Accounting Grade 11 Paper 1 KwaZulu Natal June 2019 Memo

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com

Accounting/P 1 Downloaded from hlayi$o.COWmmon Test une 2019 NSC-GRADE 11 INSTRUCTIONS AND INFORMATION Read the following instructions and be sure to follow them carefully: 1. This question paper consists of 8 pages. 2; A special ANSWER BOOK consisting of 5 pages is provided in which to answer all the questions. 3, Answer ALL the questions. 4. Workings must be shown in brackets in order to earn part marks. &. Non-programmable calculators may be used. 6. You may use dark pencil or black / blue pen to answer the questions. 7: Marks will be deducted for missing details and foreign entries. 8. Use the information in the table below as a guide when answering the question paper: Question 1: 67 Marks, 54 Minutes The topic of this question is: Content: Accounting Equation and Current Accounts e Partnership Agreement e Accounting Equation e Current Account note to the balance Sheet Question 2: 49 Marks, 39 Minutes The topic of this question is: Content: Balance Sheet (Statement of Financial Position) and Analysis e Balance Sheet (Statement of Financial Position) e Calculations e Comments Question 3: 34 Marks, 27 Minutes The topic of this question is: Content: e GAAP Fixed Assets e Fixed Asset Register e Asset Disposal e Internal Control Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com

Downloaded from hlayiso.com rest june 2018 Accounting/P1 NSC-GRADE 11 C. “Reflections Unisex Salon” was charged interest at 8% per annum on our overdue account of R6 000 by a creditor for 1 month. D. An annual insurance premium of R7 200 was paid during the year. This policy will insure the business assets until 30 June 2019. E. A debtor was declared insolvent. We received 30 cents in the rand from his estate. This amounted to R255. The balance of this account must be written off. No entries have been made. Information B e The net profit for the year ended 28 February 2019 (after adjustments, in information A above, were recorded) was R899 300. ° Gugu has only taken drawings for the past 11 months. As per the partnership agreement, she withdraws the same amount each month. ° Gugu and Anele increased their capital by R50 000 and R40 000 respectively on 1 September 2018. This has been recorded. e Both partners are entitled to interest on their capital at 10% per annum. e Gugu is entitled to a salary of R12 000 per month, and Anele R10 900 per month. e Remaining profits or losses are to be shared equally between Gugu and Anele. QUESTION 2 (49 Marks, 39Minutes) BALANCE SHEET AND ANALYSIS You are provided with information extracted from the accounting records of Pillay’s Plumbers. This partnership business is owned by two brothers Sashin and Seren Pillay. Required: 2.1 Use the information provided below to complete the Balance Sheet on (34) 28 February 2019. Show calculations in brackets so that part marks can be awarded. 2.2 Calculate the Percentage Return on Average Partners Equity (to 1 decimal place) (5) 2.3 Should the partners be satisfied with the percentage return earned? (5) ProvideTWO reasons, with figures, to motivate your answer. 2.4 If the partners decide to raise more capital in the future, would you suggest that they (5) increase their current loan? Quote relevant financial indicators to justify your answer. Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com

Accounting/P1 QUESTION 3 NSC-GRADE 11 FIXED ASSETS (34 Marks, 27Minutes) Downloaded from hlayiso.coxphmen test June 2018 Njabulo Nzama is the owner of “Njabulo’s Cargo Services”. He currently owns three trucks that are used to transport various items for his customers in Kwa Zulu Natal. The businesses financial year ends on 28 February each year. Required: 3.1 Identify the GAAP concept that is applied to each of the following situations: 3.1.1. Vehicles are always recorded at the price originally paid for them. 3.1.2 Vehicles are depreciated each year to record the book value of the vehicle. 3.1.3 Any expenses paid to maintain a vehicle must be recorded within the year in which that maintenance occurred. 3.2 Refer to Truck number 1: Truck Number 1 Make: ISUZU Date of Purchase: 7? Registration: ND 144 160 Depreciation Method: Cost Cost: R960 000 Depreciation %: 20% (1) (1) (1) Date Depreciation nae = Carrying value 28 Fel 2016 160 000 160 000 800 000 28 Feb 2017 192 000 352 000 608 000 28 Feb2018 192 000 544 000 416 000 31 Aug2018 96 000 ? ? * Truck number 1 was written off in an accident on 31 August 2018. The insurance company refused to pay out for the claim as the accident was caused due to the vehicle not being in a roadworthy condition. This vehicle was therefore sold to a scrap dealer for R30 000 cash. 3.2.1 Identify the date on which this vehicle was initially purchased. 3.2.2 Draft the asset disposal account to calculate the profit or loss made on the disposal of this vehicle on 31 August 2018. 3.2.3 Discuss TWO internal control procedures that Njabulo can implement to ensure that accidents of this nature do not happen again for this reason. Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com

