GR11 Accounting Practice exam memorandum June Paper 1

Study & Master Support Pack | Grade 11 CAPS Accounting Memorandum: June exemplar examination (Paper 1) This revision pack for Accounting Grade 11 provides support for learners revising the most important concepts and principles covered in the CAPS curriculum, by providing practice exams. This pack offers a marking memorandum for the June exemplar examination (Paper 1). You have permission to print or photocopy this document, and to distribute it electronically via email or WhatsApp. For more information on our Study & Master CAPS-approved  textbooks and valuable resource materials, visit www.cambridge.org Brighter Thinking | Better Learning i

Grade 11 JUNE Time: 2 hours EXAMINATION PAPER 1 MEMORANDUM Marks: 150 QUESTION 1 [56 marks; 45 minutes] GAAP PRINCIPLES AND STATEMENT OF COMPREHENSIVE INCOME (INCOME STATEMENT) OF A PARTNERSHIP 1.1 Match Column B with the description in Column A 1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 Column B C D E A B 5 1.2 SS Stationers Statement of comprehensive income (Income Statement) for the year ended 30 June 2018 Sales (1568 200 – 5640 – 1392) 1 561 168 Cost of sales (976 600 – 870) (975 730) Gross profit () 585 438 Other income () 65 650 Discount received  5 440 Rent income (63 600 – 5 200) 58 400 Bad debts recovered (1 060 + 670) 1 730 Provision for bad debts – adjustment () 80 Gross operating income 651 088 Operating expenses () (446 456) Discount allowed  6 870 Bad debts  10 460 Salaries and wages (321 000 + 5 800) 326 800 UIF contribution (3 210 + 58) 3 268 Insurance  10 712 Packing material (3 788 – 1 030) 2 758 Stationery (2 476+1 020 – 540) 2 956 Water and electricity  17 414 Telephone (16 213 + 988)  17 201 Sundry expenses  30 147 Loss due to rain  800 Trading stock deficit [(114 600 – 6 000 +870 -1 020) – 106 230] 2 220 Depreciation (10 080 + 4 770) 14 850 Operating profit () 204 632 Interest income (32 133 – 30 000) 2 133 Net profit for the year () 206 765 51 1

QUESTION 2 [66 marks; 53 minutes] STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) OF A PARTNERSHIP 2.1.1 Trade and other receivables Trade debtors  54 300 Provision for bad debts   (2 172) Net trade debtors  52 128 Creditors for salaries   4 000 Prepaid expenses   4 100 60 228 8 2.1.2 Current accounts Anderson Dale Total Net profit as per Income Statement ()256 000 ()270 000 526 000 Salaries 180 000 204 000 384 000 Bonus to partners 12 000 12 000 Interest on capital 55 000 40 000 95 000 Primary distribution 235 000 256 000 491 000 Final distribution ()21 000 ()14 000 ()35 000 Drawings for the year  (227 040)  (274 010) (501 050) Retained income for the year 28 960 (4 010) 24 950 Balance at the beginning of the year () 2 340 () 1 020 3 360 Balance at the end of the year 31 300  (2 990) 28 310 23 Calculations Anderson 500 000 × 10% × 6 = 25 000 12 55 000 600 000 × 10% × 6 = 30 000 12 Dale 400 000 × 10% = 40 000 2

2.1.3 Trade and other payables Trade creditors  75 208 Medical Aid  4 600 SARS (PAYE)  13 400 UIF  3 650 Accrued expenses   7 800 Income received in advance   3 700 108 358 8 2.2 Statement of financial position (Balance Sheet) on 28 February 2018 ASSETS Non-current assets () 1 589 500 Fixed assets (1 200 000 + 365 500)  1 565 500 Financial assets (50 000 – 26 000)  24 000 Current assets () 222 468 Inventory (112 460 + 2 140)  114 600 Trade and other receivables  60 228 Cash and cash equivalents (18 640 + 3 000+ 26 000)  47 640 TOTAL ASSETS 1 811 968 EQUITY AND LIABILITIES Owner’s equity () 1 028 310 Capital  1 000 000 Current accounts () 28 310 Non-current liabilities 643 300 Mortgage loan: XY Bank (675 300 – 32 000)  643 300 Current liabilities () 140 358 Trade and other receivables () 108 358 Short-term loan  32 000 TOTAL EQUITY AND LIABILITIES 1 811 968 27 3

QUESTION 3 [28 marks; 22 minutes] INTERPRETATION OF FINANCIAL STATEMENTS 3.1 Choose the concept that answers the questions. 3.1.1 Gearing  3.1.2 Operating efficiency  3.1.3 Liquidity  3.1.4 Return on equity  4 3.2 Calculate financial indicators a) Acid-test ratio 430 560 – 357 660 : 201 150 = 72 900: 201 150 = 0,36:1 4 b) Debt : Equity 380 000 : 496 610 = 0,77 : 1 3 c) Percentage return on average partners’ equity 505 160 100 1 × 2  (496 610 + 273 500) 1 = 131% 5 Comment on the liquidity position of the business for 2018. Quote 3.3 financial indicators to support your answer. State TWO points.  × 2 The current ratio decreased from 2, 2 : 1 to 2,1 : 1 and the acid-test ratio decreased from 0,7 : 1 to 0,36 : 1 in 2018. Stock turnover rate decreased from 12, 2 to eight times, due to an increase in the stock on hand. Debtors’ collection period is good – improved from 36 to 34 days. The business might experience liquidity problems due to too much stock on hand – they should sell excess stock 4 4

3.4 Discuss each option of finance and your opinion about it. Quote figures to support your answer. Make a conclusion and advise the partners on how they should finance the expansions. a) Conclusion – partners contribute half on the money needed and they get aloan for the other half  Contribute capital themselves – this is the best option as the partners are earning a good return on their investment – 131%  To take out a loan – this is not such a good option – the debt equity ratio is 0,77:1 – a loan increase would make them high geared  Take in a third partner – they could do that, but then they have to divide profit b) in three  8 5