Accounting Grade 11 Paper 1 Limpopo June 2023 Memo

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com PROVINCIAL GOVERNMENT REPUBLIC OF SOUTH AFRICA [= DEPARTMENT OF EDUCATION National Senior Certificate MARKS: 150 TIME : 2Hours This question paper consists of 12 pages (including a 1-page formula sheet)

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1/Grade 11 NSC Question paper DoE/Limpopo/June Exam 2023 INSTRUCTIONS 1. 2. Answer ALL the questions. A-special ANSWER BOOK is provided in which ALL questions are to be-answered. ASFORMULA SHEET for financial indicators is provided at the back of this question paper. Show ALL workings in order to earn part marks. You may use a non-programmable calculator. You may use a dark pencil or blue / black pen to answer the questions. Where applicable, show all calculations to ONE decimal point. Write neatly and legibly. Use the information in the table as a guide when answering the question paper. Try not to deviate from it. Question Topic Marks Time Concepts, Accounting Equation, Fixed Assets note 30 ella Concepts, Statement of . 45 36 minutes Comprehensive Income Partnerships: Current 3 Account note, Equity and 35 28 minutes Liabilities Section Concepts, Analysis and . . 40 32 minutes interpretation 150 120 minutes Copyright reserved Please turn over

1.2 Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1/Grade 11 QUESTION 1: NSC Question paper DoE/Limpopo/June Exam 2023 (30 MARKS, 24 MINUTES) CONCEPTS, ACCOUNTING EQUATION, FIXED ASSETS NOTES 1.1 CONCEPTS Match the;GAAP principles in COLUMN A with examples in COLUMN B. Write onlyithe letter (A-D) next to the question numbers (1.1.1 to 1.1.4) in the ANSWER‘BOOK. COLUMN A COLUMN B 1.1.1 | Materiality A Building are valued at R2 500 000 but is shown as R550 000 in the financial statements. 1.1.2 | Matching B_ Interest expense should be disclosed separately in the financial statements. 1.1.3 | Historical cost C_ Financial activities of a business are kept separately from those of the owner. 1.1.4 | Business Entity D Insurance, R2 500, is paid in advance. This amount is not reflected in the statement of comprehensive income. E A debtor who owes R1 270, was written off as a bad debt as he could not be traced. ACCOUNTING EQUATION (4) Complete the table provided in the answer book to indicate the effect on the accounting equation for the following transactions. Note: Assume that the bank balance is favourable for all transactions Example: Issued a receipt for rent received TRANSACTIONS: (a) One of the partners contributed a delivery vehicle as part of his investment in the partnership. (b) Credit note received for damaged equipment returned. (c) Repairs to buildings were debited to the land and buildings account in error. This must be corrected. (12) Copyright reserved Please turn over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1/Grade 11 NSC Question paper DoE/Limpopo/June Exam 2023 1.3 FIXED ASSETS The following information relates to the financial year ended 30 June 2 IRED Calgulate the missing figures denoted by (i) to (iv) on the fixed asset note. (14) INFORMATION: A. Fixed asset note Land and | Equipment | Vehicles buildings Carrying value on July 2021 3 000 000 (ii) 800 000 Cost 3000 000 420 000 | 1 080 000 Accumulated depreciation (160 000) | (280 000) Additions at cost 760 000 | 160 000 Disposal at carrying value (iv) Depreciation for the year (iii) Carrying value on 30 June 2022 Cost (i) 580000} 720000 Accumulated depreciation B. Information from the fixed asset register e Depreciation on equipment is calculated at 10% p.a on the diminishing balance method. e New equipment was purchased on 1 October 2021. e Depreciation on vehicles is calculated at 15% p.a on cost. e Adelivery vehicle was sold for R112 000 cash on 1 March 2022. The cost price was R360 000 and accumulated depreciation on 1 July 2021 amounted to R216 000. mg i Copyright reserved Please turn over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1/Grade 11 NSC Question paper DoE/Limpopo/June Exam 2023 QUESTION 2 (45 MARKS, 36 MINUTES) CONCEPTS, STATEMENT OF COMPREHENSIVE INCOME 2.1 Fill in the missing concepts 