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Gr 12 AccountingCollectable marks Answer bookACCOUNTINGCOLLECTABLE MARKSMATERIALGRADE 12ANSWER BOOKNorth West
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 11.11.1.11.1.21.1.31.1.41.2AUDIT REPORT1.2.1To whom is the audit report addressed?411.2.2Who has to ensure that the financial statements are prepared andpresented at the annual general meeting?11.2.3Fralezi Ltd received a/an (qualified/unqualified/disclaimer of opinion)audit report.Explain your choice.21.2.4Explain why the independent auditors referred to pages 11–29 in thereport.2
Gr 12 Accounting1.3Collectable marks Answer bookNorth WestFRALEZI LTDINCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2016SalesCost of salesGross profitOther incomeOperating expensesDirectors' feesSalaries and wagesSundry expensesOperating profitInterest incomeProfit before interest expenseInterest expenseNet profit before taxIncome tax for the yearNet profit after tax504 000TOTAL MARKS6070
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 22.12.1.12.1.22.1.32.1.42.2.14TEMBISO LTDINCOME STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2018SalesCost of sales(4 856 000)Gross profitOther operating income879 440Gross incomeOperating expensesSalaries and wages501 200Operating profitInterest incomeNet profit before interest expenseInterest expenseNet profit before taxIncome taxNet profit after tax959 40028
Gr 12 Accounting2.2.2Collectable marks Answer bookNorth WestORDINARY SHARE CAPITALAUTHORISED SHARE CAPITAL1 600 000 ordinary sharesISSUED SHARE CAPITAL1 480 000 Ordinary shares on 28 February 20188 816 0007RETAINED INCOMEBalance on 1 March 2017376 600Ordinary share dividends2Balance on 28 February 20182.2.37EQUITY AND LIABILITIES SECTION OF THE BALANCE SHEETSHAREHOLDERS' EQUITYOrdinary share capital8 816 000Retained incomeNON-CURRENT LIABILITIESCURRENT LIABILITIESTrade and other payablesTOTAL SHAREHOLDERS' EQUITY AND LIABILITIES16
Gr 12 Accounting2.3Collectable marks Answer bookNorth WestAUDIT REPORT2.3.1Point 1Opinion1Point 2IFRS and Companies Act2Point 3Independent22.3.2Point 4TWO examples of ethical responsibilities:Example 1:Example 2:4Point 5TWO examples of audit evidence:Example 1:Example 2:4TOTAL MARKS75
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 33.1 (a) Calculate the carrying value of Land and Buildings on 1 March 2016.2(b) Calculate the total depreciation on Vehicles on 28 February 2017.6(c) Calculate the carrying value of Vehicles on 28 February 2017.4(d) Calculate the carrying value of Equipment sold on 31 December 2016.6(e) Calculate the total carrying value of Fixed Assets on 28 February 2017.4
Gr 12 Accounting3.2Collectable marks Answer bookNorth WestBALANCE SHEET OF ODETTE LTD ON 28 FEBRUARY 2017ASSETS NON-CURRENT ASSETSCURRENT ASSETSInventory408 880Trade and other receivablesCash and cash equivalentsTOTAL ASSETSEQUITY AND LIABILITIESSHAREHOLDERS' EQUITYOrdinary share capitalRetained income520 000NON-CURRENT LIABILITIESCURRENT LIABILITIES TOTAL EQUITY AND LIABILITIES37
Gr 12 Accounting3.3Collectable marks Answer bookNorth WestAUDIT REPORTAs a shareholder, what concerns would you have regarding this auditreport? Explain THREE points.Point 1:Point 2:Point 3:6TOTAL MARKS65
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 44.1CONCEPTS4.1.14.1.24.1.34.1.444.2PHAMBILI LIMITED4.2.1Prepare the following notes for the financial year ended 28 February 2019.(a)Ordinary share capital11(b)Retained incomeBalance at the beginning of the year355 500Ordinary share dividendsBalance at the end of the year11
