ACCN101: Accounting 1A Exam Notes (UKZN BCom Accounting)

These ACCN101 Accounting 1A exam notes are tailored for University of KwaZulu-Natal (UKZN) BCom in Accounting students, and closely aligned with first-year accounting modules at South African universities (e.g. UNISA’s FAC1501, CUT’s ACC10A1, and similar “Accounting 1A” courses). They focus on the concepts and problem types you are most likely to see in ACCN101 tests, semester assessments and final exams. Use this as a comprehensive study guide together with your prescribed textbook, lecture slides and UKZN past papers.

1. The Accounting Environment and Conceptual Framework

1.1 Role and Purpose of Accounting

Accounting is the language of business. It provides financial information about an entity that is useful to a wide range of users in making economic decisions.

Key purposes of accounting:

Record financial transactions systematically.
Classify and summarise data into meaningful categories.
Report financial performance and position via financial statements.
Aid decision-making for users such as investors, creditors, managers and government.
Ensure accountability and stewardship of resources.

In ACCN101 (UKZN), you must be able to link these purposes to real-world examples, especially in a South African context.

Examples of accounting information users:

External users:
- Existing and potential shareholders (e.g. investors analysing JSE-listed companies).
- Banks and other lenders (evaluating ability to repay loans).
- SARS and other regulators (tax calculations, compliance).
- Suppliers (deciding on credit limits).
Internal users:
- Management (budgeting, performance evaluation).
- Employees (job security, wage negotiations).
- Directors (corporate governance, strategic decisions).

Exam tip: You are often asked to identify users and explain how each uses accounting information. Always mention both the type of user and the specific decision, for example:

Lenders use the statement of financial position and statement of profit or loss to assess whether the business can meet its interest and capital repayment obligations.

1.2 Types of Accounting

In first-year accounting, three broad categories are emphasised:

Financial Accounting
- Focuses on external reporting.
- Produces general purpose financial statements (GPFS) in line with IFRS or IFRS for SMEs.
- Historical, monetary, and largely regulated.
- Example at UKZN: ACCN101 and later ACCN201/ACCN202 focus heavily on financial accounting.
Management Accounting
- Focuses on internal reporting.
- Includes budgeting, cost analysis, variance analysis, decision support.
- Future-oriented and can be non-monetary.
- More emphasised in later modules but introduced conceptually in Accounting 1A.
Auditing and Governance
- Evaluates whether financial statements are fairly presented.
- Supports confidence and trust in reported figures.
- Linked to modules like Auditing in later years, but the concept of assurance appears early.

Exam-style contrasts:

You could be asked to differentiate financial vs management accounting. Structure your answers:

Purpose: external vs internal decisions.
Regulation: IFRS/Companies Act vs flexible, internal policies.
Time focus: past (historical) vs future (planning).
Level of detail: aggregated vs very detailed.

1.3 The Accounting Equation and Business Forms

1.3.1 Basic Accounting Equation

The foundation of double-entry accounting:

Assets = Equity + Liabilities

Assets: resources controlled by the entity (e.g. cash, inventory, vehicles).
Equity: owners’ residual interest after liabilities (e.g. capital, retained earnings).
Liabilities: present obligations (e.g. bank loans, trade payables).

Rearranged:

Equity = Assets − Liabilities
Liabilities = Assets − Equity

In ACCN101 exam questions, you frequently need to:

Fill in missing values in the equation.
Show the impact of transactions on assets, equity and liabilities.
Classify items correctly as assets, liabilities, equity, income or expense.

Example:

A business has:

Assets: R150 000
Liabilities: R40 000

Then:

Equity = R150 000 − R40 000 = R110 000

If the business takes an additional loan of R20 000 to buy equipment:

Assets: +R20 000 (new equipment).
Liabilities: +R20 000 (loan).
Equity: no change immediately.

The equation remains balanced at each step.

1.3.2 Forms of Business Ownership

You must be able to explain and compare:

Sole Proprietorship
- One owner, not a separate legal entity.
- Owner has unlimited liability.
- Simple to start; typically small businesses.
- Profits are taxed in owner’s hands as personal income tax.
Partnership
- Two or more owners (partners).
- Not a separate legal entity in South African law.
- Partners have unlimited liability (subject to partnership agreement).
- Profits shared according to partnership agreement.
- Complexities: admission/retirement of partners, profit-sharing ratios.
Company
- A separate legal entity (registered under Companies Act, 2008).
- Owners are shareholders; have limited liability.
- Can be public (Ltd) or private (Pty Ltd).
- Subject to Companies Act and must follow IFRS or IFRS for SMEs (depending on public interest score).

