150 original practice questions and 100 flashcards covering the full NSC Accounting curriculum.
Matric Accounting rewards systematic, logical thinking and punishes candidates who memorise without understanding. Tour practice set covers the full CAPS Grade 12 Accounting curriculum: financial statements, bank and creditors reconciliation, ratio analysis and interpretation, budgeting, companies and close corporations, and inventory systems.
Pay particular attention to ratio interpretation questions. A ratio calculated correctly but interpreted vaguely earns partial marks at best. The flashcard set covers all key ratios with their formulas, typical ranges, and what a high or low value means in practice.
Matric Accounting Grade 12 — NSC Exam Prep. Covers the three main financial statements, GAAP principles, VAT, bank reconciliation, cash flow statements, ratio analysis, and more. Questions are aligned to the NSC curriculum and CAPS requirements.
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correct answers
Q1/152
What does GAAP stand for?
Explanation: GAAP = Generally Accepted Accounting Practices. The foundation of South African accounting standards.
Q2/152
What is the accounting equation?
Explanation: The fundamental accounting equation: Assets = Liabilities + Owner's Equity. Must always balance.
Q3/152
What is double-entry bookkeeping?
Explanation: Double-entry: every transaction affects at least two accounts — one debit and one credit of equal value.
Q4/152
Which account would be debited when a business buys equipment on credit?
Explanation: Buying equipment: Equipment (asset) is debited (increases). Creditors (liability) is credited (increases).
Q5/152
What is depreciation?
Explanation: Depreciation: spreading an asset's cost over its useful life. Reduces asset book value. Increases depreciation expense.
Q6/152
What is the straight-line method of depreciation?
Explanation: Straight-line: same rand amount depreciated each year. Simple and most common method in matric accounting.
Q7/152
What is the diminishing balance method?
Explanation: Diminishing balance: multiply current book value by depreciation rate. Higher expense early, lower later.
Q8/152
What is VAT?
Explanation: VAT = Value Added Tax. Standard rate: 15% in South Africa since April 2018. Added to selling price.
Q9/152
How is VAT output calculated?
Explanation: Output VAT: collected from customers. If price is VAT-inclusive: VAT = price × 15/115. If exclusive: price × 15%.
Q10/152
What is input VAT?
Explanation: Input VAT: paid by business on purchases. SARS refunds tour or allows deduction from output VAT owed.
Q11/152
What is the VAT payable formula?
Explanation: VAT payable = Output VAT (collected from sales) - Input VAT (paid on purchases). Pay the difference to SARS.
Q12/152
What is a creditor?
Explanation: Creditor: the business owes them money. Created when buying goods/services on credit from suppliers.
Q13/152
What is a debtor?
Explanation: Debtor: owes money to the business. Created when business sells goods/services on credit to customers.
Q14/152
What is the Debtors Control account?
Explanation: Debtors Control: total of all debtors in general ledger. Must reconcile with the debtors list (subsidiary ledger).
Q15/152
What is a bank reconciliation statement?
Explanation: Bank reconciliation: identifies timing differences (outstanding cheques, deposits not yet credited) between cash book and bank.
Q16/152
What are outstanding cheques in bank reconciliation?
Explanation: Outstanding cheques: issued (paid) by business, recorded in cash book, but bank has not yet processed them.
Q17/152
What is a deposit in transit?
Explanation: Deposit in transit: business has recorded it in cash book; bank statement hasn't reflected it yet (timing difference).
Q18/152
What causes a debit balance on a bank statement (from business perspective)?
Explanation: Bank statement debit = business has a credit balance (asset). Tour seems counterintuitive — from bank's view, they owe you.
Q19/152
What is an overdraft?
Explanation: Overdraft: current account balance is negative. Business owes the bank. Shown as credit balance in cash book.
Q20/152
What is the purpose of the Cash Journals?
Explanation: Cash Journals: Cash Receipts Journal (CRJ) records all money received. Cash Payments Journal (CPJ) records all money paid.
Q21/152
What does CRJ stand for?
Explanation: CRJ = Cash Receipts Journal. All money coming IN to the business — cash sales, debtor payments, etc.
Q22/152
What does CPJ stand for?
Explanation: CPJ = Cash Payments Journal. All money going OUT — cash purchases, creditor payments, expenses paid.
Q23/152
What does DAJ stand for?
Explanation: DAJ = Debtors Allowances Journal. Records returns from debtors and allowances granted to customers.
Q24/152
What does CAJ stand for?
