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GAUTENG DEPARTMENT OF EDUCATION

PROVINCIAL EXAMINATION
NOVEMBER 2020
GRADE 10

ACCOUNTING
PAPER 1

MEMORANDUM

8 pages

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 ACCOUNTING
MEMORANDUM PAPER 1 GRADE 10

MARKING PRINCIPLES:

1. Unless otherwise stated in the marking guideline, penalties for foreign items are
applied only if the candidate is not losing marks elsewhere in the question for that item
(no penalty for misplaced item). No double penalty applied.
2. Penalties for placement or poor presentation (e.g. details) are applied only if the
candidate is earning marks on the figures for that item.
3. Full marks for correct answer. If answer incorrect, mark the workings provided.
4. 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). Note: if figures are
stipulated in memo for components of workings, these do not carry the method mark
for final answer as well.
5. 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.
6. Where indicated, part-marks may be awarded to differentiate between differing
qualities of answers from candidates.
7. Where penalties are applied, the marks for that section of the question cannot be a
final negative.
8. Operation means 'check operation'. 'One part correct' means operation and one part
correct. Note: check operation must be +, -, x, ÷, or per memo.
9. 'One part correct' means ‘operation and one part correct’. Where method marks are
awarded for one part correct, the marker must inspect the reasonableness of the
answer and at least one part must be correct before awarding the mark. If a figure has
earned a method-mark, this will be regarded as ‘one part correct’.
10. In calculations, do not award marks for workings if numerator and denominator are
swapped – this also applies to ratios.
11. In awarding method marks, ensure that candidates do not get full marks for any item
that is incorrect at least in part. Indicate with a .
12. Be aware of candidates who provide valid alternatives beyond the marking guideline.
Codes: f = foreign item; p = placement/presentation.

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 ACCOUNTING
MEMORANDUM PAPER 1 GRADE 10

QUESTION 1 : GAAP CONCEPTS AND ANALYSIS OF TRANSACTIONS

1.1 CONCEPTS

1.1.1 True 
1.1.2 True 
1.1.3 False 
1.1.4 True  4

1.2 ANALYSIS OF TRANSACTIONS

SOURCE GENERAL LEDGER EQUATION
DOCUMENT Account DR Account CR A O L
1.2.1 Cheque Equipment Bank 0 -1 000 + 1 000
Counterfoil
1.2.2 Duplicate Bank Control  Debtors’ Control - 4 950 0 - 4 950
Receipt
Discount Allowed  Debtors’ Control - 50 - 50 0

1.2.3  Cash Bank Sales 0 +3 200 Check Equity

register roll - 3 200

Cost of sales Trading stock -2 000 - 2 000 0

1.2.4  Cheque Drawings Bank 0  - 650  + 650

Counterfoil
 Journal  Drawings Trading Stock  - 950  - 950 0
Voucher
1.2.5 * Duplicate Creditors’ control Trading Stock  - 460 0  - 460
debit note
Alternative allocation of marks for the transactions A OE L
allocated method marks 0
+3 200 - 3 200

(39)
*Or: Original Credit note

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 ACCOUNTING
MEMORANDUM PAPER 1 GRADE 10

QUESTION 2: INCOME STATEMENT

INCOME STATEMENT OF VEELEE COLLECTIONS FOR THE YEAR ENDED

31 DECEMBER 2020

Sales (400 380– 1 980) 398 400

Cost of Sales  (240 000)

Gross Profit Check operations 4 158 400

Other Operating Income: Check operations 39 200

Rent income (20 800 – 1 600) 19 200

Commission income (19 000 + 1 000) 20 000

Gross Operating income 197 600

Operating Expenses Check operations 7  (140 790)

Wages & salaries 65 000

Telephone 4 050

Donations 4 000

Water & electricity (4 950 + 450) 5 400

Advertising (5 900– 700) One part correct 5 200

Insurance (3 890 – 800) 3 090

Vehicle repairs (3 300 + 11 800) 15 100

Stationery (4 520 – 950) 3 570

Packing material (2 110 – 340) 1 770

Trading Stock deficit (6 580 – 670 – 4 300) 1 610

Depreciation (20 000 + 12 000) One part correct  32 000

Operating Profit Check operations 25 56 810

Interest Income (2 000 + 2 000) 4 000

Profit before interest expense Check operations 60 810

Interest Expense  (15 000)

