Accounting Grade 12 KZN Prelim 2015 Memo

— Downloaded from hlayiso.com a ) Accounting 2 Preparatory Exam 2014 QUESTION 14 Basic Education 1-1 Indicate whether the following statements are TRUE or FASLE. Write only ‘true’ or KwaZulu-Natal Department of Education ‘false’ next to the question number (i) — (iv) in the answer book. REPUBLIC OF SOUTH AFRICA - @ Falsev i Trev . ACCOUNTING " 4 a (i) Falsev N i . 4 MEMORANDUM x iv) True’ SEPTEMBER 2015 NATIONA L 1.2 Calculate the correct totals for the Cash Receipts Journal and Cash SENIOR CERTIFICAT! Payment Journal for July 2015. GRADE 12 oy : aged MARKS: 300 146 970 . 480007] MARKING PRINCIPLES: KH LE! 1234077 1. Penalties for foreign items are applied only if the candidate is not losing marks elsewhere in the question for 600V~ that item. No double penalty applied. 2 Penalties for placement or poor presentation (@.9. details) are applied only if the candidate is earning marks on 50 000v~~ the figures for that item. 3. Full marks for correct answer. If answer incorrect, mark the workings provided. & fa pre-adjustment figure is shown as the finat figure, award one marks. Not the method mark for the answer. -——_—_—_—_—_—_] 14 5. Unless otherwise indicated, the positive or negative effect of any figure must be considered to award the mark, Ifo + of ~ sign or bracket is provided, assume that the figure is positive. jo 8. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from 14 candidates. 7. This memorandum is not for public distribution, as certain items might imply incorrect treatment, The adjusiments made are due to nuances in certain question. . 161 1407 121 720v 8. Where penaities are applied, the marks for that section of the question cannot be a final negative ce Where method marks are awarded for ‘operation, the marker must inspect the reasonableness of the answer —_—_—_—_——— eel before awarding the mark. 40. {In awarding method marks, ensuré that candidates do not get full marks for any item that is incorrect, 4. Be aware of candidates who provide valid alternatives beyond the marking guideline. 12. Codes: f=foreign item; p=placemen This memorandum consists of 19 pages. Copyright reserved Please tum over

Downloaded from hlayiso.com Accounting 3 Preparatory Exam 2014 Accounting 4 Preparatory Exam 2014 1.3 Prepare the Bank Reconciliation Statement on 31 July 2015. et — QUESTION 2 Debit Credit , 1 Ch ‘thi dis fi ji jiete thi Credit balance as per bank statement” 4a caoe 2. Choose the correct wordis from those given below to compiete the Credit outstanding deposit” 48 000” a“ 7 2.4.1 | Working capital v Debit outstanding cheques” 2.1.2 | Unqualified “ 5 8 700v te 2.4.3 | Finance cost “ . vo *_908 1200: 2.1.4 | Cash and cash equivalents V 4 2 968 3 100% 4 it balance as per bank account” 49 04081 2.2 Asset Disposal Account. a “ Operation Bobi tetabiniskbe Ing sanhe 62 040M) 62 040 Accumulated Depreciation: 2014 | 34 | Vehiclesy Gu | 800 ono | 2014 | 34 | Vehicles” | Gs | 800 000v DEC DEC (750 000 + 1.4 | Explain how cheque No. 908 should be treated when preparing the financial 50 000”) statements as at 31 July 2015 the end of the financial year. Profit on sale of a beset” GJ | 70 000% Banky GJ} 70 000v * Increase bank ¥ and increase creditors’ in the Balance Sheet notes. 2 ‘operation Bo not acces Oritanic-and Cr Crecitgrs cehltols kinkcdet Acco nck tare statement. 2 870 000 870 000 1.5 | Refer to information G. The bookkeeper has decided to.write off the amount of R50 000. = « Which GAAPIIFRS principle will the bookkeeper be applying? «The bookkeeper wants to prevent a similar problem in future. Give TWO 10 suggestions to improve internal control in this regard. E 410 Principle of prudence ~ Solutions: ¥¥ vv 5 Dich acohapeeaton't 48 S99 te anit tb nb nar se yeaa, + Division of duties . rorelati| At each (max 2) + Encourage EFT payments by customers / debtors rs * Allcash received must be deposited daily (deposit slips must tally with receipts issued) + Daily checks to see that deposits are made TOTALMARKS 36 36 Copyright reserved Please tum Copyright reserved Please tum over over ~~

