PROVINCIAL EXAMINATION

NOVEMBER 2023
GRADE 10

ACCOUNTING
(PAPER 1)

TIME: 2 hours

MARKS: 150

9 pages, a formula sheet and a 6-page answer book

P.T.O.
 ACCOUNTING (PAPER 1) 2
GRADE 10

INSTRUCTIONS AND INFORMATION

1. Answer ALL the questions.

2. Answer all questions in the ANSWER BOOK provided.

3. Show ALL calculations to earn part-marks.

4. Non-programmable calculators may be used.

5. You may use blue or black ink to answer the questions.

6. Where applicable, show ALL calculations to ONE decimal point.

7. Write neatly and legibly.

8. A FORMULA SHEET is attached at the end of this question paper.

9. Use the information in the table below as a guide when answering the question paper. Try
NOT to deviate from it.

QUESTION TOPICS MARKS TIME

GAAP Concepts and Analysis of
1 33 25 minutes
Transactions
2 Statement of Comprehensive Income 44 35 minutes
3 Notes and Statement of Financial Position 38 32 minutes
Concepts and Analysis and Interpretation of
4 35 28 minutes
Financial Statements
Total 150 120 minutes

P.T.O.
 ACCOUNTING (PAPER 1) 3
GRADE 10

QUESTION 1: GAAP CONCEPTS AND ANALYSIS OF TRANSACTIONS

(33 marks: 25 minutes)

1.1 GAAP CONCEPTS

Match the principle in COLUMN A with the example that best describes it in
COLUMN B. Write only the letter (A – D) next to the question numbers
(1.1.1 to 1.1.4) in your ANSWER BOOK.

COLUMN A COLUMN B
1.1.1 Business entity A Land and buildings are reflected in the
Balance Sheet at the original price of
R350 000, despite their market value of
R500 000.

1.1.2 Going concern B When a debtor settles his account, the

discount allowed is recorded at the same
time.

1.1.3 Historical cost C Trading stock is valued at R20 000 even

though it could be sold at R15 000.

1.1.4 Matching D Stock taken by the owner is recorded as

drawings in the financial statements. (4)

1.2 ANALYSIS OF TRANSACTIONS

Analyse the following transactions according to the headings provided in the

ANSWER BOOK. The business uses a mark-up of 50% on cost. (29)

Assume that the Bank balance is favourable for all the transactions.

Example: Bought stationery for cash, R 2 000.

TRANSACTIONS:

1.2.1 Bought equipment on credit for R10 000 from Tshwane Furnishers.

1.2.2 A debtor, N Mothusi paid R4 750 via EFT in settlement of her account
of R5 000.

1.2.3 Sold goods for cash, the cost price was R3 000.

1.2.4 The owner took trading stock at the cost of R850 for personal use.

1.2.5 The owner of the business returned damaged goods to the supplier,
they were discounted by 5%, the original cost price was R1 800.
33

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 ACCOUNTING (PAPER 1) 4
GRADE 10

QUESTION 2: STATEMENT OF COMPREHENSIVE INCOME

(44 marks; 35 minutes)

SEBENZA TRADERS

The following information was taken from the records of Sebenza Traders on
28 February 2023, the last day of the financial year. The business uses a mark-up of 40%
on cost.

REQUIRED:

2.1 Prepare the Statement of Comprehensive Income (Income Statement) for the year
ending 28 February 2023. (44)

INFORMATION:

A. Extract from the Trial Balance for the year ended 28 February 2023

Balance Sheet Accounts Debit Credit

Capital (1 March 2022) 600 000
Drawings 34 000
Vehicles 280 000
Accumulated depreciation on vehicles (1 March 2022) 56 000
Equipment 130 000
Accumulated depreciation on equipment (1 March 2022) 44 600
Fixed Deposit: Al Raji Bank @ 9% p.a. 24 000
Trading stock 44 000
Debtors' control 42 300
Bank (favourable) 4 600
Mortgage Loan: SAAB Bank 103 800
Nominal Accounts
Sales 588 000
Cost of sales 420 000
Debtors' allowances 6 800
Rent income 36 200
Commission income 10 150
Salaries 43 500
Insurance 12 500
Bad debts 4 800
Stationery 3 320
Water and electricity 19 100
Bank charges 4 200
Packing material 7 100
Advertising 2 300
Interest on fixed deposit 1 620

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 ACCOUNTING (PAPER 1) 5
GRADE 10

B. ADJUSTMENTS AND ADDITIONAL INFORMATION

(i) The water and electricity account for February 2023 has not yet been paid,
R1 830.