In ACCN101, much of the introductory work uses sole traders for simplicity, but you must know that later modules (ACCN201, ACCN202) and related courses at UNISA (e.g. FAC2601) cover companies in more depth.

1.4 The Conceptual Framework (IFRS-based)

The Conceptual Framework for Financial Reporting underpins all IFRS-compliant financial statements and is examinable in Accounting 1A.

1.4.1 Objective of General Purpose Financial Reporting

The primary objective is:

To provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity.

This is directly examinable: always mention useful information, investors, lenders and other creditors, and decisions about providing resources.

1.4.2 Qualitative Characteristics of Financial Information

Fundamental qualitative characteristics:

Relevance
- Information is capable of making a difference to decisions.
- Has predictive value, confirmatory value, or both.
- Materiality is an aspect of relevance: information is material if omitting or misstating it could influence decisions.
Faithful Representation
- Information must be:
  - Complete (includes all necessary information).
  - Neutral (without bias).
  - Free from error (no material errors; estimates are clearly explained).

Enhancing qualitative characteristics:

Comparability – across periods and between entities.
Verifiability – different knowledgeable independent observers could reach similar conclusions.
Timeliness – available in time to influence decisions.
Understandability – presented clearly and concisely.

Exam tip: A common ACCN101 question type is “Discuss whether the following information is relevant and/or faithfully represented.” Always link back to predict/confirm, completeness, neutrality and error-free.

1.4.3 Elements of Financial Statements

You must know the definitions and recognition principles for:

Assets
Liabilities
Equity
Income (includes revenue and gains)
Expenses (includes losses)

Definitions (simplified exam versions):

Asset: A present economic resource controlled by the entity as a result of past events.
Liability: A present obligation of the entity to transfer an economic resource as a result of past events.
Equity: The residual interest in the assets of the entity after deducting all its liabilities.
Income: Increases in assets or decreases in liabilities that result in increases in equity (other than contributions from owners).
Expenses: Decreases in assets or increases in liabilities that result in decreases in equity (other than distributions to owners).

Recognition criteria (Conceptual Framework):

An item is recognised as an asset, liability, income or expense if:

It meets the definition of an element, and
Recognition provides relevant information and a faithful representation.

Example exam application:

A company receives R10 000 from a customer in advance.
- Is this income? No, not yet; it is a liability (unearned revenue) because the company has the obligation to deliver goods/services in future.

1.5 Assumptions and Principles

First-year courses like ACCN101 emphasise key assumptions:

Accrual basis: Transactions are recorded when they occur, not when cash is received or paid.
Going concern: Assumes the entity will continue operating for the foreseeable future.
Monetary unit: Records are in a stable currency (e.g. South African Rand).
Time period (periodicity): The life of the business is divided into reporting periods (e.g. one year) to produce financial statements.

Accrual vs Cash Example:

Sold goods on credit for R5 000 on 25 June; customer pays on 10 July.
- Under accrual basis, income of R5 000 is recognised in June.
- Under cash basis, income of R5 000 would be recognised in July (not IFRS compliant for GPFS).

2. Double-Entry, Journals, Ledgers and the Trial Balance

2.1 Double-Entry System

Every transaction has two sides: debit and credit. Total debits must always equal total credits.

Expanded accounting equation:

Assets = Equity + Liabilities + (Income − Expenses)

Using “T-accounts” and debit/credit rules:

Element	Increases with	Decreases with
Assets	Debit	Credit
Expenses	Debit	Credit
Drawings	Debit	Credit
Liabilities	Credit	Debit
Equity	Credit	Debit
Income	Credit	Debit
Capital	Credit	Debit

A common memory technique for ACCN101: “DEAD CLIC”

Debit: Expenses, Assets, Drawings increase.
Credit: Liabilities, Income, Capital increase.

2.2 The Accounting Cycle Overview

UKZN ACCN101 exam questions often cover the full accounting cycle, especially for a sole trader:

Source documents (invoices, receipts, bank statements).
Journals (books of first entry).
Posting to ledgers (T-accounts).
Trial balance preparation.
Adjustments (accruals, prepayments, depreciation, etc.).
Adjusted trial balance.
Financial statements:
- Statement of Profit or Loss and Other Comprehensive Income.
- Statement of Changes in Equity.
- Statement of Financial Position.
Closing entries (transferring nominal accounts to equity).

You must understand each stage conceptually and be able to perform steps 2–7 numerically in exam-style questions.