2.1.1 The statement reflecting the financial results of the company is called 2.1.3 The statement reflecting the financial position of the business is called a (n) 2.1.4 Afixed deposit that matures in the next financial year will be recorded (4) under ........... in the financial statements 2.2 PARTNERSHIP: STATEMENT OF COMPREHENSIVE INCOME The following information was taken from the accounting records of Good Hope Traders. The last day of the financial year is 30 June 2022. REQUIRED Prepare the Statement Comprehensive Income (Income Statement) for the year ending 30 June 2022. (41) INFORMATION 1. LIST OF SOME OF THE BALANCES AND TOTALS OF GOOD HOPE TRADERS ON 30 JUNE 2022 Trading stock 81 000 Debtors’ control 53 000 Fixed deposit SACB (8% p.a) 12 500 Provision for bad debts (1 July 2021) 1 500 Sales 1 032 000 Cost of sales 427 000 Debtors allowances 32 000 Salaries and wages 163 700 Water and electricity 25 000 Rent income 47 250 Discount allowed 1 500 Insurance 6 400 Packing materials 4 200 Stationery 4 100 Bad debts 1 500 Discount received 4 200 Interest on fixed deposit 500 Bad debts recovered 1.000 Bank Charges 840 Interest on overdraft 360 Sundry expenses 41 000 Copyright reserved Please turn over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1/Grade 11 NSC Question paper DoE/Limpopo/June Exam 2023 2. Adjustments and additional information 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 Packing material of R500 purchased on 21 August 2021 was incorrectly postedito the stationery account. Accatding to a physical stock count, the following were on hand at the end of thelvear. e Trading stock, R79 100 e Packing material, R900 A credit note of R225 issued on 30 August 2021 to Monty has not been recorded. The stock was returned by Monty because the wrong colour of T- shirts were sent to him. The mark-up on cost for these goods was 50%. Included in the insurance amount is an annual premium of R2 400 paid for the period 1 January 2022 to 31 December 2022. Rent income includes rent received until 31 July 2022. The monthly rent was increased by 10% with effect from 28 February 2022. The loan statement received from ICC showed the following: Balance on 1 July 2021 42 875 Repayment for the year 10 000 Interest capitalised for the year 2? Balance on 30 June 2022 40 000 Bobby Lewis, a debtor whose account had been previously written off, deposited an amount of R210 in the bank account of the business on 25 August 2021. The account of Ronaldo, a debtor, for R450 must be written off as it came to light that he has left the country to play soccer in France. The provision for bad debts must be decreased by R200 Some of the interest on the fixed deposit is outstanding. Interest is not capitalised. The water and electricity account for June 2022 has been received but not paid, R5 000 Depreciation calculated for the year was R27 470 Copyright reserved Please turn over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1/Grade 11 NSC Question paper DoE/Limpopo/June Exam 2023 QUESTION 3 (35 MARKS; 28 MINUTES) PARTNERSHIP: BALANCE SHEET AND NOTES 3.1 TT BROTHERS T. Thomasand T. Titus are partners in this business. The financial year ended 3.1.1 Complete the current Account note for the financial year ended 30 September 2022 (19) 3.1.2 Complete the Equity and Liabilities section of the Balance Sheet on 30 September 2022 (16) A. Extract from accounting records on 30 September 2022: Capital: Thomas 350 000 Capital: Titus 450 000 Current account: Thomas (1 October 2021) (Dr) 30 000 Current account: Titus _(1 October 2021) (Cr) 10 500 Trading Stock 132 000 Loan: BANI Bank 2 Fixed deposit Capitec Bank 180 000 Creditors control 60 500 Accrued Expenses 8 000 Accrued income 15 000 Prepaid expenses 22 000 Income received in advance 7 500 Cash float 4 500 Bank (Cr) 35 500 Petty cash 1.000 Drawings: Thomas 345 000 Drawings: Titus 375 000 Profit and loss (Net profit) 750 000 Copyright reserved Please turn over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1/Grade 11 NSC Question paper DoE/Limpopo/June Exam 2023 B. Cc. On 31 March 2022 Titus increased his capital contribution with R50 000. This was entered in