Gr 12 Accounting4.2.2Collectable marks Answer bookNorth WestComplete the Balance Sheet (Statement of Financial Position) on28 February 2019. Where notes are not required, show ALL workings.BALANCE SHEET ON 28 FEBRUARY 2019ASSETSNON-CURRENT ASSETSCURRENT ASSETS1 400 200Cash and cash equivalentsTOTAL ASSETSEQUITY AND LIABILITIESORDINARY SHAREHOLDERS' EQUITYOrdinary share capitalNON-CURRENT LIABILITIESLoanCURRENT LIABILITIES1 208 000Trade and other payablesTOTAL EQUITY AND LIABILITIES7 920 000 29
Gr 12 AccountingCollectable marks Answer bookNorth West4.3 AUDITING4.3.1Explain why the shareholders would be satisfied with this auditreport. 24.3.2Tello Motloung, the managing director, has informed the auditorsthat he intends to buy the unissued shares for himself withoutinforming the other shareholders. What advice should theauditors give to Tello? Explain. 24.3.3Explain why the auditors found it necessary to stipulate the pagenumbers in the report. 24.3.4Explain TWO major consequences for Mxo and Frank should theybe negligent in performing their duties. 4
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 55.15.1.15.1.25.1.35.1.45.2.14ORDINARY SHARE CAPITAL:AUTHORISED SHARE CAPITAL1 500 000 ordinary sharesISSUED SHARE CAPITAL900 000 Ordinary shares on 1 July 20159 180 0007RETAINED INCOME:Balance on 1 July 2015360 000Net profit after tax444 500Balance on 30 June 20169
Gr 12 Accounting5.2.2Collectable marks Answer bookNorth WestCalculate the change in loan for the Cash Flow Statement.2Calculate the income tax paid for the Cash Flow Statement.45.2.3Net change in cash and cash equivalents45.2.4Calculate the acid-test ratio on 30 June 2016.4Calculate the debt-equity ratio on 30 June 2016.3Calculate the % return on average shareholders' equity (ROSHE)for theyear ended 30 June 2016.5Calculate the net asset value per share (NAV) on 30 June 2016.3
Gr 12 Accounting5.2.5Collectable marks Answer bookNorth WestThe liquidity of the company has improved. Quote THREE financialindicators to support this statement. Provide figures and trends.65.2.6Provide calculations to show the change in the dividend pay-out policy.4Explain why the directors decided to change the policy. State ONE pointwith figures.2
Gr 12 Accounting5.2.7Collectable marks Answer bookNorth West(a) Calculate Mary's % shareholding on 1 October 2015 after therepurchase of shares.4(b) Explain how Mary has benefitted from the decision to repurchasethe shares.2(c) The independent auditor discovered that Mary had made thedecision to repurchase the shares without informing the board ofdirectors. Why should the independent auditor be concerned aboutthis?25.2.8The Cash Flow Statement reflected fixed assets purchased to theamount of R4,5 million.Major sources offunding with figures(over R1 000 000 each)Good/BaddecisionExplanation withfinancial indicators/figureSource 1:Source 2:10TOTAL MARKS75
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 66.16.1.16.1.26.1.36.1.446.2SO-FINE LTD6.2.1ORDINARY SHARE CAPITALAUTHORISED SHARE CAPITAL1 200 000 ordinary sharesISSUED SHARE CAPITAL900 000Ordinary shares on 1 September 2016Ordinary shares on 31 August 20175 292 0007RETAINED INCOMEBalance on 1 September 2016147 370Net profit after income tax438 130Ordinary share dividends Balance on 31 August 20179
Gr 12 Accounting6.2.2Collectable marks Answer bookNorth WestSO-FINE LTDCASH FLOW STATEMENT FOR THE YEAR ENDED 31 AUGUST 2017CASH FLOWS FROM OPERATING ACTIVITIESCash generated from operationsInterest paidDividends paidIncome tax paid?CASH FLOWS FROM INVESTING ACTIVITIESPurchases of fixed assets?Change in investmentsCASH FLOWS FROM FINANCING ACTIVITIES?Change in non-current liabilities6.2.3Net change in cash and cash equivalents?Cash and cash equivalents – opening balance?Cash and cash equivalents – closing balance?19Calculate the percentage operating profit on sales.3Calculate the debt-equity ratio.46.2.4Calculate the dividends per share (DPS) of a shareholder who ownedthe same number of shares for the entire financial period.4