2.3 Source Documents and Subsidiary Journals

Source documents provide evidence of transactions:

Sales invoices, purchase invoices.
Cash register slips.
Cheques and deposit slips.
Bank statements.
Credit notes and debit notes.

These documents are then recorded in subsidiary journals. ACCN101 often includes preparing or completing the following:

Cash Receipts Journal (CRJ) – all cash received.
Cash Payments Journal (CPJ) – all cash paid.
Sales Journal (SJ) – credit sales of inventory.
Purchases Journal (PJ) – credit purchases of inventory.
Returns Journals – Sales Returns Journal (SRJ) and Purchases Returns Journal (PRJ).
General Journal (GJ) – all other entries, especially adjustments and non-regular transactions.

CRJ Example (short version):

Date	Details	Bank (R)	Sales (R)	Cost of Sales (R)
05 March 20X5	Cash sale	8 000	8 000	5 000
10 March 20X5	Capital	20 000	–	–

In practice, ACCN101 questions can ask you to:

Complete CRJ from summaries.
Identify correct contra accounts (e.g. Bank vs Capital vs Debtors).

2.4 General Journal Entries

The general journal is used when transactions do not fit into specialised journals, such as:

Opening entries.
Adjusting entries (accruals, prepayments).
Correction of errors.
Bad debts write-off.
Depreciation.
Owner’s drawings not in cash (e.g. inventory for personal use).

General journal layout:

Date	Details	Ref	Debit (R)	Credit (R)
31 Dec 20X5	Salaries expense	GJ1	3 000
	Salaries payable	GJ1		3 000

Narration is normally required in formal accounting records but may or may not be required in exams; follow your lecturer’s instructions or past paper format.

2.5 Ledger Accounts and Posting

Once journals are prepared, the next step is posting to the ledger (T-accounts).

Example: Cash received from debtor (R2 500)

Debit: Bank 2 500 (increase asset).
Credit: Trade receivables (Debtors Control) 2 500 (decrease asset).

T-accounts:

Bank

Date	Details	Debit (R)	Credit (R)
x	Debtors Control	2 500

Debtors Control

Date	Details	Debit (R)	Credit (R)
x	Bank		2 500

In exams, you may get:

A list of transactions and be asked to open and post T-accounts.
Partial T-accounts and be asked to complete them.
Questions involving control accounts for debtors and creditors, especially linked with subsidiary ledgers in more advanced modules.

2.6 The Trial Balance

A trial balance lists all general ledger accounts and their balances at a specific date to check arithmetic accuracy.

Example (simple sole trader TB):

Account	Debit (R)	Credit (R)
Capital		100 000
Drawings	10 000
Land and buildings	80 000
Vehicles	40 000
Accumulated dep. – Vehicles		10 000
Inventory (1 Jan 20X5)	20 000
Trade receivables	15 000
Trade payables		12 000
Bank	5 000
Sales		160 000
Cost of sales	90 000
Salaries expense	30 000
Rent expense	12 000
Telephone expense	4 000
Totals	306 000	306 000

Purposes of the trial balance:

Checks arithmetic equality of debits and credits.
Does not guarantee absence of all errors (e.g. omission, compensating errors).
Forms the basis for preparing financial statements.

Typical exam tasks:

Prepare a trial balance from ledger balances.
Identify whether the trial balance will balance given certain transactions.
Detect errors that do or do not affect the trial balance total.

2.7 Common Errors Not Revealed by the Trial Balance

You can be asked to discuss errors not discovered by a trial balance:

Error of omission: transaction not recorded at all.
Error of commission: wrong account of same class used.
Error of principle: wrong class of account used (e.g. capital vs revenue).
Compensating errors: equal and opposite errors cancel each other out.
Error of original entry: wrong amount recorded in both debit and credit.

In contrast, errors that are revealed (because TB will not balance):

Single-sided entry.
Arithmetical error in a ledger.
Posting to wrong side of account.
Debit/credit totals not matching in a journal.

These theoretical questions appear regularly in ACCN101-type modules across South African universities (UKZN, UNISA, CUT, UJ, etc.).

3. Adjustments and the Preparation of Financial Statements

3.1 Adjusting Entries Concept

Adjusting entries ensure the financial statements comply with the accrual basis and fairly present the financial performance and position at the reporting date.

Adjustments are recorded at the end of the period (e.g. 31 December) and often involve:

Accrued income/expenses.
Prepaid income/expenses.
Depreciation.
Bad debts and allowances.
Inventory and cost of sales.
Errors discovered during year-end.

