Accounting Grade 11 P1 Eastern Cape November 2019 Memo (Eng)

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE GRADE 11 NOVEMBER 2019 ACCOUNTING P1 MARKING GUIDELINE MARKS: 150 MARKING PRINCIPLES: 1. Penalties for foreign items are applied only if the candidate is not losing marks elsewhere in the question for that item (no foreign item penalty for misplaced items). No double penalty applied. 2. Penalties for placement or poor presentation (e.g. details) are applied only if the candidate is earning marks on the figures for that item. 3. Full marks for correct answer. If the answer is incorrect, mark the workings provided. 4. If a pre-adjustment figure is shown as a final figure, allocate the part-mark for the working for that figure (not the method mark for the answer). Note: if figures are stipulated in marking guideline for components of workings, these do not carry the method mark for final answer as well. 5. Unless otherwise indicated, the positive or negative effect of any figure must be considered to award the mark. If no + or – sign or bracket is provided, assume that the figure is positive. 6. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from candidates. 7. Where penalties are applied, the marks for that section of the question cannot be a final negative. 8. Where method marks are awarded for operation, the marker must inspect the reasonableness of the answer before awarding the mark. 9. ‘Operation’ means ‘Check operation’. ‘One part correct’ means ‘Operation and one part correct’. Note: Check operation must be +, –, x or ÷ or per candidates’ response. 10. In calculations, do not award marks for workings if numerator and denominator are swapped – this also applies to ratios. 11. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect at least in part. In such cases, do not award the method mark. Indicate by way of  12. Be aware of candidates who provide valid alternatives beyond the marking guideline. 13. Codes: f = foreign item; p = placement/presentation. This marking guideline consists of 10 pages.

Downloaded from hlayiso.com 2 ACCOUNTING P1 (EC/NOVEMBER 2019) QUESTION 1: ANALYSIS OF TRANSACTIONS AND FIXED ASSETS 1.1 ANALYSIS OF TRANSACTIONS General Ledger Owners’ Assets Liabilities Account Account credited Equity debited Trading 1.1.1 Bank +25 000  0 +25 000  stock Creditors 1.1.2 Stationery  0 +500 -500 control  Debtors 1.1.3 Debtors control  -1 400  -1 400  0 allowance  Bad debts 1.1.4 Equipment  +3 500  +3 500  0 recovered  12 No marks awarded if entries are made in all 3 columns for the accounting equation. 1.2 FIXED ASSETS 1.2.1 Calculate the missing figures denoted by (i) to (iii). WORKINGS ANSWER (i) 143 000 + 117 400 or 400 000 – 140 000 260 000  no part marks 2 (ii) 14 000  + (117 000  ÷ 3 ) 39 000 two 53 000  One part correct 4 (iii) (93 000 – 54 800) 38 200  x 20% x 9/12  = 5 730 see above 93 000 – (54 800  + 5 730 ) 435 000 – 342 000 60 530 two marks 32 470  One part correct 7 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2019) ACCOUNTING P1 3 1.2.2 The equipment was sold at a loss while the market value was R35 000. Provide TWO possible reasons for the loss and suggest ONE control measure to prevent this happening again. TWO valid reasons   Not properly taken care off Not depreciated by the correct amount Too expensive to maintain/they want to get rid of it ONE valid suggestion  Implement/improve maintenance plan Calculate the correct depreciation 5 TOTAL MARKS 30 Copyright reserved Please turn over

Downloaded from hlayiso.com 4 ACCOUNTING P1 (EC/NOVEMBER 2019) QUESTION 2: INCOME STATEMENT AND BALANCE SHEET NOTE 2.1 TYALI TRADERS Income Statement for the year ended 30 JUNE 2019 Sales (1 737 750 – 3 500) 1 734 250 * Cost of sales (993 000 – 2 000) or (1 734 250 x 100/175) (991 000) * Gross profit operation 743 250  5 Other operating income operation 116 500  Rent Income (81 792  + 7 632 ) 89 424 * Commission income 20 076  Discount received (6 850  + 150 ) 7 000  Gross operating income operation 859 750  10 Operating expense Adjusted sales x 24% (416 220)  Depreciation 71 680 Salaries and wages 138 500  Consumable stores (11 900  – 2 900 ) 9 000  Bad debts (4 120  + 2 880 ) 7 000  Insurance (19 300  – 6 200 ) 13 100 * Provision for bad debts adjustment (3 125 – 2 010) 1 115 * Trading stock deficit 3 600  Sundry expenses Balancing figure 172 225  Operating profit operation 443 530  17 Interest income (9 000  + 2 250 )or (5 250 + 6 000) 11 250 * Profit before interest expense operation 454 780  Interest expense (161 250 + 257 250 – 375 000) (43 500) * Net profit for the year operation 411 280  9 41 -1 each for foreign items (all balance sheet accounts) Max. -2 *one part correct Misplaced items must be marked wrong. Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2019) ACCOUNTING P1 5 2.2 TRADE AND OTHER RECEIVABLES Trade debtors (68 880 – 2 880 – 3 500 ) 62 500 * Provision for bad debts 5% of Trade debtors (3 125)  Net trade Debtors 59 375 Accrued Income (7 632 + 2 750) see 2.1 10 382 * Prepared Expense see 2.1 6 200  75 957 * *one part correct 9 TOTAL MARKS 50 Copyright reserved Please turn over