Gr 12 Accounting6.36.3.1Collectable marks Answer bookNorth WestCASTRO LTDComment on the price of R9,10 charged by Castro Ltd for the newshares issued.36.3.2Explain how the issue of new shares has affected the financial gearingand risk of Castro Ltd. Quote TWO financial indicators.66.3.3If Henry wanted to retain his 60% shareholding in the company, howmany shares would he have had to buy?3How much would he have had to pay?2Henry decided NOT to buy these shares. Apart from the% shareholding, explain TWO reasons why he has made a mistake bynot taking up this option.Reason 1:Reason 2:6
Gr 12 Accounting6.3.4Collectable marks Answer bookNorth WestRONKI LTDComment on the liquidity of Ronki Ltd. Quote TWO financialindicators.66.3.5Comment on the price paid by Ronki Ltd for the repurchase (buy-back)of shares.36.3.6Explain THREE ways in which Henry has benefited from therepurchase of the shares by Ronki Ltd.Point 1:Point 2:Point 3:6TOTAL MARKS85
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 77.17.1.1CALCULATION OF FINANCIAL INDICATORS FOR 2018Calculate: % operating expenses on salesWorkingsAnswer27.1.2Calculate: Acid-test ratioWorkingsAnswer47.1.3Calculate: % return on shareholders' equityWorkingsAnswer47.27.2.1FIGURES FOR 2018 CASH FLOW STATEMENTCalculate: Change in investmentsWorkingsAnswer27.2.2Calculate: Income tax paidWorkingsAnswer47.2.3Calculate: Fixed assets sold (at carrying value)WorkingsAnswer5
Gr 12 AccountingCollectable marks Answer bookNorth West7.3EXPLANATIONS ON CASH FLOW STATEMENT7.3.1Explain why the directors are satisfied with the improvement in cash andcash equivalents since 1 July 2016.Quote figures.37.3.2Identify THREE decisions that the directors made to pay for land andbuildings.Decision 1(with figures)Decision 2(with figures)Decision 3(with figures)6Explain how these decisions affected the capital employed in the 2018financial year. Quote figures.Explain how these decisions affected the financial gearing in the 2018financial year. Quote TWO indicators and their figures.67.3.3From the Cash Flow Statement identify ONE decision made by thedirectors in 2017 that they did NOT make in 2018, besides the pointsmentioned above. Give a possible reason for the decision in 2017.Decision (with figures)Possible reason3
Gr 12 AccountingCollectable marks Answer bookNorth West7.4DIVIDENDS, RETURNS AND SHAREHOLDING7.4.1Calculate: Total interim dividends paid for the 2018 financial yearWorkingsAnswerCalculate: Interim dividends per share for the 2018 financial yearWorkingsAnswer67.4.2Calculate total dividends earned by DuduMkhize for the 2018 financialyear.WorkingsAnswer57.4.3Calculate the minimum number of additional shares that Dudu shouldhave bought.WorkingsAnswer3
Gr 12 Accounting7.5.1Collectable marks Answer bookNorth WestExplain why it was necessary to purchase properties in other provincesinstead of in KZN.2Explain whether the decision to purchase these properties had thedesired effect on sales. Quote figures.3Explain another strategy they used to solve the problem of low sales.Quote figures.37.5.2Give advice on what Ben Palo should say about the following topics:Advice on what to say on earnings per share:3Advice on what to say on % return earned:3Advice on what to say on share price on the JSE:3TOTAL MARKS70
