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Fac2601 Assignment 4 2023 solution
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MULTIPLE CHOICE QUESTION ASSIGNMENTAnswer the following multiple choice questions. Indicate your choice by selecting
only one option from the four options given for each question answered.
Use the following information to answer question 1 to 2:
Maxmor Ltd is a television manufacturing company. At the beginning of the financial
year ended 28 February 20.19, Maxmor Ltd started selling all its televisions with a refund
policy. If the customer is not satisfied, the television may be returned for a full refund.
Sales for the year ended 28 February 20.19 amounted to R1 500 000. At year-end on
28 February 20.19 the company’s directors reliably estimated that based on the current
year’s returns and industry patterns 5% of the television sets sold will be returned for a
refund
REQUIRED:
Question 1:
Which one of the following statements are correct based on the information provided
above?
1.
Maxmor Ltd has only a constructive obligation to provide customers with a refund
2.
Maxmor Ltd has only a legal obligation to provide customers with a refund.
3.
Maxmor Ltd has both a legal and constructive obligation to provide customers with a
refund.
4.
Maxmor Ltd has neither a legal nor a constructive obligation to provide customers with a
refund
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Question 2
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Question 2 is based on the information in Question 1
QUESTION 2:
Maxmor Ltd will have to ………………………..in their financial statements for the year ended
28 February 20.19.
1.
Raise a provision
2.
Disclose a note for the contingent liability
3.
Disclose a note for a contingent asset
4.
Neither raise a provision, nor disclose a note for a contingent asset nor disclose a note
for a contingent liability
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Question 3
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Use the following information to answer question 3 to 4:
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