In ACCN101 exams, you are usually given:

An unadjusted trial balance.
Additional information (adjustments).
Required to prepare:
- Adjusting journal entries.
- Adjusted trial balance.
- Financial statements (statement of profit or loss and statement of financial position).

3.2 Accruals and Prepayments

3.2.1 Accrued Expenses (Outstanding Expenses)

Expense incurred but not yet paid or recorded fully.

Example:

Telephone expense per TB: R4 000 for the year ended 31 Dec 20X5, but December invoice of R400 is still unpaid and not recorded.

Adjustment:

Debit: Telephone expense 400
Credit: Telephone payable (or Accrued expenses) 400

Effect:

Statement of profit or loss: Telephone expense = 4 400
Statement of financial position: Current liability (telephone payable) = 400

3.2.2 Prepaid Expenses

Expenses paid in advance; the unused portion is an asset.

Example:

Insurance expense per TB: R12 000 for the year (paid 1 Oct 20X5 for 12 months). Year-end: 31 Dec 20X5. Only 3 months (Oct–Dec) relate to current year; 9 months relate to next year.

Insurance expense for current year = 12 000 × 3/12 = R3 000
Prepaid insurance (asset) = 12 000 × 9/12 = R9 000

Adjustment:

Debit: Prepaid insurance 9 000
Credit: Insurance expense 9 000

After adjustment:

Insurance expense in profit or loss = 3 000
Prepaid insurance (current asset) = 9 000

3.2.3 Accrued Income

Income earned but not yet received or recorded.

Example:

Interest income of R1 500 earned on fixed deposit but not recorded; will be received in the next period.

Adjustment:

Debit: Accrued income (Interest receivable) 1 500
Credit: Interest income 1 500

Effect:

Profit or loss: Interest income increases by 1 500.
Statement of financial position: Current asset (accrued income) increases by 1 500.

3.2.4 Income Received in Advance (Unearned Income)

Cash received but not yet earned; recorded as a liability.

Example:

Rent received per TB: R24 000, representing 12 months from 1 April 20X5 to 31 March 20X6. Year-end: 31 Dec 20X5.

Total months covered: 12 (Apr–Mar).
Months earned in current year: Apr–Dec = 9 months.
Months relating to next year: Jan–Mar = 3 months.

Rent income for current year:

R24 000 × 9/12 = R18 000 (income).
Rent received in advance (liability): R24 000 × 3/12 = R6 000.

Adjustment:

Debit: Rent income 6 000
Credit: Rent received in advance (Unearned rent income) 6 000

3.3 Depreciation of Non-Current Assets

Depreciation allocates the cost of a tangible non-current asset over its estimated useful life.

Key terms:

Cost: purchase price plus directly attributable costs.
Residual (salvage) value: estimated value at end of useful life.
Useful life: estimated period of economic benefit.

Two common methods introduced in Accounting 1A:

Straight-line method
Diminishing balance (reducing balance) method

3.3.1 Straight-Line Depreciation

Formula:

Annual depreciation = (Cost − Residual value) ÷ Useful life (years)

Example:

Vehicle cost: R60 000
Residual value: R6 000
Useful life: 6 years

Annual depreciation:

(60 000 − 6 000) ÷ 6 = 54 000 ÷ 6 = R9 000 per year

Journal entry (year-end):

Debit: Depreciation – Vehicles 9 000
Credit: Accumulated depreciation – Vehicles 9 000

3.3.2 Diminishing Balance Method

Depreciation is calculated as a fixed percentage of the carrying amount (cost − accumulated depreciation) at the beginning of each year.

Formula:

Depreciation = Carrying amount at beginning of year × Rate

Example:

Equipment cost: R100 000
Depreciation rate: 20% per annum (diminishing balance).

Year 1 depreciation:

100 000 × 20% = 20 000
Carrying amount end of Year 1: 100 000 − 20 000 = 80 000

Year 2 depreciation:

80 000 × 20% = 16 000
Carrying amount end of Year 2: 80 000 − 16 000 = 64 000

3.4 Bad Debts and Allowance for Credit Losses

3.4.1 Bad Debts (Irrecoverable Debts)

When a trade receivable is deemed uncollectible, it is written off as a bad debt.

Example:

Debtor A owing R3 000 is declared insolvent; no payment expected.

Journal entry:

Debit: Bad debts expense 3 000
Credit: Trade receivables – A 3 000

Effect:

Profit or loss: Bad debts expense increases by 3 000.
Statement of financial position: Trade receivables decrease by 3 000.

3.4.2 Allowance for Credit Losses (Provision for Doubtful Debts)

Instead of only writing off bad debts when they occur, entities estimate expected credit losses.

