NATIONAL GRADE 11 SENIOR CERTIFICATE ACCOUNTING NOVEMBER 2017 MEMORANDUM

[Pages:14]GRADE 11

NATIONAL SENIOR CERTIFICATE

ACCOUNTING NOVEMBER 2017 MEMORANDUM

MARKS: 300

MARIKING PRINCIPLES:

1. Penalties for foreign items are applied. No foreign item penalty for misplaced item. No double penalty applied.

2. 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.) 4. 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. 6. 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

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1.1.1

B

1.1.2

E

1.1.3

D

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3 3

1.2 GENERAL LEDGER 1.2.1.

BANK ACCOUNT

201 1 Balance

88 300 201 2 Bank

1 860

7

7

8 charges

Feb

Feb

Donation

500

Insurance

6 000

Stationery

1 800

Debtors R/D 9 420

Interest received

600

Dombo

12 250

Dombo(cancelled) 12 250

Balance c/d *73 920

Balance

103 450 *73 920

19 103 450

19

*Both totals equal to One mark.

1.2.2

BANK RECONCILIATION STATEMENT ON 28 FEBRUARY 2017

Debit

Credit

Dr. Balance as per Bank Account Cr. Outstanding Deposit Dr. Outstanding Cheques

73 920

55 600

No 286

No 312 No 334 Cr. Incorrect cheque

23 400

7 500 12 250

1 250

Cr. Balance as per Bank Statement

60 220

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

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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

6

To detect fraud and corruption

6

1.3.2

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.) 1. Rejected discount claimed

Interest charged on overdue account 2. Corrected debit order 201 3. No entry 4. No entry 5. Discount allowed considered 6. Corrected/ Credited invoice 6120

7. No entry

27 200 +1 360 +1 316 -228

0 0 - 2000

+16 200 Or + 8 100 + 8 100

0 10

43 848 10

QUESTION 2

GAAP, PARTNERSHIP FINACIAL STATEMENTS, ETHICS AND INERNAL CONTROL

2.1 GAAP CONCEPTS

2.1.1

C

.

2.1.2

E

.

2.1.3

B

2.1.4

F

5

.

2.1.5

A

5

.

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2.2 PARTNERSHIP FINANCIAL STATEMENTS

2.2.1 Makhado Holiday Resort Income Statement for year ended 31 October 2017

Sales (2 386 000 ? 48 000 + 7 200) Cost of sales (1 336 000 + 4 110)

Gross profit Other operating income

Operation Operation

Rent income (81 600 - 6 720) Discount received

one part correct

Profit on sale of asset

Provision for bad debts adjustment

Gross income

Operating Expenses

Salaries and wages (304 600 + 5 400+645)

2 345 200 (1 340 110)

1 005 090 89 940

74 880 9 320

5 600 140

1 095 030 (574 615)

310 645

Insurance (23 370 - 1 300) no part marks

22 070

Packing materials (25 980-3 830) no part marks

Repairs and maintenance (20 650 + 12 000) Water and electricity (36 480 + 2 980) no part marks Bad debts (7 140 + 2 400)

Sundry expenses

Depreciation (42 000+6 600+48 800+5

000)

one part correct

Trading stock deficit

Operating profit

Interest income

22 150 32 650

39 460 9 540 32 410 102 400

3 290 520 415

6 000

Profit before interest expenses Interest expenses (62 200 + 6 800) one part correct Net profit for the year

Foreign entries -1 (max 2)

526 415 (69 000) 54 457 415 54

Misplaced items 1 (max 2)

2.2.2 NOTES TO BALANCE SHEET AT 31 OCTOBER 2017

TANGIBLE ASSET

Carrying value Cost price Accumulated depreciation Movements Additions Disposals Depreciation for the year

Carrying value

Land and Buildings

1 200 000 1 200 000

0

Equipment

234 000 420 000 (186 000)

Motor vehicles

280 000 960 000

(680 000)

100 000 1 300 000

0 0

See 2.2.1

(42 000)

192 000

300 000 (29 400)

(60 400)

See 2.2.1

490 200

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Cost price

1 300 000

420 000 1 040 000

Accumulated depreciation

(228 000) (549 800) 20

operation

operation

20

2.3 INTERNAL CONTROL 2.3.1

Identify a problem with figures for each query?

Air-conditioner:

Inflation of prices by R3 200 Collusion on prices - R9 000

Chairs:

4

Missing/stolen/ damaged chairs

4

2.3.2

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

2

Conduct regular stock taking. 2

QUESTION 3

PARTNERSHIP LEDGER ACCOUNTS AND ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS

3.1 LEDGER ACCOUNTS

APPROPRIATION ACCOUNT

2017

Salary:

Nov 30 Kgadi L

Salary:

Lesiba K

Interest on

capital

(90 000

+ 84 000)

Current

account:

Kgadi L

Current

account:

120 000 2017

Profit and loss

Nov 30 account

138 000

174 000

64 800 43 200

540 000

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Lesiba K

6 NSC_Memorandum

540 000

LimpopoDoE/November 2017

16

540 000

16

3.2 ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS

3.2.1 CALCULATE THE FOLLOWING RATIOS

(a) Acid test ratio:

378 200 ? 176 000 : 180 000

4

202 200: 180 000

1.1 :1 one part correct

4

(b) Debt equity ratio:

220 000 : 988 200

3

0.2 : 1

3

(c) Percentage return earned by Ngobeni.

244 600 ?(457 600+ 304

000 )

x

100 1

244 600 380 800

x

100 1

64.2% one part correct 6

6

3.2.2 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% (2016) to 21% (2017)

5

The net profit on sales decreased from 19.2% (2016)

5

to 16.1% (2017)

3.2.3 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

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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 (2016) to 2.1 : 1

(2017) Or increase by 0.2

Acid test ratio ? improved from 0.9: 1 (2016) to 1.1. : 1 (2017) Or increased by 0.2

Stock turnover rate improved from 10 times (2016) to 12.4

6

times (2017) ? goods sold faster and profits generated

quicker.

6

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)

3.2.4 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% (2016) to 51% (2017)

4

It is still above rates offered by alternative investment e.g. fixed deposits at 6 %

4

3.2.5

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 R400 000 instead of introducing more capital. Explain, quoting TWO financial indicators to justify their decision.

Debt/equity ratio ? improved from 0.3 : 1 (2016) to 0.2 :

(2017) It indicates low financial risk ? easy to obtain loans

6

ROTCE ? improved from 45.8% (2016) to 47.1% (2017) It is above interest rates on loan of 10%

6

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QUESTION 4

CLUBS AND INVENTORY SYSTEM

4.1 Club concepts

4.1.1 4.1.2. 4.1.3 4.1.4.

Surplus Membership Fees Accumulated/Capital Fund Affiliation fees

4.2 4.2.1

MEMBERSHIP FEES ACCOUNT

201 1 Accrued

6

income

Jan

Dec 3 Income

1 received in

advance

Bank

7 800 4 800 1 200

Income and Expenditure

*67 200

81 000

2016 Jan

Dec

1 Income received in advance

31 Bank

Membership fees written off

Accrued income

*(109+ 18-4-2-9) x R600

4 4

4 200

61 800

5 400

9 600

81 000

18

18

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