ACCN GR10 MEMO NOV2017 English hlayiso.com

Downloaded from hlayiso.com 1 ACCOUNTING (MARKING GUIDELINE) (EC/NOVEMBER 2017) NATIONAL SENIOR CERTIFICATE GRADE 10 NOVEMBER 2017 ACCOUNTING MARKING GUIDELINE GENERAL RULES: 1. Award full marks for the correct final answers. If the answer is incorrect, mark the workings provided. If a workings figure/amount is shown as a final answer, allocate the working mark. 2. “Method” marks are denoted by .  In calculations and final totals, at least one part of the workings must be correct to earn the mark.  In cases where answers of previous questions must be used, check the transfer.  Ignore brackets on statements, but check the operation before awarding marks. 3. Where penalties are applied, the marks for that section cannot be a negative (foreign items). 4. For questions requiring explanations and comments, award part-marks. A good explanation will normally mention and explain a point. Beware of alternative wording reflecting the same points. This marking guideline provides some explanations – they are not conclusive. Read the candidates’ responses and give credit for their interpretations. 5. Where appropriate/acceptable, accept recognisable abbreviations. 6. Educators are expected to work through the entire paper and make reasonable adjustments within the framework of the mark allocation. This marking guideline consists of 14 pages. Copyright reserved Please turn over

Downloaded from hlayiso.com 2 ACCOUNTING (MARKING GUIDELINE) (EC/NOVEMBER 2017) QUESTION 1: ACCOUNTING CONCEPTS, DEBTORS, INTERNAL CONTROL AND ACCOUNTING EQUATION 1.1 ACCOUNTING CONCEPTS 1.1.1 E  1.1.6 I  1.1.2 H  1.1.7 D  1.1.3 G  1.1.8 J  1.1.4 F  1.1.9 C  1.1.5 B  1.1.10 A  10 1.2 DEBTORS 1.2.1 DEBTORS LEDGER OF MARY LEE STORES TT Rosie DATE DETAILS FOL DEBIT CREDIT BALANCE 2017 Sep 1 Balance b/d  3 200 2 Invoice  DJ  1 800 5 000 6 Credit note  DAJ  180 4 820 9 Receipt  CRJ  3 040 1 780 Receipt CRJ  160 1 620 15 Invoice DJ  4 160 5 780 30 Receipt CRJ  2 890  2 890 12 1.2.2 What information about a prospective debtor does this business need before an account can be opened? Give a reason for your answer. INFORMATION   REASON   Any relevant answer Reason should fit information  ID document  Confirm identity of debtor  Salary advice  Proof of income  Proof of address  Address for accounts  Other accounts  Credit record 4 1.2.3 Name TWO methods the business can apply to improve the collection of outstanding amount from debtors. Any relevant answer   Add interest to outstanding accounts  Allow discount for early payments  Regularly send out accounts  Follow up outstanding account with SMS 2 Copyright reserved Please turn over

3 Downloaded from hlayiso.com ACCOUNTING (MARKING GUIDELINE) (EC/NOVEMBER 2017) 1.3 ACCOUNTING EQUATION ASSETS OWNER’S EQUITY LIABILITIES NO JOURNAL REASON EFFECT REASON EFFECT REASON EFFECT E.g. CPJ Bank - 200 Drawings - 200 + 11875 CJ  Trading stock  Creditors control  + 11 875  1.3.1  PCJ  Petty cash  - 150  Wages  - 150  1.3.2 DAJ  Debtors control  - 900  Debtor allowances - 900  1.3.3 Trading stock  + 600  Cost of sales  + 600  CRJ  Bank  + 9 500  Interest of fixed + 2 500  1.3.4 deposit  Fixed deposit  - 7 000  27 Q1 55 Copyright reserved Please turn over

