Learning Channel (Pty) Ltd 2nd Floor 37 Bath Ave Rosebank Grade 10 Accounting MEMORANDUM

Transcription

1 Learning Channel (Pty) Ltd 2nd Floor 37 Bath Ave Rosebank Grade 10 Accounting MEMORANDUM Grade 10 Accounting products available from Learning Channel:

2 Discipline Transparency Independence Accountability Responsible management Fairness Social responsibility GRADE 10 ACCOUNTING EXEMPLAR PAPER - MEMORANDUM QUESTION 1 [9] 1.1 Informal bookkeeping system 1.2 Formal bookkeeping system 1.3 Informal bookkeeping system 1.4 Formal bookkeeping system 1.5 Formal bookkeeping system 1.6 FORMAL The business affairs are set up in an ordered and logical manner generally based on accepted accounting practice. INFORMAL These types of businesses are generally smaller and are not set up in an ordered way and do not always adhere to accepted accounting practice. Many of these businesses are the informal traders who are operating small businesses in order to make a living. QUESTION 2 (ETHICS) [28] NB Where two alternates are given accept any one for two marks Irry tells his kitchen assistant to throw waste food in the river nearby. Irry makes lengthy private calls from the business phone. Irry pays his gardener at home wages of R800, but he records this as a business epense. A customer is ill after eating fish at the restaurant. Irry says to him that his fish supplier delivered defective fish. Irry serves alcohol to customers under the age of 18. Irry fires a waiter because his wife had an argument with him. The wife was at fault. Irry deliberately under-pays VAT to SARS by R Irry employs a new waiter at half the salary paid to other waiters, because he knows he is desperate for the job. 1

3 Irry tells his father that he cannot make the loan repayments this month because business was slow. However, he took etra drawings to pay for an overseas holiday. Irry spends R2 000 per week from petty cash on sundry epenses (the budget is R500 per week). Irry deliberately gives a customer change of R80 instead of R60. The customer does not notice. Irry refuses to spend R3 000 on a security gate at the front door of the business. One afternoon, the cashier is seriously injured by a burglar in a robbery. Irry tells his employees that he cannot give them more than a 4% salary increase this year because the business is not doing well. Meanwhile, he decides to employ his wife as a manager. Despite the fact that many employees from a local business regularly buy lunch at his restaurant, Irry refuses to contribute R500 for an advertisement in their AIDS-awareness brochure. QUESTION 3 (GAAP PRINCIPLES) WORD BANK [6] 3.1 Matching principle 3.2 Going concern principle 3.3 Business entity principle 3.4 Materiality principle 3.5 Prudence principle 3.6 Historical cost principle QUESTION 4 - Debtors reconciliation [37] 4.1 GENERAL LEDGER OF NKINA SPORT SHOP Dr Debtors Control Cr Balance b/d Bank & discount CRJ Oct Oct allowed 31 Sales DJ Debtors DAJ 525 allowances Bank (R/D) CPJ 300 Journal credits GJ ( ) ( ) Journal debits GJ 420 Balance c/d ( ) 2011 Nov Balance b/d ( ) 2

4 4.2 Debtors list on 31 October 2011 R N. Bantjies ( ) G. Botha ( ) P. Adams ( ) 0 N. Ntuli ( ) ( ) IMPORTANT: If you look at the balance of the Debtors control account in the General ledger (R9 000) it is the same as the total of the Debtors list (R9 000). The two balances reconcile with each other. QUESTION 5_ Transaction Analysis [48] General ledger Nr Account debited Account credited A E L 1 Bank Capital +R R Trading stock Creditors control +R R Debtors control Sales +R R Cost of sales Trading stock -R R Creditors Control Trading stock -R R320 5 Drawings Trading stock -R800 -R Bank Debtors control +-R Discount allowed Debtors control -R50 -R Bank Fied deposit: +R Perm Bank -R Bank Interest on fied +R R deposit 8 Debtors control Petty cash +-R Debtors control Bank +-R Debtors control Discount allowed +R20 +R20 0 QUESTION 6 VAT [8] 6.1 VAT-input = Purchases VAT-output = Sales 6.2 Passengers transport by tai Dried beans A bo of apples Maize meal Brown bread White bread Taable supplies Eempt supplies Zero-rated supplies 3