the books The partnership agreement states the following e Interest on capital of 12% p.a ¢ Titus}fegeived an annual salary of R240 000 ¢ Thomas received a salary of R5 000 per month more than Titus due to extra management responsibilities. ° Titastéceived a bonus of 10% of his annual salary ° Remaining profits are shared equally between the partners. - R50 000 will be paid on the capital amount of the loan in the next financial year. Total assets for the year amounted to R1 170 000 [35] Copyright reserved Please turn over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1/Grade 11 NSC Question paper DoE/Limpopo/June Exam 2023 QUESTION 4: (40 MARKS; 32 MINUTES) CONCEPTS, ANALYSIS AND INTERPRETATION 4.1 CONCEPTS Indicate Whether the following statements are True or False. Write only ‘True’ or ‘False’ nextto the question number (4.1.1- 4.1.4) in THE ANSWER BOOK. 4.1.1 Solvency is the ability of the business to settle current liabilities. 4.1.2 Profitability is the effective management of expenses. 4.1.3 Liquidity is the ability of the business to pay its short term debts. 4.1.4 Stock holding period is the number of times stock is replaced. (4) 4.2, ANALYSIS AND INTERPRETATION The following information is extracted from the accounting records of Golden Brown Traders, a partnership between Mr Gold and Mrs Brown. REQUIRED Calculate the following indicators for 2023 4.2.1 Acid-test ratio (4) 4.2.2 Debt-equity ratio (3) 4.2.3 % return on average equity earned by partners (5) 4.3. Should the partners be concerned about the liquidity of the business for 2023? Quote TWO financial indicators. (5) 4.4 Explain whether the business is managing its operating expenses effectively. Quote TWO financial indicators. (4) 4.5 The partners are considering increasing the loan by R300 000. 4.4.1 Is this a good idea to borrow R300 000? Quote ONE financial indicator to support your answer. (3) 4.4.2 Provide TWO other suggestions that the partners can consider instead of increasing the loan. (2) 4.6 Gold is concerned about the % return that he is earning. Is this a valid concern? Quote ONE financial indicator to support your answer. (4) 4.7 Gold is not happy with Brown’s current contributions to the partnership. He is deciding to have a meeting with her about this. List TAREE points he should discuss with her at this meeting. ~ (6) Copyright reserved Please turn over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1/Grade 11 NSC Question paper DoE/Limpopo/June Exam 2023 INFORMATION: Extract from the Balance Sheet of Golden Brown Traders on 28 February: 2023 2022 R R Fixed deposit: Nedbank (10% p.a) 300 000 390 000 Current-assets 171 000 304 000 Inventory 9 6000 134 000 Trade and other receivables 64 000 45 000 Cash and cash equivalents 11 000 125 000 Capital accounts 800 000} 1200000 Current accounts 58 000 10 000 Mortgage loan: Nedbank (12% p.a) 240 000 135 000 Current Liabilities 84 000 78 000 Total Gold Brown 2023 R R R Current accounts at the beginning of the year 10000} 40000] (30000) Current accounts at the end of the year 58 000} 108000} (50 000) Net profit for the year 278 000 Partners’ salaries 140 000} 70000 70 000 Interest on capital (6% p.a.) 54000} 36000 18 000 Partners’ share of remaining profit 84000} 42000 42 000 Partners’ drawings for the year 230 000} 80000 150 000 NOTE: i. Each partner contributed capital of R600 000 when the business started, but Brown reduced her capital by R400 000 half-way through the 2023 financial year. ii. Gold maintained his capital contribution at R600 000 throughout the year. He also reduced his drawings in order to prevent the business from going into a bank overdraft. Copyright reserved Please turn over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1/Grade 11 NSC Question paper DoE/Limpopo/June Exam 2023 Financial indicators: Bim 2023 2022 (Operating profit on sales 20% 23% %.Net profit on sales 12% 15% ‘% Operating expenses on sales 25% 23% Current ratio 2.2.1 3,9:1 Acid-test ratio 2? 2.2:1 Debt-equity ratio 2? 0,1:1 Return on equity: Gold 22% 29% Return on equity Brown 36% 21% Return on equity of partnership 2 18% TOTAL: 150 Copyright reserved Please turn over

