Accounting Grade 11 P1 Gauteng November 2020 QP (Eng)

Downloaded from hlayiso.com GAUTENG DEPARTMENT OF EDUCATION PROVINCIAL EXAMINATION NOVEMBER 2020 GRADE 11 ACCOUNTING PAPER 1 TIME: 2 hours MARKS: 150 14 pages + 1 formula sheet P.T.O.

Downloaded from hlayiso.com ACCOUNTING 2 PAPER 1 GRADE 11 INSTRUCTIONS 1. Answer ALL the questions. 2. A special ANSWER BOOK is provided in which all questions are to be answered. 3. Show ALL workings in order for part marks to be allocated. 4. Where applicable, round all calculations to the nearest rand. All other calculations to be rounded to one decimal place. 5. Read the instructions of each question carefully and follow them precisely. 6. Learners will forfeit marks for:  the use of non-standardized abbreviations.  overwriting of figures or words.  superfluous/foreign entries. 7. Non-programmable calculators may be used. 8. All answers must be written in blue or black ink. 9. Use the information in the table as a guide when answering the question paper. Try not to deviate from it. Question Topic Marks Time 1 Financial Statements 55 42 minutes 2 Partnerships 40 32 minutes Analysis and interpretation 3 20 16 minutes of Financial Statements Asset Management & 4 35 30 minutes Internal Control 150 120 minutes P.T.O.

Downloaded from hlayiso.com ACCOUNTING 3 PAPER 1 GRADE 11 QUESTION 1: FINANCIAL STATEMENTS (55 marks; 42 minutes) The following information was taken from the accounting records of Golden Gate Traders on 30 June 2020, the last day of the financial year. REQUIRED: 1.1 Prepare the Statement of Comprehensive Income (Income Statement) for the year ending 30 June 2020. (40) 1.2 Complete the following Notes to the Financial Statements: 1.2.1 Trade and other receivables (6) 1.2.2 Trade and other payables (9) INFORMATION 1. Figures extracted from the pre-adjustment Trial Balance on 30 June 2020: Balance Sheet Accounts Vehicles 130 000 Equipment 78 500 Accumulated depreciation on vehicles 34 000 Accumulated depreciation on equipment 30 000 Trading stock 42 563 Debtors’ control 31 900 Provision for bad debts 550 Bank (favourable) 8 540 Creditors’ control 21 363 Fixed deposit : Zee Bank @ 15% p.a. 10 000 Loan : Zee Bank 60 000 Nominal Accounts Section Sales (less Debtors’ Allowances) 337 600 Cost of sales ??? Repairs 1 618 Bad debts 1510 Telephone 2 350 Rent income 17 836 Interest on fixed deposit 1 125 Rates 2 850 Insurance 4120 Discount received 600 Packing materials 13 500 Water and electricity 4 830 Salaries 78 000 U.I.F. contributions 3 120 P.T.O.

Downloaded from hlayiso.com ACCOUNTING 4 PAPER 1 GRADE 11 2. Adjustments and additional information. 2.1 A credit note for R1600 issued to a debtor, dated 27 June 2020, was not recorded. The cost price of these goods was R1000.The goods were placed back into stock. 2.2 The business prices its goods at a mark up of 60% on cost. Trade discount of R4000 was allowed on invoices to certain customers. 2.3 A physical stock count on 30 June 2020 revealed the following to be on hand.  Trading stock R 44 000  80% of packing material was used during the year 2.4 A cheque issued to a creditor for R1 900 settling our account of R2 000 was dishonoured and sent back by the bank marked R/D. 2.5 On 18 June 2020, R1 370 was received from M. Stuurman whose debt had previously been written off as irrecoverable. The amount was credited to the Debtors’ Control account in the General Ledger. 2.6 The provision for bad debts must be increased by R400. 2.7 Insurance includes a policy with an annual premium of R3 000 which expires on 31 October 2020. 2.8 A suite of offices has been let to an estate agent since 01 February 2019. The rent agreed upon was R15 600 for the first year and a 12 % increase in the second year. Make the necessary adjustments. 2.9 The telephone account for June 2020 must still be paid, R230. 2.10 On 30 December 2018 an amount of R10 000 was placed in a fixed deposit at 15 % interest per annum. Interest for the last quarter is still receivable. Interest is not capitalised. 2.11 Depreciation for the year totalled, R23 475. P.T.O.

