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

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE GRADE 11 NOVEMBER 2019 ACCOUNTING P1 MARKS: 150 TIME: 2 hours *IACCNE* This question paper consists of 12 pages, a 1-page formula sheet and a 10-page answer book.

Downloaded from hlayiso.com 2 ACCOUNTING P1 (EC/NOVEMBER 2019) INSTRUCTIONS AND INFORMATION Read the following instructions carefully and follow them precisely. 1. Answer ALL the questions. 2. A special ANSWER BOOK is provided in which to answer ALL the questions. 3. A FORMULA SHEET for financial indicators is attached to this question paper. You may use it if necessary. 4. Show ALL workings to earn part-marks. 5. You may use a non-programmable calculator. 6. You may use a dark pencil or blue/black ink to answer the questions. 7. Where applicable, show all calculations to ONE decimal point. 8. Write neatly and legibly. 9. A breakdown of the questions is provided. You must attempt to comply with the suggested time allocation for each question. Try NOT to deviate from it. QUESTION 1: 30 marks; 20 minutes Topic of the question: This question integrates: Analysis of transactions Analysis and accounting equation Fixed assets Fixed asset note: Calculate missing figures Internal control QUESTION 2: 50 marks; 40 minutes Topic of the question: This question integrates: Income statement and Income statement Balance sheet note Trade and other receivables note QUESTION 3: 40 marks; 30 minutes Topic of the question: This question integrates: Partnerships Concepts Balance sheet Notes to the financial statements QUESTION 4: 30 marks; 30 minutes Topic of the question: This question integrates: Analysis and interpretation Concepts Analysis and interpretation of financial statements Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2019) ACCOUNTING P1 3 QUESTION 1: ANALYSIS OF TRANSACTIONS AND FIXED ASSETS (30 marks; 20 minutes) 1.1 ANALYSIS OF TRANSACTIONS Analyse the following transactions by completing the table provided in the ANSWER BOOK. Refer to the example below. The perpetual stock system is used. The bank is in overdraft (negative balance) at all times. (12) EXAMPLE: Pay the cleaner from the petty cash, R200. General Ledger Owners’ Account debited Account Assets Liabilities equity credited Wages Petty cash -200 -200 0 TRANSACTIONS: 1.1.1 Bought trading stock from Sarah Baartman Suppliers for R25 000 and paid by cheque. 1.1.2 Issued a debit note to CNA Stationers for stationery returned, R500. 1.1.3 A debtor returned goods for R1 400 (cost price, R700). These goods were totally damaged. 1.1.4 A second hand cash register was accepted from W. Fray as payment for his debt. His debt of R3 500 was written off the previous year. 1.2 FIXED ASSETS The information relates to Vens General Dealers for the financial year ended on 28 February 2019. REQUIRED: 1.2.1 Calculate the missing figures denoted by (i) to (iii). (13) 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 from happening again. (5) Copyright reserved Please turn over

Downloaded from hlayiso.com 4 ACCOUNTING P1 (EC/NOVEMBER 2019) INFORMATION: A. Extract: Fixed Assets Note: VEHICLES EQUIPMENT Carrying value (1/03/2018) 143 000 222 720 Cost (i) 435 000 Accumulated depreciation (117 000) (212 280) Movements: Additions 140 000 Disposals (iii) Depreciation (ii) Carrying value (28/02/2019) Cost 400 000 342 000 Accumulated depreciation B. On 1 December 2018, old equipment was sold on credit for R25 000. The accumulated depreciation on the equipment sold was R54 800 on 1 March 2018. C. A new vehicle was bought on 1 September 2018. Depreciation for the six months amounted to R14 000. D. Depreciation on equipment is calculated at 20% p.a. on carrying value. E. Depreciation on vehicles is calculated on the straight-line method. NOTE: The old vehicle was bought on 1 March 2015. 30 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2019) ACCOUNTING P1 5 QUESTION 2: INCOME STATEMENT AND BALANCE SHEET NOTE (50 marks; 40 minutes) TYALI TRADERS The following information relates to the financial year ended on 30 June 2019. REQUIRED: 2.1 Complete the Income statement. (41) 2.2 Prepare the Trade and other receivables note. (9) INFORMATION: A. Extract from Pre-adjustment TRIAL balance on 30 June 2019 BALANCE ACCOUNT SECTION Vehicles 680 000 Accumulated depreciation on vehicles 150 000 Fixed deposit (at 9% p.a. at Nedbank) 160 000 Trading stock 302 500 Debtors control 68 880 Provision for bad debts 2 010 Loan: Mtolo Bank 375 000 NOMINAL ACCOUNT SECTION Sales (including 75% mark-up) 1 737 750 Cost of sales ? Rent income 81 792 Commission income 20 076 Discount received 6 850 Interest on fixed deposit 8 500 Salaries and wages 138 500 Consumable stores 11 900 Insurance 19 300 Sundry expense ? Bad debts 4 120 B. Additional information and adjustments: (a) Goods returned by a debtor B. Jonson, R3 500 (cost price of R2 000), were placed back to the shelves. The transaction was not recorded. (b) Stocktaking revealed that stock, cost price R3 600, were missing and consumable stores on hand amounted to R2 900. Copyright reserved Please turn over

