PROVINCIAL ASSESSMENT

GRADE 10

ACCOUNTING P1

NOVEMBER 2019

MARKS: 150

TIME: 2 hours

This question paper consists of 9 pages, a 6-page answer book and a formula
sheet.

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INSTRUCTIONS AND INFORMATION

Read the following instructions carefully and follow them precisely.

1. Answer ALL the questions.

2. A special ANSWER BOOK is provided in which to answer ALL the questions.
3. A FORMULA SHEET for financial indicators is provided at the back of this
question paper. You may use this if necessary.
4. Show ALL workings to earn part-marks.
5. You may use a non-programmable calculator.
6. You may use a dark pencil or blue/black ink to answer the questions.
7. Where applicable, show ALL calculations to ONE decimal point.
8. Write neatly and legibly.
9. Use the information in the table below as a guide when answering the question
paper. Try NOT to deviate from it.

QUESTION 1: 30 marks; 25 minutes

Topic of the question: This question integrates:
Concepts GAAP Accounting Concepts
Accounting Equation Accounting Equation

QUESTION 2: 55 marks; 45 minutes

Topic of the question: This question integrates:
Year-end adjustments
Income Statement
Income Statement of a sole trader

QUESTION 3: 40 marks; 30 minutes

Topic of the question: This question integrates:
Concepts
Balance Sheet and
Year-end adjustments
notes
Balance Sheet and notes

QUESTION 4: 25 marks; 20 minutes

Topic of the question: This question integrates:
Concepts
Analysis and
Calculation of financial indicators
interpretation
Interpretation of financial indicators

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NSC – Grade 10

QUESTION 1: CONCEPTS AND ACCOUNTING EQUATION

(30 marks; 25 minutes)

1.1 GAAP PRINCIPLES

Choose a term from COLUMN B that matches the description in

COLUMN A. Write Only the letter (A–E) next to the question number
(1.1.1–1.1.5) in your ANSWER BOOK, for example 1.1.6 G. (5)

COLUMN A COLUMN B
1.1.1 This principle means that the person A Historical cost
drawing up the financial statements will principle
assume that the business will continue
to trade.

1.1.2 The income generated during the B Business entity

particular financial period, and the rule
expenses incurred to generate the
income for the period, should be taken
into account in that specific financial
period. C Prudence principle

1.1.3 According to this principle, information

that is not important and that will not
influence the decision-making process,
D Materiality principle
does not have to be reflected in the
financial statements. (e.g Expenses for
example cleaning materials could
therefore be included in the account
E Matching principle
Sundry Expenses.)

1.1.4 Fixed assets purchased are recorded in

the Asset account, reflecting the amount F Going-concern
that each asset originally cost.

1.1.5 Money lost due to theft of stock is

written off, even though there is a
possibility that it may be recovered in
future.

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1.2 ANALYSIS OF TRANSACTIONS

The transactions appeared in the books of Leo Stores. The business

maintains a gross profit mark-up of 50% on cost.

REQUIRED:

Analyze the following transactions according to the headings provided in the

ANSWER BOOK. (25)

Assume that Bank balance is favourable for all the transactions.

Example: The owner took goods for personal use, R500.

TRANSACTIONS:

1.2.1 Leo Stores pay their account/debt of R3 000 to a creditor.

1.2.2 A debtor returned goods, cost R500, to the business.

1.2.3 Purchased trading stock on credit, R14 000 less 8% trade discount.

1.2.4 A creditor charged interest of R25 on the overdue account which

Leo Stores had forgotten to pay on time.

30

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QUESTION 2: INCOME STATEMENT (55 marks; 45 minutes)

The information set out below was taken from the books of RAV Distributors.
Their financial year ends 28 February 2019. The percentage mark-up used
by RAV Distributors is 75%.

REQUIRED:

Prepare the Income Statement of RAV Distributors for the year ended
28 February 2019. (55)

INFORMATION:

Pre-adjustment Trial Balance of RAV Distributors on 28 February 2019

Debit Credit
Balance Sheet Accounts Section
Capital 784 490
Drawings 403 860
Loan: DEF Bank (18% p.a.) 235 000
Land and Buildings 910 000
Equipment 140 000
Accumulated Depreciation on Equipment 52 000
Trading Stock 16 500
Debtors Control 20 720
Bank 55 500
Creditors Control 135 000
Nominal Accounts Section
Sales 875 000
Cost of Sales 400 000
Debtors’ Allowances 13 000
Wages 20 300
Commission Income 8 400
Salaries 95 250
Rent Income 37 100
Discount Allowed 800
Discount Received 880
Insurance 9 800
Bank Charges 1 210
Bad Debts 2 300
Telephone 12 560
Water and Electricity 11 700
Stationery 10 800
Sundry Expenses 3 570
2 127 870 2 127 870

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Adjustments and additional information:

A. Commission of R4 000 has not yet been received by the business.

B. The telephone account for February 2019 was not recorded,

R1 450.

C. The business made a donation of stock with a selling price of R1 400 to

a local crèche before stock count. No entry was made of this
transaction.

D. A physical stock count on 28 February 2019 revealed the following on

hand:
 Trading Stock R15 500
 Stationery R460

E. A debtor who owed R1 200 was declared insolvent. A dividend of

40 cents to the rand was received and recorded. Write off the remaining
debt as irrecoverable.

