WESTERFORD HIGH SCHOOL GRADE 10 ACCOUNTING EXAMINATION. 26 May 2009

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1 WESTERFORD HIGH SCHOOL GRADE 10 ACCOUNTING EXAMINATION 26 May 2009 : 200 TIME: 2 HOURS Name:... Grade Question Topic 1 Documents, recording, accounting equation & concepts Learner s Mark Mark allocation for question 50 2 Debtors & stock 50 3 General Journal 45 4 Different accounting systems 15 5 Debtors and creditors ledgers 30 6 Code of ethics 10 TOTAL 200

2 QUESTION Date Document Journal Account debited Account credited Amount 1 Receipt CRJ Bank Capital R Effect on equation A O L 1 JV GJ Vehicles Capital R R R R R R R R R R R

3 1.2 Do you agree with Patricia s opinion about documents? Provide a convincing but concise explanation for your opinion. 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 name of the business. (5) 1.4 Explain what is meant by the following: Assets Liabilities Owner s equity (6) 50 3

4 QUESTION 2: DEBTORS: 2.1 According to the general ledger, how much is owed by the debtors at the end of April? 2.2 What is the best way of checking that the amount owed by debtors according to the general ledger is correct? 2.3 What is the value of credit sales for April? 2.4 If the discount allowed to debtors for early payment is R620, how much did the debtors pay during April? 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)? 2.6 Give one possible explanation for the entry of R340 on the debit side. 2.7 Give one possible explanation for the entry of R588 on the credit side. 2.8 Have the debtors generally been settling their accounts on time? Provide figure/s from the ledger account to support your opinion. 2.9 If a debtor proves to be slow in settling his debt, what two points of advice would you provide to Phatedi Traders to solve this problem? 2.10 All new customers opening accounts should be screened by Phatedi Traders. What is meant by screening and why is it important for the business to do this? 4

5 TRADING STOCK: 2.11 According to the general ledger, how much trading stock is on hand at the end of April? 2.12 What is the best way of checking that the amount of stock on hand according to the general ledger is correct? 2.13 What is the value of cash sales for April? 2.14 In your opinion, should this business try to encourage more cash sales than credit sales? Briefly explain your reason. (3) 2.15 How much stock was bought on credit during April? 2.16 What is the main advantage of buying stock on credit? 2.17 Provide the folio reference for the entry of R4 426 on the credit side Should Phatedi Traders be satisfied with the quality of goods they have been receiving from their suppliers? Provide figure/s from the ledger account to support your opinion Provide the contra detail for the entry of R3 360 on the debit side Is Phatedi Traders carrying enough stock to satisfy the needs of its customers for May? Provide figure/s to support your opinion. (3) 50 5

6 QUESTION 3: General Journal of Winter Traders for August 2009 GJ Debtors control Creditors control Day Details Debit Credit Debit Credit Debit Credit 45 6

7 QUESTION 4.1: Briefly explain what is meant by an entrepreneur Briefly explain the difference between indigenous and formal bookkeeping systems. (3) Consider the following statements. Decide which statements would apply to Mary and which would apply to Brenda. Place a tick in the appropriate column/s. Note that some statements could apply to both. (10) She relies on self-management She plans extensively and ensures that budgets are drawn up regularly 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 software package Making a profit is an important objective for her business She keeps journals and ledgers and prepares a trial balance each month She adheres to GAAP There is only one person involved in her business She employs an accountant to prepare her financial statements There are divisions of duties within her business so that one employee serves as a check on another She is concerned about a good relationship with customers MARY Indigenous system BRENDA Formal system 15 7

8 QUESTION 5 Debtors Ledger of Charming Stores Sleek Date Code Details / Document no. fol Debit Credit Balance Creditors Ledger of Charming Stores Smooth Date Code Details / Document no. fol Debit Credit Balance 30 8

9 QUESTION 6 COLUMN A No PRINCIPLE / ETHICS 6.1 Objectivity COLUMN B PRINCIPLE AS PER CONTRACT 6.2 Technical standards 6.3 Confidentiality 6.4 Integrity 6.5 Professional conduct and due care 10 9