Accounting Grade 10 P1 Gauteng November 2023 Memo (English)

Downloaded from hlayiso.com PROVINCIAL EXAMINATION NOVEMBER 2023 GRADE 10 MARKING GUIDELINES ACCOUNTING (PAPER 1) 6 pages 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 penalty for misplaced items). No double-penalty is 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). 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. Operation means 'check operation'. 'One part correct' means operation and one part correct. Note: check operation must be +, -, x, ÷ as per candidate’s calculation (if valid) or per memo. 9. Where method marks are awarded for operation, the marker must inspect the reasonableness of the answer and at least one part must be correct before awarding the mark. 10. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect at least in part. 11. Be aware of candidates who provide valid alternatives beyond the marking guidelines. 12. Codes: F = foreign item; P = placement/presentation. 1

Downloaded from hlayiso.com ACCOUNTING (PAPER 1) MARKING GUIDELINES GRADE 10 QUESTION 1: GAAP CONCEPTS AND TRANSACTION ANALYSIS 1.1 GAAP CONCEPTS 1.1.1 D ✓ 1.1.2 C ✓ 1.1.3 A ✓ 1.1.4 B ✓ 4 1.2 ANALYSIS OF TRANSACTIONS GENERAL LEDGER AMOUNT EQUATION Account debited Account credited R A O L E.g. Stationery Bank 2 000 - - 0 1.2.1 Equipment Creditors' control ✓ ✓ 10 000 +✓ 0 +✓ +✓ 1.2.2 Bank ✓ Debtors' Control ✓ 4 750 0 0 _✓ Discount allowed ✓ Debtors' Control ✓ ✓ 250 _✓ +✓ 0 1.2.3 Bank Sales✓ ✓✓4 500 +✓ +✓ 0 Cost of sales Trading stock ✓ 3 000 _✓ _✓ 0 1.2.4 Drawings ✓ Trading stock 850 _✓ _✓ 0 1.2.5 Creditors' Control ✓ Trading Stock ✓✓ 1 710 _✓ 0 _✓ 29 TOTAL 33 2

Downloaded from hlayiso.com QUESTION 2: STATEMENT OF COMPREHENSIVE INCOME 2.1 STATEMENT OF COMPREHENSIVE INCOME OF SEBENZA TRADERS FOR THE YEAR ENDED 28 FEBRUARY 2023 Sales (588 000 – 6 800) ✓✓ 581 200 Cost of Sales ✓ (420 000) Gross profit 4  161 200 Other operating income  49 750 Commission income 10 150 Rent income (36 200 ✓ + 3 400✓✓)  39 600 Gross operating income 6  210 950 Other operating expenses  (139 855) Salaries 43 500 Stationery 3 320 Advertising 2 300 Water and electricity (19 100 + 1 830) ✓✓ 20 930 Insurance (12 500 – 1 980 ✓✓)  10 520 Packing materials (7 100 – 1 950) ✓✓ 5 150 Bad debts (4 800 + 600) ✓ 5 400 Donations ✓✓ 1 800 Bank charges (4 200 + 260) ✓ 4 460 Trading stock deficit (44 000✓ – 1 800 ✓- 41 000✓)  1 200 Depreciation (28 000 ✓+ 12 810 ✓✓+ 465✓✓)  41 275 Operating profit 25  71 095 Interest income (1 620✓ + 540 ✓✓ + 220✓)  2 380 Profit before interest expense  73 475 Interest expense (117 300 + 46 200 -150 000) ✓✓ (13 500) Net profit for the year 9  59 975 44 TOTAL 44 3