4 Downloaded from hlayiso.com ACCOUNTING (MARKING GUIDELINE) (EC/NOVEMBER 2017) QUESTION 2: GENERAL JOURNAL, GENERAL LEDGER AND INTERNAL CONTROL 2.1 GENERAL JOURNAL General Journal of AM Traders – October 2017 DEBTORS CONTROL CREDITORS CONTROL DAY DETAILS DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT 31 Totals 492 236 632 298 [Drawings  865] Stationery  130 Trading stock  735 Bad debts  430 J Small  430  430 Interest paid  147 NO1 Dealers  147  147 Repairs  20 000 Land and buildings  20 000 A Cona  20  20 Discount allowed  20 R Lewis  1 250  1 250 Bad debts recovered  1 250 1 762 666 632 445  [Details and amount]   -1 per extra entry (maximum -2)  entry requiring calculation 20 Copyright reserved Please turn over

(EC/NOVEMBER 2017) Downloaded from hlayiso.com ACCOUNTING (MARKING GUIDELINE) 5 2.2 GENERAL LEDGER GENERAL LEDGER OF AM TRADERS Trading Stock DATE DETAILS FOL AMOUNT DATE DETAILS FOL AMOUNT 2017 1 Balance b/d  28 000 2017 31 Drawings  GJ  735 Oct 31 Bank CPJ  5 400 Oct Cost of sales CRJ  14 550 Creditors CJ  7 800 Cost of sales DJ  11 616 Cost of sales  DAJ  200 Creditors CAJ  900 Balance b/f  13 599 41 400 41 400 Nov 1 Balance b/d  13 599 14 Creditors Control DATE DETAILS FOL AMOUNT DATE DETAILS FOL AMOUNT 2017 31 Bank CPJ  7 040 2017 1 Balance b/d  15 430 Oct Discount received CPJ  340 Oct 31 Sundry purchases CJ  12 200 Sundry returns CAJ  2 400 Journal credits GJ  445 Journal debits GJ  632 Balance b/f  17 663 28 075 28 075 Nov 1 Balance b/d  17 663 9 Stationery DATE DETAILS FOL AMOUNT DATE DETAILS FOL AMOUNT 2017 1 Total b/d  670 2017 31 Drawings  GJ  130 Oct 23 Bank CPJ  330 Oct Creditors CAJ  300 31 Creditors CJ  700 6 Copyright reserved Please turn over

Downloaded from hlayiso.com 6 ACCOUNTING (MARKING GUIDELINE) (EC/NOVEMBER 2017) 2.3 INTERNAL CONTROL What can the owner of AM Traders do to ensure that stock is not stolen by his employees? State THREE internal control measures. Any valid control measure referring to stock     Do regular stock counts  Limit entry to store room  Security cameras / staff  Search employees when leaving  Division of duties for employees handling stock / stock records Award part marks for:     Stock count  Security / cameras  Division of duties 6 Q2 55 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2017) ACCOUNTING (MARKING GUIDELINE) 7 QUESTION 3: FIXED ASSETS, INTERNAL CONTROL AND INCOME STATEMENT 3.1.1 ASSET REGISTER MALAMBO TRADERS ASSET REGISTER: VEHICLES Mahindra Pik-up- Item: Purchased from: Mahindra PE Loader Date of 1 December 2015 Cost price: R110 000 purchase: Depreciation 20% on diminishing balance method: ACCUMULATED DATE DEPRECIATION BOOK VALUE DEPRECIATION 29 Feb 2016 26 400 83 600  28 Feb 2017 16 720  43 120  66 880  Depreciation: (110 000 – 26 400) x 20% = 16 720 MALAMBO TRADERS ASSET REGISTER: EQUIPMENT Canon Pixma Capital Item: Purchased from: MX924 contribution Date received: 1 March 2016 Cost price: R14 000 Depreciation 10% on cost price method: ACCUMULATED DATE DEPRECIATION BOOK VALUE DEPRECIATION 28 Feb 2017 1 400  1 400  12 600  10 3.1.2 State ONE reason why the asset register is a valuable tool in asset management. Any relevant reason   Verification of assets for balance sheet  Quick reference when selling assets 2 3.1.3 Make TWO suggestions on how the business can improve the safety of their vehicles. Any relevant safety measure    Install tracking devices  Lock-up garage when not in use  Used only by approved drivers Award part marks for:   Tracking  garage 4 Copyright reserved Please turn over