Explanation: CAJ = Creditors Allowances Journal. Records goods returned to suppliers and allowances received from them.
Q25/152
What is the difference between gross profit and net profit?
Explanation: Gross profit: Revenue minus Cost of Sales only. Net profit: after ALL expenses (admin, selling, distribution) deducted.
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Q26/152
What is cost of sales formula for a trading business?
Explanation: Cost of sales = Opening stock + (Purchases - Purchase returns - Trade discount) - Closing stock. What it cost to generate sales.
Q27/152
What is gross profit percentage?
Explanation: Gross profit %: (Gross profit ÷ Net sales) × 100. Shows what percentage of each rand of sales is profit before expenses.
Q28/152
What is the net profit percentage?
Explanation: Net profit % = (Net profit ÷ Net sales) × 100. Measures overall profitability after deducting ALL expenses from revenue.
Q29/152
What is the current ratio?
Explanation: Current ratio: current assets ÷ current liabilities. Ideal ≈ 2:1. Measures ability to pay short-term debts.
Q30/152
What is the acid test ratio (quick ratio)?
Explanation: Acid test: excludes stock (least liquid current asset). (Debtors + Cash) ÷ Current liabilities. Ideal ≈ 1:1.
Q31/152
What is the return on equity (ROE)?
Explanation: ROE = Net profit ÷ Average owners' equity × 100. How effectively owner's investment generates profit.
Q32/152
What is the debt-equity ratio?
Explanation: Debt-equity ratio: total liabilities ÷ owners' equity. High ratio = highly geared = more financial risk.
Q33/152
What is the stock turnover rate?
Explanation: Stock turnover: cost of sales ÷ average stock. Higher = faster moving stock. Average stock = (opening + closing) ÷ 2.
Explanation: Creditors period: (average creditors ÷ credit purchases) × 365. Should be longer than debtors period for good cash flow.
Q36/152
What is working capital?
Explanation: Working capital = current assets - current liabilities. Positive = can pay short-term debts. Essential for operations.
Q37/152
What does a Balance Sheet show?
Explanation: Balance Sheet (Statement of Financial Position): shows what business OWNS (assets) and OWES (liabilities + equity) at a specific date.
Q38/152
What does the Income Statement show?
Explanation: Income Statement (Statement of Comprehensive Income): shows revenue, costs and expenses to calculate profit or loss over a period.
Q39/152
What is a Cash Flow Statement?
Explanation: Cash Flow Statement: shows where cash came from and how it was spent. Three sections: operating, investing, financing.
Q40/152
What are fixed assets?
Explanation: Fixed assets (non-current): land, buildings, equipment, vehicles. Used in operations long-term. Subject to depreciation.
Q41/152
What are current assets?
Explanation: Current assets: expected to be used/converted within 12 months. Examples: inventories, debtors, prepaid expenses, cash/bank.
Q42/152
What is equity in accounting?
Explanation: Equity = what owners are owed after paying all liabilities. Capital + net profits accumulated - withdrawals (drawings).
Q43/152
What are drawings?
Explanation: Drawings: owner withdrawing cash or goods from business for personal use. Reduces capital. NOT an expense.
Q44/152
What is the difference between capital expenditure and revenue expenditure?
Explanation: Capital expenditure: buying fixed assets. Revenue expenditure: maintaining/operating assets. Important GAAP distinction.
Q45/152
What is the accrual concept in GAAP?
Explanation: Accrual concept: match income and expenses to the period they relate to. Basis of all professional accounting.
Q46/152
What is the matching concept?
Explanation: Matching concept: expenses are recognised in the period they helped earn revenue. E.g., cost of stock expensed when sold.
Q47/152
What is the going concern concept?
Explanation: Going concern: assume business will keep operating. If going concern assumption fails, assets valued at liquidation prices.
Q48/152
What is trade discount?
Explanation: Trade discount: deducted before invoice. Never appears in accounting records — only net (discounted) amount is recorded.
Q49/152
What is settlement (cash) discount?
Explanation: Settlement discount: incentive to pay early. E.g., 2.5% if paid within 30 days. Recorded as Discount Allowed (expense) or Received (income).
Q50/152
What is petty cash?
Explanation: Petty cash: small fund for minor expenses (stamps, tea, small supplies). Imprest system: always topped up to fixed amount.
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Q51/152
What is the imprest system?
Explanation: Imprest: at any time, cash + receipts = fixed float amount. When replenished, cash equals float amount again.
Q52/152
What is a provision for bad debts?