Gr 12 AccountingCollectable marks Answer bookNorth WestINVENTORIESQUESTION 11.1INVENTORY VALUATION1.1.1Explain the FIFO valuation method.Explain the specific identification valuation method.41.1.2Calculate the cost price per laptop on hand on 1 October 2015.21.1.3Calculate the value of the closing stock on 30 September 2016.9
Gr 12 Accounting1.21.2.1Collectable marks Answer bookNorth WestMANAGEMENT OF INVENTORIESWhat decision did Kyle take regarding the selling price of the desks?Provide figures.2How has this decision affected the business? State TWO points.Provide figures.41.2.2Was it a good idea for Kyle to change to a cheaper supplier of chairs?YES/NO:Explain TWO points. Provide figures.51.2.3Based on the information given, provide TWO separate suggestions toKyle to improve the profit on printers in 2017.Suggestion 1 (with figures):Suggestion 2 (with figures):4TOTAL MARKS30
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 22.1CONCEPTS2.1.12.1.22.1.32.1.42.24HOT-WHEELS (PTY) LTDMotorbikes:2.2.1Calculate the value of the closing stock on 30 September 2017usingthespecific identification method.72.2.2Mike requires your advice on the three different models of motorbikes inwhich he is trading. Explain TWO points of advice.Point 1:Point 2:4
Gr 12 AccountingCollectable marks Answer bookNorth WestHelmets:2.2.3Calculate the value of the closing stock on 30 September 2017usingthe weighted-average method.92.2.4Is the weighted-average method appropriate to value the helmets?Explain ONE point.32.2.5Mike suspects that helmets are being stolen from the shop despitesecurity cameras being installed. Provide a calculation to verify hissuspicion.5What can Mike do to improve the internal control of stock?State THREE points.Point 1:Point 2:Point 3:335
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 33.13.1.13.1.23.1.33.1.443.2PACKER'S SUITCASE SHOP3.2.1Calculate the value of the closing stock on 30 June 2018 using the firstin-first-out method.WorkingsAnswer53.2.2Charles suspects that suitcases have been stolen. Provide a calculationto support his concern.WorkingsAnswer53.2.3Charles is concerned about the volume of stock on hand.Calculate for how long his closing stock is expected to last.WorkingsAnswer6ONE problem with keeping too much stock on hand:ONE problem with keeping insufficient stock on hand:4
Gr 12 AccountingCollectable marks Answer book3.33.3.1WORKINGSNorth WestMINDEW LIMITEDANSWER(i)(ii)(iii)(iv)(v)173.3.2Explain how the internal auditor should check that movable fixed assetswere not stolen.23.3.3As an independent auditor, what advice would you give? Provide ONEpoint.2TOTAL MARKS45
Gr 12 AccountingCollectable marks Answer bookNorth WestMANUFACTURINGQUESTION 11.11.1.11.1.21.1.31.1.41.2.14Calculate direct labour cost.8Calculate direct material cost.61.2.2Production Cost Statement for the year ended 29 February 2016:Prime costCost of production of finished goods8
Gr 12 Accounting1.2.3Collectable marks Answer bookNorth WestCalculate the break-even point for 2016.5Explain whether the owner should be concerned or not. Providefigures.31.2.4The owner is not satisfied with the internal control of the rawmaterial (fabric).STOREROOM:Raw material stolenFACTORY:Raw material wastedCALCULATION:metres of fabricSTRATEGY1145
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 22.1GEVEN MANUFACTURERS2.1.1PRODUCTION COST STATEMENTFOR THE YEAR ENDED 28 FEBRUARY 2017Direct material costDirect labour costPrime costFactory overhead costTotal cost of production142.1.2ABRIDGED INCOME STATEMENTFOR YEAR ENDED 28 FEBRUARY 2017SalesCost of salesGross profitAdministration costSelling and distribution costNet profit14