This estimate is recorded as a contra-asset account: Allowance for credit losses.
Reduces trade receivables to their net realisable value.

Example:

Trade receivables at year-end: R50 000
Allowance required: 5% of receivables = 50 000 × 5% = R2 500

If existing allowance per TB is R1 800, then:

Required increase = 2 500 − 1 800 = R700

Adjustment:

Debit: Credit losses (or Doubtful debts expense) 700
Credit: Allowance for credit losses 700

On the statement of financial position:

Trade receivables: 50 000
Less: Allowance for credit losses: (2 500)
Net trade receivables: R47 500

3.5 Inventory and Cost of Sales (Periodic System)

Most Accounting 1A modules in South Africa (including UKZN’s ACCN101) introduce the periodic inventory system first.

Key formula:

Cost of sales = Opening inventory + Purchases − Closing inventory

Example:

Inventory (1 Jan 20X5): R20 000
Purchases: R80 000
Inventory (31 Dec 20X5): R25 000

Cost of sales:

20 000 + 80 000 − 25 000 = R75 000

Adjusting entry for closing inventory (periodic system):

Debit: Inventory (31 Dec 20X5) 25 000
Credit: Cost of sales 25 000

Recording opening inventory (if TB only lists purchases):

Sometimes, a separate opening inventory account is closed to cost of sales.

Debit: Cost of sales 20 000
Credit: Inventory (1 Jan 20X5) 20 000

3.6 Preparation of the Statement of Profit or Loss (Income Statement)

In UKZN’s ACCN101, the statement of profit or loss is usually prepared in a single-step or multi-step format, depending on the lecturer’s preference.

Multi-step format (common in textbooks):

Revenue (Sales)
Less: Cost of sales
= Gross profit
Less: Other expenses (e.g. salaries, rent, telephone, depreciation)
Add: Other income (e.g. interest received, discount received)
= Profit for the period

Example (simplified):

Statement of Profit or Loss for the year ended 31 Dec 20X5 (R)

Revenue (Sales): 160 000
Less: Cost of sales: (75 000)
= Gross profit: 85 000
Other income:
- Interest income: 1 500
  = 1 500
Operating expenses:
- Salaries: 30 000
- Rent expense: 12 000
- Depreciation – Vehicles: 9 000
- Telephone: 4 400
- Bad debts: 3 000
  = 58 400
Profit for the year: 85 000 + 1 500 − 58 400 = R28 100

3.7 Preparation of the Statement of Financial Position (Balance Sheet)

The statement of financial position lists assets, equity and liabilities at a specific date.

Classification:

Non-current assets (e.g. land and buildings, vehicles, equipment).
Current assets (e.g. inventory, trade receivables, bank, cash).
Equity (capital + retained earnings/reserves).
Non-current liabilities (e.g. long-term loans).
Current liabilities (e.g. trade payables, accrued expenses, bank overdraft).

Example – Statement of Financial Position at 31 Dec 20X5 (R)

Assets

Non-current assets:
- Land and buildings: 80 000
- Vehicles: 60 000
- Less: Accum. dep. – Vehicles: (19 000)
- Carrying amount – Vehicles: 41 000
- Total non-current assets: 121 000
Current assets:
- Inventory (31 Dec 20X5): 25 000
- Trade receivables: 47 500
- Prepaid insurance: 9 000
- Accrued income (interest receivable): 1 500
- Bank: 5 000
- Total current assets: 88 000

Total assets: 121 000 + 88 000 = 209 000

Equity and Liabilities

Equity:
- Capital: 100 000
- Add: Profit for the year: 28 100
- Less: Drawings: (10 000)
  = Total equity: 118 100
Non-current liabilities:
- Long-term loan (if any; assume 40 000)
  = 40 000
Current liabilities:
- Trade payables: 12 000
- Telephone payable: 400
- Rent received in advance: 6 000
  = 18 400

Total equity and liabilities:

118 100 + 40 000 + 18 400 = 176 500

If this total does not match total assets (209 000), it indicates missing items (e.g. some liabilities or adjustments) in a simplified illustration. In actual exam questions, you must ensure the statement balances by carefully incorporating all adjustments. When practising with UKZN ACCN101 past papers and tutorials, work systematically:

Start from the adjusted TB totals.
Recalculate equity (capital + profit − drawings).
List non-current and current assets clearly.
List non-current and current liabilities.
Check the accounting equation: Assets = Equity + Liabilities.