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com Accounting/P1/Grade 11 NSC Question paper DoE/Limpopo/June Exam 2023 GRADE 11 ACCOUNTING: FINANCIAL INDICATOR FORMULA SHEET Gross profit x 100 Net profit x 100 Cost of sales 1 Sales 1 Operating expenses x 100 Operating profit x 100 Sales 1 Sales 1 Total earnings by partner x 100 Net profit x 100 Partner's average equity 1 Average owner’ equity 1 Current assets : Current liabilities (Current assets — Inventories) : Current liabilities (Trade and other receivables + Cash a nd cash equivalents) : Current liabilities Average debtors x 365 Credit sales 1 Average creditors x 365 Credit purchases 1 365_ or 1 Average inventories x 12 Cost of sales x 365 1 Cost of sales Average inventories Non-current liabilities : Owners’ equity Total assets: Total liabilities Copyright reserved

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com REPUBLIC OF SOUTH AFRICA <a DEPARTMENT OF EDUCATION National Senior Certificate GRADE 11 | NAME OF LEARNER: MAX LEARNER'S ] MODERATOR’S QUESTION MARKS MARKS MARKS 1 30 2 45 3 35 4 40 TOTAL BR This answer book consist of 9 pages Copyright reserved Please turnover

Downloaded from hlayiso.com Sewnloedzde from Stanmorephysics.com DoE/Limpopo/June Exam 2023 NSC Answer Book QUESTION 1 1.1 CONCEPTS 1.1.1 1.1.2 1.1.3 1.1.4 1.2 Complete the table provided to indicate the effect on the accounting equation NO _ | Account debited | Account credited A [e} L e.g Bank Rent income + + 0 - + b 7 LE 1.3. Calculate the missing figures in the fixed asset note WORKINGS ANSWER 14 Copyright reserved TOTAL MARKS 30 Please turnover

Downloaded from hlayiso.com Sewvondede from Stanmorephysics.com Dok/Limpopo/June Exam 2023 NSC Answer Book QUESTION 2 2.1 CONCEPTS e missing concepts Copyright reserved Please turnover

Downloaded from hlayiso.com Gewvondede from Stanmorephysics.com Dot/Limpopo/June Exam 2023 NSC Answer Book 2.2 PARTNERSHIP: STATEMENT OF COMPREHENSIVE INCOME Statement of Comprehensive income of Good Hope Traders for the year ended 30-June 2022 R Sales Cost of sales. Gross profit Other operating income Rent income Discount received 4200 Gross operating income Other operating expenses Salaries and wages 163 700 Discount allowed 1 500 Sundry expenses 41 000 Water and electricity Insurance Packing material Stationery Bad debts Operating profit Profit before interest expense Net profit for the year 41 TOTAL MARKS 45 Copyright reserved Please turnover

Downloaded from hlayiso.com Gewvoudede from Stanmorephysics.com Dot/Limpopo/June Exam 2023 NSC Answer Book QUESTION 3 3.1 TT BROTHERS 3.1.1 CURRENT, ACCOUNT NOTE THOMAS TITUS Partner’s salaries Interest on capital Partner’s bonuses Primary distribution Final distribution Net profit for the year Drawings (345 000) (375 000) Retained income Balance at the beginning ( 30 000) 10 500 Balance at the end 19 Copyright reserved Please turnover