Downloaded from hlayiso.com 8 ACCOUNTING (MARKING GUIDELINE) (EC/NOVEMBER 2017) 3.2.1 INCOME STATEMENT OF MALAMBO TRADERS FOR THE YEAR ENDING 28 FEBRUARY 2017 492 736 – 5 890 Sales 485 881  – 965 Cost of sales 263 380 – 580 (262 800)  Gross profit ## 223 081  Other operating income 17 040  Rent income 16 900 – 1 300 15 600  Bad debts recovered 1 440  Gross operating income ## 240 121  Expenses (220 615)  Packaging 3 656 Advertising 1 900 Salaries 170 000 Telephone 3 995 + 135 4 130  Water and electricity 3 385  Insurance 5 300 – 1 000 4 300  Stationery 2 450 – 120 2 330  Bad debts 3 744  16 720 + 4 000 Depreciation SEE 3.1.1 # 24 770  + 1 400 + 2 650 (31 440 – 29 620) + Trading stock deficit 2 400  580 Operating profit ## 19 506  Interest income SEE 3.2.2 5 494  Profit before interest expense ## 25 000  Interest expense (8 100)  Net profit for the year ## 16 900  43 # See calculations ## Confirm operation Foreign items -1 (maximum -2); -1 for misplaced items (maximum -2) 3.2.2 Interest income Interest of fixed deposit 3 100 + 350 3 450  Interest on current account 889  Interest received 1 155  5 494 6 Q3 65 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2017) ACCOUNTING (MARKING GUIDELINE) 9 QUESTION 4: GAAP PRINCIPLES AND INTERPRETATION OF FINANCIAL STATEMENTS 4.1 GAAP PRINCIPLES 4.1.1 Prudence  4.1.2 Matching  4.1.3 Historical cost  4.1.4 Going concern  4.1.5 Materiality  5 4.2.1 INTERPRETATION OF FINANCIAL STATEMENTS (a) Current ratio 104 000  : 35 000  3 : 1  (must be X : 1) 3 (b) Acid test ratio 104 000  – 42 000  : 35 000  62 000 : 35 000 1,8 : 1  (must be X : 1) 4 (c) Net profit percentage on sales 55 000  x 100 177 000  = 31,1 %  3 Copyright reserved Please turn over

Downloaded from hlayiso.com 10 ACCOUNTING (MARKING GUIDELINE) (EC/NOVEMBER 2017) 4.2.2 Comment on the return on owner’s equity. Provide a calculation to support your comment. (Use average equity.) 55 000  X 100 ½  (279 000  + 321 000 ) 55 000 X 100 300 000 = 18,3%  Yes,  Return of 18,3% is much better than 8,5% interest at financial institutions.  8 4.2.3 Solvency ratio 50 000  + (360 900  – 65 900 ) + 104 000  : 35 000  + 85 000  449 000 : 120 000  3, 7 : 1  (must be X : 1) Is Langa Traders in a position to acquire another long term loan? Motivate your answer. Yes , They have R3,70 available to cover every R1 debt.  11 4.2.4 Mark-up percentage 177 000  – 112 000  x 100 112 000  65 000 x 100 112 000 = 58%  Give TWO reasons why the target was not achieved. Any valid reason    Sale at discounted prices  Wrong calculations  Allowances for inferior goods sold without return of goods 6 Q4 40 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2017) ACCOUNTING (MARKING GUIDELINE) 11 QUESTION 5: VAT, SALARIES AND INTERNAL CONTROL 5.1 VAT 5.1.1 Evasion  5.1.2 SA Revenue Services  5.1.3 Input  5.1.4 14%  5.1.5 Zero-rated  5 5.2 SALARIES 5.2.1 Name TWO methods that the employer can use to improve the productivity of employees. Any valid method    Training courses  Improve computer skills  Improve supervision  Meals / cafeteria at work Award part marks for:    Train  Skills  Supervise 4 Copyright reserved Please turn over