4. Special Topics for ACCN101: Cash, Bank Reconciliation and Inventory

4.1 Cash and Cash Equivalents

Cash management is critical in Accounting 1A. You must understand:

Cash on hand: petty cash, till floats.
Cash at bank: cheque accounts, savings accounts.
Cash equivalents: short-term, highly liquid investments (e.g. 3-month Treasury bills) – often introduced conceptually.

Internal control over cash is examined both in theory and in simple scenarios:

Key principles:

Segregation of duties (different people handle cash, record transactions, reconcile bank).
Pre-numbered receipts and vouchers.
Regular bank reconciliations.
Daily cash counts.
Safe storage and limited access.

4.2 Bank Reconciliation

A bank reconciliation statement (BRS) explains differences between the cash book balance and the bank statement balance at month-end.

Common reconciling items:

Deposits not yet credited (outstanding deposits).
Unpresented cheques (cheques issued but not yet presented).
Bank charges (in bank statement, not yet recorded in cash book).
Interest earned (in bank statement, not in cash book).
Dishonoured cheques.
Direct debits/credits.

4.2.1 Process of Bank Reconciliation

Update the cash book for items on the bank statement not yet recorded:
- Bank charges.
- Interest received.
- Direct debits/credits.
Determine the adjusted cash book balance.
Prepare the bank reconciliation statement, starting from:
- Adjusted cash book balance, or
- Bank statement balance (depending on instructions), and adjust for:
  - Outstanding deposits.
  - Unpresented cheques.
Final result: adjusted cash book balance = adjusted bank statement balance.

4.2.2 Example of Bank Reconciliation

Cash book balance (Dr) on 30 June 20X5: R8 000
Bank statement balance (Cr) on 30 June 20X5: R6 500

Additional information:

Bank charges of R200 in bank statement, not recorded in cash book.
Interest received of R300 in bank statement, not in cash book.
Deposits of R2 000 made on 30 June not yet reflected in bank statement.
Cheques issued totalling R1 000 not yet presented.

Step 1 – Update cash book:

Bank charges:
- Debit Bank charges (expense) 200
- Credit Bank 200
Interest received:
- Debit Bank 300
- Credit Interest income 300

Updated cash book balance:

Opening cash book balance: 8 000
Less bank charges: (200)
Add interest income: +300
= Adjusted cash book balance: R8 100

Step 2 – Bank reconciliation statement (starting with bank statement balance):

Bank statement balance (Cr) 30 June: 6 500
Add: Deposits not yet credited: +2 000
= 8 500
Less: Unpresented cheques: (1 000)
= Adjusted bank balance: R7 500

This does not yet match the adjusted cash book of R8 100. This signals that either:

One of the opening balances is misstated; or
A reconciling item is missing (e.g. a deposit error, bank error, or cash book error).

Typical exam questions, however, will design figures so that adjusted balances agree when all reconciling items are accounted for accurately.

In a fully consistent example, you might have:

Adjusted cash book: R7 500
Adjusted bank statement: R7 500

and the numbers in the reconciling items would be chosen accordingly in the exam.

Exam tips:

Distinguish clearly between updating the cash book and preparing the bank reconciliation statement.
Cash book errors and omissions must be corrected in the cash book, not in the BRS.
Bank errors appear on the BRS but not in the cash book.

4.3 Petty Cash and the Imprest System

The petty cash system deals with small cash payments (e.g. taxi fares, small stationery purchases).

Imprest system: petty cash is maintained at a fixed float (e.g. R1 000). Periodically, it is reimbursed to restore the float.

Example:

Petty cash float: R1 000.
During the month, payments total R650 (stationery, postage, taxi, etc.).
At month-end, petty cash on hand: R350.

Reimbursement journal entry:

Debit: Stationery expense, Postage expense, Taxi expense, etc. (as per analysis of petty cash vouchers) 650
Credit: Bank 650

Petty cash remains at R1 000 (R350 on hand + R650 reimbursement).

Petty cash control is often tested in multiple-choice or short scenario questions in ACCN101.

4.4 Inventory Systems: Periodic vs Perpetual

4.4.1 Periodic Inventory System

No continuous record of inventory quantities and cost.
Purchases recorded in a Purchases account.
Inventory count at year-end determines closing inventory and cost of sales.

Advantages:

Simple and cheap, suitable for small businesses.
Does not require sophisticated systems.

Disadvantages:

No real-time information on inventory.
Harder to detect theft or errors.

4.4.2 Perpetual Inventory System

Continuous record of inventory on hand and cost of sales.
Cost of sales recorded at time of each sale.
Needs robust inventory records and (usually) computerised systems.

Advantages:

Up-to-date information on inventory.
Easier to detect shrinkage/theft.