Downloaded from hlayiso.com Sewvondede from Stanmorephysics.com Dot/Limpopo/June Exam 2023 NSC Answer Book 3.1.2 BALANCE SHEET ON 30 SEPTEMBER 2022 EQUITY AND LIABILITIES Owners’ equity Capital Current account Non-current liabilities Loan Current liabilities Trade and other payables Current portion of loan Bank overdraft TOTAL EQUITY AND LIABILITIES TOTAL MARKS 35 Copyright reserved 16 Please turnover

Downloaded from hlayiso.com Sewnloedzde from Stanmorephysics.com Dck/Limpopo/June Exam 2023 NSC Answer Book QUESTION 4 4.1 CONCEPTS 4.1.1 4.1.2 4.1.3 4.1.4 4 4.2 _CALCULATION OF FINANCIAL INDICATORS FOR 2023 4.2.1 Acid -test ratio: 4.2.2 Debt -equity ratio: Copyright reserved Please turnover

Downloaded from hlayiso.com Sewnlordzde from Stanmorephysics.com DcE/Limpopo/June Exam 2023 NSC Answer Book 4.2.3 % return on average equity earned by the partnership: 4.3 ee Should the partners be concerned about the liquidity of the business for 2023? Quote TWO financial indicators. > FS Explain whether the business is managing its operating expenses effectively. Quote TWO financial indicators Copyright reserved Please turnover

Downloaded from hlayiso.com Sewnlordzde from Stanmorephysics.com DcE/Limpopo/June Exam 2023 NSC Answer Book 4.5 4.5.1 Is it a good idea to borrow R 300 000? Quote ONE financial indicator to support your answer. 4.5.2 Provide TWO other suggestions that the partners can consider instead of increasing loan 4.6 Gold is concerned about the % return that he is earning. Is this a valid concern? Quote ONE financial indicator to support your answer. 4.7 Gold is not happy with Brown’s current contributions to the partnership. He is deciding to have a meeting with her about this. List THREE points he should discuss with her at this meeting. TOTAL MARKS 40 Copyright reserved

Downloaded from hlayiso.com Downloaded from Stanmorephysics.com REPUBLIC OF SOUTH AFRICA DEPARTMENT OF EDUCATION tional Senior Certificate GRADE 11 MARKS: 150 TIME: 2 Hours so 10. 11. 12. 13 MARKING PRINCIPLES Penalties for foreign items are applied only if the candidate is not losing marks elsewhere in the question for that item (no foreign item penalty for misplaced item). No double penalty applied. Penalties for placement or poor presentation (e.g. details) are applied only if the candidate is earning marks on the figures for that item. Full marks for correct answer. If the answer is incorrect, mark the workings provided. 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). 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. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from candidates. This memorandum is not for public distribution, as certain items might imply incorrect treatment. The adjustments made are due to nuances in certain questions Where penalties are applied, the marks for that section of the question cannot be a final negative. Where method marks are awarded for operation, the marker must inspect the reasonableness of the answer before awarding the mark: ‘Operation’ means ‘Check operation’. ‘One part correct’ means ‘Operation-&.one part correct’. Note: Check operation means must be +, —, x or + as per memo, but some4items can be + or — such as provision for bad debts adjustment / sale of asset. Note: Where appropriate, use of numerator and denominator must be correctly applied to earn marks. In awarding method marks, ensure that candidates do not get full marks-for.any item that is incorrect at least in part. In such cases, do not award the method mark. Indicate by-way of Be aware that some candidates provide valid alternatives beyond the memorandum. Codes: f = foreign item; p = placement/presentation. This marking guideline consist of 9 pages

Downloaded from hlayiso.com Sewnloedzde from Stanmorephysics.com DcE/Limpopo/June Exam 2023 NSC Marking Guidelines QUESTION 1 1.1 CONCEPTS 1.1.1 By 1.1.2 bv 4 1.1.3 Av 1.1.4 cv 1.2 Complete the table provided to indicate the effect on the accounting equation NO _ {Account debited | Account credited A fe) L e.g Bank Rent income + + 0 a Vehicle v Capital v tv +v 0 b Creditors Equipment v -v 0 |-v allowances ¥ c Repairs v Land and buildings v | - v -v 0 12 1.3. Calculate the missing figures in the fixed asset note WORKINGS ANSWER (i) 3 000 000 + 760 000 3 760 000 vv (ii) [420000 — 160 000 260 000 vv (ii) [ see (il) x 10% above 26 000vM + 12000 vv 38 000 4 (iv) 360 000v — (216 000vY + 36 000v~ ) | 108000 B 252 000 three marks 7 TOTAL MARKS 30 Copyrights reserved Please turnover

