Grade 10Control Test-2September 2022

ACCOUNTING

GRADE 10 - CONTROL TEST 2

September, 2022

MARKS: 100

TIME: 60 Minutes

INSTRUCTIONS AND INFORMATION

1. Answer ALL the questions in the specially designed answer book.

2. Show workings in order to achieve part marks.

3. Non-programmable calculators may be used.

4. Try not to deviate from the suggested time.

QUESTION TOPIC MARKS MINUTES

1 Income statement , Balance Sheet 72 40
and notes.
2 Concepts, Financial indicators 28 20
analysis and interpretation
100 60

This question paper consists of 6 pages and a 6-page Answer book.

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Grade 10Control Test-2September 2022

QUESTION 1: INCOME STATEMENT; BALANCE SHEET AND NOTES.

(72 marks, 40 minutes)
HLAHLA TRADERS
REQUIRED:
Refer to information B
1.1 Complete the INCOME STATEMENT (Statement of Comprehensive Income)
for the year ended 30 June 2022. (40)
1.2 Prepare the NOTE for owner’s equity to the Balance Sheet
(Statement of Financial Position) on 30 June 2022 (7)
1.3 Prepare the Equity and Liabilities section for Balance Sheet on 30 June 2022 (11)
INFORMATION:

A. Extract from the Pre-adjustment Trial Balance of Hlahla Traders for

the year ended 30 June 2022

Capital R 1 000 000

Drawings 42 600
Land and buildings 4 000 000
Vehicles 780 000
Equipment 350 000
Accumulated depreciation on vehicles (01/07/2021) 468 000
Accumulated depreciation on equipment (01/07/2021) 105 000
Fixed deposit (8% p.a. interest) 200 000
Trading stock 418 400
Debtors control 280 200
Bank overdraft 124 000
Loan: BM Bank (12% p.a.) 652 000
Creditors control 380 000
Sales 4 350 000
Debtors allowances 18 000
Cost of sales 2 900 000
Rent income 200 700
Bad debts recovered 1 800
Interest in fixed deposit 9 000
Stationery 2 100
Telephone 9 000
Insurance 12 100
Bad debts 3 800
Bank charges 1 200
Consumable stores 4 000

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Grade 10Control Test-2September 2022

B. Additional information and adjustments:

(i) Goods are sold at a profit mark-up of 50% on cost price.

(ii) A credit note for R12 000 was issued to a debtor Sam Mag for merchandise returned by
her, that were totally damaged. No entries were made for this transaction.

(iii) S. Hlahla took stock for her personal use at a cost price, R4 800. This has not been
recorded.

The stock-taking revealed that the following were on hand on 30 June 2022:
 Trading stock, R406 100
 Stationery, R500
 Consumable stores, R800

(iv) The following entries appeared in the June Bank Statement but had not yet been recorded
in the books of the business:
 Bank charges, R1 000,
 A direct deposit by a debtor L. Xulu whose debt had previously been written off as bad,
R1 200.

(v) A debtor, Z Mlombo, has been declared insolvent. He owes R1 500. His insolvent estate
will pay out 60c in the Rand and the balance must be written off as irrecoverable.

(vi) The rent income was increased by R900 on 1 March 2022. The tenant has not yet paid the
rent for June 2022.

(vii) Outstanding interest on fixed deposit must be taken into account. The fixed deposit was
invested on 1 October 2021. Interest on fixed deposit is not capitalised.

(viii) An insurance premium of R5 600 was paid in 1 April 2022 for the period 1 April 2022 to 31
October 2022.

(ix) The loan statement from BM Bank on 30 June 2022 reflects the following:
Balance on 1 July 2021 R665 600
Total payments during the year including interest R103 200
Balance on 28 June 2022 R652 000

 The interest for the year must be capitalised.

 A capital amount of R70 000 will be paid off the loan in the next financial year.

(x) Depreciation for the year amounted to R195 150.

