ACCOUNTING NOVEMBER 2017 MEMORANDUM

Transcription

1 NATIONAL GRADE 11 SENIOR CERTIFICATE ACCOUNTING NOVEMBER 017 MEMORANDUM MARKS: 300 MARIKING PRINCIPLES: 1. Penalties for foreign items are applied. No foreign item penalty for misplaced item. No double penalty applied.. Full marks for correct answer. If answer is incorrect, mark the workings provided. 3. 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. 5. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from candidates.. Where penalties are applied, the marks for that section of the question cannot be a final negative. 7. Where method marks are awarded for operation, the marker must inspect the reasonableness of the answer before awarding the mark. 8. In awarding method marks, ensure that candidates do not get full marks for many items that are incorrect at least in part. 9. Teachers must do the question paper before they start marking. This Memorandum consists of 15 pages. QUESTION 1: RECONCILIATIONS AND INTERNAL CONTROL 1.1 CONCEPTS

2 Accounting Grade 11 LimpopoDoE/November B 1.1. E D GENERAL LEDGER BANK ACCOUNT 01 7 Feb 1 Balance Feb 8 Bank charges 1 80 Donation 500 Insurance 000 Stationery Debtors R/D 9 0 Interest received 00 Dombo 1 50 Dombo(cancelled) Balance *73 90 *Both totals equal to One mark Balance c/d * BANK RECONCILIATION STATEMENT ON 8 FEBRUARY 017 Debit Credit Dr. Balance as per Bank Account Cr. Outstanding Deposit Dr. Outstanding Cheques No No No Cr. Incorrect cheque 1 50 Cr. Balance as per Bank Statement CREDITORS RECONCILIATION a) ONE duty/role of an Internal auditor. They help deter fraud in the business. To carry out and direct checks and balances on the entire business systems. To ensure that internal controls are tested and assessed for their

3 Accounting Grade 11 3 LimpopoDoE/November 017 effectiveness. Any relevant response b) TWO points you would mention to Miss A. Upta concerning the comments she has made in the scenario? It is necessary for internal control purposes To detect errors and omissions To detect fraud and corruption 1.3. Calculate the correct balance of Duduzane wholesalers account in the creditor s ledger, after taking into account the errors and omissions under additional information. Show the changes to the balance of Duduzane Wholesalers in the amount column. Indicate with a (+) for an increase, a ( ) for a decrease and (0) for a no entry. Opening Balance (1 Oct.) Rejected discount claimed Interest charged on overdue account Corrected debit order No entry 0. No entry 0 5. Discount allowed considered Corrected/ Credited invoice Or No entry QUESTION GAAP, PARTNERSHIP FINACIAL STATEMENTS, ETHICS AND INERNAL CONTROL.1 GAAP CONCEPTS.1.1 C..1. E..1.3 B.1. F A 5

4 Accounting Grade 11 LimpopoDoE/November 017. PARTNERSHIP FINANCIAL STATEMENTS..1 Makhado Holiday Resort Income Statement for year ended 31 October 017 Sales ( ) Cost of sales ( ) ( ) Gross profit Operation Other operating income Operation Rent income ( ) one part correct Discount received 9 30 Profit on sale of asset 5 00 Provision for bad debts adjustment 10 Gross income Operating Expenses (57 15) Salaries and wages ( ) Insurance ( ) no part marks 070 Packing materials ( ) no part marks 150 Repairs and maintenance ( ) 3 50 Water and electricity ( ) no part marks 39 0 Bad debts ( ) 9 50 Sundry expenses 3 10 Depreciation ( ) one part correct Trading stock deficit 3 90 Operating profit Interest income 000 Profit before interest expenses 5 15 Interest expenses ( ) one part correct (9 000) 5 Net profit for the year Foreign entries -1 (max ) Misplaced items 1 (max ).. NOTES TO BALANCE SHEET AT 31 OCTOBER 017 TANGIBLE ASSET Land and Buildings Equipment Motor vehicles Carrying value Cost price Accumulated depreciation 0 (18 000) (80 000) Movements Additions Disposals 0 (9 00) Depreciation for the year See..1 (0 00) ( 000) See..1 Carrying value

5 Accounting Grade 11 5 LimpopoDoE/November 017 Cost price Accumulated depreciation (8 000) operation (59 800) operation INTERNAL CONTROL Identify a problem with figures for each query? Air-conditioner: Inflation of prices by R3 00 Collusion on prices - R9 000 Chairs: Missing/stolen/ damaged chairs For each query indicate how you would handle it? Air conditioner: Get three or more quotations for comparison Conduct an investigation into the issue Institute a disciplinary hearing Possibility of suspension Do not accept dismissal Chairs : Improve security Conduct regular stock taking. QUESTION 3 PARTNERSHIP LEDGER ACCOUNTS AND ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS 3.1 LEDGER ACCOUNTS APPROPRIATION ACCOUNT 017 Nov 30 Salary: Kgadi L Salary: Lesiba K Interest on capital ( ) Current account: Kgadi L Current account: Nov Profit and loss account

6 Accounting Grade 11 LimpopoDoE/November 017 Lesiba K ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS 3..1 CALCULATE THE FOLLOWING RATIOS (a) Acid test ratio: : : :1 one part correct (b) Debt equity ratio: : : (c) Percentage return earned by Ngobeni. 00 ½( ) x x % one part correct 3.. Should the partners be satisfied with the control of the operating expenses? Briefly explain, quoting relevant calculations to support your answer. No The operating expenses on sales increased from 18% (01) to 1% (017) The net profit on sales decreased from 19.% (01) to 1.1% (017) Ngobeni M and Baloyi G are uncertain about the liquidity position of the business. They ask you for your opinion. Quote TWO relevant financial indicators and explain to them