Downloaded from hlayiso.com - Accounting 5 Preparatory Exam 2014 Accounting 6 Preparatory Exam 2014 23 GREY LIMITED 244 INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2015 Sales(7 200 000 — 30 0007 —7 2007 ) [cal 7 162 800 ORDINARY SHARE CAPITAL Cost of sales (4780 000” —4 80077 ) Y (4775 200) AUTHORISED: 9_| Gross profit__ eperation 2.387 600 Number of authorized ordinary shares: 3 000 000 shares . Other operating income operation [=i 157 040 . Bad debts recovered 7 600 ISSUED: Rent income (93 8007 —7 7oovv) [raj 86 100 2 000 000 ordinary shares in issue at the beginning of financial year 5 225 000 Provision for bad debts adjustment vv 340 = ~ : 3 Profit on sale of asset Perey 70 000 250 000W’ additional shares issued during the financial year at an issue 8 Gross operating income 2.544 640 Price of R2,50 per share 625 000Y z Operating Expense speraton | M1 (1349 640) 10 000~’ shares bought back during the financial year at R2607ET "(26 000) Audit fees. 68 000 —— - insurance 748 000 2.240 000” rdinary shares in issue at the end of the financial year § 824 000M Directors fees 470 009 Operations ct Salaries and wages(270 0007 + 10 0067) v 280 000 haan Employer contribution (72 0007 +1 0507247 200%) vv 74 250 Consumable stores. {12 000v —3 000) v 9 000 ‘Sundry expenses operation mesonatie figure 30 090 Loss due to theft (42000 “x 20/80V) [cay 10 500 2.4.2 Trading stock deficit {197 000V + 4 800” — 52 5007 — 144 000 ) 5 300 26 Depreciation (50 000M + 165 0007/7 + 39 500v ) 254 500 RETAINED INCOME Operating profit operaticn 1495 000 Balance at the beginning of the financial year 770 000 Interest Income. v 12006 Funds used for shares buy-back 10 000” x 0,501 (5 000}M Operating profit before interest expense cpus | 1207 000 back ( % (© 000) interest expense v (7.000) Net profit after fax for the year 840 000” Net profit before tax v 4200 000 Dividends (370 000) income tax operation cj (860 000) 42 7 _| Net profit after tax v 840 000) Interim/paid (100 000)” 42 Operation for tial arieorts fot Sepeea a ae MAG NS SOT Finaifrecommended (2250 0007 x 0,42” eReaton iF ct 150 , operation if one part correct (270 000) Cae cence a 8 {tthe pre-acjstment Rule's sown as the final anstverthe relevant mark. iSstitgiven rT “teats seco Se a me heoret mat ern, Hooks momar Balance at the end of the nancist-fear spemtion | 1235 000 ‘Operation if.¢rie'partS correct a TOTALMARKS 85 85 Copyright reserved Please tum Copyright reserved Please tum over over