Disadvantages:

More complex and costly to implement.

In Accounting 1A, questions typically focus on the periodic system but may ask you to explain the difference between the two.

4.5 Cost of Sales, Gross Profit and Mark-up

Understanding the relationship between cost, selling price and mark-up is critical for trading business questions.

Definitions:

Cost price (CP) – cost of goods sold.
Selling price (SP) – price charged to customer.
Mark-up – profit as a percentage of cost.
Gross margin – profit as a percentage of selling price.

Formulas:

SP = CP + Mark-up
Mark-up % on cost = (Gross profit ÷ Cost) × 100
Gross margin % on selling price = (Gross profit ÷ Sales) × 100

Example:

Cost of goods = R50
Mark-up = 40% on cost.

Mark-up amount: 50 × 40% = 20
Selling price: 50 + 20 = R70

Gross profit margin on selling price:

GP = 20; SP = 70
Gross margin % = 20 ÷ 70 × 100 ≈ 28.57%

These relationships can appear in multiple-choice or structured questions, often requiring rearranging formulas to find cost when given sales and mark-up (or vice versa).

5. UKZN ACCN101 Exam Strategy, Common Question Types and Practice Approach

5.1 Typical UKZN ACCN101 Exam Structure

While the exact structure may vary by year and lecturer, most first-year Accounting 1A exams at UKZN share common patterns similar to other SA universities (UNISA’s FAC1501, CUT’s ACC10A1, UFS’s FRK104).

Common features:

Mix of theory and practical/problem-solving.
Sections such as:
- Multiple-choice questions (MCQs).
- Short theoretical questions.
- Structured questions (journals, ledgers, trial balances).
- Full question on financial statements from an adjusted TB.
- Question on bank reconciliation or cash control.
Marks allocated heavily towards:
- Double-entry and trial balances.
- Adjustments and financial statements.

5.2 High-Yield Topics (Must-Master Concepts)

Based on standard ACCN101 syllabi at UKZN and similar BCom Accounting streams:

Accounting equation & classification of accounts.
Double-entry & T-accounts (DEAD CLIC).
Journals and posting to ledgers.
Trial balance preparation and error analysis.
Adjusting entries (accruals, prepayments, depreciation, bad debts, provisions).
Inventory & cost of sales (periodic system).
Bank reconciliation and cash book adjustments.
Preparation of financial statements (profit or loss; financial position).
Conceptual framework and qualitative characteristics.
Forms of business ownership and basic theory.

Aim to score near full marks in these areas as they are predictable and heavily weighted.

5.3 Common Question Styles and How to Approach Them

5.3.1 Journal Entry Questions

You may be given a list of transactions and required to:

Record them in the general journal; or
Indicate the debit and credit accounts only.

Strategy:

Identify the two accounts affected (sometimes more).
Determine whether each account increases or decreases.
Apply the DEAD CLIC rule to decide debit or credit.
Provide brief narrations if required.

Example:

Owner contributes equipment worth R20 000 and cash of R5 000 to start the business.

Debit: Equipment (asset increase) 20 000
Debit: Bank (asset increase) 5 000
Credit: Capital (equity increase) 25 000

5.3.2 Ledger and Trial Balance Questions

You might receive:

A list of journal entries and be asked to post them to T-accounts.
Then you must balance the accounts and prepare a trial balance.

Strategy:

Label each T-account clearly.
Post each journal entry once to debit and once to credit in relevant accounts.
At the end, total each side and calculate closing balance.
Indicate whether each closing balance is debit or credit.
Transfer balances to the trial balance.

Carelessness with plus/minus signs and misclassification is a frequent cause of lost marks.

5.3.3 Adjusted Trial Balance and Financial Statements

One of the main long questions in ACCN101 often involves:

Unadjusted trial balance.
Additional information (e.g. inventory, depreciation, accruals).
Requirement to prepare:
- Certain adjusting journal entries; and
- Statement of profit or loss; and
- Statement of financial position (maybe also statement of changes in equity).

Strategy:

Read additional information carefully twice.
Highlight:
- Year-end date.
- Periods relating to prepaid or accrued items.
- Depreciation methods and rates.
For each adjustment:
- Decide whether it affects income/expense and asset/liability.
- Record it as a mini-journal in rough work.
Adjust relevant trial balance amounts:
- E.g. adjust expenses for accruals/prepayments.
- Remove old balances and replace with calculated year-end balances.
Once all adjustments are applied, draft the statement of profit or loss first, then the statement of financial position.