(ii) Stock with a selling price of R2 520 was donated to a local orphanage.
No entry was made.

(iii) According to a physical stock count on 28 February 2023, the following items
were on hand:

• Trading stock R 41 000

• Packing material R 1 950

(iv) Insurance includes an annual premium of R3 960 paid for the period
1 September 2022 to 31 August 2023.

(v) Rent for February 2023 has not yet been received. The rent was increased
by R300 per month with effect from 1 July 2022.

(vi) R. Adam, a debtor, who owed R1 200 to Sebenza Traders was declared
insolvent. His estate was able to settle half of the amount owing. Write off
the outstanding amount.

(vii) The loan statement received from SAAB Bank on 28 February 2023 reflected
the following:

Balance on 1 March 2022 R150 000

Repayments during the year (including interest) R 46 200
Interest on loan (capitalised) ?
Balance on 28 February 2023 R117 300

(viii) Provide for the outstanding interest on fixed deposit, interest is not
capitalised.

(ix) The bank statement for February 2023 reflected the following:

• EFT fees – R 170

• Credit card levies – R 90
• Interest on the current account – R220

(x) Depreciation is calculated as follows:

• On vehicles at 10% p.a. on cost

• On equipment at 15% p.a. on the diminishing balance method

NOTE: Additional equipment with a cost price of R12 400 was purchased
on 1 December 2022. This transaction has not yet been recorded.
44

P.T.O.
 ACCOUNTING (PAPER 1) 6
GRADE 10

QUESTION 3: NOTES AND STATEMENT OF FINANCIAL POSITION

(38 marks; 32 minutes)

SAVAGE TRADERS

Jasper Savage is the owner of Savage Traders a supplier of catering equipment. The
business also services equipment at a fee for various clients. The business uses a
mark-up of 100% on cost.

REQUIRED:

3.1 Prepare the following notes to the Statement of Financial Position;

3.1.1 Owner's Equity (6)

3.1.2 Trade and Other Payables (20)

3.2 Complete the Equity and Liabilities section of the Statement of Financial Position
for the year ended 31 July 2023. (12)

INFORMATION:

Extract from the Pre-adjustment Trial Balance on 31 July 2023

Capital 3 000 000
Drawings 200 000
Mortgage Loan: SWYS Bank (see adjustment (v)) ?
Debtors' Control 680 000
Creditors' Control 530 000
SARS: PAYE 51 000
Pension Fund 19 000
Medical Aid 17 000
Bank overdraft 105 000

ADDITIONAL INFORMATION AND ADJUSTMENTS NOT RECORDED

(i) Jasper Savage invested another R100 000 cash in the business on
30 June 2023. This transaction has not been recorded.

(ii) Net profit for the year amounted to R170 000 and it has not been entered in
the books.

(iii) Jasper Savage took additional merchandise with a cost price of R40 000
for personal use.

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 ACCOUNTING (PAPER 1) 7
GRADE 10

(iv) A debtor returned three industrial ovens with a selling price of R75 000
each. Upon inspection Savage Traders found that all three ovens were not
working and subsequently returned them to the supplier.

(v) Baking trays costing a total of R3 000 were purchased on credit from the
supplier, however they were posted as indicated in the table below: Correct
the error.

Details Debit Credit

Trading stock R3 000
Bank R3 000

(vi) The statement from SWYS Bank received on 31 July 2023 was as follows:

Balance on 01 June 2022 290 000

Repayments including interest (80 000)
Interest charged 30 000
Balance on 31 July 2023 240 000

25% of the outstanding balance on loan will be repaid in the next financial
year.

