30 000 + 120 000 − 45 000 = R105 000

If you prepare the income statement, include:

Sales revenue (given)
Less cost of sales (R105 000)
Gross profit

And in the statement of financial position, include inventory at closing stock (R45 000).

VAT-style considerations (South African context)

Many South African accounting modules introduce VAT conceptually and may ask you to treat VAT amounts separately. Whether VAT is included in ACC11M1 depends heavily on the institution and syllabus. In exams that include VAT, typical expectations are:

VAT is not revenue and not an expense; it is a liability/asset relative to the tax authority.
Output VAT is collected on sales; input VAT is paid on purchases.
Net VAT payable is output VAT minus input VAT (or vice versa if input exceeds output).

Because VAT treatment differs by question design, your guiding exam practice is:

Read the question carefully for whether amounts given are VAT-inclusive or VAT-exclusive.
If VAT-inclusive amounts are given and VAT rate is stated (commonly 15% in South African contexts), separate VAT using:
- If VAT-inclusive: VAT = Total × 15/115
- Net price (ex VAT) = Total − VAT

If your course does not include VAT, do not introduce it. If it does include VAT, follow the VAT instruction precisely and show VAT accounts accordingly.

Integration: how inventory and returns affect the full accounting cycle

A high-scoring answer often demonstrates integration:

A credit sale increases receivables and sales.
When goods are returned, sales decreases and receivables decreases.
Inventory returned affects cost of sales and ending inventory (depending on periodic/perpetual).
These changes then flow through to gross profit and the statement of financial position.

5) Exam Preparation and Full Problem-Solving Strategy for ACC11M1 (South African Assessment Focus)

What examiners usually test in Accounting 1A

Across South African universities, colleges, and TVETs, ACC11M1 assessments commonly test:

Journal entry accuracy
Ledger posting and closing balances
Trial balance correctness
Financial statement preparation (income statement and statement of financial position)
Conceptual classification (assets vs expenses, revenue vs capital, drawings vs expenses)
Inventory and cost of sales mechanics where included
Error detection (e.g., trial balance doesn’t balance—what could be wrong?)

A disciplined method for answering transaction questions

Use the following method during your exam:

Extract transactions: rewrite the question data in a bullet list.
Decide the system: perpetual vs periodic (if inventory is involved).
Identify each account affected:
- Cash/bank
- Accounts receivable / payable
- Inventory
- Equipment
- Revenue/expenses
- Capital/drawings
Determine the direction (debit/credit):
- Asset increase debit; asset decrease credit
- Liability increase credit; liability decrease debit
- Revenue credit; expenses debit
Ensure double-entry balance for every transaction.
Post to ledgers (use T-accounts if allowed; otherwise compute closing balances systematically).
Prepare trial balance.
Prepare statements if requested:
- Calculate profit and reconcile equity
Check your consistency:
- Does Assets = Liabilities + Equity hold?
- Do totals match?

How to handle “trial balance doesn’t balance” questions

If your trial balance totals don’t match, common causes include:

Arithmetic mistake when adding balances
Posting error (putting debit to credit side or vice versa)
Omitting an account balance
Copy error from journal to ledger
Miscalculation of closing balance in one ledger

A good exam tactic:

Re-sum debit balances and credit balances carefully.
Identify which side is short and confirm the ledger balances of accounts on that side.
Check whether any transaction’s “other side” was skipped.

Designing a full mock exam question (with full solution logic)

Consider the following exam scenario for a short period.

Given information

During March 2026, a business had the following transactions:

01/03/2026 Owner invests cash: R80 000
02/03/2026 Buys inventory on credit: R25 000
03/03/2026 Purchases equipment for cash: R15 000
05/03/2026 Credit sales: R40 000
08/03/2026 Receives cash from customers: R16 000
10/03/2026 Pays supplier: R9 000
12/03/2026 Cash paid utilities: R2 400
15/03/2026 Owner withdraws cash: R3 000
20/03/2026 Sales returns from a customer on credit: R6 000 (assume cost of sales for returned goods is R3 600)
25/03/2026 Purchases return to supplier on credit: R2 500

Assume:

Perpetual inventory system (cost of sales recorded when sales occur)
Cost of goods sold for the original credit sales of R40 000 is given by the question as R24 000
VAT is not included (so treat amounts as ex-VAT)

Step A: Journal entries (key transactions)

01/03: Owner investment

Dr Cash 80 000
Cr Capital 80 000

02/03: Credit purchase inventory

Dr Inventory 25 000
Cr Accounts Payable 25 000

03/03: Cash purchase equipment

Dr Equipment 15 000
Cr Cash 15 000

05/03: Credit sale

Dr Accounts Receivable 40 000
Cr Sales Revenue 40 000

Also record cost of sales (perpetual):

Dr Cost of Sales 24 000
Cr Inventory 24 000

08/03: Cash received from customers

Dr Cash 16 000
Cr Accounts Receivable 16 000

10/03: Pay supplier

Dr Accounts Payable 9 000
Cr Cash 9 000

12/03: Utilities paid

Dr Utilities Expense 2 400
Cr Cash 2 400

15/03: Owner drawings

Dr Drawings 3 000
Cr Cash 3 000

20/03: Sales returns (reduce sales revenue and receivables)

Dr Sales Returns 6 000
Cr Accounts Receivable 6 000

Also reverse the cost of sales on returns:

Dr Inventory 3 600
Cr Cost of Sales 3 600

(Another way some courses present returns is crediting Sales Returns into revenue directly; but the “reduce revenue by R6 000” logic stays.)