Always reconcile:

Profit for the year must be carried to equity in the statement of financial position.
Closing inventory must appear as a current asset and must be included in cost of sales calculations.

5.3.4 Bank Reconciliation and Cash Book Questions

Typically, you are asked to:

Update the cash book using the bank statement.
Prepare a bank reconciliation statement.

Strategy:

Start with initial cash book balance; update with:
- Bank charges.
- Interest.
- Direct debits and credits.
- Dishonoured cheques.
- Correction of cash book errors.
Calculate adjusted cash book balance.
Prepare bank reconciliation starting with either:
- Bank statement balance; or
- Adjusted cash book balance; as specified.
Add or subtract:
- Outstanding deposits.
- Unpresented cheques.
- Bank errors.
Final answer should show equality between adjusted balances.

Be careful about signs: outstanding deposits are added to bank statement balance, unpresented cheques are deducted.

5.4 Time Management in the Exam

Read the entire paper quickly at the start (if allowed) to gauge difficulty.
Allocate time proportionally to marks:
- Example: 20-mark question ≈ 24 minutes in a 3-hour exam (180 mins/150 marks ≈ 1.2 mins per mark).
Begin with the question you are most confident in (often the financial statements question for well-prepared students).
Show all workings clearly; markers can award partial credit.
If stuck on an adjustment, leave a blank line, make a reasonable assumption, and move on.

5.5 Integrating ACCN101 with Other South African University Modules

Many UKZN BCom Accounting students also reference online resources and past papers from UNISA, CUT, UJ and others. While the codes differ, the content overlaps.

Some comparable first-year modules:

UNISA: FAC1501 (Introductory Financial Accounting), FAC1502.
CUT: ACC10A1 (Accounting 1A).
UP: FRK111.
UFS: FRK104.
NWU: ACCS111.

Common keywords you might search alongside ACCN101:

“ACCN101 UKZN past exam papers”
“FAC1501 exam notes”
“ACC10A1 study notes”
“Accounting 1A trial balance questions”
“BCom Accounting first year financial statements”

Concepts such as the accounting equation, double-entry, trial balance, adjustments, and basic financial statements are core across all these modules, so practising with any reputable source that follows IFRS/IFRS for SMEs will support your learning.

5.6 Study Plan and Practice Approach

A structured approach to preparing for ACCN101 at UKZN:

Weeks 1–2 before exam: Conceptual Revision
- Revisit lecture notes and prescribed chapters.
- Summarise:
  - Accounting equation and classification.
  - Conceptual framework.
  - Business forms.
- Create a formula sheet for mark-up, depreciation, basic ratios.
Weeks 2–3: Procedural Practice
- Work through full examples on:
  - Journals → ledgers → trial balance.
  - Adjustments and adjusted trial balance.
  - Financial statement preparation.
- Use past tutorial questions and sample exams from UKZN.
Last Week: Past Paper Focus
- Attempt at least 3 full past exam papers under timed conditions.
- After each paper:
  - Mark your work using memos (if available).
  - List topics you consistently lose marks on.
  - Re-study those topics and redo similar questions.
Day Before the Exam
- Light review only:
  - Keywords and definitions.
  - Common journal entries (accruals, prepayments, depreciation).
  - Bank reconciliation steps.
- Avoid learning new topics from scratch at this stage.

5.7 Common Pitfalls and How to Avoid Them

Mixing up debit and credit rules
- Always refer back to DEAD CLIC.
- Practise with simple T-accounts until it becomes second nature.
Ignoring the year-end date
- All adjustments revolve around the period end (e.g. 31 Dec 20X5).
- Always calculate months or days relative to this date.
Forgetting to adjust expenses and income for accruals/prepayments
- A checklist can help:
  - Inventory.
  - Depreciation.
  - Accrued income and expenses.
  - Prepaid expenses and income received in advance.
  - Bad debts and allowances.
Not balancing statements
- After completing the statement of financial position, always verify:
  - Assets = Equity + Liabilities.
- If not, re-check postings from the adjusted TB.
Untidy layout
- Examiners need to follow your logic.
- Use headings, sub-totals and lines to separate sections clearly.
- Label workings “W1, W2, etc.” and reference them in the financial statements.

These ACCN101: Accounting 1A exam notes for the University of KwaZulu-Natal (UKZN) BCom in Accounting programme consolidate the foundational concepts, procedures and exam strategies that first-year students must master. Combined with consistent practice using past ACCN101 papers and tutorials, as well as comparable resources from UNISA’s FAC1501 and CUT’s ACC10A1, they provide a solid platform to achieve strong results in introductory financial accounting.