Gr 12 AccountingCollectable marks Answer bookNorth West2.2GYMWEAR MANUFACTURERS2.2.1Shirts:Calculate the break-even point for shirts.4Identify ONE variable cost (with figures) that has not been wellcontrolled. Give TWO possible reasons for this problem.ONE VARIABLE COSTWITH FIGURESREASONSReason 1:Reason 2:4Explain why Jan might be concerned about the large decreases in theother TWO variable costs.4Jan does not understand why the unit cost of production has increasedwhen neither his fixed costs nor the variable costs have increased.Explain why this is so. State ONE point (with figures).4
Gr 12 Accounting2.2.2Collectable marks Answer bookNorth WestShoes:Calculate the % increase in the selling price of shoes.3Jan decided to improve the quality of the shoes and to export them.Explain how the direct material costs and the selling and distributioncosts were affected by this decision. Provide figures.4Jan was concerned that the increase in price would have a negativeimpact on the business. Explain whether his concern was justified. StateTWO points.Point 1:Point 2:4TOTAL MARKS55
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 33.13.1.13.1.23.1.33.23.2.13KRIGE SHIRTSCalculate direct labour cost.93.2.2PRODUCTION31 JULY 2018COSTSTATEMENTDirect material costFORTHEYEARENDED528 300Prime costTotal production costWork-in-progress (1 August 2017)Cost of production of finished goods12
Gr 12 AccountingCollectable marks Answer bookNorth West3.3GEMMA'S MANUFACTURERS3.3.1Calculate the break-even point for the year ended 31 August 2018.53.3.2Compare and comment on the break-even point and the productionlevel achieved over the last two years. Quote figures.63.3.3Give TWO reasons for the increase in direct material cost. Suggest ONEway to control this cost.REASONS:SUGGESTION:5TOTAL MARKS40
Gr 12 AccountingCollectable marks Answer bookNorth WestRECONCILIATIONS AND VATQUESTION 11.1.1Simply Traders have the telephone numbers of all their debtors. Whatother information should they obtain before allowing customers to openaccounts? State TWO points with a reason in EACH case. Information to beobtainedReasonPoint 1Point 241.1.2Calculate the correct closing balance of the Debtors' Control Account on31 October 2016.6Calculate the correct amounts owing by debtors.CalculationsJ Ramsay (D2)37 500W Smith (D3)19 500C Prince (D5)3 900Balance12
Gr 12 Accounting1.1.3Collectable marks Answer bookNorth WestCalculate the percentage of debtors complying with the credit terms. 4Explain TWO measures to improve the collection from debtors.41.2Calculate the amount receivable from or payable to SARS for VAT on31 August 2016.Receivable/Payable:10TOTAL MARKS40
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 22.12.1.12.1.22.1.332.2.1Calculation of CRJ totalCalculation of CPJ total90 50085 920Bank account balance:142.2.2Bank Reconciliation Statement on 30 June 20179
Gr 12 Accounting2.2.3Collectable marks Answer bookNorth WestExplain the problem relating to deposits. Quote evidence.Explain TWO strategies to prevent this in future.Strategy 1:Strategy 2:4TOTAL MARKS30
Gr 12 AccountingQUESTION 33.1VAT3.1.1Collectable marks Answer bookWORKINGSNorth WestANSWER(a)(b)(c)(d)3.1.210You are the internal auditor. The sole owner, Samson, used a businesscheque to buy a new car for R460 000 including VAT. This car is kept athome for his wife's use. Samson says the vehicle must be recorded as abusiness asset and R60 000 must be recorded as a VAT input in thebusiness' books.Explain what you would say to Samson. Provide TWO points.Point 1Point 243.2.1CREDITORS' RECONCILIATIONCREDITORS' LEDGER: ACCOUNTOF MARITI SUPPLIERSBalance147 820STATEMENT OFACCOUNT145 060(a)(b)(c)(d)(e)(f)13