Downloaded from hlayiso.com 6 ACCOUNTING P1 (EC/NOVEMBER 2019) QUESTION 3: PARTNERSHIPS 3.1 CONCEPTS 3.1.1 Income statement  3.1.2 Income received in advance  3.1.3 Balance sheet  3.1.4 Cash and cash equivalents  4 3.2.1 CURRENT ACCOUNT NOTE OF PARTNERS NTUBENI KOLISI Partners’ salaries 300 000 * 240 000  240 000 + 60 000  or 25 000 x 12 Interest on capital 27 000 + 24 000  42 000 51 000 * Partners’ bonuses 24 000  Primary distribution operation 342 000  315 000  Final distribution see bottom 46 500 * 46 500 * Net profit for the year 388 500 361 500 Drawings (345 000) (375 000) Retained income operation 43 500  (13 500)  Balance at the beginning (30 000) 10 500 Balance at the end operation 13 500  (3 000)  19 *one part correct 342 000 + 315 000 Final distribution: 750 000 – 657 000 = 93 000 ÷ 2 = 46 500 one mark one mark one mark one mark Accept alternative format/presentation – Net profit can also be shown above. Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2019) ACCOUNTING P1 7 3.2.2 BALANCE SHEET ON 30 SEPTEMBER 2019 EQUITY AND LIABILITIES Owners’ equity operation 810 500  Capital (350 000 + 450 000 ) 800 000 * Current Account (13 500 – 3 000) see 3.2.1 10 500 * 5 Non-current liabilities 198 000 Loan balancing figure: (TE&L – E- CL) 198 000  Current liabilities operation 161 500  Trade and other payables (60 500 +8 000 +7 500 ) 76 000 * Current portion of loan 50 000  12 Bank overdraft 35 500  TOTAL EQUITY AND LIABILITIES 1 170 000  *one part correct 17 TOTAL MARKS 40 Copyright reserved Please turn over

Downloaded from hlayiso.com 8 ACCOUNTING P1 (EC/NOVEMBER 2019) QUESTION 4: ANALYSIS AND INTERPRETATION 4.1 CONCEPTS True or False 4.1.1 False  4.1.2 True  4.1.3 True  4.1.4 False  4 4.2 MK TRADERS 4.2.1 Percentage return earned by Mike. Calculate the average percentage return earned by Mike 290 000 two marks   X 100    671 952 three marks = 43,2%  one part correct 6 Comment on the return earned by Mike. Quote figures. Compared the partners’ % return  Mention increase/decrease in capital  Possible answers Koline’s return on earnings is 45% compared with that of Mike’s of 43%. Mike increased his capital from R600 000 to R700 000 above Koline’s capital of R600 000.  Koline decreases her capital from R640 000 to R600 000 which is less than Mike’s capital of R700 000. 2 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2019) ACCOUNTING P1 9 4.2.2 Comment on TWO liquidity indicators which improved. Quote figures. ANY TWO Financial indicator  : Figures and trend  : Comments  Current Ratio: In 2018 it was 1,4 : 1 and in 2019 it is 1,8 : 1, improved by 0,4, which is 29%. The business will be able to cover its short term debts. Stock Holding Period: The period of holding stock improved from 165 days (almost six months) in 2018 to 68 days in 2019 (97 days). The movement of stock is better compared to the previous year. Debtors Collection Period: The period of collections from debtors improved from 41,2 days in 2018 to 36,2 days in 2019 (improvement of 6 days). Debtors are paying faster, closer to the normal credit terms which is 30 days. 6 4.2.3 The partners planned minor extensions to the building to the value of R80 000. Partner Koline suggested an additional loan to be taken out for the extensions. Why do you think Koline made this suggestion? Quote a financial indicator with figures to support your answer. Financial indicator  Figures and trend  Explanation  The debt equity ratio decreased from 0,3 : 1 in 2018 to 0,2 : 1 in 2019 – the business is lowly geared (equity is still more than the loans). 3 Copyright reserved Please turn over

Downloaded from hlayiso.com 10 ACCOUNTING P1 (EC/NOVEMBER 2019) 4.3 JOHN’S APPLIANCES 4.3.1 Refer to the electric fans: Identify TWO negative effects of the increase in the mark-up percentage. Quote the relevant figures. Any TWO   Drop in the net number of units sold (395 – 320 = 75 units). Drop in sales revenue by R16 000. Decrease in stock turnover rate from 7,9 times to 5,8 times. 4 4.3.2 Identify ONE consequence (problem) resulting from the change in supplier. Quote figures. Provide a possible reason for the problem you identified. PROBLEM  REASON  Increase in the units returned Poor quality products. by the customers, by 70 Customers not familiar with the units. brand name. Unsold stock / large stock Customers not prepared to pay balance 200 – 120: the same price as the older 80 units compared to last model. year. Lower stock turnover rate from 4,1 to 2,6 times. 3 Provide ONE suggestion (besides those mentioned above) that John can use to increase sales in general. Valid suggestion  Advertise more Provide free delivery or after sales services 2 TOTAL MARKS 30 TOTAL: 150 Copyright reserved Please turn over