Accounting November Exam Grade 10

QUESTION 1 – ACCOUNTING EQUATION [95 marks; 30 minutes]

Subsidiary General Ledger Subsidiary Ledger Owner’s

No. Journal Account Debit Account Credit Debit Credit Assets Equity Liability
E.g. CRJ Bank Capital +10 000 +10 000
1 GJ √ Drawings √ Trading stock √ -500 √ -500 √
2 CRJ √ Bank√ Debtors control√ M. Cholephi√ ±1 900√√
Discount allowed√ Debtors control M. Cholephi -100√ -100√
3 DJ√ Debtors control√ Sales√ R. Desai√ +10 500√ +10 500√
Cost of sales√ Trading stock√ -6 000√ -6 000√
4 CPJ √ Bank charges√ Bank√ -170√ -130√
Interest on overdraft√ -40√
5 GJ√ Debtors control√ Interest income√ B. Oghuehi√ +27√ +27√
6 CJ√ Equipment√ Creditors control√ Coetzer Traders√ +4 875√ +11 895√
Stationery√ -390√
Drawings√ -6 630√
7 GJ√ Wages√ Salaries√ ±1 300√
8 DAJ√ Debtors allowance√ Debtors control√ A. Ozo√ -100√ -100√
9 CRJ√ Bank√ Fixed deposit: FNB√ -40 000√
Interest on fixed deposit√ +40 800√ +800√
10 CAJ√ Creditors control√ Trading stock√ Sibisi Stores√ -310√ -310√
11 CRJ√ Debtors control√ Bank√ T. Bettell√ ±650√√
GJ Debtors control Discount allowed√ T. Bettel +50√ +50√
12 GJ√ Debtors control√ Debtors control√ F. Shan√ R. Shan√ ±300√√
13 CPJ√ Trading stock√ Bank√ ±450√
14 CPJ√ Rent expense√ Bank√ -4 500√ -4 500√

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Accounting November Exam Grade 10
QUESTION 2 [31 marks; 25 minutes]

2.1 Briefly explain the difference between tax evasion and tax avoidance. Give an example of each from the article.
TAX EVASION Tax evasion is illegal. It is when someone is not being truthful about their income or overstating expenses. √
EXAMPLE Hiding income in foreign accounts as to pay less taxes. √
TAX AVOIDANCE Avoiding paying tax by purchasing less product that are taxed or spending less money. √
EXAMPLE Trading in countries where little or no tax is paid. √
(4)

2.2 Complete the table on the answer sheet by completing the VAT calculations.
COST PRICE PROFIT MARGIN (%) SALES PRICE VAT SALES PRICE
(VAT EXCLUSIVE) (VAT INCLUSIVE)
R5 000 60% R8 000√√ R1 120√√ R9 120√√
R3 150 30%√√ R4 095√√ R573.30 R4 668,30√√
R3 550 70%√√ R6 035 R844,90√√ R6 879,90√√
R2 000√√ 25% R2 500√√ R350√√ R2 850
(24)

2.3 In your opinion, do you think the behaviour of the persons from the article is unethical? Motivate your answer. What will the effect be on the
economy?
Yes it is unethical. √
They are taking money out of the South African economy. √
Money (tax) that is very needed for development in the country is invested in other countries. √
(3)

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Accounting November Exam Grade 10
QUESTION 3 – FINANCIAL STATEMENT [69 marks; 55 minutes]

3.1 BALANCE SHEET OF CILLIERS STORES ON 30 JUNE 2015

ASSETS
NON-CURRENT ASSETS 1 024 401√
Tangible assets√ 974 401√
Financial assets: Fixed deposit√ 50 000√
CURRENT ASSETS 105 112√
Inventory (61 200 + 680 √ + 1 450√ + 450√) 63 780√
Trade and other receivables√ (24 000√ – 3 600√ – 1 088√ + 18 000√ ) 37 312√
Cash and cash equivalents ( - 6 780√ + 9 000√ + 1 000√ + 800√ ) 4 020√
TOTAL ASSETS 1 129 513√

EQUITY AND LIABILITIES

OWNERS EQUITY (123 000√ – 8 500√ + 357 453√) 471 953√
NON-CURRENT LIABILITIES 563 000√
Loan: FNB√ (600 000√ + 11 000√ – (4 000 x 12√√)) 563 000√
CURRENT LIABILITIES 94 560√
Trade and other payables√ (21 320√ + 7 650√ + 9 580√ + 1 200√ + 1 500√ + 94 560√
750√+ 120√ + 120√ + 1 800√ + 800√ + 800√ + 920√ + 48 000√)
TOTAL EQUITY AND LIABILITIES 1 129 513√
(49)