Downloaded from hlayiso.com Accounting 7 Preparatory Exam 2014 QUESTION 3 3.1.4 | Direct labour cost BOY x BY x AV x SY XD5Y X 127 21 440 000 Overtime ABV x 207 x BOY x BY 7s 000 ‘peration fi 515 000 43, 43 3.1.2 | Factory overheads ‘Sundry expenses 12.000 Depreciation 75 500 Insurance 72.000 Consumable stores (11 000v + 50 000” + 2 00” — 8 C00”) 55 000 Factory foreman (6 000 x 7)” + (8 500x5)¥ (2103 500 Factory cleaner (48% x 800% ) 138 400 Maintenance (8 000M + 3 G00” ) ¥ 41 000 Water and electricity (80 000V )70/100v 56 000 Rent (33 600”) 560/840” ¥22 400 ‘enétaion, | i446 800 21 21 Copyright reserved Please turn over Accounting 8 Preparatory Exam 2014 3.1.3 | Production cost statement for the year ended 28 February 2015. Direct material cost (600 000” + 2 000 000¥ + 18 O00” — 418 000”) 1 2 200 000 Direct labour cost chek ait 2. it 515 000 Prime cost/Direct cost operation 3715 600 Factory overheads check 312 3. 446 600 Total cost of production/total manufacturing costs 4161 800 Work in process at beginning of the year ¥ 80 900 ‘4 242 700 Work in process at the end of the year ‘Spetation. byasketisiessential & (850 700) Cost of production of finished goods M13 392 000 a 1 44 3.2.1] The number of unproductive hours that were caused due to load-shedding. 20 weeks” x 3 days” x 3hrsY x 30 workersY = 5 400 Hours or 9 hours per week x 4 weeks x 5 months x 30 workers = 5 400 Hours The Rand amount lost on direct wages as a result of the load shedding. 5 400 Hours x R25V x= R135 000 4 : 8 3 ~ Please tum Copyright reserved over

Downloaded from hlayiso.com Accounting 9 Preparatory Exam 2014 3.2.2 ] Apart from these unproductive hours, exy may have negatively affected the business. plain TWO other ways in which load shedding Any possible points. “vv profit will be less byf 52 000 X Ri,60) R83 200 * They might lose customers to alternative suppliers because of failing to meet the demand. * Workers have had to be paid extra for overtime worked but still not enough units were produced. . *° Zwide Pampers produced 848 000 instead of 900 000 and is less by 52 000. The estimated Accounting 10 3.3 DIEGO COSTA MANUFACTURING Preparatory Exam 2014 4 a 3.2.3] What advice would you Provide to Robert to counteract the effect of load shedding? Provide TWO points. Any possible points!“ v* * To have a backup system (use of generator). * Work in shifts >_Use oad shedding time for activities that do not need power e.g. meetings, planning. Copyright reserved over Please tum 3.3.1 | Calculate the number of units that Diego Costa Manufacturing needed to produce in order to break even in 2015. ¥452 000. 311, 50.Y — 111, 50.v a = 2.260 units. © opetationitone paris correct z $3.2) Comment on the number of watches they are producing. Quote figures or financial indicators to support your answer. {Refer to 3.2.1) "The business produced 5 000 units. This exceeds the break-even point of 2260 units by 2 740 units. The business is operating at a profit.“ 2 2 TOTALMARKS 67 7 Copyright reserved Please tum over

Downloaded from hlayiso.com Accounting ay QUESTION 4 Preparatory Exam 2014 414 Stock turnover rate 5 625 000M % (670 000 + 580 000~) 5.625 000 625 000 g times] vperaticn one part must beicsrmect Accounting 2 Preparatory Exam 2014 The shareholders are pleased with the return, earnings and dividends: 42 * Quote THREE financial indicators that indicate this. Quote figures and trends to support your comment. Figaneiat indicators (: iguresyandtrend’) Yo vo v Valid explanation beyonditheltrends ¥ < ¥ Comment on shareholders return per share: This has increased from 12% to 13%. Good retum better than alternative investment (Good Day Bank is offering 9% on all investments) Comment on earnings per share: These have increased from 120 cents to 133 cents. This indicates that the profits have increased from the previous year. Comment on dividends per share: These have increased from 20 cents to 34 cents. Shareholders should be satisfied. 4.4.2 % return on total average capital employed 4.3 Calculate the missing figures in the Cash Flow Statement. 1330 000 V+ 185 000V X 100 %(7 850 000" + 1 800 000Y + 6 450 000” + 950 000 “) 1515000 X mitie) 8525 000 1 17,77% oF 17.8% ovstat 4 NO. WORKINGS ANSWER 399 OOO — 18 DUOY — 32 000Y (a) Jor 48 000 ~ 399 000 + 32 000 b) 4326 000” + 380 000 + 140 000 “~~ 1 489 000% ) (3357 000) Copyright reserved over Please tun 5 950 000M + 425 000” — 5 200 000” eee ae at met Or (ce) [100 000" x 11,75vY (d) | 50000" x11 titaronly on’ line sign must be correct Copyright reserved over =~ Please tum

