GR11 Accounting Practice exam memorandum November Paper 1

Study & Master Support Pack | Grade 11 CAPS Accounting Memorandum: November 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 November 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 NOVEMBER Time: 2 hours EXAMINATION PAPER 1 MEMORANDUM Marks: 150 QUESTION 1 [68 marks] PARTNERSHIP: FINANCIAL STATEMENTS 1.1 Give one word or term 1.1.1 Income  1.1.2 Current liability  1.1.3 Current asset  1.1.4 Materiality principle  4 1.2 General Ledger Dr    Trading stock Cr Date Details Fol. Amount Date Details Fol. Amount 2023 2023 Feb 28 Balance a/b 352 800 Feb 28 Drawings: Du Toit 1 300 Cost of sales 900 Loss due to theft  2 400 Bank  9 600 Trading stock deficit ()560 Balance c/f  339 840 353 700 353 700 2023 Mar. 1 Balance a/b 339 840 9 1

1.2 FINANCIAL STATEMENTS Statement of Comprehensive Income (Income Statement) of DIY Hardware 1.2.1 for the year ended 28 February 2023 Sales (1 797 600 – 9860 – 1575) 1 786 165 Cost of sales (1 027 200 - 900) (1 026 300) GROSS PROFIT () 759 865 Other income () 3 848 Bad debts recovered 1 340 Discount received 2 340 Provision for bad debts adjustment  168 Gross operating income 763 713 Operating expenses () (491 035) Insurance 10 560 Discount allowed 1 990 Rent expense (59 700 – 4 900) 54 800 Advertisements (10800-240) 10 560 Stationery (3 490 – 480) 3 010 Salaries and wages (324 000 + 6000) 330 000 UIF contribution (3240+60) 3 300 Bad debts (5670+3425) 9 095 Water and electricity (17 724 + 1098) 18 822 Telephone (12 336 + 662) 12 998 Loss due to stock theft/ ( 12000- 9600) () 2 400 Trading stock deficit () 560 Depreciation (30 000 + 2 940) 32 940 OPERATING PROFIT () 272 678 Interest income  3 250 NET PROFIT 275 928 40 2

1.2.2.1 Trade and other receivables Trade debtors (35 600 – 1575 – 3425) 30 600 Provision for bad debts  (918) 29 682 Prepaid expense (4 900 + 240) 5 140 () 34 822 7 1.2.2.2 Trade and other payables Trade creditors 45 170 Accrued expenses (1 098 + 662) 1 760 SARS (PAYE)  1 080 UIF (60 + 60) 120 Medical Aid  760 Creditors for salaries  4 100 () 52 990 8 QUESTION 2 [28 marks] ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS 2.1.1 Current ratio 170 340 : 100 200 = 1,7:1 3 2.1.2 Debt/Equity ratio 142 260 : 710 565 = 0,2 : 1 3 3

2.1.3 Percentage return earned by Griessel on her average equity 154 400 1 × 100 2 (412 500 – 37 035 + 300 000 + 3 525)  154 400 = × 100 339 495 = 45,5% 4 2.2 Should the partners be satisfied with the control over operating expenses? Briefly explain your answer by quoting percentages. Yes Operating expenses on sales decreased from 23,2% to 21% or Operating profit on sales increased from 19,5% to 22,8%  3 2.3 Comment on the liquidity position of the business on 28 February 2023. Quote ratio’s, percentages or figures to support your answer. The current ratio decreased from 2,5:1 to 1,7:1 in 2013 The acid-test ratio decreased from 0,8:1 to 0,6:1 in 2013 Debtors collection period improved from 45 days to 30 days Stock turnover rate improved from 4,5 times to 6 times Creditors payment period remained constant on 60 days Any 2 ×  Although it seems that the liquidity situation is worse than the previous year, looking at the current ratio and the acid-test ratio The situation improved – looking at the other financial indicators The reason for this is because the excess funds were invested in a fixed deposit – R210 000 The liquidity situation of the business is therefore good – as these funds would be available, should the business experience cash flow problems 6 4

2.4 Bestbier feels that Griessel’s drawings are unreasonable. Quote figures to support this opinion. How does this affect the business? Griessel withdrew more than she earned during the financial year Her current account therefore changed from a positive amount of R3 525 to a negative (dr) balance of R37 035 This could have an influence on the cash flow of the business  4 2.5 The business urgently needs a delivery vehicle, which is expected to cost R300 000. In your opinion, how should the business finance the cost of the vehicle? Give a reason for your answer. Suggestion for funds: Loan/Capital/Investment/Combination The business should easily obtain the loan of R300 000, because they are low-geared and creditworthy The interest on the loan is, however, an unnecessary expense – rather use the R210 000 on the investment and then use a loan or capital contribution for the rest Any acceptable answer 2 ×  5 QUESTION 3 [19 marks] FIXED ASSETS 3.1 General Ledger Dr   Asset disposal Cr Date Details Fol. Amount Date Details Fol. Amount 2023 2023 Accumulated depreciation on Jul 31 Equipment 9 000 Jul 31 equipment  4200 Bank  1 000 Loss with asset disposal   3 800 9 000 9 000 Depreciation on sold equipment on 31 Jul 2013: 9 000 × 20% × 10 = 1 500 12 8 5

3.2 Calculate the missing figures indicated by A, B and C in the Fixed Assets note below. Answer A 9 000 – 4200() = 4800 4 800 Sold equipment: 1 500 Old equipment: 47 000 × 20% = 9 400 Answer B 10 900 9 400 + 1 500() = 10 900 Answer C 21 400 + 10900 – 4200 = 28100 28 100 9 QUESTION 4 [37 marks] PARTNERSHIP: STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) 4.1 Current accounts N Hardisty M Grové Net profit as per Income Statement () 368 100 () 395 600 240 000 × 115 100 Salaries 240 000  276 000 620000 × 12% × 6 + 700000 × 12% × 6750000 × 12% × 6 + 700000 × 12% × 6 12 12 12 12 Interest on capital  79 200  87 000 Primary distribution 319 200 363 000 32600 × 3 2 Final distribution  48 900  32 600 368 100 × 95% Drawings for the year () (349 695)  (384 340) Retained income for the year 18 405 11 260 Balance at the beginning of the year (5 415) 8 740 Balance at the end of the year () 12 990  20 000 14 6

4.2 Statement of Financial Position (Balance Sheet) on 28 February 2018 ASSETS Non-current assets () 1 359 600 Fixed assets 1 309 600 Fixed deposit: AB Bank 50 000 (90 000 – 40 000) Current assets () 371 140 Inventory 156 400 Trade and other receivables (36 900 – 1 845 + 3 700) 38 755 Cash and cash equivalents (135 485 + 500 + 40 000) 175 985 TOTAL ASSETS 1 730 740 EQUITY AND LIABILITIES Owner’s equity () 1 432 990 Capital () 1 400 000 Current accounts () 32 990 Non-current liabilities 186 000 Loan: XY Bank 186 000 (250 000 + 28 500 – 62 500) – 30 000 Current liabilities () 111 750 Trade and other payables (72 630 + 2 800 + 6 320) 81 750 Short-term loan   30 000 TOTAL EQUITY AND LIABILITIES 1730 740 23 7