Explanation: Provision for bad debts: estimated uncollectable amount. Created to match expected bad debt expense to the period.
Q53/152
What is a bad debt written off?
Explanation: Bad debt: confirmed irrecoverable. Debit bad debts expense, credit debtors control. Reduces debtors and increases expenses.
Q54/152
What is recovery of bad debt?
Explanation: Bad debt recovery: reinstate debtor (Dr Debtors, Cr Bad Debts Recovered), then record payment (Dr Bank, Cr Debtors).
Q55/152
What is a suspense account used for?
Explanation: Suspense: temporary placeholder. Used when trial balance doesn't balance — entries posted here until error found.
Q56/152
What does the trial balance test?
Explanation: Trial balance: lists all ledger balances. Debit total must equal credit total. Does NOT prove no errors, just arithmetic.
Q57/152
List three errors not revealed by the trial balance.
Explanation: Trial balance doesn't find: omission (transaction not recorded), commission (wrong account same class), principle (wrong account type), compensating, reversal of entry.
Q58/152
What is an error of omission?
Explanation: Error of omission: entire transaction left out. Trial balance still balances because nothing was recorded.
Q59/152
What is an error of commission?
Explanation: Error of commission: right amount, wrong person/account but SAME type. Trial balance still balances.
Q60/152
What is an error of principle?
Explanation: Error of principle: fundamentally wrong type of account used. E.g., recording vehicle purchase as an expense.
Q61/152
What is a contra entry in bank reconciliation?
Explanation: Contra: already on both sides — no reconciliation adjustment needed. Also means same person is both debtor and creditor.
Q62/152
What is the perpetual inventory system?
Explanation: Perpetual: running balance of stock maintained continuously. Cost of sales calculated after each sale. Common in modern businesses.
Q63/152
What is the periodic inventory system?
Explanation: Periodic: stock physically counted at year-end. Cost of sales = Opening stock + Purchases - Closing stock.
Q64/152
What is FIFO stock valuation?
Explanation: FIFO: assumes oldest stock sold first. In rising prices, FIFO gives higher closing stock, higher gross profit.
Q65/152
What is weighted average cost (AVCO)?
Explanation: AVCO: new average calculated after each purchase. Smooths out price fluctuations. Common in SA matric.
Q66/152
What is the lower of cost or net realisable value (NRV) rule?
Explanation: Prudence concept: if NRV < cost, write down stock to NRV. Prevents overstating assets and profit.
Explanation: Accrued income: earned but not received. E.g., interest earned but not yet paid by bank. Current asset on Balance Sheet.
Q69/152
What is income received in advance (deferred income)?
Explanation: Income received in advance: cash received, service not yet performed. Current liability — must earn it next period.
Q70/152
What is accrued expenses (outstanding expenses)?
Explanation: Accrued expense: owed but not yet paid. E.g., salaries owed for December paid in January. Current liability on Balance Sheet.
Q71/152
What is a prepaid expense?
Explanation: Prepaid: paid but not yet used/expired. E.g., insurance paid for next year. Remove from expense, show as current asset.
Q72/152
What is the formula for net realisable value (NRV) of stock?
Explanation: NRV: what you can actually get for the stock after selling costs. Compare to cost and use the LOWER value.
Q73/152
What is a note payable?
Explanation: Note payable: formal promissory note. Liability. Can be short-term (current) or long-term (non-current).
Q74/152
What is a mortgage bond?
Explanation: Mortgage bond: long-term loan using property as security. Repaid in instalments. Non-current liability on Balance Sheet.
Q75/152
What is share capital?
Explanation: Share capital: company equivalent of owner's capital. Issued shares × issue price. Part of shareholders' equity.
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Q76/152
What are retained earnings?
Explanation: Retained earnings: past profits kept in company. Increases by net profit, decreases by dividends declared.
Q77/152
What is a dividend?
Explanation: Dividends: company pays portion of profit to shareholders. Declared from retained earnings. Not a business expense.
Q78/152
What are ordinary shares?
Explanation: Ordinary shares: voting rights, last claim on assets/dividends. Dividend amount varies with company performance.
Q79/152
What are preference shares?
Explanation: Preference shares: fixed dividend. Priority over ordinary in dividends and liquidation. Typically no voting rights.
Q80/152
What is a debenture?
Explanation: Debentures: company borrows money from public. Pays fixed interest. Debenture holders are creditors, not shareholders.
Q81/152
What is the purpose of a bank reconciliation?
Explanation: Bank reconciliation: ensures cash book is accurate. Finds timing differences and errors. Prepared monthly.