Accounting/P1 Downloaded fram hlayiso.cormmmon test sune 2019 NSC-GRADE 11 FORMULAE SHEET: GRADE 11 Gross Profit X 100 Sales 1 cos Gross Profit X 100 Net Profit X 100 1 Sales 1 Operating Expenses X 100 Sales 1 Operating Profit X 100 Sales 1 Total Earnings By Partner X_100 Partners’ Average Equity 1 Net Profit X 100 Av Partners’ Equity 1 Current Assets : Current Liabilities (CA — Inventory) : Current Liabilities Average Debtors. X 365 (or 12) Credit Sales 1 Average Creditors X 365 (or 12) Credit Purchases 1 Average Inventories. X 365 (or 12) Cost of Sales 1 Cost of Sales Average Trading Stock Non-Current Liabilities : Owners’ Equity Total Assets : Total Liabilities Copyright Reserved

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com

Accounting/P1 Downloaded feom hlayiso.cortmmon Test June 2019 NSC-GRADE 11 QUESTION 1 (67 Marks, 54 Minutes) ACCOUNTING EQUATION AND CURRENT ACCOUNTS 1.1. State TWO reasons for Gugu and Anele deciding to start their business as a partnership. 1.2 When this business was first formed, they would have needed to draw up a partnership agreement. 1.2.1 Identify THREE important items that should have been included in their partnership agreement. 4.2.2 Although partnership agreements can be verbal, it is preferred that they are in a written format. Provide ONE reason for this. 1.3 | No Account DR Account CR Amount | A (e) L A 2 000 B 140 Cc. D E (4) (3) (32) Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com

Accounting/P1 Downloaded from hlayiso.COWanon Test June 2019 NSC-GRADE 11 2.2 Calculate the Percentage Return on Average Partners Equity (to 1 decimal place) (5) 2.3 Should the partners be satisfied with the percentage return earned on their (5) investment? Provide TWO reasons, with figures, to motivate your answer. 2.4 If the partners decide to raise more capital in the future, would you suggest that they (5) increase their current loan? Quote relevant financial indicators to justify your answer. Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com

Accounting/P1 3.3 3.4 NSC-GRADE 11 Refer to Truck number 2: 3.3.1 A TAM) O;O}w 3.3.2 Identify TWO possible reasons for this high maintenance cost. Refer to Truck number 3: 3.4.1 Calculate the cost price of this truck. 3.4.2 This Truck has the lowest mileage. It only travelled 43 000 km in the last year. Identify TWO possible reasons for this low mileage. Copyright Reserved TOTAL MARKS: 150 Downloaded from hlayiso.cobamon test June 2019 (4)