(xi) The telephone account for June 2019, has not been paid, R1 600.

(xii) The owner invested a further R100 000 in the business to increase her capital
contribution. This has been properly recorded.

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Grade 10Control Test-2September 2022
1.4 INTERNAL CONTROL AND ETHICS ON FIXED ASSETS AND INVENTORY

Rogers Mokoena is the owner of Hlahla Traders. The business has two delivery
vehicles. According to the vehicles’ policy of the business, drivers are allowed to
drive the delivery vehicles home especially when the last delivery to customers
finishes late. The policy clearly states that the delivery vehicles must not be
used for private trips.

The owner discovered that one of the delivery vehicles (driven by John) has
travelled 2 000 kilometres more for June 2020 compared to the average
kilometres travelled each month. After an investigation, John confessed that he
used the delivery vehicle to visit his family in Eastern Cape.

1.4.1 Explain how John’s unethical conduct will affect the

business financially. Provide TWO points. (4)

1.4.2 Provide THREE internal control measures that can be

implemented by the owner of the business to avoid any (6)
abuse of delivery vehicles by employees.

1.4.3 Provide TWO steps that can be taken against John for his
unethical conduct. (4)

72

QUESTION 2: INTERPRETATION OF FINANCIAL INFORMATION

(28 marks, 20 minutes)

2.1 Complete the following sentences using the word(s) in the list below. Write only
the word next to the question number (2.1.1 – 2.1.5) in the ANSWER BOOK.

Liquid; profitable; solvent; return; risk/gearing

2.1.1 A business with total assets exceeding total liabilities is….

2.1.2 A business that relies heavily on loans will have high….
2.1.3 a business that controls its income and expenses properly will be….
2.1.4 A business percentage net income on equity indicates the….earned by
the owner.
2.1.5 A business that is able to settle its immediate debts is…. (1x5) (5)

2.2 NOMTHI’S STORES

The information was taken from Nomthi's Stores accounting records on

28 February 2022, the end of the financial year.
REQUIRED:
2.2.1 Calculate the following financial indicators on 28 February 2022:

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Grade 10Control Test-2September 2022
 Operating profit on sales (3)
 Acid test ration (3)
 Return on average owner’s equity (5)
2.2.2 Comment whether or not Nomthi’s business was more or less profitable in
2022 when compared to 2021. Quote a financial indicator. (3)
2.2.3 Comment on the liquidity position of Nomthi’s Stores. Quote TWO
financial indicators. (5)
2.2.4 Explain why the owner should be satisfied with the return on average
owner’s equity. Quote figures. (4)

A. Information from the financial records on 28 February 2022. The target mark-up
is 60% on cost.

Sales R1 200 000

Cost of sales 800 000
Other income 100 000
Operating expenses 200 000
Operating profit 300 000
Net profit 160 000
Trading stock 210 000
Current assets 400 000
Fixed/Tangible assets 2 100 000
Non-Current/Long-term liabilities ?
Owner’s equity (1/03/2021) 400 000
Owner’s equity (28/02/2022) 900 000
Current liabilities 240 000

B. Financial indicators on 28 February:

2022 2021
Current ratio 1,7 : 1 3,5 : 1
Acid-test ratio ? 1,6 : 1
Solvency ratio 1,6 : 1 2,9 : 1
% return on owner’s equity ? 34,2%
% net profit on sales 12,6% 18,3%
% actual mark-up achieved 50% 60%
% operating profit on sales ? 26%
% operating expenses on sales 16,7% 18%

28

TOTAL: 100

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Grade 10Control Test-2September 2022

GRADE 10 ACCOUNTING:
FINANCIAL INDICATOR FORMULA SHEET
Gross x 100 Gross profit x 100 Net profit x 100
profit 1 Cost of 1 Sales 1
Sales sales
Operating expenses x 100 Operating profit x 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 x 100 Total assets: Total liabilities

Owners' equity 1

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