Downloaded from hlayiso.com 6 ACCOUNTING P1 (EC/NOVEMBER 2019) (c) The bookkeeper omitted a discount of R150 from Jula Traders, a creditor. This was for early payment of the account. (d) Outstanding debts of R2 880 must be written off. (e) Provision for bad debts must be adjusted to 5% of debtors. (f) Insurance of R9 300 was fully recorded. The amount was paid for the period of 1 May 2019 up to 31 October 2019. (g) Rent income was increased by 6% on 1 December 2018. The rent for June 2019 is still outstanding. (h) The bookkeeper recorded R60 000 as additional fixed deposit on 1 February 2019. (i) Operating expenses amounted to 24% of the adjusted sales for the year. (j) The loan statement is as follows: Balance on 01 July 2018 375 000 Repayment of loan (including interest) 161 250 Balance on 30 June 2019 257 250 (k) Depreciation for the year amounted to R71 680. 50 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2019) ACCOUNTING P1 7 QUESTION 3: PARTNERSHIPS (40 marks; 30 minutes) 3.1 CONCEPTS Choose the correct term from the list to complete each of the following statements. Write only the term next to the question number (3.1.1–3.1.4) in the ANSWER BOOK. current liabilities; income received in advance; balance sheet; cash and cash equivalents; income statement; prepaid expense 3.1.1 The statement reflecting the financial results of the company is called a(n) … 3.1.2 The amount of rent paid by the tenant for the next financial year will be recorded as ... 3.1.3 The statement reflecting the financial position of the company is called a/an … 3.1.4 A fixed deposit that matures in the next financial year will be recorded under … in the financial statements. (4 x 1) (4) 3.2 SS BROTHERS S. Ntubeni and S. Kolisi are partners in this business. The financial year ended on 30 September 2019. REQUIRED: 3.2.1 Complete the Current Account note for the financial year ended. (19) 3.2.2 Complete the Equity and Liabilities section of the Balance sheet on 30 September 2019. (17) Copyright reserved Please turn over

Downloaded from hlayiso.com 8 ACCOUNTING P1 (EC/NOVEMBER 2019) INFORMATION: A. Extract from accounting records on 30 September 2019: Capital: Ntubeni 350 000 Capital: Kolisi 450 000 Current account: Ntubeni (1 October 2018) (Dr) 30 000 Current account: Kolisi (1 October 2018) (Cr) 10 500 Trading stock 132 600 Loan: BANI Bank ? Fixed deposit: Easy Bank 180 000 Creditors control 60 500 Accrued expenses 8 000 Accrued income 15 000 Prepaid expenses 22 000 Income received in advance 7 500 Cash float 4 500 Bank (Cr) 35 500 Petty cash 1 000 Drawings: Ntubeni 345 000 Drawings: Kolisi 375 000 Profit and loss (Net profit) 750 000 B. On 31 March 2019 Kolisi increased his capital contribution with R50 000. This was entered in the books. C. The partnership agreement states the following:  Interest on capital of 12 % p.a.  Kolisi received an annual salary of R240 000.  Ntubeni received a salary of R5 000 per month more than Kolisi due to extra management responsibilities.  Kolisi received a bonus of 10% of his annual salary.  Remaining profits are shared equally between the partners. D. R50 000 will be paid on the capital amount of the loan in the next financial year. E. Total assets for the year amounted to R1 170 000. 40 Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2019) ACCOUNTING P1 9 QUESTION 4: ANALYSIS AND INTERPRETATION (30 marks; 30 minutes) 4.1 CONCEPTS Indicate whether the following statements are True or False. Write only ‘True’ or ‘False’ next to the question number (4.1.1–4.1.4.) in the ANSWER BOOK. 4.1.1 Solvency is the ability of the business to settle current liabilities. 4.1.2 Profitability is the effective management of expenses. 4.1.3 Creditors payment period is the period between 60–90 days that creditors should be paid. 4.1.4 Stock holding period is the amount of times stock is replaced. (4 x 1) (4) 4.2 MK TRADERS This business is owned by partners Mike and Koline. The financial year ends on 30 September each year. REQUIRED: 4.2.1 Percentage return earned by Mike:  Calculate the average percentage return earned by Mike. (6)  Comment on the return earned by Mike. Quote figures. (2) 4.2.2 Comment on TWO liquidity indicators which improved. Quote figures. (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. (3) Copyright reserved Please turn over