Downloaded from hlayiso.com ACCOUNTING 5 PAPER 1 GRADE 11 2.12 The following details of a new employee, D. Laurence, were omitted from the Salaries Journal for June 2020.  Gross salary R4 200  Deductions : P.A.Y.E. R840 Medical aid R150 U.I.F. 1%  The enterprise contributes to the U.I.F. on a rand for rand basis. No payments in respect of the above have been made. 2.13 The loan statement showed the following information:  Balance on 01 July 2019 R60 000  Balance on 30 June 2020 R48 000  Repayments for the year R18 000  Interest capitalized ??? P.T.O.

Downloaded from hlayiso.com ACCOUNTING 6 PAPER 1 GRADE 11 QUESTION 2: PARTNERSHIPS (40 marks; 32 minutes) The following information was taken from the accounting records of Mighty Mouse Traders on 28 February 2020, the last day of the financial year. The business is a partnership with Mighty and Mouse as partners. REQUIRED: 2.1 State whether the following statements are TRUE or FALSE. (5) 2.1.1 Owners’ Equity for a partnership consists of Capital and Drawings only. 2.1.2 All current accounts are current liabilities. 2.1.3 The partnership agreement stipulates the amount of capital that each partner has to contribute to the business. 2.1.4 The double entry principle means that the partnership needs to have a separate bank account from the personal bank accounts of each of the partners. 2.1.5 A partner cannot contribute more capital to a partnership. 2.2 Use all relevant information and prepare the Current Account Note on 28 February 2020. (14) 2.3 Use all relevant information and prepare the Statement of Financial Position (Balance Sheet) on 28 February 2020. Where notes are not required, show all calculations in brackets to earn part marks. (21) P.T.O.

Downloaded from hlayiso.com ACCOUNTING 7 PAPER 1 GRADE 11 INFORMATION: 1. List of balances and totals extracted from the accounting records on 28 February 2020: Capital : Mighty 200 000 Capital : Mouse 100 000 Current account : Mighty (01 March 2019) (Debit) 4 800 Current account : Mouse (01 March 2019 (Credit) 6 200 Drawings : Mighty 20 000 Drawings : Mouse 6 800 Fixed assets at carrying value (Missing figure) ??? Fixed deposits (See information 3.1) 30 000 Inventories (Missing figure) ??? Total trade and other receivables (See information 4) ??? Petty cash 500 Cash float 1 000 Loan : Giant Bank (See information 4) ??? Total trade and other payables (Before adjustment 3.3) 45 050 Bank overdraft 12 200 Salaries : Mighty (See information 5.1) 49 600 Salaries : Mouse (See information 5.1) 78 000 Net profit for the year 141 000 2. Transactions not yet recorded: 2.1 Mighty returned merchandise with a cost price of R700. This merchandise was taken from stock for personal use. 2.2 A cash cheque for R1 000, drawn by Mighty for personal use, was recorded as Drawings : Mouse, by mistake. 3. Additional information: 3.1 The business has two fixed deposits:  R10 000 at Giant Bank – matures on 01 April 2020  R20 000 at Small Bank – matures on 01 December 2021 3.2 A repayment of R5 000 on the loan is made annually on 28 February. The payment for this year was made on 28 February 2020. However, this has not been recorded in the books of the business. 3.3 After the Bank Reconciliation for February 2020 was completed, it showed, as part of the outstanding cheques, a total of R1 200 for post- dated cheques. P.T.O.