Net Profit/loss for the year Check operations 6  45 810

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 ACCOUNTING
MEMORANDUM PAPER 1 GRADE 10

QUESTION 3: BALANCE SHEET AND ETHICS

3.1 NOTE: TRADE AND OTHER PAYABLES

Creditors’ control ( 38 500 + 650 ) 39 150 

Accrued expenses 4 200 
Income received in advance 3 600 
Creditors for salaries 12 300 
SARS: PAYE 5 300 
Unemployment Insurance Fund (UIF) 4 800 
69 350  8

3.2 EGOLI SUPPLIERS

EQUITY AND LIABILITIES ON 30 JUNE 2020

EQUITY AND LIABILITIES

Owners’ Equity one part correct  594 000
(409 000 + 80 000 + 245 000 – 140 000)
NON-CURRENT LIABILITIES 340 000
Mortgage loan: Bank of South Africa
400 000 – 60 000 one part correct  340 000

CURRENT LIABILITIES Operation  130 850

Trade and other payables
see 3.1 69 350 
one part correct

Bank overdraft (3 200 – 1 700)  1 500

Current portion of loan/Short term loan  60 000

TOTAL EQUITY AND LIABILITIES Operation  1 064 850 13

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 ACCOUNTING
MEMORANDUM PAPER 1 GRADE 10

3.3 ETHICS
3.3.1 What advice would you give to Wendy? Provide TWO points.
Any two valid points   Part-marks for incomplete responses

 Approach Human Resource (HR) Department to sort out the problem.

 Refer the matter to the nearest Department of Labour – they will conduct an
investigation of the business.
 Refer the matter to the nearest SARS branch, the payslips reflecting the UIF
deductions will have to be produced. 4

3.3.2 Explain the action that will be taken against the employer for failing to
pay UIF on behalf of the employee. Provide ONE point.
Any one valid point  Part-marks for incomplete response

 The employer will be expected to pay the money that was not paid over to
SARS for UIF.
 The penalty and the interest will be charged against the employer by SARS
 Fraud – deduction from employees but not paying over to the fund.
2

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 ACCOUNTING
MEMORANDUM PAPER 1 GRADE 10

QUESTION 4: ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS

4.1.1 Gross profit on turnover

55 000  X 100 = 44.4%  One part correct

124 000 1

4.1.2 Gross profit on cost of sales

55 000  x 100 = 79.7%  One part correct

69 000   1

4.1.3 Return on owners’ equity

20 000 x 100 = 9.9% One part correct

 (206 000 + 200 000)
203 000

4.1.4 Current ratio

40 000 : 10 000

(18 000 + 19 000 + 3 000) : 10 000
= 4:1  One part correct

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 ACCOUNTING
MEMORANDUM PAPER 1 GRADE 10

4.1.5 Acid test ratio

22 000: 10 000
(19 000 + 3 000) : 10 000
= 2,2: 1  One part must be correct

4.1.6 Respond to the following questions:

A Comment on the liquidity position of Mabena Shop in 2019. Quote TWO
financial indicators.
 Current ratio increased from 3,6 : 1 in 2018 to 4 : 1 in 2019 Check 4.1.5
 Acid test ratio slightly improved from 2,1 : 1 to 2,2 :1 in 2019 Check 4.1.5
 The business is in a good financial position and is able to meet its short-term
obligations  6
B The business did not maintain its intended mark-up of 100% on the cost
price of goods sold. Explain in TWO points why the intended results
were not achieved.
Any two valid points  
 Goods could have been marked up incorrectly
 The business could have allowed too much discount
 Stock shortages might have affected the sales figures
 Shrinkage in stock resulting from poor controls 4
C Give TWO reasons and explain why trading stock is subtracted to
calculate the Acid test ratio.
Any two valid reasons  
 Stock is less liquid
 It is difficult to convert trading stock into cash within a short period of time 4
D Should Mabena be happy with the return on her investment? Explain
and quote relevant financial indicators.
Yes
Return on owner’s equity has improved from 7.8% to 9.9%, or by 2.1%. Check 4.1.3
The return on owners’ equity is above the 7% interest on alternative investment.  4

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TOTAL: 150