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting (Grade 11) 1June 2019Common Test NSC ACCOUNTING – PAPER 1 MARKING GUIDELINE JUNE 2019 COMMON TEST NATIONAL SENIOR CERTIFICATE GRADE 11 GRADE 10 MARKS : 150 TIME : 2 hours Question Topic Marks Minutes 1 Accounting Equation and Current Accounts 67 54 2 Balance Sheet and Analysis 49 39 3 Fixed Assets 34 27 150 120 This marking guideline consists of 5 pages. Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accounting/P1 2 Common Test June 2019 NSC-GRADE 11 QUESTION 1 (67 Marks, 54 Minutes) ACCOUNTING EQUATION AND CURRENT ACCOUNTS 1.1 State TWO reasons for Gugu and Anele deciding to start their business as a (4) partnership.  Share financial risks and costs.  Friends / family members that decided to work together  More resources (capital/skills/expertise)  Each person has a different speciality that they can then focus on.  Any logical answer 1.2 When this business was first formed, they would have needed to draw up a partnership agreement. 1.2.1 Identify THREE important items that should have been included in their (3) partnership agreement.  Name of business.  Product or service provided.   Capital contribution.  Sharing of profits and losses.  The amount of drawings taken by each partner.  The right of a partner to salary and interest on capital.  Admission of new partners.  Whether or not the books will be audited and by whom. 1.2.2 Although partnership agreements can be verbal, it is preferred that they are in (2) a written format. Provide ONE reason for this.  The agreement can be referred back to when needed.  The agreement needs to be signed by both parties to show that they agree with all items in the document.  Any logical answer 1.3 No Account DR Account CR Amount A O L (32) A Repairs Equipment 2 000 - - 0 Consumable Stores / B Stationery 140 + + 0 Stationery on Hand C. Interest Expense Creditors Control 40 0 - + Deferred / Prepaid 2 400 D Insurance + + 0 Expense  255 + E Bank Debtor’s Control 0 0  - 595 Bad Debts Debtors Control - - 0  Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1 3 Common Test June 2019 NSC-GRADE 11 1.4 Current Account note to the Balance Sheet (26) Gugu Anele Total Profit per Income Statement 207 500 191 800 399 300 Partners’ Salaries 144 000 130 800 274 800 Interest on Capital 52 500 50 000 102 500 Primary distribution of profits 196 500 180 800 377 300 Final distribution of profits 11 000 11 000 22 000 Drawings (192 000) (216 000) (408 000) Retained Income for the year 15 500 (24 200) (8 700) Retained Income (1/3/2018) 5 400 (3 200) 2 200 Retained Income (28/2/2019) 20 900 (27 400) (6 500) QUESTION 2 (49 Marks, 39 Minutes) BALANCE SHEET AND ANALYSIS 2.1 Balance Sheet on 28 February 2019. (34) ASSETS Non-current assets 632 640 Tangible / Fixed assets(125 140 – 10 000 + 600 000 – 120 000) 595 140 Financial assets: Fixed deposit(50 000 + 2 500 – 15 000) 37 500 Current assetsCL X 2.8 87 360 InventoriesMissing amt OR - 780 10 140 Trade and other receivables (26 000 – 950 + 170) 25 220 Cash and cash equivalents (35 000 + 2 000 + 15 000) 52 000 Total assetsTA = TE &L 720 000 EQUITY AND LIABILITIES Partners’ equity 492 000 Capital (240 000 + 220 000) 460 000 Current accounts (21 500 + 10 500) 32 000 Non-current liabilities 196 800 Mortgage Loan (10.5%)Partners Equity X 0.4 196 800 Current liabilities 31 200 Trade and other Payables 31 200 Total equity and liabilities (both totals to be equal) 720 000 Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accounting/P1 4 Common Test June 2019 NSC-GRADE 11 2.2 Calculate the Percentage Return on Average Partners Equity (to 1 decimal place) (5) . 90 870 . (492 000 + 485 300)/2 X 100 90 870 488 650 X 100 = 18.6% 2.3 Should the partners be satisfied with the percentage return earned on their (5) investment? Provide TWO reasons, with figures, to motivate your answer. Yes / No  The percentage return has increased from 17.3% in 2018 to 18.6% in 2019.  The return of 18.6% is higher than the investment in the fixed deposit which currently earns 5%. 2.4 If the partners decide to raise more capital in the future, would you suggest that they (5) increase their current loan? Quote relevant financial indicators to justify your answer. Yes The business is positively geared as the return on partners equity of 18.6% is higher than the interest rate on the loan of 10.5%. According to the Debt: Equity Ratio of 0.4 : 1, the business risk is moderate, thus allowing for more loans to be taken out in the future. QUESTION 3 (34 Marks, 27 Minutes) FIXED ASSETS 3.1 Identify the GAAP concept that is applied to each of the following situations: 3.1.1 Vehicles are always recorded at the price originally paid for them. (1) Historical Cost 3.1.2 Vehicles are depreciated each year to record the book value of the vehicle. (1) Prudence Concept 3.1.3 Any expenses paid to maintain a vehicle must be recorded within the year in (1) which that maintenance occurred. Matching Concept 3.2 Refer to Truck number 1: 3.2.1 Identify the date on which this vehicle was initially purchased. (2) 1 May 2015 OR 30 April 2015 192 000 / 12 = 16 000 per month therefore 10 months old. Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1 5 Common Test June 2019 NSC-GRADE 11 3.2.2 (8) Asset Disposal Accumulated Depreciation 960 000 640 000 Vehicles on Vehicles (544 000 +   96 000) 30 000 Bank  290 000 Loss on sale of asset  960 000  960 000 3.2.3 Discuss TWO internal control procedures that Njabulo can implement to (4) ensure that accidents of this nature do not happen again for this reason.  Service all vehicles regularly  Check condition of all vehicles daily before they leave for delivery.  Ensure the drivers inform the business of any problems with the vehicles.  Any logical answer 3.3 Refer to Truck number 2: 3.3.1 A 208 000 (6) B 832 000 C 208 000 D 207 999 E 1 039 999 F 1 3.3.2 Identify TWO possible reasons for this high maintenance cost. (4)  This is the oldest vehicle so will maintenance due to its age of 5 years.  The driver might be driving erratically and therefore damaging the vehicle  Older vehicles high mileage so repairs due to wear and tear are to be expected.  ANY LOGICAL ANSWER 3.4 Refer to Truck number 3: 3.4.1 Calculate the cost price of this truck. (3) 270 000 X 100/20 = 1 350 000 3.4.2 This Truck has the lowest mileage. It only travelled 43 000 km in the last year. (4) Identify TWO possible reasons for this low mileage.  The driver may have been ill  This is the most expensive vehicle so it might only be used for deliveries within the city due to the risk of the current violence against trucks.  It might not be suitable to transport all items like the other 2 vehicles do.  Vehicle might have been unable to run due to repairs  ANY LOGICAL ANSWER TOTAL MARKS: 150 Copyright Reserved Please Turn Over