Downloaded from hlayiso.com ACCOUNTING 8 PAPER 1 GRADE 11 4. Some of the financial indicators of the business as calculated on 28 February 2020:  Current ratio 1,2 : 1  Acid test ratio 0,5 : 1  Debt-Equity ratio 1,5 : 1 5. Information taken from the Partnership Agreement: 5.1 Salaries  The partners increased their annual salaries by 20% p.a. on 01 July 2019.  Mighty has not as yet withdrawn his February 2020 salary.  Mouse has withdrawn her salary for the financial period. 5.2 Interest on capital Take note that Mighty increased his capital contribution by R100 000 on 01 September 2019. This has been properly recorded.  8% p.a. on any amount up to R100 000 of capital contribution.  10% p.a. on the amount of capital above R100 000. 5.3 Remaining profit or loss The remaining profit or loss is shared between the two partners in the ratio of their capital contributions at the beginning of the financial year. P.T.O.

Downloaded from hlayiso.com ACCOUNTING 9 PAPER 1 GRADE 11 QUESTION 3: ANALYSIS AND INTERPRETATION (20 marks; 16 minutes) The following information was taken from the accounting records of Kings Traders on 31 December 2020, the last day of the financial year. The business is a partnership, with King Midas and King Ben as partners. REQUIRED: Use all relevant information to do the following: Where relevant, answers need to include financial indicators and figures. 3.1 Calculate King Ben’s percentage earnings for the year ended 31 December 2020. Does he have reason to be satisfied? Give ONE reason for your answer. (10) 3.2 Calculate the debt-equity ratio on 31 December 2020. (3) 3.3 The partners are considering taking up an additional R200 000 loan at an interest rate of 12% per annum. Do you think this is a good idea? Refer to one financial indicator and to gearing to motivate your answer with figures. (3) 3.4 The partners are concerned about the liquidity position of the business. Refer to two financial indicators with figures to justify their concerns. (4) INFORMATION: 1. The following balances were taken from the accounting records: 31 Dec 2020 31 Dec 2019 Owners’ equity 1 038 154 988 054 Equity : King Midas 532 592 401 042 Equity : King Ben 505 562 597 012 Loan @ 15 % p.a. 250 000 320 000 2. Additional information for the year ended 31 December 2020: 2.1 Net profit for the year, R420 100 2.2 Both King Midas and King Ben earn an annual salary of R165 000 each. 2.3 Interest on capital : King Midas, R48 000 and King Ben, R60 000 P.T.O.

Downloaded from hlayiso.com ACCOUNTING 10 PAPER 1 GRADE 11 2.4 Drawing for the year : King Midas, R200 000 and King Ben, R180 000 2.5 Share of the remaining profit : partners share equally in the remaining R37 100. 3. Some of the financial indicators of the business: Financial indicator 31 Dec 2020 31 Dec 2019 Current ratio 1,4 : 1 1.7 : 1 Acid test ratio 0,8 : 1 1,2 : 1 Stock turnover rate 9,2 times 8,4 times Solvency ratio 2,4 : 1 3,5 : 1 Return on equity (partnership) 32,2 % 27,9 % Debt-equity ratio ??? 0,3 : 1 Interest on fixed Deposit 5% 5% P.T.O.

Downloaded from hlayiso.com ACCOUNTING 11 PAPER 1 GRADE 11 QUESTION 4: ASSET MANAGEMENT AND INTERNAL CONTROL (35 marks; 30 minutes) The following four questions are independent of each other. 4.1 ETHICS REQUIRED: Match each of the terms in COLUMN A with the most appropriate description in COLUMN B. Write down only the correct letter next to the question number (4.1.1 to 4.1.5) in the ANSWER BOOK. COLUMN A COLUMN B 4.1.1 Confidentiality A “people, planet, profit” 4.1.2 Transparency B The ability to maintain economic, social and environmental resources without doing harm to any of the three. 4.1.3 Triple bottom line C The acknowledgement and assumption of responsibility for your actions, duties and decisions. 4.1.4 Code of ethics D A written set of rules and guidelines outlining ethical principles to be followed by a business and all its members. 4.1.5 Accountability E Information obtained while performing professional services should be treated appropriately. F An open and honest way of doing things and does not seek to hide the truth. (5) P.T.O.