7 Accounting Grade 11 7 LimpopoDoE/November 017 the liquidity position of the business. General comment: Liquidity position of the business is satisfactory the business will be able to pay its current liabilities in the next financial year Current ratio improved from 1.9 : 1 (01) to.1 : 1 (017) Or increase by 0. Acid test ratio improved from 0.9: 1 (01) to 1.1. : 1 (017) Or increased by 0. Stock turnover rate improved from 10 times (01) to 1. times (017) goods sold faster and profits generated quicker. Any other answer is acceptable provided that a liquidity comparison is made from last year s calculation to this year s calculations. Candidate s response must be checked with their calculation of acid test ratio in (a) 3.. Should Baloyi G be satisfied with the return he is earning in the business? Quote a relevant financial indicator in your explanation. Yes Although his return on equity decreased from 53% (01) to 51% (017) It is still above rates offered by alternative investment e.g. fixed deposits at % 3..5 The business wants to expand in the next financial year and needs additional capital. The partners have decided to take out an additional loan of R instead of introducing more capital. Explain, quoting TWO financial indicators to justify their decision. Debt/equity ratio improved from 0.3 : 1 (01) to 0. : (017) It indicates low financial risk easy to obtain loans ROTCE improved from 5.8% (01) to 7.1% (017) It is above interest rates on loan of 10%

8 Accounting Grade 11 8 LimpopoDoE/November 017 QUESTION CLUBS AND INVENTORY SYSTEM.1 Club concepts. 01 Jan Dec Surplus.1.. Membership Fees.1.3 Accumulated/Capital Fund.1.. Affiliation fees..1 MEMBERSHIP FEES ACCOUNT 1 Accrued income Income received in advance Jan 1 Income received in advance Dec 31 Bank Bank 1 00 Membership fees written off Income and Expenditure *( ) x R00 *7 00 Accrued income

9 Accounting Grade 11 9 LimpopoDoE/November A group of members presented a formal complaint to the committee that the membership fees of R00 were too high. This dissatisfied group said: The club is supposed to be a non-profit making organisation, but this is clearly not the case. Do you agree with the members concerns and complaints? Explain ONE point briefly and suggest ONE possible solution. Yes Reason The club show a surplus of R Solution Decrease the membership fees. Improve facilities, with money from the investment Any acceptable suggestion INVENTORY SYSTEMS Analyse the transactions in the table below. Only indicate the influence of each transaction in the applicable column. Example: Purchased Equipment for R5 00 cash. No General Ledger Assets Equity Liabilities Account Debited Account Credited e. Equipment Bank g Bank Capital Purchases Creditors control Carriage on purchases Bank Drawings Purchases QUESTION 5 MANUFACTURING ACCOUNTS

10 Accounting Grade LimpopoDoE/November Calculate the selling price per pair of shoes Hint: = Units sold. Not to be marked R0, 5 or R0.5 One part correct. Must be in rands. 5. RAW MATERIAL STOCK ACCOUNT Jan 1 Balance Dec 31 Creditors control Dec 31 Bank/ Work in Creditors progress Balance * Jan Balance * *One mark for both balances Jan 01 Dec 3 1 Jan 01 7 WORK IN PROCESS STOCK ACCOUNT 1 Balance b/d Dec Finished goods Raw material Balance c/d * Direct labour Manufacturing overhead Balance *

11 Accounting Grade LimpopoDoE/November 017 Calculate the number of units that Khensani should produce in order to break even. ( ) 570 (8 19 ) 9 30 units. One part correct. Answer cannot be in rand, % or cents Khensani is happy with what she produced. Do you agree with her? Motivate. Award part (one) mark for partial answers. Agree/Yes Reason Produced more than the break-even point Produced more than his target. Any other valid point 3 3 QUESTION VAT AND BUDGETING.1 VAT

12 Accounting Grade 11 1 LimpopoDoE/November Calculate the input tax on the purchases of the stock from Bruno Wholesalers 5335,0 x R55, 0 method mark if one part is correct 3.1. Calculate the selling price (VAT inclusive) a customer will pay for a pair of Legend trainers R317 x x R578, 1 method mark if one part is correct Mr Moima, the owner of Tekkie Shop feels that he does not have to pay VAT as his business does not make enough profit. What advice can you give to him? VAT is a compulsory/legal system-every registered vendor should submit VAT return forms. It is up to SARS to determine if the business should pay tax or not. Any valid point. INTERNAL CONTROL What basic internal control policies and procedures over VAT should businesses adhere to? Give TWO Only valid VAT invoices should be issued VAT 01 return form should be completed accurately and submitted timeously VAT payments should processed punctually and paid in full Collection of debt should be carefully managed so that output VAT is received as soon as possible Any relevant responses.3 BUDGETING.3.1 Items that do NOT belong to the Cash Budget. Name TWO.

13 Accounting Grade LimpopoDoE/November 017 (a) Depreciation (b) Discount allowed (c) Bad debts (d) Cost of sales.3. Cash Budget for the THREE months ending 31 October 017 August September October (actual figures) R R R RECEIPTS Cash sales Cash from debtors Bad debts recovered Loan received PAYMENTS Cash purchases of inventory Payments to creditors Wages Salaries Interest on loan 000 Bank charges Land bought Cash surplus Bank - opening balance Bank closing balance Briefly discuss the cash situation of Real Sport Shop for the months of September and October 017. Discuss ONE point The business has a cash surplus in September and October respectively

14 Accounting Grade 11 1 LimpopoDoE/November 017 The business is in a sound cash (flow) position Any relevant response