Downloaded from hlayiso.com Gewvondede from Stanmorephysics.com Dot/Limpopo/June Exam 2023 QUESTION 2 2.4 CONCEPTS. NSC Marking Guidelines Filllin the missing concepts 2.1.1 Income statement ¥ Income received in advance ¥ Balance sheet ¥ Current assets Vv Copyrights reserved Please turnover

Downloaded from hlayiso.com Gewvoudede from Stanmorephysics.com Dot/Limpopo/June Exam 2023 NSC Marking Guidelines 2.2 PARTNERSHIP: STATEMENT OF COMPREHENSIVE INCOME Statement of Comprehensive income of Good Hope Traders for the year ended 30 June 2022 R Sales (1032 odbus2 000V - 225v ) 999 775 M* Cost of sale8(427 000 - 150¥ ) (426 850) @* Gross profit operation 572 925 0 Other operating income 49010 Rent income(47 250 -3850v v ) 43 400 M* Discount received 4200 Bad debts recovered (1000V +210 ) 1210 M* Provision for bad debts adjustment 200 ¥ Gross operating income operation 621 9354) Other operating expenses operation (281 110) Salaries and wages 163 700 Discount allowed 1 500 Sundry expenses 41 000 Water and electricity(25000 +5000) 30 000¥ m* Insurance (6 400 — 1200V) 5 200 M* Packing material(4 200 + 500 v-—900 Vv) 3 800 M* Stationery (4 100 — 500 ¥ 3.600 M* Bad debts(1 500 + 450) 1950 ¥M* Bank charges 840Y Trading Stock deficit(81 000 + 150 ¥-79 100v) 2050 Vv m* Depreciation 27470 v Operating profit operation 340825) Interest income(500 +500) 1000 vm* Profit before interest expense operation 3418254) Interest expense (360 +7 125v v ) (7 485 )a* Net profit for the year operation | —334 340m - TOTAL MARKS 45 Copyrights reserved Please turnover

Downloaded from hlayiso.com Gewvoudede from Stanmorephysics.com Dot/Limpopo/June Exam 2023 NSC Marking Guidelines QUESTION 3 3.1 TT BROTHERS 3.1.1 CURRENT, ACCOUNT NOTE THOMAS TITUS Partner’s salaries 300000 M* | 240 000 v 240 000Y + 60 000Y or 25 000 x 12 Interest on capital 42 000V 51 000 M* (24 000Y +27 000”) Partner’s bonuses 24 000 v Primary distribution 342 000 m* 315 000M* Final distribution ahead 46 500 V Net profit for the year 388 500 M* | 361500 M* Drawings (345 000) (375 000) Retained income 43 500 v (13 500) ~ Balance at the beginning ( 30 000) 10 500 Balance at the end 13500 M* (3 000) * *one part correct 19 Copyrights reserved Please turnover

Downloaded from hlayiso.com Sewvoudede from Stanmorephysics.com Dot/Limpopo/June Exam 2023 NSC Marking Guidelines 3.1.2 BALANCE SHEET ON 30 SEPTEMBER 2022 EQUITY AND LIABILITIES Owners’ equity operation 810 500M Capital ( 350;000vV + 450 000v) 800 000M* Current Account ( 13 500 — 3000) see 3.1.1 10 500V m* Non-current liabilities 198 000 Loan balancing figure : TE& L — E -CL 198 000v M* Current liabilities operation 161 500M Trade and other payables ( 60 500v +8 000v +7 500v) 76 000m* Current portion of loan 50 000Y Bank overdraft 35 500¥ TOTAL EQUITY AND LIABILITIES 1 170 000Y ~ Zi One part correct 16 TOTAL MARKS 35 Copyrights reserved Please turnover

