Accounting Grade 10 P1 Gauteng November 2018 QP (Eng)

Downloaded from hlayiso.com GAUTENG DEPARTMENT OF EDUCATION PROVINCIAL EXAMINATION NOVEMBER 2018 GRADE 10 ACCOUNTING PAPER 1 TIME: 2 hours MARKS: 150 11 pages P.T.O.

Downloaded from hlayiso.com ACCOUNTING 2 Paper 1 GRADE 10 GAUTENG DEPARTMENT OF EDUCATION PROVINCIAL EXAMINATION ACCOUNTING TIME: 2 hours MARKS: 150 INSTRUCTIONS 1. Answer all questions in the ANSWER BOOK provided. 2. Show all workings where applicable in order to earn part marks. 3. Read all instructions carefully. 4. Try at all times to adhere to the suggested time allocation. 5. Non-programmable calculators may be used. 6. Write neatly and legibly. QUESTION TOPIC MARKS TIME 1 Analysis of transactions 22 18 minutes 2 Concepts and Debtors’ Ledger 15 11 minutes 3 Income Statement 52 42 minutes 4 Notes and Balance Sheet 36 29 minutes 5 Analysis and Interpretation 25 20 minutes TOTAL 150 120 minutes P.T.O.

Downloaded from hlayiso.com ACCOUNTING 3 Paper 1 GRADE 10 QUESTION 1: 22 marks; 18 minutes Topic of the question: This question integrates: Analysis of transactions Analysis of transactions of a sole trader QUESTION 2: 15 marks; 11 minutes Topic of the question: This question integrates: Concepts and Debtors' Concepts Ledger Debtors' transactions QUESTION 3: 52 marks; 42 minutes Topic of the question: This question integrates: Income Statement Income Statement of a sole trader QUESTION 4: 36 marks; 29 minutes Topic of the question: This question integrates: Notes to the Financial Statements; Notes and Balance Balance Sheet: Equity and Liabilities Section; Sheet Ethics QUESTION 5: 25 marks; 20 minutes Topic of the question: This question integrates: Analysis and Analysis and interpretation of financial statements interpretation P.T.O.

Downloaded from hlayiso.com ACCOUNTING 4 Paper 1 GRADE 10 QUESTION 1: ANALYSIS OF TRANSACTIONS (22 marks ; 18 minutes) INFORMATION: Andile Makotsi is the owner of AM Stores. AM Stores sells men’s clothing. Andile uses a fixed mark-up percentage of 65% for all merchandise sold. He also employs a tailor to do alterations for his customers. He uses a Fee Income Account to record all alterations done. REQUIRED:  Analyse the following THREE transactions according to the example provided in your ANSWER BOOK.  Assume that the bank balance is favourable for all the transactions. EXAMPLE: e.g. Purchased stationery from XY Stationers for R800 and paid by cheque TRANSACTIONS 1.1 Purchased shirts on credit from Siva Traders for R35 000 less 10% trade discount 1.2 Cash sales of merchandise, R14 355 1.3 Charged Madhav R350 for alterations to a pair of trousers. Madhav promised to pay the amount at the end of the month. QUESTION 2 : CONCEPTS AND DEBTORS’ LEDGER (15 marks ; 11 minutes) 2.1 CONCEPTS Choose the correct word(s) from COLUMN B to match the description in COLUMN A. (4) Write only the letter (A – D) next to the number (2.1.1 – 2.1.4) in the ANSWER BOOK. COLUMN A COLUMN B 2.1.1 The maximum amount of time a debtor is A Bad debts allowed to take to pay his debt 2.1.2 Debtors written off, who are not likely to B Credit Limit settle their accounts 2.1.3 The maximum amount a debtor is C Credit Control allowed to buy goods on credit 2.1.4 Are policies and procedures aimed at D Credit terms controlling the granting of credit P.T.O.