Q82/152
How is opening stock treated in the trading account?
Explanation: Opening stock: beginning inventory becomes part of cost of goods available for sale in the current period.
Q83/152
What is a sole trader?
Explanation: Sole trader: simplest business form. One owner. Unlimited personal liability. No separate legal identity from owner.
Q84/152
What is a partnership?
Explanation: Partnership: 2+ partners. Governed by Partnership Act and partnership agreement. Partners jointly and severally liable.
Q85/152
What is goodwill?
Explanation: Goodwill: intangible. Arises when business purchased for more than its net asset value. Represents reputation, location, customer base.
Q86/152
What is amortisation?
Explanation: Amortisation: like depreciation but for intangible assets (goodwill, patents, trademarks). Reduces carrying value over time.
Q87/152
What are contingent liabilities?
Explanation: Contingent liabilities: not certain yet. E.g., pending lawsuit. Disclosed in financial statement notes if probable and estimable.
Q88/152
What is the profitability ratio category focused on?
Explanation: Profitability ratios: measure efficiency of profit generation. Include gross profit %, net profit %, return on equity, return on assets.
Q89/152
What is the purpose of financial ratios?
Explanation: Ratios: allow comparison between periods, between businesses, and against industry benchmarks. Aid decision-making.
Q90/152
What is the liquidity ratio category focused on?
Explanation: Liquidity ratios: measure ability to pay current (short-term) debts. Key ratios: current ratio and acid test ratio.
Q91/152
What is the solvency/gearing ratio?
Explanation: Solvency ratios: measure long-term ability to pay ALL debts. Debt-equity and interest coverage ratios.
Q92/152
What is SARS?
Explanation: SARS: South African Revenue Service. Collects income tax, VAT, PAYE, customs duties. Every VAT vendor must register with SARS.
Q93/152
What is PAYE?
Explanation: PAYE: employer deducts income tax from employees' salaries every month and pays directly to SARS on behalf of employees.
Q94/152
What is UIF?
Explanation: UIF: 2% total (1% employer + 1% employee). Provides income replacement during unemployment, illness, maternity leave.
Q95/152
What is the effect of a credit note on the debtor's account?
Explanation: Credit note to debtor: reduces what they owe. Entered in Debtors Allowances Journal (DAJ). Dr Sales Returns, Cr Debtors.
Q96/152
What is an invoice?
Explanation: Invoice: creates the debt. Sent by seller to buyer. Details goods, quantities, prices, VAT, total amount owed.
Q97/152
What is a statement of account?
Explanation: Statement of account: monthly summary sent to debtors. Shows opening balance, all transactions, closing balance (amount owed).
Q98/152
What is the purpose of the audit?
Explanation: Audit: external auditor verifies financial statements are fairly presented and comply with accounting standards.
Q99/152
What is a public company (Ltd)?
Explanation: Public company (Ltd): can be listed on JSE. Must publish financial statements. Strict regulation under Companies Act.
Q100/152
What is the concept of materiality in accounting?
Explanation: Materiality: significant items must be separately disclosed. Insignificant (immaterial) items can be combined or treated simply.
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Q101/152
What is the prudence (conservatism) concept?
Explanation: Prudence: don't anticipate profits; provide for all known losses. Prevents overstating assets/income or understating liabilities/expenses.
Q102/152
What is the difference between a private company (Pty Ltd) and a public company (Ltd)?
Explanation: Private (Pty Ltd): shares not publicly traded. Public (Ltd): can offer shares on JSE. Both governed by Companies Act 71 of 2008.
Q103/152
What is the Companies Act 71 of 2008?
Explanation: Companies Act 71 of 2008: replaced 1973 Act. Covers company formation, directors' duties, financial statements, and business rescue.
Q104/152
What is business rescue?
Explanation: Business rescue: formal process under Companies Act. Supervised restructuring. Alternative to liquidation when company is distressed but viable.
Q105/152
What is liquidation?
Explanation: Liquidation: company wound up. Assets sold to pay creditors. If insolvent: compulsory. If solvent: voluntary.
Q106/152
What is the difference between insolvency and bankruptcy?
Explanation: Insolvency: financial state (can't pay debts). Bankruptcy: legal process for individuals. Liquidation: equivalent process for companies.
Explanation: True and fair view: statements are free from material misstatement, not misleading, and comply with IFRS/GAAP.
Q112/152
What is IFRS?
Explanation: IFRS: International Financial Reporting Standards. Used by JSE-listed companies. Prepared by IASB. Ensures global comparability.
