Acc Gr10 May 2009 Paper

8/9/2019 Acc Gr10 May 2009 Paper

http://slidepdf.com/reader/full/acc-gr10-may-2009-paper 1/9

WESTERFORD HIGH SCHOOL

ACCOUNTING EXAMINATION

GRADE 10

26 May 2009

200 marks ; 2 hours

Examiners: Ms G Visser

Moderator: Mrs J Abrahams

INSTRUCTIONS

1. Answer ALL questions.

2. An ANSWER BOOK is provided. No pages must be removed from the answerbook.

3. Show your calculations in order for part marks to be allocated.

4. Read the instructions carefully and follow them precisely.

5. Candidates will forfeit marks for:Dates which are omittedUsing abbreviationsOver-writing of figures

6. Non-programmable calculators may be used.

7. Use the table, on the next page, as a guide when answering the question paper andtry not to deviate from the time allocation.



2

QUESTION 1: 50 marks; 30 minutes

The topic of the question is: The learning outcomes covered are:

Documents, recording,

accounting equation & concepts

LO1 Financial accounting- AS 1.1 Explain accounting concepts- AS 1.2 Recording information in books

- AS 1.3 Analyse effect on accounting equationLO3 Managing resources

- AS 3.6 Apply internal control processes



Debtors & stock

LO1 Financial accounting- AS 1.2 Recording information in books

LO3 Managing resources- AS 3.4 Perpetual inventory system- AS 3.6 Apply internal control processes



General Journal

LO1 Financial accounting- AS 2 Records information in the journals

LO3

- AS 4 Discusses the Perpetual inventory systems



Different accounting systemsLO3 Managing resources

- AS 3.1 Indigenous systems



Debtors and creditors ledgers

LO1 Financial accounting- AS 1.2 Recording information in books

LO3 Managing resources- AS 3.4 Perpetual inventory system- AS 3.6 Apply internal control processes


The topic of the question is: The learning outcomes covered are:Code of ethics LO3 Managing accounting

- AS 5 Explains code of ethics



3

QUESTION 1 (50 marks ; 30 minutes)DOCUMENTS, RECORDING, ACCOUNTING EQUATION & CONCEPTS

Michael Marais has started his own business, M&M Clothing, which sells school uniforms.He does not know much about Accounting, but he has employed a qualified bookkeeper,Patricia Pretorius to look after the financial control of the business. Michael uses the

perpetual inventory system and a mark-up of 50% on cost.

Patricia’s opinion is that documents are vitally important in controlling the businessfinances and providing information. Her first task was to get all the documents preparedwith ‘M&M Clothing’ printed on each document. Michael has also opened a bank accountin the name of the business.

Some of the transactions that occurred in January 2009 are as follows:

Jan 1 Michael provided capital in the form of cash, R80 000, and avehicle, R90 000.

4 M&M Clothing bought stock on credit from ABC Suppliers,R5 000. They also charged a delivery fee of R400.

5 Returned stock to ABC Suppliers, R700.11 Sold uniform items for cash to N Naude, R750. The cost price

was R500.12 Paid Space Computers R8 000 by cheque for equipment bought.15 Sold uniform items on credit to T Tredoux. The selling price was

R1 350 and the cost price was R900.16 T Tredoux returned a school tracksuit that she had bought the

day before. The selling price was R240 and the cost price wasR160.

18 Paid for repairs to equipment out of petty cash, R40.20 T Tredoux settled her account by cheque.22 Donated stock to a learner who could not afford to pay. The cost

price was R450.25 Settled the account of ABC Suppliers by cheque, less 5% cash

discount.

REQUIRED:

1.1 Analyse the transactions on the table provided in order to reflectthe source document and journal, the accounts affected in theledger, and the effect on the accounting equation. The first

transaction has been done for you as an example. (35)1.2 Do you agree with Patricia’s opinion about documents? Provide a

convincing but concise explanation for your opinion. (5)1.3 Explain what is meant by the ‘Business Entity Rule’ and why it is

important for Michael to open a separate bank account in the nameof the business. (4)

1.4 Explain what is meant by the following:

• Assets

• Liabilities

• Owner’s equity (6)

50



4

QUESTION 2 (50 marks; 30 minutes)DEBTORS & STOCK

You are provided with two accounts from the General Ledger of Tweety Traders. Thebusiness uses the perpetual inventory system and a mark-up of 33 ⅓% on cost at alltimes.