Downloaded from hlayiso.com ACCOUNTING 5 Paper 1 GRADE 10 2.2 DEBTORS’ LEDGER The following information was taken from the books of Dlomo Stores for April 2018. Dlomo Stores allows its debtors 30 days to pay. If a debtor is in arrears, interest of 6% per month is charged. REQUIRED: Prepare the Debtors' Ledger account of M. Smart for the month of May 2018. (11) INFORMATION: 01 Balance at the beginning of the month, R7 000 05 Sold goods on credit to M. Smart for R5 000. Issued invoice no. 101. 10 Received payment of R6 800 in full settlement of the amount owing on 1 May, issued Receipt no. 4002 15 Issued credit note no. 12 for R900 in respect of goods returned 20 The bank returned the cheque received on 10 April 2018, with the remark, “R/D – Insufficient funds”. 25 Charged M. Smart interest for one month on his opening balance P.T.O.

Downloaded from hlayiso.com ACCOUNTING 6 Paper 1 GRADE 10 QUESTION 3: INCOME STATEMENT (52 marks ; 42 minutes) The information below was taken from the books of Romeo Traders. Their financial year ends on 28 February 2018. Romeo Traders uses a mark-up of 100% on all merchandise sold. REQUIRED: Prepare the Income Statement for Romeo Traders for the year ended 28 February 2018. (52) INFORMATION: ROMEO TRADERS EXTRACT FROM THE PRE-ADJUSTMENT TRIAL BALANCE: 28/02/2018 DEBIT CREDIT BALANCE SHEET ACCOUNTS SECTION Capital 570 000 Drawings 68 090 Land and Buildings 480 000 Vehicles at carrying value 180 000 Equipment at carrying value 75 000 Loan: Pretor Bank 120 000 Trading Stock 38 000 Consumable Stores on hand – stationery (1/3/2017) 300 Debtors’ Control 29 380 Bank 17 060 Cash Float 500 Petty Cash 1 200 Creditors’ Control 55 500 NOMINAL ACCOUNTS SECTION Sales 625 850 Cost of Sales 309 000 Debtors’ Allowances 17 850 Discount Received 9 000 Discount Allowed 1 800 Salaries and wages 120 900 Advertising 5 600 Bad Debts 1 035 Rent Income 22 200 Bank Charges 1 210 Insurance 16 000 Telephone 4 425 Stationery 1 800 Sundry Expenses 3 400 Water and Electricity 24 000 Interest on Fixed Deposit 5 000 Interest on loan 11 000 1 407 550 1 407 550 P.T.O.

Downloaded from hlayiso.com ACCOUNTING 7 Paper 1 GRADE 10 ADJUSTMENTS: 1. The sale of merchandise on credit to MK Jonas, for R4 500 was not recorded. 2. A credit note was issued to J Robbie in respect of goods returned. The cost price of the goods was R7 500. The transaction was not recorded. 3. The owner had donated stock worth R5 200 (at cost) to an old age home. This transaction was not recorded. 4. The accountant of Romeo Traders did not reverse the stationery on hand from the previous year. 5. A physical stock take on 28 February 2018 revealed the following on hand : Trading Stock R29 000 Stationery R800 6. B. Dillyn, a debtor, who owed Romeo Traders R7 000 was declared insolvent. He transferred R 2 100 into the bank account, the balance must be written-off. 7. Depreciation of R16 350 must still be provided for. 8. Rent was received up to the end of April 2018. Take into account that rent increased by 10% from 1 September 2017. 9. The payment for advertising was a payment for 2 adverts. One of the adverts will only appear in the newspaper in March. 10. A debtor deposited R760 into the bank account. The debtor’s account had been previously written-off. 11. The bank statement received from the bank reflected the following: Service fees R1 470 Interest on current account R1 300 12. Water and electricity of R1 300 for February 2018 will only be paid in March 2018. 13. Insurance includes an amount of R4 200 which is the annual premium for insurance payable on the 1st of June every year. P.T.O.