Q113/152
What is SAICA?
Explanation: SAICA: registers and regulates Chartered Accountants (CAs). Sets ethical standards. Represents the profession.
Q114/152
What is the JSE?
Explanation: JSE: Africa's largest stock exchange. Over 400 listed companies. Operates under Financial Markets Act.
Q115/152
What is a general ledger?
Explanation: General ledger: master record. Every account (assets, liabilities, equity, income, expenses) has its own ledger account.
Q116/152
What is a subsidiary ledger?
Explanation: Subsidiary ledger: supporting detail for control accounts. Debtors ledger lists each customer. Creditors ledger lists each supplier.
Q117/152
What is posting in accounting?
Explanation: Posting: transferring journal entries to ledger accounts. Creates the running balance in each account.
Q118/152
What is the source document?
Explanation: Source documents: evidence for each transaction. Must be kept. Examples: invoices, cash register slips, bank statements, cheques.
Q119/152
What is a journal?
Explanation: Journal: transactions first enter accounting records here. Includes date, accounts, amounts, narration. Posted to ledger subsequently.
Q120/152
What is the general journal (GJ) used for?
Explanation: General journal: for transactions not fitting other journals — depreciation, bad debts, year-end adjustments, corrections.
Q121/152
What are the differences between a receipt and an invoice?
Explanation: Invoice: creates the obligation to pay. Receipt: proves payment was made. Both are source documents.
Q122/152
What is a debit note?
Explanation: Debit note: buyer sends to supplier when returning goods. Basis for supplier to issue a credit note. Recorded in CAJ.
Q123/152
What is mark-up percentage?
Explanation: Mark-up %: profit as % of COST price. Different from GP% (profit as % of SELLING price). Higher mark-up % than GP%.
Q124/152
How does mark-up % relate to gross profit %?
Explanation: If mark-up = 25%: cost R100, sell R125. GP% = 25/125 = 20%. Same profit, different base. Mark-up% always higher than GP%.
Q125/152
What is the cost of sales for a service business?
Explanation: Service businesses: no stock/cost of sales. Direct costs (labour, materials used in service) are operating expenses, not cost of sales.
Q126/152
What is a contra account?
Explanation: Contra account: works against a related account. Accumulated Depreciation is contra to the asset. Shows separately for disclosure.
Q127/152
What is accumulated depreciation?
Explanation: Accumulated depreciation: running total of all depreciation on an asset. Book value = Cost - Accumulated depreciation.
Q128/152
What is book value (carrying value) of an asset?
Explanation: Book value = Cost - Accumulated depreciation. What asset is 'worth' in the accounting records. Not necessarily market value.
Q129/152
What is a fixed asset register?
Explanation: Fixed asset register: detailed record per asset. Shows cost, rate, annual depreciation, accumulated depreciation, book value. Supports the ledger.
Q130/152
What is a pro forma financial statement?
Explanation: Pro forma: forward-looking. Used for budgeting, business plans, capital raising. Based on assumptions about future performance.
Q131/152
What is a budget?
Explanation: Budget: financial plan/target. Compare actual results to budget to identify variances. Tool for planning and control.
Q132/152
What is a variance in budgeting?
Explanation: Variance: actual - budget. Favourable if profit higher or cost lower than budget. Adverse if profit lower or cost higher.
Q133/152
What is cash flow management?
Explanation: Cash flow management: ensuring enough cash is available when needed. Business can be profitable but fail from poor cash flow.
Q134/152
Why can a profitable business run out of cash?
Explanation: Profit ≠ cash. Business may sell on credit (profit recorded, cash not received). Must buy stock (cash out, no profit impact yet).
Q135/152
What is a promissory note?
Explanation: Promissory note: formal written promise to pay. Creates a legal obligation. Used in trade credit, loans. Negotiable instrument.
Q136/152
What is the entity concept in GAAP?
Explanation: Entity concept: business and owner are separate. Personal expenses never in business books. Capital is a liability (business owes owner).
Q137/152
What is the historical cost concept?
Explanation: Historical cost: record at what you paid. Simple, objective, verifiable. Disadvantage: may not reflect current value in inflation.
Q138/152
What is the consistency concept?
Explanation: Consistency: use the same methods each period. If you change (e.g., depreciation method), disclose the change and its effect.
Q139/152
What is the full disclosure concept?
Explanation: Full disclosure: disclose all material information — in statements and notes. Users (investors, lenders) must have complete picture.