12 Downloaded from hlayiso.com ACCOUNTING (MARKING GUIDELINE) (EC/NOVEMBER 2017) 5.2.2 SALARIES JOURNAL Salaries journal of Jakaranda Traders – October 2017 DEDUCTIONS CONTRIBUTIONS GROSS NET EMPLOYEES MEDICAL PENSION PENSION SALARY UIF PAYE TOTAL SALARY UIF AID FUND FUND 1 644 G Zikwe 13 700 137 1 000 822 # 2 466 4 425  9 275  137  1 074 T Titus 17 900 179 800 # 3 388 5 441  12 459 179  2 148  129 1 548 C Cartoon 12 900 1 000  774 2 322 4 225 8 675  129   21 CALCULATIONS OF PAYE [# TO BE MARKED] Zikwe: 164 400 x 18% ÷ 12 = 2 466 Titus: [34 178  + ((214 800  – 189 880 ) x 26%)] ÷ 12  = 3 388  Q5 30 Copyright reserved Please turn over

Downloaded from hlayiso.com 13 ACCOUNTING (MARKING GUIDELINE) (EC/NOVEMBER 2017) QUESTION 6: COST ACCOUNTING AND BUDGET 6.1.1 CHOOSE THE CORRECT TERM (a) Sales and distribution  (b) Indirect  (c) Fixed  6 6.1.2 COST CALCULATIONS AND ADVICE A COST ITEM CALCULATION ANSWER DIRECT LABOUR COST 300  x 0,50  150  DIRECT MATERIAL COST 2 100  + (25  x 8 ) 2 300  Butter + lettuce + rent OVERHEAD COST 250  40  + 110  + 100  TOTAL COST OF PRODUCTION 2 700  UNIT COST OF PRODUCTION 2 700 ÷ 300 9  SELLING PRICE 9  + 66⅔%  15  17 B Name TWO things that Mary can do in order to decrease her cost. Any valid answer    Find cheaper supplier  Use less garnish  Bargain for cheaper rent 4 C Advise Mandy on THREE marketing strategies that she can implement at the school to improve her sales. Any valid advice     Public announcement at break time / at end of day  Posters on notice boards  Banner at tuck-shop  Mobile sales option Award part marks for:     Advertise 6 Copyright reserved Please turn over

Downloaded from hlayiso.com 14 ACCOUNTING (MARKING GUIDELINE) (EC/NOVEMBER 2017) 6.2 BUDGETS 6.2.1 Calculate the total cost of the tour for the players. INCOME Sponsorship 8 456  Donation 5 000  TOTAL INCOME 13 456 EXPENSES BUDGET ITEM CALCULATION ANSWER Transport 3 000  + 850 x 2  4 700  Accommodation 1 120  x 3  x 4  13 440  Meals and refreshments 300  x 18 5 400  Kit 6 880  + 400  7 280  TOTAL EXPENSES 30 820  TOTAL COST OF THE TOUR FOR THE PLAYERS 17 364  18 6.2.2 The team has financial problems as some players cannot afford the amount expected of them. Suggest TWO ways to solve the problem. Any valid suggestion    Sell raffle tickets  Donation list for individual group members  Fundraising event at school / community  Sell food (hotdogs) at school / busy pavement  Work a shadow shift at a restaurant and earn commission / tips Award part marks for:    Raffle  Donation  Fundraising 4 Q6 55 TOTAL: 300 Copyright reserved Please turn over