Downloaded from hlayiso.com 10 ACCOUNTING P1 (EC/NOVEMBER 2019) INFORMATION: A. Details of Partners Capital on 30 September 2019: MIKE KOLINE TOTAL Balance at the beginning of the year 600 000 640 000 1 240 000 Additional capital contributed 100 00 - 100 000 Decrease in capital - (40 000) (40 000) Balance at the end of the year 700 000 600 000 1 300 000 B. Extract from the Partners Current Account on 30 September 2019: MIKE KOLINE TOTAL Balance at the beginning of the year 21 152 (2 094) 19 058 Primary distribution 263 000 260 000 523 000 Final distribution 27 000 18 000 45 000 Drawings for the year (288 400) (277 380) (565 780) Undrawn profit for the year 1 600 620 2 220 Balance at the end 22 752 (1 474) 21 278 C. Financial Indicators on 30 September: 2019 2018 Current ratio 1,8 : 1 1,4 : 1 Acid test ratio 0,5 : 1 0,6: 1 Stock holding period 68 days 165 days Average Debtors collection period 35,2 days 41,2 days Average Creditors payment period 36,2 days 39 days Debt/equity ratio 0,2 : 1 0,3 : 1 Return on earnings: Mike ? Return on earnings: Koline 45% Copyright reserved Please turn over

Downloaded from hlayiso.com (EC/NOVEMBER 2019) ACCOUNTING P1 11 4.3 JOHN’S APPLIANCES John’s Appliances sells (amongst other items) electric fans and electric heaters. You are provided with information for the first three months of the financial year ended 28 February 2019. REQUIRED: 4.3.1 Refer to the electric fans: Identify TWO negative effects of the increase in the mark-up percentage. Quote the relevant figures. (4) 4.3.2 Refer to the electrical heaters: The original supplier has left the country. John was forced to change to another supplier. In order to maintain the selling price, he had to decrease the mark-up %, and accepted that the gross profit would decrease in the short term.  Identify ONE consequence (problem) resulting from the change in supplier. Quote figures. Provide a possible reason for the problem you identified. (3)  Provide ONE suggestion (besides those mentioned above) that John can use to increase sales in general. (2) INFORMATION: ELECTRIC FANS ELECTRIC HEATERS 2019 2018 2019 2018 Units sold 320 400 600 500 Returns by customers 0 5 80 10 Selling price R 1 530 R 1 280 R 420 R 420 Cost price R 850 R 800 R 300 R 280 Mark-up % 80% 60% 140% 150% TOTAL SALES R 489 600 R 505 600 R 218 400 R 205 800 Gross profit R 217 600 R 189 600 R 62 400 R 68 600 Stock on hand 55 50 200 120 Stock turnover rate 5,8 7,9 2,6 4,1 30 TOTAL: 150 Copyright reserved Please turn over

Downloaded from hlayiso.com 12 ACCOUNTING P1 (EC/NOVEMBER 2019) GRADE 11 ACCOUNTING: FINANCIAL INDICATOR FORMULA SHEET Gross profit x 100 Gross profit x 100 Net profit x 100 Sales 1 Cost of sales 1 Sales 1 Operating expenses x 100 Operating profit x 100 Sales 1 Sales 1 Total earnings by partner x 100 Net profit x 100 Partner's average equity 1 Average owners' equity 1 Current assets : Current liabilities (Current assets – Inventories) : Current liabilities (Trade and other receivables + Cash and cash equivalents) : Current liabilities Average debtors x 365 Average creditors x 365 Credit sales 1 Credit purchases 1 Average inventories x 365 or 12 Cost of sales . Cost of sales 1 Average inventories Non-current liabilities : Owners’ equity Total assets : Total liabilities Copyright reserved Please turn over

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