Downloaded from hlayiso.com Sewvoudede from Stanmorephysics.com Dot/Limpopo/June Exam 2023 NSC Marking Guidelines QUESTION 4 4.1 CONCEPTS 4.1.1 Falsev 4.1.2 Truev 4.1.3 Truev 4 4.1.4 Falsev 4.2 _CALCULATION OF FINANCIAL INDICATORS FOR 2023 4.2.1 Acid -test ratio: 64 000 v + 11 000 v: 84 000 v =0.9:1M accept 0.89: 1 OR 171000 - 96000: 84 000 =0.9:1 accept 0.89 :1 OR 4 75 000 : 84 000 =0.9:1 accept 0.89: 1 4.2.2 Debt -equity ratio: 240 000 v: 858 000 v 3 =0.3:1M accept 0.27: 1 Copyrights reserved Please turnover

Downloaded from hlayiso.com Gewvordede from Stanmorephysics.com Dot/Limpopo/June Exam 2023 NSC Marking Guidelines 4.2.3 % return on average equity earned by the partnership: 278 000 v X 100 Ye v (858 000 V +1 210000 v) 1 = a =27 % accept 26.9 % OR 278 000 xX 100 % (2.068 000) 1 OR 278 000 x 100 (1 034 000) 1 4.3 Should the partners be concerned about the liquidity of the business for 2023? Quote TWO financial indicators. Comment v Indicators vv Figures Vv Current ratio decreased from 3.9: 1 in 2022 to 2,2: 1 in 2023. Acid test ratio decreased from 2.2 :1 in 2022 to 0.9 /0.89 : 1 in 2023 The partners should not be concerned because the business is liquid. 5 They should have no problem paying off their short — term debts. The liquidity ratios are far more efficient in 2023 as they were too high in 2022. 4.4 Explain whether the business is managing its operating expenses effectively. Quote TWO financial indicators Indicators v v Figures vv 4 %operating expenses increased from 23% in 2022 to 25% in 2023 %operating profit decreased from 23% in 2022 to 20% in 2023 %net profit on sale decreased form 15% in 2022 to 12% in 2023 Copyrights reserved Please turnover

Downloaded from hlayiso.com Sewvoudede from Stanmorephysics.com Dok/Limpopo/June Exam 2023 NSC Marking Guidelines 4.5 4.5.1 Is it a good idea to borrow R 300 000? Quote ONE financial indicator to support your answer. Comment v Indicators v Figuresv Debt-equity-fatio increased from 0.1: 1 in 2022 to 0.3: 1 in 2023. Yes, the partnership is lowly geared /has low risk /They are not making much use of loans; OR No, if they borrow R 300 000 the debt —equity ratio will increase to 0.6:1 which increases the risk because there will be high interest and repayment commitments. 4.5.2 Provide TWO other suggestions that the partners can consider instead of increasing loan Two valid suggestions v v e Increase their capital contributions. e Get another partner. e Use the fixed deposit. 4.6 Gold is concerned about the % return that he is earning. Is this a valid concern? Quote ONE financial indicator to support your answer. Explanation vv Figures vv Gold should be concerned as his % return on equity decreased from 29% in 2022 to 22% in 2023, while Brown’s % return on equity increased from 21% in 2022 to 36 % in 2023. 4.7 Gold is not happy with Brown’s current contributions to the partnership. He is deciding to have a meeting with her about this. List THREE points he should discuss with her at this meeting. Three valid points vv vv vv Brown withdrew R 400 000 of her capital contribution during the year. Brown has a negative current account due to drawings. They receive the same salary; they may not be doing the same amount of work. They must renegotiate the partnership agreement as it is not fairjon Gold. He provides 75% of the capital and has not drawn all his earnings)yet he is earning a lower return TOTAL MARKS 40 Copyrights reserved