Standard Rates

1.1 Briefly describe what is meant by cross- referencing (2 marks)
1.2 What does the double entry system specify regarding accounts that represent application of funds and those that represent sources of funds? (2 marks)
1.3 Illustrate your understanding of the double entry system by recording each of the following transactions in their appropriate accounts in the General ledger (ignore VAT): (28 marks)
(a) 1 January 2018 -The owner made a cash contribution of R 250 000 towards the business
(b) 3 January 2018-Bought a vehicle by cheque- R 130 000
(c) 7 January 2018-Purchased trading inventory on credit- R 21 600
(d) 11 January 2018-Cash sales- R 27 900
(e) 14 January 2018-paid casual wages- R 2 800
(f) 19 January 2018-Credit sales-R 9 250
(g) 20 January 2018-bought fuel by cheque- R760

Question 2(15 marks)
Use illustrative examples to distinguish between the following VAT concepts (use a standard VAT rate of 14%):

Screenshot from 2018-10-11 17-48-40

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