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Accounting November Exam Grade 10
3.2 TANGIBLE ASSETS
Land and Vehicles Equipment Total
buildings
Carrying value - beginning of year 750 000 128 000 6 000 938 000
Cost 750 000√ 200 000√ 60 000√ 1 010 000
Accumulated depreciation (72 000) √ (54 000)√ (126 000)
Movement 27 000 69 400 (5 999) 90 401
Additions at cost 27 000√√ 100 000√ 127 000
Disposal at carrying value
Depreciation (30 600) √√√√ (5 999) √√ (36 599)
Carrying value - end of year 777 000 197 400 1 974 401√
Cost 777 000√ 300 000√ 60 000√ 1 137 000
Accumulated depreciation (102 600) √ (59 999) √ (108 599)
(20)

QUESTION 4 – RATIO ANALYSIS [34 marks; 22 minutes]

4.1 Calculate the mark-up achieved for 2015. Give a possible reason for the difference in actual and target mark-up.

260 000√ / 600 000√ X 100

= 43%√

Reason: Trade discount given to clients, clearance sale, etc. √

(4)

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Accounting November Exam Grade 10
4.2 Explain the reason for the difference in operating profit and net profit.
Financing expenses needed to be calculated. E.g. Interest on loan and other interest expenses√
(1)

4.3 Calculate the operating profit on turnover for 2015.

2015

225 000 √ / 860 000 √ X 100

= 26,16% √ √

(4)

4.4.1 Calculate the current ratio for 2015.

2015

68 800 √ : 28 700 √
2,4 : 1 √√

(4)

4.4.2 Calculate the acid test ratio for 2015.

2015

(68 800 √ - 32 000 √) OR (15 400 + 21 400) : 28 700

36 800 : 28 700 √
1,28 :1√√

(5)

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Accounting November Exam Grade 10
4.4.3 Calculate the solvency ratio for 2015.
2015

(950 000 √ + 68 800 √) : (115 000 √ + 28 700 √)

1 018 800 : 143 700
7,09 : 1 √ √

(6)

4.4.4 Comment on the business’ liquidity from 2014 to 2015.

Liquidity has improved from 2014 to 2015. √ √
Current ratio and acid test ratio are above the norm of 2:1. √ √
Solvency ratio is above the ratio 1:1.
(2x2=4)

4.5.1 Calculate the return on equity for 2015.

2015

200 000 √ / [(9875 100 √ + 801 500 √) / 2] X 100

= 23,86% √

(4)

4.5.2 Do you think the owner should be pleased with her return on investment for 2015? Provide a reason for your answer.
Yes. √ It’s more than the return he would have earned in an investment like a fixed deposit. √
(2)

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Accounting November Exam Grade 10
QUESTION 5 – ETHICS [15 marks; 15 minutes]
5.1 What is meant by ‘copyright’ and why is copying of music and software illegal?
Copyright is a legal right created by the law of a country that grants the creator of an original work
exclusive rights for its use and distribution. √ Copyright is a form of intellectual property, applicable to
certain forms of creative work. Under copyright law, legal protection attaches only
to fixed representations in a tangible medium. √ √
(3)
5.2 Who are two of the organizations fighting for the clampdown on safety and fraud?
Digital citizens Alliance √
NetNames √
(2)
5.3 Do you feel that these organizations are being reasonable in their stance? Explain.
Yes. √
They are trying to enforce the law as well as protect the rights of the person who the created the
music/movies/programs. √
(2)
5.4 In your opinion, how will businesses be affected in the long-run if they turn a blind eye to this problem?
They lose out on profit. √
Which might lead to cutting costs like jobs. √
Weakens the economy.
Less taxes are paid.
(2)
5.5 Do you feel that the copying of a CD, DVD or software is unethical? Explain.
Yes. √ It is the intellectual property of someone else. Very similar to theft. √ √
(3)
5.6 Do you think that there are people suffering because of piracy? Explain.
Yes. √ Performers, programmers, etc. are losing income. √ √
(3)

QUESTION 6 – ACCOUNTING CONCEPTS [6 marks; 3 minutes]

6.1 B √ √ 6.2 D √ √ 6.3 A √ √

TOTAL: 250 MARKS
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