F. An amount of R2 000 received from B. Ben, a debtor whose debt was

written off as irrecoverable the previous year, was credited to Debtors
control and to the account of B.Ben. Correct the error.

G. The February Bank Statement was received after the pre-adjustment

trial balance was drawn up. The following must be adjusted:
 Dishonoured cheque, R2 000. This was in settlement of
H. Heidi's account of R2 040.
 Interest on favourable bank balance, R480.
 Bank charges, R183.

H. The insurance amount includes an annual premium of R2 160 paid on

1 July 2018.

I. The rent increased by R400 per month from 1 November 2018. The
rent for March 2019 was received and deposited.

J. Interest on the loan from DEF Bank has not been entered yet. Interest
is capitalized. The loan statement received from DEF Bank reflected the
following:
Balance on 1 March 2018 270 000
Repayments made during the year 85 000
Interest ?
Balance on 28 February 2019 235 000

K. Depreciation on equipment is calculated at 10% p.a. on the cost price

method. New equipment was bought on 1 September 2018 for
R24 000. This transaction was recorded.
55

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QUESTION 3: CONCEPTS AND NOTES TO THE BALANCE SHEET

(40 marks; 30 minutes)

3.1 Indicate whether the following statements are TRUE or FALSE.

3.1.1 Current assets include items that are expected to be converted into
(1)
cash within one year.

3.1.2 Non-current liabilities contain debts that will be settled within one
(1)
year.

3.1.3 Creditors for salaries and SARS (PAYE) will be shown under current
assets. (1)

3.2 Thabo Sepere owns a shoe store namely Thabo Shoes. You are
provided with an extract from the Post-adjustment trial balance on
30 September 2019. The bookkeeper has not yet taken all the
adjustments into account.
Note: The Net profit for the year is R774 300.

REQUIRED:
Use the trial balance and additional information to prepare the following
notes to the balance sheet at 30 September 2019:

3.2.1 Stock (4)

3.2.2 Trade and other receivables (5)

3.2.3 Owner’s equity (7)

3.2.4 Trade and other payables (6)

3.2.5 Statement of financial position (Balance sheet) (15)

EXTRACT FROM POST-ADJUSTMENT TRIAL BALANCE OF THABO SHOES ON

30 SEPTEMBER 2019
Balance sheet accounts section Debit Credit
Capital (01 October 2018) 1 036 470
Drawings 33 870
Trading stock 105 000
Fixed Assets 1 933 000
Debtors control 80 500
Fixed Deposit 649 350
Loan: ASA 120 000
SARS (PAYE) 4 600
Accrued income (interest on fixed deposit) 8 700
Accrued expenses (interest on loan) 5 500
Consumable goods on hand (stationery) 900
Bank 710 000
Cash Float 8 500
Petty Cash 5 000
Creditors Control 55 000
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ADJUSTMENTS NOT YET BROUGHT INTO ACCOUNT:

A. Thabo Sepere transferred a vehicle to the value of R100 000 on

1 January 2019 to the business. It is not recorded yet.

B. On 30 September 2019, after physical stock-taking was performed, Thabo

took shoes with a cost price of R2 000 for his personal use. This is not yet
recorded.

C. An installment of R20 000 is annually repaid on the loan at ASA on

31 December.

D. The rental income account reflects a total of R102 000. It includes rent
for three months received in advance.

E. To much insurance was paid, R950. This amount must be used to settle
the insurance due the following year.

F. An amount of R500 was incorrectly credited against the debtors control

account. This amount was received from C. Els, a debtor, whose
account was already written off as bad debts in 2017.
40

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QUESTION 4: ANALYSIS AND INTERPRETATION (25 marks; 20 minutes)

Use the information given for Beatle Bailey to answer the questions correct.

Post closing Trail Balance on 30 June 2019 2018

Tangible assets 222 664 203 804
Fixed Deposit: ABSA (10%) 45 000 45 000
Inventory 54 070 42 120
Trade and other receivables 34 700 25 328
Cash and Cash equivalents 1 650 6 200
Owner’s equity 271 430 180 000
Mortgage bond: First Bank (15% p.a.) 60 000 120 000
Trade and other payables 26 654 22 452

Additional information:
Cost of Sales 600 000
Operating expenses 158 000
Net profit 130 000

REQUIRED:

4.1 Calculate Sales if the firm uses a markup of 50% on cost. (2)

4.2 Calculate the return on average owner’s equity. Should the owner be
satisfied with this return? Give a reason for your answer. (6)

4.3 Calculate the current ratio for 2019. (5)

4.4 Calculate the acid test ratio for 2019. (4)

4.5 Calculate the degree of solvency on 30 June 2019. (8)

25

TOTAL 150

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GRADE 10 ACCOUNTING FINANCIAL INDICATOR FORMULA SHEET

Gross profit X 100 Gross profit X 100 Net profit before tax X 100
Sales 1 Cost of sales 1 Sales 1

Operating expenses X 100 Operating profit X 100

Sales 1 Sales 1

Current assets : Current liabilities (Current assets – Inventories) : Current liabilities

(Trade and other receivables + Cash and cash equivalents) : Current liabilities

___Net profit__ X 100

Total assets : Total liabilities
Owner’s equity 1

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