REQUIRED:

Study the information and then answer the questions which follow.

TWEETY TRADERSDr General Ledger Cr

DEBTORS CONTROL2006

Apr

1 Balance b/d 9 6912006

Apr

30 Bank & discount CRJ 11 722

30 Bank CPJ 340 Debtors allowances DAJ 588

Sales DJ 26 320 Sundry accounts GJ 510

Sundry accounts GJ 400 Balance c/d

Petty cash PCJ 200

May 1 Balance b/d

TRADING STOCK2006Apr

1 Balance b/d 18 7162006Apr

30 Cost of sales CRJ 4 110

30 ? CPJ 3 360 Cost of sales DJ 19 740

Cost of sales DAJ 441 Creditors control ? 4 426

Creditorscontrol

? 14 280 Balance c/d

May 1 Balance b/d

QUESTIONS:

DEBTORS:2.1 According to the general ledger, how much is owed by the debtors at

the end of April? (2)

2.2 What is the best way of checking that the amount owed by debtorsaccording to the general ledger is correct? (2)

2.3 What is the value of credit sales for April? (2)

2.4 If the discount allowed to debtors for early payment is R620, how

much did the debtors pay during April? (2)2.5 A bad debt was written off during April. In which figure in the ledger

account, is this bad debt included (provide only the figure)? (2)



5

2.6 Give one possible explanation for the entry of R340 on the debitside. (2)

2.7 Give one possible explanation for the entry of R588 on the credit

side. (2)

2.8 Have the debtors generally been settling their accounts on time?Provide figure/s from the ledger account to support your opinion. (4)

2.9 If a debtor proves to be slow in settling his debt, what two points ofadvice would you provide to Tweety Traders to solve this problem? (4)

2.10 All new customers opening accounts should be ‘screened’ byTweety Traders. What is meant by ‘screening’ and why is itimportant for the business to do this? (4)

TRADING STOCK:2.11 According to the general ledger, how much trading stock is on hand

at the end of April? (2)

2.12 What is the best way of checking that the amount of stock on handaccording to the general ledger is correct? (2)

2.13 What is the value of cash sales for April? (3)

2.14 In your opinion, should this business try to encourage more cashsales than credit sales? Briefly explain your reason. (2)

2.15 How much stock was bought on credit during April? (2)

2.16 What is the main advantage of buying stock on credit? (2)

2.17 Provide the folio reference for the entry of R4 426 on the credit side. (2)

2.18 Should Tweety Traders be satisfied with the quality of goods theyhave been receiving from their suppliers? Provide figure/s from theledger account to support your opinion. (4)

2.19 Provide the contra detail for the entry of R3 360 on the debit side. (2)

2.20 Is Tweety Traders carrying enough stock to satisfy the needs of itscustomers for May? Provide figure/s to support your opinion. (3)

50



6

QUESTION 3 (45 marks; 27 minutes)GENERAL JOURNAL

Use the information given below to complete the General Journal in the books of WinterTraders for August 2009.

Transactions for August 2009

2 The owner M Milo took goods marked at R500 for his own use. (Cost price R350)

5 Charged the account of Nesquik with 10% p.a. interest for 4 months. Nesquik owesthe business R900.

9 A payment of R795 made to Hot Choc, a creditor, was correctly entered in the Cashpayments journal but was in error posted to the account of Milk Shake, a debtor.

19 Cold Milk was declared insolvent. A final dividend of 75c in the rand was received

from his insolvent estate. His cheque of R600 was received and recorded in thecorrect subsidiary journal and posted. The remainder of his account must be writtenoff as irrecoverable.

24 The cheque for R225, received from Chomp, a debtor, was received from the bankmarked (r/d). The cheque was previously received in full settlement of his account ofR250. No entry was made to cancel the discount.

28 Equipment was bought for cash, R907. However, the entry in the CPJ was made forR970.

29 Milky Bar charged our overdue account with R15 interest.

30 An invoice from C Crunch for trading stock R600 and stationery R400 was recordedas follows:

Creditors Journal for August 2009

Creditor Creditorscontrol

Trading stock Stationery

C Crunch 1 000 400 600

Correct the error

31 The owner donated goods costing R175 to a local high school. This donations wasmade on behalf of the business.



7

QUESTION 4 (15 marks; 9 minutes)DIFFERENT ACCOUNTING SYSTEMS

4.1 INDIGENOUS & FORMAL SYSTEMS

You know two entrepreneurs with their own businesses.