Gr 12 Accounting3.2.2Collectable marks Answer bookNorth WestThe internal auditor insists that direct payments (EFTs) must be used topay suppliers.Explain ONE reason to support his decision.2Explain ONE internal procedure to ensure control over this system.23.2.3Besides dismissing Vernon, provide ONE suggestion for action to betaken against him.Provide ONE suggestion to prevent this problem in future.4TOTAL MARKS35
Gr 12 AccountingCollectable marks Answer bookNorth WestBUDGETSQUESTION 11.1.1TWO items recorded incorrectly in the Cash Budget:21.1.2TWO items in the Cash Budget that would NOT appear in a ProjectedIncome Statement:21.2DEBTORS' COLLECTION SCHEDULEMONTHSCREDIT SALESSEPTEMBERJuly120 0008 400August151 20060 480September172 80086 400OCTOBEROctober155 2801.3AMOUNTS FOR THE CASH BUDGETWORKINGS(a) Cash sales for September(b)Payments to creditors for October(c)Directors' fees for October(d)Interest on loan for October9AMOUNT18
Gr 12 Accounting1.4.1Collectable marks Answer bookNorth WestThe directors changed the method of payment to the salespersons.Explain how this has benefitted the salespersons. Quote figures.Explain how this has benefitted the business. Quote figures.41.4.2The directors are not concerned about the overspending on packingmaterial. Explain why this is so. Quote figures or calculations.5TOTAL MARKS40
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 22.1Explain the main purpose of a Cash Budget.Explain the main purpose of a Projected Income Statement.22.2.1Larry expects debtors to settle accounts by the end of the monthfollowing the sales transaction month.Use the November figures to calculate the % of debtors that areexpected to comply with the credit terms.Use the November figures to calculate the % of bad debts expected.92.2.2Larry does not believe that his debtors' control clerk, Shirley, deservesa bonus on 31 October 2017.Provide evidence to support his opinion.Offer Larry advice to improve debtors' collections (TWO points).Point 1:Point 2:4
Gr 12 Accounting2.3.1Collectable marks Answer bookNorth WestCalculate the fixed % of sales used by Larry to budget for deliveryexpenses.Calculate the amount of the loan to be repaid on 31 December 2017.62.3.2Refer to variances in Information D. Explain why Larry would feel thatall these variances are problems for his business.COMMENT ON xpenses9TOTAL MARKS30
Gr 12 AccountingCollectable marks Answer bookNorth WestQUESTION 33.1Debtors' Collection Schedule for October 2018MONTHSCREDIT SALESSEP. 2018July369 60081 312August384 400211 420September403 20076 608October420 000OCT. 2018369 34073.2Calculate:(i) Cash sales for SeptemberWorkingsAnswer(ii) Rent income for OctoberWorkingsAnswer(iii) Payments to creditors in OctoberWorkingsAnswer93.3Calculate the % increase in salaries of sales assistants for October 2018.WorkingsAnswer3Explain whether the sales assistants should be satisfied with this increase.2
Gr 12 AccountingCollectable marks Answer bookNorth West3.4Refer to Information E.3.4.1Explain the effect of the new competitor on any TWO items in the budget forSeptember. Provide figures.43.4.2Identify TWO changes Donald implemented in October in response to the newcompetitor. Quote figures. Give ONE reason for EACH change.Item (with figures)Possible reason63.4.3Explain why Donald feels that his decisions were successful. Provide TWOpoints (with figures).Point 1Point 24TOTAL MARKS35
Gr 12 Accounting Collectable marks Answer book North West 5.2.7 (a) Calculate Mary's % shareholding on 1 October 2015 after the repurchase of shares.
