Grade 11 · CAPS

Grade 11 Accounting Concepts and GAAP

Accounting practice questions and a worked example

Grade 11 Accounting questions on concepts and GAAP ask you to match principles such as matching, materiality, business entity and going concern to their descriptions, fill in missing terms, show the effect of a transaction on the accounting equation, and name the principle a partner has broken. They come from the Eastern Cape Department of Education’s Grade 11 November papers for 2023, 2024 and 2025, each with the answer from the marking guideline.

Worked example

QUESTION 4: BUSINESS ETHICS AND GAAP PRINCIPLES Jose and Roman are partners in the business called Joeman Traders. They started their business three years ago which sells and repairs laptops. They agreed and drafted business ethics and a code of conduct that should be followed by all members. Roman has recently got into a business deal with a new supplier from North West who promised to get him better deals on laptops and consumables provided he agrees to some terms and conditions. Terms and conditions included the following: The business must agree to order goods at no less than R100 000 each month but only 50% of this must be recorded in business books. The rest will be sold and the proceeds will be split between Roman and the supplier. Roman will also get an incentive of R10 000 each month from the supplier. Roman also took a laptop for his daughter but he did not record this transaction in the books of the business, and did not tell his partner Jose about it. 4.2 Which GAAP principle did Roman contravene when he took a laptop from the business, but did not record this transaction? Briefly explain this principle to support your answer.

Answer & explanation

Business entity rule: Business affairs should be kept or recorded separately from the financial affairs of the owners / When goods or cash are taken by the owner for personal use, these should be recorded as drawings in the books of the business.
1. The business entity rule is a GAAP principle that requires the business's financial transactions to be kept separate from the personal transactions of its owners. 2. When Roman took a laptop for his daughter without recording it, he mixed personal and business affairs, violating this principle. 3. The transaction should have been recorded as a drawing, reflecting the owner's personal use of business assets. 4. By not recording the transaction, Roman failed to maintain the integrity of the business's financial records, which is essential for accurate reporting.

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Accounting Concepts and GAAP

Question 1 of 3

QUESTION 1: ACCOUNTING EQUATION AND FIXED ASSET NOTE 1.1 ACCOUNTING EQUATION Indicate the effect on the accounting equation (A = O + L) for the transaction below. Follow the example provided. NOTE: Assume that the bank balance is unfavourable and the perpetual inventory system is in use for all transactions. Example: Purchase trading stock on credit. A: + O: 0 L: + 1.1.1 The account of a debtor who could not be traced, must be written off as irrecoverable.

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Explore additional Grade 11 Accounting Concepts and GAAP questions.

  • 2
    QUESTION 1: ACCOUNTING EQUATION AND FIXED ASSET NOTE 1.1 ACCOUNTING EQUATION Indicate the effect on the accounting equation (A = O + L) for the transaction below. Follow the example provided. NOTE: Assume that the bank balance is unfavourable and the perpetual inventory system is in use for all transactions. Example: Purchase trading stock on credit. A: + O: 0 L: + 1.1.4 The credit balance of a debtor must be transferred to his account in the creditors’ ledger.
  • 3
    QUESTION 2: STATEMENT OF COMPREHENSIVE INCOME 2.1 Choose a GAAP principle from COLUMN B that matches the description in COLUMN A. Which letter matches: 2.1.1 Income and expenses must be recorded in the current financial year?
  • 4
    QUESTION 2: STATEMENT OF COMPREHENSIVE INCOME 2.1 Choose a GAAP principle from COLUMN B that matches the description in COLUMN A. Which letter matches: 2.1.2 Affairs of the owner of a business must be kept separate from the records of the business?
  • 5
    QUESTION 2: STATEMENT OF COMPREHENSIVE INCOME 2.1 Choose a GAAP principle from COLUMN B that matches the description in COLUMN A. Which letter matches: 2.1.3 Financial information relevant to a reader of financial statements must be disclosed separately?

Common mistakes

  • Mixing up matching and going concern. Recording income and expenses in the current financial year is matching; assuming the business will continue in future is going concern.
  • Missing the business entity rule. A laptop a partner takes for personal use must be recorded as drawings, because business affairs are kept separate from the owners’.
  • Calling the remaining value of an asset its carrying value. The value left after an asset has been fully depreciated is its scrap or residual value.

More Grade 11 Accounting topics

Aligned to CAPS Grade 11 Accounting — Accounting Concepts and GAAP. Curriculum source: CAPS for the FET Phase, Department of Basic Education.

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