Unit 2

Question 1

Taxable supplies

Answer 1

Goods and services that are subjected to GST.May also include supplying information or advice, providing hire equipment or leasing business premises.

Example- Furniture,clothing, computers, stationery ,telephone,electricity

Question 1

GST Free Supplies

Answer 1

GST Supplies are supplies that are not taxed.They’re defined by legislations

E.g.- Basix food, education, water, export,duty free items, international mail

Question 2

Input taxed supplies

Answer 2

Supply that seller cannot charge GST on and also cannot claim GST incurred in relation to supply

E.g. - Bank charges, interest, sales of residential premises, residential rent and sale of food in school tuckshops and canteens.

Question 3

What are the 7 Control variables

Answer 3

Reliable personnel,
 Verification, 
Authorisation,
Responsibility,
 Separation/ Rotation of of duties
Adequate and accurate Documents and Records
Physical control and security

Question 4

Reliable personnel

Answer 4

Accounting system is only as good as individual who implement and maintain it.Therefore employ qualified personnel and ensure duties given are commensurate with their ability.

Question 5

Verification

Answer 5

Checking accuracy of accounting period by some independent means
E.G.- Compare physical assets with accounting record
- Trial balance to ensure debits equal credits
- Work from one person is checked by another person.

Question 6

Authorisation

Answer 6

A person in position of responsibility or authority will validate a course of action

E.g.- Purchasing of assets, granting credit, paying bills, sourced documents authorised

Question 7

Responsibilty

Answer 7

Organization should have a fixed responsibility for the functions to be performed and confer the authority to carry them out.Employes should be defined areas of responsibility so if error occurs, responsible individual can be tracked.

Question 8

Separation of duties/Rotation

Answer 8

Separation of authorisation,recording and custodianship.
Example - People who are authorised to transaction should not be involved in haldering or recording assets

Employes should rotate duties as much as possible

• Allows detection of errors
• Employees can take leaves

Question 9

Adequate and accurate document records

Answer 9

Necessary to capture information what enters the accounting system
Documents should
- Consecutively numbered control missing documents and to aid location
- Simple in design to ensure accuracy of completion
- Prepared simultaneously or soon as possible after the transaction takes place

Question 10

Physical control and secturity

Answer 10

Controls that physically safeguard assets, particularly cash, inventories and long term assets.