Downloaded from hlayiso.com ACCOUNTING 8 Paper 1 GRADE 10 QUESTION 4: CONCEPTS, NOTES AND BALANCE SHEET (36 marks ; 29 minutes) 4.1 CONCEPTS Indicate whether the following statements are TRUE or FALSE. Write only 'true' or 'false' next to the question numbers (4.1.1 – 4.1.4) in the ANSWER BOOK 4.1.1 Accrued expenses are expenses incurred by the business and they have been paid by the end of the financial year. 4.1.2 The loan payable within the next 12 months will be classified as current liabilities on the Balance Sheet. 4.1.3 Solvency is the ability of the business to pay its outstanding debts when they are due. 4.1.4 The credit balance of the Bank Account is reduced when payment is (1 x 4) made to creditors. 4.2 NOTES AND BALANCE SHEET Below is an extract from the Post-closing Trial Balance of Baba Dealers on 28 February 2018. Baba Dealers hired an inexperienced bookkeeper during the year and the adjustments below were not taken into account. REQUIRED: 4.2.1 Prepare the following Notes to the Financial Statements. (a) Owner’s Equity (04) (b) Trade and Other Payables (18) 4.2.2 Prepare the Equity and Liabilities section of the Balance Sheet of Baba Dealers on 28 February 2018. (10) (Where no notes are required, show calculations to earn part marks.) P.T.O.

Downloaded from hlayiso.com ACCOUNTING 9 Paper 1 GRADE 10 INFORMATION: BABA DEALERS EXTRACT OF POST-CLOSING TRIAL BALANCE ON 28 FEBRUARY 2018 DEBIT CREDIT BALANCE SHEET ACCOUNTS SECTION Loan: BNB Bank ? Consumable Stores on Hand 3 000 Debtors’ Control 38 000 Accrued Income 1 800 Accrued Expenses 2 300 Prepaid Expenses 2 400 Income Received in Advance 4 700 Bank overdraft 29 000 Creditors’ Control 23 400 ADJUSTMENTS AND ADDITIONAL INFORMATION: 1. The net profit calculated in the Income Statement amounted to R397 695. 2. The owner increased his capital contribution during the year by R70 000. 3. The owner withdrew R25 000 during the financial year. 4. A debtor with a credit balance of R900 should be transferred to creditors. 5. The following relates to the loan from BNB Bank. Balance on 1 March 2017 60 000 Repayments include interest 21 000 Interest 7 000 Balance on 28 February 2018 ? Payments of R14 000 will be made during the next financial year on the loan. P.T.O.

Downloaded from hlayiso.com ACCOUNTING 10 Paper 1 GRADE 10 6. J Smith joined Baba Dealers on 1 February 2018. The Finance Department left him out of the February payroll by mistake. The details of his salary are as follows: Gross Salary 15 000 Deductions: PAYE 3 500 Pension Fund 1 500 Medical Aid 2 000 UIF 150 Net salary 7 850 The business also contributes towards the: Pension fund : 7.5% of gross Medical Aid : For every R1, the business contributes R1.50. UIF : On a Rand-to-Rand basis NOTE: The Income Statement has already been adjusted. P.T.O.

Downloaded from hlayiso.com ACCOUNTING 11 Paper 1 GRADE 10 QUESTION 5: ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS (25 marks ; 20 minutes) The information provided below is extracted from the books of Simona Traders. Their financial year ends on 28 February 2018. REQUIRED: 5.1 Calculate the current ratio for 2018. (5) 5.2 Calculate the acid-test ratio for 2018 (4) 5.3 Comment on whether the business is able to meet its short-term debts. Quote figures. (4) 5.4 Calculate the percentage operating expenses on sales for 2018. Comment on the control of expenses. Use figures to support your answer. (5) 5.5 Use the figures provided to calculate the return on average Owner’s Equity for 2018. Should Simona be satisfied with the rate of return? (7) Information from the Income Statement for the year ended 28 February 2018 Sales 760 000 Cost of Sales (570 000) Other operating income 18 200 Operating expenses 146 260 Net Profit 61 900 Information from the Balance Sheet on 28 February 2018 Fixed Assets 397 000 Fixed Deposit: Bank of Tshwane (9 % p.a.) 10 000 Inventories 35 200 Trade and Other Receivables 47 000 Cash and Cash Equivalents 13 000 Owner's Equity (beginning of the year) 390 000 Owner's Equity (end of the year) 420 000 Long Term Loan 80 000 Trade and Other Payables 21 000 FINANCIAL INDICATORS ON 28 FEBRUARY 2017: Current ratio 2,9 : 1 Acid-test ratio 1,2 : 1 Percentage operating expenses on sales 27,2% Return on average owner’s equity 25,5% TOTAL: 150 END