CENTENARY SECONDARY SCHOOL
DEPARTMENT OF BUSINESS, COMMERCE AND MANAGEMENT STUDIES
ACCOUNTING : GRADE 10
FOCUS : YEAR END ADJUSTMENTS AND FINAL ACCOUNTS
ACTIVITIES
Question one
1.1 GAAP PRINCIPLES
1.1.1 What does GAAP stand for? (2)
1.1.2 Indicate which of the following GAAP principles would be applied in each case:
materiality going concern business entity
historical cost prudence matching (10)
(a) Items of significance must be reported.
(b) Financial information is always reported conservatively.
(c) Income and expenses must be recorded in the correct financial period.
(d) The financial statements are completed under the assumption that the
business will continue operating in the foreseeable future.
(e) All assets must be reported at its original cost price.
1.2 SOURCE DOCUMENTS:
Source documents are used to record transactions in the subsidiary journals. Below is
a list of transactions in Column A. In Column B are a number of source documents.
Identify which source document will be used to record the transaction in Column A. Write
only the letter (A-E) next to the question number (1.2.1 – 1.2.5) in the ANSWER BOOK. (10)
Column A Column B
Transaction Source document
1.2.1 Goods sold on credit to a customer. A Cheque counterfoil
1.2.2 Bought a computer and paid by cheque. B Duplicate credit note
1.2.3 Cash sales for the week. C Duplicate receipt
1.2.4 Customer returned goods that was not D Original invoice
according to the order placed.
1.2.5 Received rental from tenant for the month. E Duplicate invoice
F Cash register tape
1.2. Give one word/term for each of the following descriptions by choosing a
word/term from the list provided below.
Finance cost Balance Sheet Prudence
Income Statement Going Concern Materiality
Historical Cost
A The profit or loss a business is calculated in the financial document.
B Financial Statements are prepared with the assumption the will continue to
operate in the future.
C Interest on Overdraft, Interest on Loan
D Tangible assets are recorded at the original purchase price and not at current
market value.
E Reflects the net worth of the business.
Question two
Analyse the following transactions of Lemon Traders.
A Goods costing R1 000 were sold on credit to G. Nel for R1 500.
B Purchased equipment from New Concepts on account, R7 550.
C The bank returned A. Jacob’s unpaid cheque of R300. Jacob owed R330 and
paid R300 in full and final settlement. No entries have been made to record
this entry.
D Paid JJ Traders, a creditor, by cheque R3 430. Received a discount of R170.
E Issued a cheque to Q Log for transport of stock purchased, R1 230
F Received R25 000 from Capitec Bank for a fixed deposit that matured. This
amount included interest of R5 000. No entries have been made.
G The owner took goods for personal use, R 1 050.
Answer sheet
No. Account Debit Account Credit A O L
Question three
3.1. State whether the following situations are deemed ethical or unethical?
3.1.1. Selling second hand goods as new.
3.1.2. The owner takes goods for his own use and asks the bookkeeper not to record
the transaction.
3.1.3. Management gives their employees a letter of warning after being rude to a
customer.
3.1.4. The business sells goods to a client; the owner doesn’t put the money in the till
but takes it for his own use.
3.1.5. The owner requested a supplier not to charge him VAT and that he will then
pay him in cash.
3.2. You are required to choose the answer which you feel is most suitable
from the four alternatives given below. Write down the numbers 1.3.1. –
1.3.5. and show the alternative of your choice by indicating the
corresponding letter next to the number. EG. 1.1. E
3.2.1. The financial year of a business starts on 1 March 2011 and ends on 28
February 2012. On 1 July 2011 a new computer was purchased for R 5 800.
Depreciation is calculated at 12% p.a. on the fixed instalment method. On the
28 February 2012, the depreciation to be written off will amount to ………….
A. R 696
B. R 464
C. R 58
D. R 232
3.2.2. The entry to record the abovementioned transaction is made in the ………….
A. Cash Receipts Journal
B. Cash Payments Journal
C. General Journal
D. Subsidiary Journal
3.2.3. In which journal should a dishonoured cheque that we originally received, be
reversed?
A. CJ
B. CRJ
C. GJ
D. CPJ
3.2.4. A cheque received from A Morkel for R 2 500 was correctly entered in the
Cash Receipts Journal but posted to the account of M. Morkel. The error is
rectified as follows :
A. Debit M. Morkel; credit A. Morkel
B. Debit Bank; credit A. Morkel
C. Debit M. Morkel; credit Bank
D. Debit A. Morkel; credit M. Morkel
3.2.5. A part of the building has been let out to a tenant since 1 March 2011. The
total rent received from our tenant amounted to R 54 390 for a period of
eleven months. The rent for the last month (February 2012) of the financial
year had not yet been received. It must be noted that the rental amount had
been increased by 10 % from 1 January 2012. The outstanding rent at the end
of the financial year amounts to …………………..
A. R 5 390
B. R 4 900
C. R 4 533
D. None of the above.
Question four
Use the Trial Balance of Twin Traders on 31 December 2012, provided on the next
page, as well as the adjustments and additional information supplied below, to:
4.1. Determine the adjustment amount
4.2. Identify the two accounts affected and show whether are to be debited or
credited
Adjustments and additional information:
1. A profit mark-up of 66% on cost was maintained throughout the year.
2. Before the physical stock taking was completed, the owner withdrew stock to the
value of R 670. This transaction must still be recorded.
3. According to a physical stock taking, the following were on hand at year-end:
• Trading stock R 4 300
• Stationery R 950
• Packing material R 340
4. A donation of R 400 made in the name of the business, was erroneously
recorded as drawings. Correct the error.
5. An amount of R 11 800, paid for repairs to one of the vehicles was debited to the
Vehicles account instead of the Repairs account. Correct the error.
6. The water and electricity bill of R 450 for December 2012 has been received, but
not yet paid.
7. The amount for insurance includes an amount of R 800 paid in advance for the
next financial year.
8. Advertising includes an amount of R 1 400 for a four month advertising contract.
The contract runs from 1 November 2012 until 28 February 2013.
9. Both the fixed Deposit and the loan were taken out on 1 January 2011. Provide
for any outstanding interest.
10. Depreciation of R 10 000 on equipment and R 20 000 on vehicles has not yet
been taken into account.
11. Rent has been received for 13 months.
12. Commission of R 1 000 is still owing.
TWIN TRADERS
TRIAL BALANCE ON 31 DECEMBER 2012
Balance Sheet Section Debit Credit
Capital 650 000
Drawings 147 460
Land & Buildings 340 000
Vehicles 211 800
Equipment 100 000
Accumulated depreciation on Vehicles 20 000
Accumulated depreciation on Equipment 20 000
Fixed Deposit: Capitec Bank (10%p.a.) 40 000
Trading stock 6 580
Debtors’ Control 12 000
Bank 3 890
Petty cash 1 000
Cash float 550
Loan: Nedbank (19% p.a.) 60 000
Creditors’ Control 18 950
Nominal Accounts Section
Sales 400 380
Cost of Sales 240 000
Debtors’ Allowances 1 980
Wages & salaries 65 000
Telephone 4 050
Water & electricity 4 950
Advertising 5 900
Donations 3 600
Insurance 3 890
Rent income 20 800
Vehicle repairs 3 300
Commission income 19 000
Stationery 4 520
Packing material 2 110
Interest on fixed deposit 2 000
Interest on loan 8 550
1 211 130 1 211 130