Downloaded from hlayiso.com QUESTION 3: NOTES AND STATEMENT OF FINANCIAL POSITION 3.1 3.1.1 OWNER'S EQUITY AMOUNT Capital balance on 01 June 2022 ✓ 3 000 000 Additional capital contributed ✓ 100 000 Net profit ✓ 170 000 Drawings (200 000 + 40 000) ✓✓ (240 000) Capital balance on 31 July 2023 Operation  3 030 000 6 3.1.2 TRADE AND OTHER PAYABLES AMOUNT Trade creditors  420 500 (530 000 ✓ – 112 500 ✓✓ + 3 000✓) Pension Fund (19 000 + 1 500 ✓+ 3 000 ✓✓)  23 500 Medical Aid (17 000✓ + 1 300 ✓ + 1 300 ✓)  19 600 Accrued expenses ✓6 000 Income received in advance ✓12 000 SARS - PAYE (51 000 + 2 100) ✓53 100 Creditors for salaries #✓10 100 Operation  544 800 20 # Amount must not exceed R15 000. 3.2 STATEMENT OF FINANCIAL POSITION AS AT 31 JULY 2023 EQUITY AND LIABILITIES EQUITY 3 030 000 Owner’s equity see 3.1.1  3 030 000 NON-CURRENT LIABILITIES 180 000 Loan: SWYS Bank  180 000 (240 000 ✓ – 60 000 ✓) CURRENT LIABILITIES  606 800 Trade and other payables  544 800 Short-term loan  60 000 Bank Overdraft (105 000 ✓ – 100 000 ✓ – 3 000✓)  2 000 TOTAL EQUITY AND LIABILITIES OE + NCL + CL  3 816 800 12 TOTAL 38 4

Downloaded from hlayiso.com QUESTION 4: CONCEPTS AND INTERPRETATION OF FINANCIAL STATEMENTS 4.1 CONCEPTS 4.1.1 False ✓ 4.1.2 True ✓ 4.1.3 True ✓ 3 4.2 Calculate the financial indicators as at 28 February 2023: 4.2.1 Calculate the mark-up percentage. 156 000 ✓ 100  520 000 ✓ 1 30%  One part correct 3 4.2.2 Calculate the net profit on sales. 81 000 ✓ 100  676 000 ✓ 1 12%  One part correct 3 4.2.3 Calculate the current ratio. 490 000 ✓ : 220 200 ✓ 2,2:1  One part correct 3 4.2.4 Calculate the acid-test ratio. 490 000 ✓ – 200 000 ✓ : 220 200 ✓ OR 165 000 + 125 000 : 220 200 4 290 000 two marks 1,3: 1  One part correct 4.2.5 Calculate the return on owner's equity. 81 120 ✓ 100  2 ✓ (550 000 ✓+ 500 000 ) 1 ✓ 1 1 050 000 2 marks 525 000 3 marks = 15,5% or 15,45% or 15%  One part correct ( Do not accept 16%) 5 5

Downloaded from hlayiso.com 4.2.6 James Milan is not happy with the control of expenses in the business. Quote ONE financial indicator with figures to support his concern. Financial indicator and comment ✓✓ trend and figures ✓ Operating expenses are poorly controlled and have increased from 9% to 14,2% or by 5,2 basis points or by 57,8% (Accept 58% and 57,77%) 3 4.2.7 Comment on liquidity of the business. Quote TWO financial indicators and provide figures to support your answer. Quote indicators✓ ✓ trend and figures ✓ ✓ • The current ratio has slightly dropped from 2,8:1 to 2,2:1. Check 4.2.3 • Acid test ratio has dropped from 1,5:1 to 1,3:1. Check 4.2.4 4 4.2.8 Millan Dealers has a mark-up policy of 40% on all merchandise. The owner is concerned that the business is not achieving the mark-up. Provide TWO reasons why the business is not achieving its intended mark-up. Two valid reasons ✓ ✓ • Too much discount was allowed to customers. • The incorrect mark-up was applied. • The business was forced to sell goods at a reduced price to remain competitive. • There was a lower demand for goods sold by a business. 2 4.2.9 State whether Milan Dealers will be happy with the % return on equity. Explain TWO reasons for your answer. Quote the financial indicators and relevant figures. Answer: Yes ✓ Reasons or financial indicators ✓ ✓ trend and figures ✓ ✓ • % return on average equity increased from 12,8% to 15,5%. • % return on average equity is higher than interest rate on fixed deposit of 9%. Check 4.2.5 5 TOTAL 35 TOTAL: 150 6