25/03: Purchase returns (reduce inventory and payables)

Dr Accounts Payable 2 500
Cr Inventory 2 500

Step B: Compute ledger balances

We compute closing balances after these journal entries.

Cash:

Debits: +80 000 (investment) +16 000 (collection) = 96 000
Credits: −15 000 (equipment) −9 000 (supplier payment) −2 400 (utilities) −3 000 (drawings) = −29 400
Closing Cash = 96 000 − 29 400 = 66 600

Inventory:
Start effects:

+25 000 purchase
−24 000 cost of sales
+3 600 inventory returned (from sales return)
−2 500 purchase return

Closing Inventory = 25 000 − 24 000 + 3 600 − 2 500 = 2 100

Equipment: 15 000 debit

Accounts Receivable:

+40 000 from credit sale
−16 000 collection
−6 000 sales returns

Closing A/R = 40 000 − 16 000 − 6 000 = 18 000 debit

Accounts Payable:

+25 000 from purchase
−9 000 paid
−2 500 purchase return

Closing A/P = 25 000 − 9 000 − 2 500 = 13 500 credit

Capital: credit 80 000

Sales Revenue: credit 40 000
Sales Returns: debit 6 000 (contra-revenue; net sales = 34 000)

Cost of Sales:

+24 000 debit
−3 600 (credit to cost of sales because of return reversal)

Closing Cost of Sales = 24 000 − 3 600 = 20 400 debit

Utilities Expense: 2 400 debit
Drawings: 3 000 debit

Step C: Trial balance

Create trial balance totals:

Debits:

Cash 66 600
Inventory 2 100
Equipment 15 000
Accounts Receivable 18 000
Sales Returns 6 000
Cost of Sales 20 400
Utilities Expense 2 400
Drawings 3 000
Total debits = 66 600 + 2 100 + 15 000 + 18 000 + 6 000 + 20 400 + 2 400 + 3 000
= 66 600 + 2 100 = 68 700

15 000 = 83 700
18 000 = 101 700
6 000 = 107 700
20 400 = 128 100
2 400 = 130 500
3 000 = 133 500

Credits:

Accounts Payable 13 500
Capital 80 000
Sales Revenue 40 000
Total credits = 13 500 + 80 000 + 40 000 = 133 500

Trial balance balances perfectly.

Step D: Income statement and statement of financial position

Income statement:

Sales Revenue = 40 000
Less Sales Returns = 6 000 → Net Sales = 34 000
Less Cost of Sales = 20 400
Gross Profit = 34 000 − 20 400 = 13 600
Less Utilities Expense 2 400
Net Profit = 13 600 − 2 400 = 11 200

Statement of financial position:
Assets:

Cash 66 600
Accounts Receivable 18 000
Inventory 2 100
Equipment 15 000
Total Assets = 66 600 + 18 000 + 2 100 + 15 000 = 101 700

Liabilities:

Accounts Payable 13 500
Total liabilities = 13 500

Equity:

Capital 80 000
Add Net Profit 11 200
Less Drawings 3 000
Closing equity = 80 000 + 11 200 − 3 000 = 88 200

Check:
Liabilities + Equity = 13 500 + 88 200 = 101 700 → balances.

This mock exam demonstrates how ACC11M1 questions are expected to connect: a correct journal set produces a correct trial balance and then correct statements that reconcile.

Institutional study focus (South Africa): tailoring practice to your setting

Different South African institutions often vary slightly in emphasis even if the core accounting concepts are similar. To fit your ACC11M1 exam environment:

If your college/university uses a step-by-step “show workings” approach: practise ledgers, T-accounts, and trial balance layout heavily.
If your programme is more problem-based: practise interpreting transactions into journal entries quickly, then check trial balance.
If inventory is included early: ensure your cost of sales recording matches whether the system is perpetual or periodic.
If VAT is included: practise separating VAT amounts as instructed and ensure VAT accounts don’t appear as revenue/expense.

Regardless of institution style, the underlying accounting logic remains consistent.

Practice schedule and revision strategy

A realistic plan for ACC11M1 exam readiness:

Week 1: accounting equation, debits/credits, analysing transactions
Week 2: journals to ledgers, trial balances
Week 3: financial statements and reconciliation (profit to equity)
Week 4: inventory, returns, integrated questions and timed practice

During revision:

Do at least three full integrated questions (journal → trial balance → statements).
Do at least ten transaction mini-questions for speed and accuracy.
Rework past mistakes by writing the “rule” that caused the mistake (e.g., “drawings are not an expense”).

Final exam checklist (use in the last 10 minutes)

Before submitting:

Did each journal entry balance (debits = credits)?
Did you post all entries to the correct ledger accounts?
Does the trial balance total debits equal credits?
If statements are required, does Assets = Liabilities + Equity?
Did you correctly reduce inventory and cost of sales for sales returns (when required)?
Did you treat drawings as a deduction from equity, not as an expense?

This final checklist often rescues marks on otherwise strong scripts, because errors frequently occur in the “last-mile” presentation and reconciliation steps.