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
Accounting Grade 11 LimpopoDoE/November 017 1.1.1 B 1.1. E 1.1.3 D 3 3 1. GENERAL LEDGER 1..1. BANK ACCOUNT 01 7 Feb 1 Balance 88 300 01 7 Feb 8 Bank charges 1 80 Donation 500 Insurance 000 Stationery 1 800 Debtors R/D 9 0 Interest received 00 Dombo 1 50 Dombo(cancelled) Balance *73 90 *Both totals equal to One mark. 1 50 Balance c/d *73 90 103 50 103 50 19 19 1.. BANK RECONCILIATION STATEMENT ON 8 FEBRUARY 017 Debit Credit Dr. Balance as per Bank Account 73 90 Cr. Outstanding Deposit 55 00 Dr. Outstanding Cheques No 8 3 00 No 31 7 500 No 33 1 50 Cr. Incorrect cheque 1 50 Cr. Balance as per Bank Statement 0 0 7 117 070 117 070 7 1.3 CREDITORS RECONCILIATION 1.3.1 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
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.) 7 00 1. Rejected discount claimed +1 30 Interest charged on overdue account +1 31. Corrected debit order 01-8 3. No entry 0. No entry 0 5. Discount allowed considered - 000. Corrected/ Credited invoice 10 +1 00 Or + 8 100 + 8 100 7. No entry 0 10 3 88 10 QUESTION GAAP, PARTNERSHIP FINACIAL STATEMENTS, ETHICS AND INERNAL CONTROL.1 GAAP CONCEPTS.1.1 C..1. E..1.3 B.1. F 5..1.5. A 5
Accounting Grade 11 LimpopoDoE/November 017. PARTNERSHIP FINANCIAL STATEMENTS..1 Makhado Holiday Resort Income Statement for year ended 31 October 017 Sales ( 38 000 8 000 + 7 00 ) 35 00 Cost of sales (1 33 000 + 110 ) (1 30 110) Gross profit Operation 1 005 090 Other operating income Operation 89 90 Rent income (81 00-70 ) one part correct 7 880 Discount received 9 30 Profit on sale of asset 5 00 Provision for bad debts adjustment 10 Gross income 1 095 030 Operating Expenses (57 15) Salaries and wages (30 00 + 5 00 +5 ) 310 5 Insurance (3 370-1 300) no part marks 070 Packing materials (5 980-3 830) no part marks 150 Repairs and maintenance (0 50 + 1 000 ) 3 50 Water and electricity (3 80 + 980) no part marks 39 0 Bad debts (7 10 + 00) 9 50 Sundry expenses 3 10 Depreciation ( 000 + 00 +8 800 +5 10 00 000 ) one part correct Trading stock deficit 3 90 Operating profit 50 15 Interest income 000 Profit before interest expenses 5 15 Interest expenses ( 00 + 800 ) one part correct (9 000) 5 Net profit for the year 57 15 5 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 1 00 000 3 000 80 000 Cost price 1 00 000 0 000 90 000 Accumulated depreciation 0 (18 000) (80 000) Movements Additions 100 000 0 300 000 Disposals 0 (9 00) Depreciation for the year See..1 (0 00) ( 000) See..1 Carrying value 1 300 000 19 000 90 00
Accounting Grade 11 5 LimpopoDoE/November 017 Cost price 1 300 000 0 000 1 00 000 Accumulated depreciation (8 000) operation (59 800) operation 0 0.3 INTERNAL CONTROL.3.1.3. 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 (90 000 + 8 000 ) Current account: Kgadi L Current account: 10 000 017 Nov 30 138 000 17 000 800 3 00 Profit and loss account 50 000
Accounting Grade 11 LimpopoDoE/November 017 Lesiba K 1 50 000 50 000 1 3. ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS 3..1 CALCULATE THE FOLLOWING RATIOS (a) Acid test ratio: 378 00 17 000 : 180 000 0 00: 180 000 1.1 :1 one part correct (b) Debt equity ratio: 0 000 : 988 00 0. : 1 3 3 (c) Percentage return earned by Ngobeni. 00 ½(57 00+30 000) x 100 1 00 100 x 380 800 1.% 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) 5 5 3..3 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
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 R00 000 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%
Accounting Grade 11 8 LimpopoDoE/November 017 QUESTION CLUBS AND INVENTORY SYSTEM.1 Club concepts. 01 Jan Dec 3 1.1.1 Surplus.1.. Membership Fees.1.3 Accumulated/Capital Fund.1.. Affiliation fees..1 MEMBERSHIP FEES ACCOUNT 1 Accrued income Income received in advance 7 800 01 Jan 1 Income received in advance 00 800 Dec 31 Bank 1 800 Bank 1 00 Membership fees written off Income and Expenditure *(109+ 18---9) x R00 *7 00 Accrued income 5 00 9 00 81 000 81 000 18 18
Accounting Grade 11 9 LimpopoDoE/November 017.. 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 R38 000 Solution Decrease the membership fees. Improve facilities, with money from the investment Any acceptable suggestion 5 5.3 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 5 00 5 00 1 Bank Capital 0 000 0000 Purchases Creditors control 7 875 Carriage on purchases Bank 500 500 7875 3 Drawings Purchases 1000 1000 18 18 QUESTION 5 MANUFACTURING ACCOUNTS
Accounting Grade 11 10 LimpopoDoE/November 017 5.1 Calculate the selling price per pair of shoes Hint: 170 + 5 00 0 = 5 130 Units sold. Not to be marked 1 33 570 5130 R0, 5 or R0.5 One part correct. Must be in rands. 5. RAW MATERIAL STOCK ACCOUNT Jan 1 Balance 9 000 Dec 31 Creditors 90 01 01 control Dec 31 Bank/ 80 000 Work in 80 00 Creditors progress Balance * 000 509 000 509 000 Jan 01 7 1 Balance * 000 8 8 *One mark for both balances Jan 01 Dec 3 1 Jan 01 7 WORK IN PROCESS STOCK ACCOUNT 1 Balance b/d 1 100 Dec 01 31 Finished goods 1 108 830 Raw material 80 00 Balance c/d *57 000 Direct labour Manufacturing overhead 158 000 50 70 1 15 830 1 15 830 1 Balance *57 000 10 10 5.3
Accounting Grade 11 11 LimpopoDoE/November 017 Calculate the number of units that Khensani should produce in order to break even. (515+55 ) 570 (8 19 ) 9 30 units. One part correct. Answer cannot be in rand, % or cents. 5 5 5. 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
Accounting Grade 11 1 LimpopoDoE/November 017.1.1 Calculate the input tax on the purchases of the stock from Bruno Wholesalers 5335,0 x 1 1 11 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. 10 11 R317 x x 100 100 R578, 1 method mark if one part is correct 3.1.3 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.
Accounting Grade 11 13 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 39 000 1 000 880 000 Cash sales 00 000 380 000 0 000 Cash from debtors 35 000 3 000 3 000 Bad debts recovered 000 5 000 000 Loan received 00 000 PAYMENTS 3 980 8 885 731 7 Cash purchases of inventory 9 000 93 000 93 00 Payments to creditors 8 330 3 35 1 50 Wages 18 000 18 000 19 080 Salaries 5 000 5 000 5 000 Interest on loan 000 Bank charges 50 50 3 07 Land bought 500 000 Cash surplus 0 00 19 115 18 78 Bank - opening balance 15 000 19 00 11 135 5 Bank closing balance 19 00 11 135 559 83 5.3.3 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
Accounting Grade 11 1 LimpopoDoE/November 017 The business is in a sound cash (flow) position Any relevant response.3..3.5