5 QUESTION 7 INCOME STATEMENT OF A SOLE TRADER [75] 7.1 Dr Trading stock Cr 2010 Jun 30 Balance b/d Jun 30 Drawings GJ 400 Cost of sales GJ 400 Trading stock deficit GJ 60 Balance ( ) c/d Jul 1 Balance b/d (10) Income statement of Pompey Traders for the year ended 30 June 2010 Sales ( ) Cost of sales ( ) ( ) Gross profit ( ) Operating income ( ) Rent income ( ) Bad debts recovered 200 Gross operating income ( ) Operating epenses (77 921)( ) Advertising ( ) Bank charges Rates Bad debts ( ) 740 Salaries Stationery ( ) Telephone ( ) Insurance ( ) Water and electricity Trading stock deficit 60( ) Depreciation ( ) ( ) Operating profit ( ) Interest income ( )* 512 Net profit before interest epense ( ) Interest epense** Net profit for the year (200) ( ) (52) *Interest income is not an operating income that is why we have to put it separate. The business also needs to know how much money they received from interest. **Interest epense is not an operating epense that is why we have to put it separate. The business also needs to know how much interest they paid on borrowed money It appears that the cashier is defrauding the business false receipts are issued and all the cash is not banked. 4

6 The same person in charge of the general ledger and general journal should not also be in charge of the personal accounts of the debtors and cash receipts. / Separate duties. More than one person should be responsible for the bank every day. This must be checked by a senior person against the receipts issued, entry in CRJ and the actual money deposited. Rotate duties, etc Ethical problem e.g. Not a genuine business epense Ta evasion Accounting problem e.g. Financial results of business would not be accurate Business entity principle QUESTION 8 RATIOS [39] = 135% Gross profit = R R = R Possible answers (any 2 2 = 4) Theft of trading stock may have taken place. Trading stock may have been purchased and paid for and then not taken into stock. Cash received for merchandise sold may have been stolen The selling price of articles may have been calculated incorrectly. 8.2 Liquidity = if the business can pay its short-term debts. Solvency = if the business can pay its long-term debts. 8.3 Current assets inventories : Current liabilities : ,8 : 1 The acid test ratio decreased from 1 : 1 in 2008 to 0,8 : 1 in The business is going to find it difficult to pay its short-term debts. 8.4 To help her to make a decision, we need to do the Debt/Equity ratio. Long term liabilities : owner s equity : ,67 : 1 The debt/equity ratio decreases from 0,8 : 1 in 2008 to 0,67 : 1 in The owner can take out another loan the business is low geared. 8.5 mark for formula 5

7 = 8,5% ( ) 8.6 Although the ratio decreased, the owner received more than he would have if he had invested in financial institutions (+-6%) Unions Employees SARS Creditors Financial institutions QUESTION 9 [Cost concepts] [30] 9.1 Material R24 0,75 = R18 Cotton 50 = R0,50 Webbing R20 0,75 = R15 Beads R7 = R28 R18 + R0,50 + R15 + R28 = R61, ,5 R15 = R37, R61,50 + R37,50 = R R R50 + R200 = R Fied costs are costs that remain the same irrespective of how many items are produced. - Variable costs change in direct proportion to the number of items produced. 9.6 Variable cost = R99 per unit 100 (number of units) = R9 900 Fied cost = R1 750 SP = = Profit = SP VC FC = = QUESTION 10 [Budget concepts] [20] To plan for future receipts and payments of cash - To keep control of money coming in and going out of the business - To ensure that sufficient cash is available at all times to meet obligations It is not a cash item Yes. It is a cash item = 15% 10.4 Depreciation Discount received Profit on sale of asset Loss on sale of asset Discount allowed. 6

8 10.5 Office telephone and electricity Motor vehicle running epenses Office maintenance costs Manager s salary Drawings by Boipelo Mokoena Bank charges Staff uniforms They increase by nearly R per annum. It is too high. She should decrease withdrawals It is an overdraft. 7