(vii) The statement for the telephone account was only received a few days
after 31 July 2023. The amount of R6 000 will be paid in August 2023.

(viii) One of the debtors had paid R12 000 for servicing electrical stoves. Due to
loadshedding, the service will only be done in August 2023.

(ix) Savage Traders employed a new sales assistant at the beginning of

July 2023. Human Resource (Labour) Department had not processed the
assistant’s information and he was not paid for July 2023.

His salary details are as follows:

Gross Pension Fund Medical Aid Nett

PAYE
salary Deductions Deductions Salary
15 000 2 100 1 500 1 300 ?

Business contributions are:

Pension fund R2,00 for every R1,00 deducted.

Medical Aid On a rand for rand basis.
38

P.T.O.
 ACCOUNTING (PAPER 1) 8
GRADE 10

QUESTION 4: CONCEPTS AND INTERPRETATION OF FINANCIAL STATEMENTS

(35 marks; 28 minutes)

4.1 CONCEPTS

Indicate whether the following statements are TRUE or FALSE. Write only ‘True’ or
‘False’ next to the numbers (4.1.1 to 4.1.3) in the ANSWER BOOK.

4.1.1 Fixed deposit maturing in the next financial year is recorded under
non-current liabilities.

4.1.2 The financial institution will be interested in the financial statements of a

business if they apply for a loan.

4.1.3 Solvency is the ability of a company to meet its long-term debts and
financial obligations. (3)

4.2 ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS

Milan Dealers is owned by James Milan. He sells ladies bags locally. The financial
year end is 28 February 2023.

Calculate the financial indicators as at 28 February 2023.

4.2.1 Calculate the mark-up percentage. (3)

4.2.2 Calculate the net profit on sales. (3)

4.2.3 Calculate the current ratio. (3)

4.2.4 Calculate the acid test ratio. (4)

4.2.5 Calculate the return on owner's equity. (5)

4.2.6 James Milan is not happy with the control of expenses in the business.
Quote ONE financial indicator with figures to support his concern. (3)

4.2.7 Comment on the liquidity of the business. Quote TWO financial indicators
(4)
and provide figures to support your answer.

4.2.8 Milan Dealers has a mark-up policy of 40% on all merchandise. The owner
is concerned that the business is not achieving the mark-up. Provide TWO
reasons why the business is not achieving its intended mark-up. (2)

4.2.9 State whether Milan Dealers will be happy with the % return on equity. Give
TWO reasons for your answer. Quote the financial indicators and relevant
figures. (5)

P.T.O.
INFORMATION:

A. EXTRACT FROM STATEMENT OF COMPREHENSIVE INCOME

2023 2022
Sales 676 000 600 000
Cost of sales 520 000 480 000
Gross profit 156 000 120 000
Operating expenses 74 880 54 000
Net profit 81 120 66 000

B. EXTRACT FROM STATEMENT OF FINANCIAL POSITION

2023 2022
Owner's equity 550 000 500 000
Non-current assets 680 000 440 000
Current assets 490 000 570 000
Non-current liabilities 620 000 840 000
Current liabilities 220 200 200 200
Inventories 200 000 261 000
Cash and cash equivalents 165 000 124 000
Trade and other receivables 125 000 185 000

C. FINANCIAL INDICATORS 2023 2022

% Mark up on cost ? 25%
% Operating expenses on sales 14.2% 9%
% Net profit on sales ? 11%
Current ratio ? 2,8 : 1
Acid test ratio ? 1,5: 1
% Return on average equity ? 12,8%
Interest rate on fixed deposit 9% 9%
Interest rates on loan 18% 18%
35

TOTAL: 150

END
GRADE 10 ACCOUNTING FINANCIAL INDICATORS FORMULA SHEET

Gross profit 100 Gross profit 100 Net profit 100

  
Sales 1 Cost of sales 1 Sales 1

Operating expenses 100 Operating profit 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 100
 Total assets: Total liabilities
Owner' s equity 1