GR11 Accounting Practice Exam Memorandum June Paper 1 PDF

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examination (Paper 1)
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i
Grade 11 JUNE Time: 2 hours
EXAMINATION
PAPER 1 MEMORANDUM Marks: 150
QUESTION 1 [56 marks; 45 minutes]

GAAP PRINCIPLES AND STATEMENT OF COMPREHENSIVE
INCOME (INCOME STATEMENT) OF A PARTNERSHIP
1.1 Match Column B with the description in Column A
1.1.1 1.1.2 1.1.3 1.1.4 1.1.5

Column B C D E A B
1.2
SS Stationers
Statement of comprehensive income (Income Statement) for the year ended 30 June 2018
Sales (1568 200 – 5640 – 1392) 1 561 168
Cost of sales (976 600 – 870) (975 730)
Gross profit () 585 438
Other income () 65 650
Discount received  5 440
Rent income (63 600 – 5 200) 58 400
Bad debts recovered (1 060 + 670) 1 730
Provision for bad debts – adjustment () 80
Gross operating income 651 088
Operating expenses () (446 456)
Discount allowed  6 870
Bad debts  10 460
Salaries and wages (321 000 + 5 800) 326 800
UIF contribution (3 210 + 58) 3 268
Insurance  10 712
Packing material (3 788 – 1 030) 2 758
Stationery (2 476+1 020 – 540) 2 956
Water and electricity  17 414
Telephone (16 213 + 988)  17 201
Sundry expenses  30 147
Loss due to rain  800
Trading stock deficit [(114 600 – 6 000 +870 -1 020) – 106 230] 2 220
Depreciation (10 080 + 4 770) 14 850
Operating profit () 204 632
Interest income (32 133 – 30 000) 2 133
Net profit for the year () 206 765
51
1
STATEMENT OF FINANCIAL POSITION (BALANCE SHEET)
OF A PARTNERSHIP
2.1.1 Trade and other receivables
Trade debtors  54 300
Provision for bad debts   (2 172)
Net trade debtors  52 128
Creditors for salaries   4 000
Prepaid expenses   4 100
60 228
2.1.2 Current accounts

Anderson Dale Total
Net profit as per Income Statement ()256 000 ()270 000 526 000
Salaries 180 000 204 000 384 000
Bonus to partners 12 000 12 000
Interest on capital 55 000 40 000 95 000
Primary distribution 235 000 256 000 491 000
Final distribution ()21 000 ()14 000 ()35 000
Drawings for the year  (227 040)  (274 010) (501 050)
Retained income for the year 28 960 (4 010) 24 950
Balance at the beginning of the year () 2 340 () 1 020 3 360
Balance at the end of the year 31 300  (2 990) 28 310
23
Calculations
Anderson
500 000 × 10% × 6 = 25 000
12 55 000
600 000 × 10% × 6 = 30 000
12
Dale
400 000 × 10% = 40 000
2
2.1.3 Trade and other payables
Trade creditors  75 208
Medical Aid  4 600
SARS (PAYE)  13 400
UIF  3 650
Accrued expenses   7 800
Income received in advance   3 700
108 358
2.2 Statement of financial position (Balance Sheet) on 28 February 2018

ASSETS
Non-current assets () 1 589 500
Fixed assets (1 200 000 + 365 500)  1 565 500
Financial assets (50 000 – 26 000)  24 000
Current assets () 222 468
Inventory (112 460 + 2 140)  114 600
Trade and other receivables  60 228
Cash and cash equivalents (18 640 + 3 000+ 26 000)  47 640
TOTAL ASSETS 1 811 968
EQUITY AND LIABILITIES

Owner’s equity () 1 028 310
Capital  1 000 000
Current accounts () 28 310
Non-current liabilities 643 300
Mortgage loan: XY Bank (675 300 – 32 000)  643 300
Current liabilities () 140 358
Trade and other receivables () 108 358
Short-term loan  32 000
TOTAL EQUITY AND LIABILITIES 1 811 968
27
3
INTERPRETATION OF FINANCIAL STATEMENTS
3.1 Choose the concept that answers the questions.
3.1.1 Gearing 
3.1.2 Operating efficiency 
3.1.3 Liquidity 
3.1.4 Return on equity 
3.2 Calculate financial indicators

a) Acid-test ratio
430 560 – 357 660 : 201 150
= 72 900: 201 150
= 0,36:1
b) Debt : Equity
380 000 : 496 610
= 0,77 : 1
c) Percentage return on average partners’ equity

505 160 100
1 ×
2 (496 610 + 273 500) 1
= 131%
Comment on the liquidity position of the business for 2018. Quote

3.3
financial indicators to support your answer. State TWO points.  × 2
The current ratio decreased from 2, 2 : 1 to 2,1 : 1 and the acid-test ratio decreased from
0,7 : 1 to 0,36 : 1 in 2018.
Stock turnover rate decreased from 12, 2 to eight times, due to an increase in the stock on
hand.
Debtors’ collection period is good – improved from 36 to 34 days.
The business might experience liquidity problems due to too much stock on hand – they
should sell excess stock
4
3.4 Discuss each option of finance and your opinion about it. Quote figures to
support your answer. Make a conclusion and advise the partners on how
they should finance the expansions.
a) Conclusion – partners contribute half on the money needed and they get aloan for
the other half 
Contribute capital themselves – this is the best option as the partners are earning a
good return on their investment – 131% 
To take out a loan – this is not such a good option – the debt equity ratio is 0,77:1 –
a loan increase would make them high geared 
Take in a third partner – they could do that, but then they have to divide profit
b) in three 

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Study & Master

Support Pack | Grade 11

This revision pack for Accounting Grade 11 provides support

Brighter Thinking | Better Learning

QUESTION 1 [56 marks; 45 minutes]

1.1.1 1.1.2 1.1.3 1.1.4 1.1.5

Trade debtors  54 300

Provision for bad debts   (2 172)

Net trade debtors  52 128

Creditors for salaries   4 000

Prepaid expenses   4 100

2.1.2 Current accounts

Salaries 180 000 204 000 384 000

Bonus to partners 12 000 12 000

Interest on capital 55 000 40 000 95 000

Primary distribution 235 000 256 000 491 000

Final distribution ()21 000 ()14 000 ()35 000

Retained income for the year 28 960 (4 010) 24 950

Balance at the end of the year 31 300  (2 990) 28 310

Trade creditors  75 208

Medical Aid  4 600

SARS (PAYE)  13 400

Accrued expenses   7 800

Income received in advance   3 700

2.2 Statement of financial position (Balance Sheet) on 28 February 2018

EQUITY AND LIABILITIES

3.1.2 Operating efficiency 

3.1.4 Return on equity 

3.2 Calculate financial indicators

c) Percentage return on average partners’ equity

Comment on the liquidity position of the business for 2018. Quote

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QUESTION 1 [56 marks; 45 minutes]