Downloaded from hlayiso.com Accounting 1B Preparatory Exam 2014 44 The directors decided to increase the loan during the current financial year: * Quote TWO financial indicators (actual figures/ratios/percentages) that are relevant to their decision. Explain why this was a good decision, or not Accounting 46 4 Preparatory Exam 2014 Ratios with figure :v“ vv" Comment: vv vv ROTCE + This is 17,77% see'ato Debtlequity ratio + This is 0,231 Explanation Positively geared as ROTCE is higher than interest rate. Low financial risk / not making much use of loans {it relies more on funds from internal source) The Cash Flow Statement highlights some important decisions taken by the directors during the past year. + Explain THREE of these important decisions. Quote figures to support your answer. Explain how these decisions would benefit the company. THREE decisions with figuresi) v7 ae Explanation'of Decisions benefiting te companyy vv Decisions (with figures) Explanation of Benefits ‘Allocate 4-mark forthe item and't mark Tor ane figure Fixed asset purchased for R3 357 000 Improve profit earning capacity/existing tangible assets may be obsolete. 45 |issued: + Comment on the price af which the 100 000 new shares were issued *_ Quote TWO financial indicators to support your comment The existing shareholders are happy with the price af which the new shares were Issue of additional shares for R1 175 000 To finance the purchasing of tangible assets. Increase in loan by R850 000 Comment “ov Quoting: ofinidicaton vv Shares were issued at a price higher than the NAV. NAV was R1 1, 21 and shares. were issued at R11, 75. ‘Shares were issued at a price higher than a market price. Market price was R10, 50 and shares were issued for R14, 75. To finance the fixed cost / purchases of tangible asset Copyright reserved r Please tum TOTALMARKS Copyright reserved over Please tum

Downloaded from hlayiso.com Accounting 15 Preparatory Exam 2014 Accounting 16 Preparatory Exarn 2014 QUESTION 5 5.1.4 5.1 STOCK VALUATION Calculate the gross profit earned_during August 2015 54.4 70 000V + 80 000 V+ 120 000M = 280 00H operand ines Explain why it would be unreasonable for this business to value its stock Toeepancorest 4 items on the basis of FIFO or weighted average. Provide TWO points z Possibiganewersvv 9 ¥¥ . ‘They sell low volumes of these large articles which makes it easier to identify the specific cost on each car 5.2. CONTROL OF INVENTORY ° It would be inappropriate to value cars based on the weighted ‘Comment on the stock control of each item, quoting figures to support your comment. In average because the cost prices vary considerabiy. each case offer Nokubonga practical advice for the future * They sell separate items that are very different from each other in 4 figureys~ terms of character ry tno mark(s) Agcopt any valid point Problem identified with figures. Advice 5.4.2 “There is cash missing. The actual _| Institute investigation. Administer Explain why if would be unreasonable for certain businesses to use the sales should be R4 800 000 instead | disciplinary procedures and sanction the specific identification method, e.g petroi shop. Provide TWO points TV sets of R4 700 000 (R100 000 is missing) | guilty parties’ e.g. legal actions, eee : suspension and ect. Accept any valid pointy ve The control of stock is @ problem 40 _| Institute procedure to safeguard the stock . Petrol cost price might change depending on the pertormancy of 4 cellphones are missing. e.g. special cabinets with one person Rand against the Dollar. 7 Cellphones controlling the key. © Old stocks may be sold at higher price or lower prices depending on Radios “The radios are not selling well only _| Discontinue selling radios if is not worth it how the petrol price changes. 10 per month sold. The stock on . Petrol prices are also regulated and depend on Brent crude oi prices. hand is high. * Cannot identify the exact petrol bought on a specific day at a’specific 5 Price ° Petrol price is regulated by the goverment. 9 5.1.3 ibusiso Car Dealers does not want the cost prices of stock items to be TOTALMARKS public knowledge. What strategies could they use to keep the cost prices confidential? 23 AcceptAnyvalidpoint Vv 2 23 Keep the cost prices in a catalogue which can be secured in the managers 2 Office. Secret cost codes could be used Copyright reserved Please tum Copyright reserved Please tun over over ~