• Mary Mchunu uses an indigenous bookkeeping system – she sells fruit by herself

from a kiosk in a busy part of town• Brenda Bokwe uses a formal bookkeeping system – she employs managers and

shop assistants to sell furniture from a shop that she owns in a busy shoppingcomplex.

REQUIRED:

4.1.1 Briefly explain what is meant by an ‘entrepreneur’. (2)

4.1.2 Briefly explain the difference between ‘indigenous’ and ‘formal’

bookkeeping systems. (3)

4.1.3 Consider the following statements. Decide which statementswould apply to Mary and which would apply to Brenda. Place atick in the appropriate column/s. Note that some statements couldapply to both. (10)

STATEMENTS:

MARYIndigenous system

BRENDAFormal system

She relies on self-management

She plans extensively and ensures that budgets are drawn upregularly

She uses documents extensively

She relies mainly on cash transactions

She safeguards her cash and her assets herself

She has separate bank accounts for herself and her business

She notes her important transactions in a notebook only

She may consider using a computerized accounting softwarepackage

Making a profit is an important objective for her business

She keeps journals and ledgers and prepares a trial balanceeach month

She adheres to GAAP

There is only one person involved in her business

She employs an accountant to prepare her financialstatements

There are divisions of duties within her business so that oneemployee serves as a check on another

She is concerned about a good relationship with customers



8

QUESTION 5 (30 marks; 18 minutes)DEBTORS AND CREDITORS LEDGERS

INSTRUCTIONS

Use the information given below to prepare the account of Sleek, a debtor in the DebtorsLedger and Smooth, a creditor in the Creditors Ledger of Charming Stores.

INFORMATION

On 1 February 2003, Sleek owed the business R500 and the business owed Smooth R1800.

The following transactions took place in the books of the business during February 2003.

3 Received a cheque from Sleek in full settlement of his account. Issued receipt 77.

5 Received invoice X221 (renumbered 106) from Smooth for the following:-goods, R2 600 (less 5% trade discount)-equipment, R1 120

8 Sold goods costing Charming Stores R1 600 to Sleek. Goods are sold at cost plus25%. Issued invoice 58 to him.

15 Sent a cheque to Smooth for half of the amount owed to them as on 1 February2003. Issued cheque 876 to him.

18 Sleek returned goods with a selling price of R200 to us. These goods were boughton the 8th. Issued credit note 45 to him.

21 Received a cheque from Sleek for R500 on account. Issued receipt 100 to him.

25 Bought goods on credit from Smooth, R1 000. Invoice renumbered 130.

26 Returned unsatisfactory goods with an invoice price of R200 (less 5% tradediscount) to Smooth. These goods were bought on 5th. Issued debit note 24 tohim.

30 Sent a cheque to Smooth in full settlement of account. Issued cheque 1000.



9

QUESTION 6 (10 marks ; 6 minutes) ETHICS

Kyle Summers is employed at the accounting firm DJM Accounting Services as a SeniorAccountant.

In his day to day work, he tries to do his job to the best of his ability to satisfy hissupervisors and their clients. When he was employed, he signed a service contract thatincluded some of the following principles of ethical and professional conduct:

A All employees should be honest in the performance of their duties.B All employees should be fair and not allow prejudice or bias to override impartial

behaviour.C Employees are expected to be competent in performing their duties if they agree to

provide professional services.D Employees should respect the secrecy of information acquired during the course of

performing their duties.

E Employees should act in a manner that is consistent with the good reputation of theorganisation.F Employees should carry out their duties in accordance with standards set by the

employer, Government and the Institute of Chartered Accountants.

REQUIRED:

Identify the principles of ethics and professional conduct by listing the above-mentionedprinciples (A – F) in column B, next to the relevant principle.

Only indicate the appropriate letter on your answer sheet.

No

COLUMN A COLUMN B

PRINCIPLE / ETHICS PRINCIPLE AS PER CONTRACT

6.1 Objectivity

6.2 Technical standards

6.3 Confidentiality

6.4 Integrity

6.5 Professional conduct and duecare

Acc Gr10 May 2009 Paper

Documents

Transcript of Acc Gr10 May 2009 Paper