Downloaded from hlayiso.com ACCOUNTING 12 PAPER 1 GRADE 11 4.2 ACCOUNTING EQUATIONS REQUIRED: Analyse the following transactions according to the headings provided in the answer book, using the example as a guide. The bank account is in overdraft at all times. Example: Partner Barack deposited R50 000 directly into the bank account of the business as part of his capital contribution. 4.2.1 Paid partner Barack R8 000 by EFT as part of his monthly salary. According to the partnership agreement, he is entitled to a monthly salary of R8 000. (5) 4.2.2 Partner Michelle took goods, with a cost price of R800, for personal use. Goods are sold at a profit margin of 25% on cost. (3) 4.3 ASSET MANAGEMENT REQUIRED: Read through all the information relating to the tangible (fixed) assets of Disney Manufacturers and then answer the following questions. 4.3.1 If all vehicles are depreciated using the same method, what is the rate of depreciation used by the business? (3) 4.3.2 It was decided to sell Vehicle 2 (see fixed asset register) as it was costing too much in repairs and maintenance. Complete the asset register page to calculate the vehicle’s book value on the date it was sold. (Round off to the nearest rand when doing all depreciation amounts.) (10) P.T.O.

Downloaded from hlayiso.com ACCOUNTING 13 PAPER 1 GRADE 11 INFORMATION: 1. General Information  Disney Manufacturers makes and delivers wooden furniture.  They rent their factory.  On 01 March 2020 they owned equipment and three delivery vehicles, which are used to deliver furniture in a 100 km radius around Johannesburg. 2. Fixed Asset Register Type of asset: Vehicle 2 Registration number: GT66YRGP Date purchased: 31 August 2017 Supplier: Toyota Date sold: 31 May 2020 Rate of depreciation: ? Depreciation method: ? Movement Date Cost price Depreciation Accumulated Carrying depreciation value 28 February 2018 380 000 47 500 47 500 332 500 28 February 2019 380 000 83 125 130 625 249 375 28 February 2020 380 000 31 May 2020 380 000 4.4 PROBLEM SOLVING REQUIRED: Study all the given information and identify one problem in each branch. Provide a solution to the problem under the headings provided in the ANSWER BOOK. (9) P.T.O.

Downloaded from hlayiso.com INFORMATION: Bongiwe Zwane opened an Accounting franchise called “Accounting Made Easy”. After 10 months of operating, she has 3 branches open, one each in Daveyton, Actonville and Farramere. The school offers extra Accounting lessons to high school learners from 14:00 to 18:30. All lessons are on an individual basis for 45 minutes (six lessons per day), Monday to Friday, at a cost of R120 per lesson. Each learner attends 1 lesson per month. The total number of learners a school can take in, is 360 per month. A total of 3 educators can teach at any one time at each branch. Educators are paid R70 per lesson. Bongiwe has obtained the monthly figures from the 3 schools for November 2020. She is concerned that not all 3 schools are operating as efficiently as possible. Figures for November 2020: Daveyton Actonville Farramere Number of educators 3 3 2 Number learners 300 400 190 Income from lessons R36 000 R48 000 R19 000 EXPENSES Rent R6 000 R8 000 R12 000 Advertising R600 R1 200 R0 Salaries R22 400 R25 200 R13 300 Other expenses R2 000 R2 000 R4 500 TOTAL: 150 END

Downloaded from hlayiso.com ANNEXURE FORMULA SHEET Gross profit 100 Gross profit 100 Net profit 100 x x x Sales 1 Cost of Sales 1 Sales 1 Operating Expenses 100 Operating Profit 100 x x Sales 1 Sales 1 Total Earnings by Partner 100 Net Profit 100 x x Average Partner' s Equity 1 Average Partners' Equity 1 Current Assets: Current Liabilities Current Assets – Inventories: Current Liabilities Average Debtors 365 12 Average Creditors 365 12 x or x or Credit Sales 1 1 Credit Purchases or Cost of Sales 1 1 Average Inventorie s 365 12 Cost of Sales x or Cost of Sales 1 1 Average Inventorie s Non Current Liabilities: Partners Equity Total Assets: Total Liabilities