Downloaded from hlayiso.com Accounting 7 Preparatory Exam 2014 Accounting is Preparatory Exam 2014 QUESTION 6 6.4.1 | Calculate percentage increase in salary and wages with effect from July 2015. =| 6.1 | Why it is a good idea to compare budgeted against actual figures” 8 100 800¥ / 90 000 YX 100 = 12% eperaton 3 Any valid explanation v¥ 2 Possible responses: 2 * To reflect on whether your projected income and expenditure have been realistic. 6.4.2 | Calculate Missing figures A and B in the extract from the Gash ‘Budget * To improve future projections. + To determine variances between projections and actual amounts. * To be able to control income and expenditure on a monthly basis. WORKINGS ANSWER a ict (280 000 X 100 / 160)” = (175 000 X 30/ 100)” =(52 500 X 95 / 100)” 49 875 8.2 [Refer to the Cash Budget under information 4. Identity TWO items that was Incorrectly : =e =e » entered in the Cash Budget. ‘operation * Depreciation ¥ B__ | (820 000 x 100 / 160) = (200 000 X 70 / 100)” %140 000 + Vehicle bought on credit 7 a 6.3] Complete the Debtors Collection Schedule for July 2075. Credit sales dune 2015 July 2076 April 72.000 12.960 May 420 000 60.000 24 600 June 168 000 49 140V 44 84 000VY July 192 000 56 160V vv Operation if one.partis Total collection cones 422 1001 161 760% 10 10 Copyright reserved Please turn Copyright reserved over Please tum

i | i Downloaded from hlayiso.com Accounting 19 Preparatory Exam 2014 6.5 | At the end of July 2015 you identified the following, when comparing the budgeted against the actual figures: items at the end of July 2015. « Explain what you would mention to shareholders about each of ‘the following + _In each case explain what effect these items will have on the Company. EXPLANATION ¥ ADVICE ¥ Buy- back of shares: Well controlled / amount spent is equal to budgeted amount. Maintain the good budgeting ethics. ‘Audit fees: ‘Over budget/ poor control of audit/‘change of auditors increase in prices/ the business has been audited twice or more this year/peor internal auditing resulting in.a longer and expensive extemal audit. Change of auditors/ audited twice will eliminate fraud and assure shareholders ‘that their investment is protected against any fraudulent activities. Improve the internal audit Directors fees: Over budget by 100% or double the amount/ poor control of directors fees by R170 000. The increase in director's fees is acceptable if the company made a profit and salaries of employees have been increased along those lines to avoid problems in future. The finance committee must approve that and shareholders must be informed. ‘Advertising: The amounted budgeted, R20 000, has not been used. ‘Consider the implications of not advertising. It is important to advertise in order to attract customers and possibly improve sales. 6. | Shareholders are thinking of purchasing the business premises rather than renting the premises. Explain ONE major advantage and ONE major disadvantage of this: option. Advantage:” Saving on rent / Earn capital gains as property increases in value. 2 Disadvantage:” 2 Repairs and maintenance to be paid/ additional loans will be required to finance this option. TOTALMARKS: 4 a i Copyright reserved Please tum over —