Q140/152
What is the periodicity concept?
Explanation: Periodicity/time period: report financial results for defined, regular periods. Enables trend analysis and comparison.
Q141/152
What is the cost benefit concept?
Explanation: Cost-benefit: don't spend more gathering/reporting information than the benefit it provides. Practical constraint in accounting.
Q142/152
What is a EFT?
Explanation: EFT: Electronic Funds Transfer. Replaces cheques. Secure, fast, electronic payment. Recorded in Cash Payments or Receipts Journal.
Q143/152
What is trade receivables?
Explanation: Trade receivables = debtors = amounts customers owe. Current asset. Shown net of provision for bad debts on Balance Sheet.
Q144/152
What is trade payables?
Explanation: Trade payables = creditors = amounts owed to suppliers. Current liability. Shown on Balance Sheet.
Q145/152
What is the difference between direct and indirect taxes?
Explanation: Direct taxes: income tax, capital gains tax — paid directly by individual/company to SARS. Indirect: VAT, customs duties — collected via businesses.
Q146/152
What is capital gains tax (CGT)?
Explanation: CGT: when you sell asset for more than you paid. Gain × inclusion rate × tax rate. Not charged on primary residence (up to R2m gain).
Q147/152
What is estate duty?
Explanation: Estate duty: tax when you die. Payable on net estate value above R3.5m primary abatement. 20%/25% rate.
Q148/152
What is transfer duty?
Explanation: Transfer duty: when buying property from non-VAT vendor. Rate varies by price (0% below R1.1m). Paid to SARS within 6 months.
Q149/152
What is the difference between tax avoidance and tax evasion?
Explanation: Tax avoidance: legal (e.g., using allowable deductions). Tax evasion: illegal (hiding income, false returns). Only evasion is criminal.
Q150/152
What is a tax invoice?
Explanation: Tax invoice: required for VAT input claims. Must show: supplier VAT number, buyer details, date, description, VAT amount, totals.
Q151/152
What is the role of a management accountant?
Explanation: Management accounting: internal focus. Budgets, variance analysis, costing, decision support. Not governed by GAAP (internal use).
Q152/152
What is cost accounting?
Explanation: Cost accounting: determines cost per unit, cost centre costs, overhead allocation. Supports pricing and profitability decisions.
Assets = Liabilities + Owner's Equity. Every transaction maintains tour balance. Assets are resources owned (cash, debtors, inventory, equipment). Liabilities are amounts owed to outsiders (creditors, loans). Owner's equity is the owner's claim on assets (capital + retained income − drawings).
In NSC Accounting, accounts are categorised as: Assets (e.g., cash, debtors, vehicles), Liabilities (creditors, loans, overdraft), Owner's Equity (capital, drawings, retained income), Income (sales, rent income), and Expenses (salaries, rent expense, depreciation). The type determines whether increases are debited or credited.
A bank reconciliation compares the company's cash book balance with the bank statement balance, identifying and explaining differences. Common reconciling items: outstanding deposits (recorded in cash book, not yet on statement), unpresented cheques (issued but not cleared), bank charges (on statement, not yet in cash book), errors.
Two methods: Straight-line method: (Cost − Residual Value) ÷ Useful Life = annual depreciation. Diminishing balance method: Net Book Value × Depreciation Rate each year. Depreciation journal entry: Debit Depreciation, Credit Accumulated Depreciation. The asset stays at cost in the asset account; Accumulated Depreciation is subtracted to get book value.
The debtors control account is a summary account in the general ledger representing the total amount owed by all credit customers. It is reconciled monthly against the debtors ledger (individual customer accounts). The total of all individual debtor accounts must equal the debtors control account balance.
VAT (Value-Added Tax) in South Africa is currently 15%. Output VAT: collected from customers on sales. Input VAT: paid to suppliers on purchases. VAT payable to SARS = Output VAT − Input VAT. Businesses with turnover above the threshold (R1 million) must register as VAT vendors. Financial statements show amounts excluding VAT.
NSC Accounting requires preparation of: Income Statement (profit or loss — revenue minus expenses), Balance Sheet/Statement of Financial Position (assets, liabilities, equity at a date), Statement of Changes in Equity (capital movements), and Notes to Financial Statements. All must comply with GAAP principles: going concern, consistency, matching, prudence.
A debtor is a person or business that owes money TO your business — they bought goods on credit. They represent an asset (Accounts Receivable). A creditor is a person or business that your business owes money TO — you bought goods on credit from them. They represent a liability (Accounts Payable).