Accounting Grade 12 KZN Prelim 2015 Question Paper

Basic Education KwaZulu-Natal Department of Basic Education REPUBLIC OF SOUTH AFRICA RRR REE R RR RRB R RE RRRRRRBRRRE BRE RRR RS Pi delaieielelalene ee ey " ACCOUNTING Hi t PREPARATORY EXAMINATION ‘ om SEPTEMBER 2015 : eee rrr Terr rrrrrrrr rr rrrrrr ret Tree ttt NATIONAL SENIOR CERTIFICATE - GRADE 12° ‘MARKS: 300 ( TIME: 3 HOURS N.B. This question paper consists of 21 pages. Copyright Reserved Please Turn Over STR RT TTT T TLR = cmaaiieineasoamaa

Downloaded from hlayiso.com Accounting tember 2015 Preparatory Examination NSC . INSTRUCTIONS AND INFORMATION Read the following instructions carefully and follow them precisely. 1. ALL the questions. 2. A special ANSWER BOOK is provided in which to answer ALL the questions. 3. Show workings in order to achieve part-marks. 4. You may use a non-programmable calculator. 5. You may use a dark pencil or blue/black ink to answer the questions. Copyright Reserved Please Turn Over ”

*Accounti ing Downloaded from hlayiso.com eptember 2015 Preparatory Examination NSC QUESTION 1: 36 Marks; 22 Minutes Topic of the question This question integrates: Bank reconciliation Financial accounting >» CRJ,CPJ, Bank Reconciliation Statement Managing resources » Internal control QUESTION 2: 85 Marks; 51 Minutes Topic of the question This question integrates: Concepts, Income statement, Asset Disposal and Balance Sheet notes Financial accounting » Concepts, Income Statement, Asset Disposal and Balance Sheet notes QUESTION 3: 67 Marks; 40 Minutes Topic of the question This question integrates: Manufacturing Managerial accounting > Direct material cost » Factory overheads > Production cost statement >» Analysis and interpretation of unit costs and break-even point Managing resources >_ Internal control QUESTION 4: 55 Marks; 33 Minutes Topic of the question This question integrates: Cash Flow and interpretation of | information Financial accounting > Cash Flow Statement >» Calculations and financial indicators » Analysis and interpretation QUESTION 5: 23 Marks; 14 Minutes Topic of the question This question integrates: Stock valuation and internal control Managing resources « Inventory valuation: specific identification and internal control: problem-solving QUESTION 6; 34 Marks; 20 Minutes Topic of the question This question integrates: Cash Budget and internal control Managerial accounting e Analyse and interpret a cash budget Managing resources # Internal control and internal audit Copyright Reserved Please Turn Over

Accounting Downloaded from hlayiso.com Nsc QUESTION 1 (36 Marks; 22 Minutes) BANK RECONCILIATION You are provided with information related to Quick Traders on 31 July 2015. REQUIRED: 11 1.2 1.3 14 1.5 Indicate whether the following statements are TRUE or FASLE. Write only ‘true’ or ‘false’ next to the question number (i) — (iv) in the answer book. (i) A post dated cheque issued by Quick Traders on 24 July 2015 but dated 24 August 2015, will only be entered in the Cash Payments Journal of Quick Traders on 24 August 2015. (1) (ii) A debit balance on the bank statement reflects an unfavourable balance. (1) (iii) | Service fees and interest on an overdraft will be recorded as bank charges in the Cash Payment Journal. (1) (iv) | Aninternal auditor should inspect the bank reconciliation statement at the end of each month. (1) Calculate the correct totals for the Cash Receipts Journal and Cash Payment Journal for July 2015. (14) Prepare the Bank Reconciliation Statement on 31 July 2015. (11) Explain how cheque No. 908 should be treated when preparing the financial statements as at 31 July 2015 the end of the financial year. (2) Refer to information G. The bookkeeper has decided to write off the amount of R50 000. « Which GAAP/IFRS principle will the bookkeeper be applying? (1) « The bookkeeper wants to prevent a similar problem in future. Give TWO suggestions to improve internal control in this regard. (4) Copyright Reserved Please Turn Over eptember 2015 Preparatory Examination y

Downloaded from hlayiso.com , Accounting September 2015 Preparatory Examination ‘ . NSC INFORMATION: A. — The following items appeared in the Bank Reconciliation Statement on 30 June 2015 DEBIT CREDIT Debit balance as per Bank statement 19 310 Outstanding deposit (10 May 2015) 50 000 Outstanding cheques: No.892 (1 January 2015) 12 340 No.897 (10 June 2015) 8 700 Debit balance as per Bank Account 9 650 50 000 50 000 B. Before receiving the July 2015 Bank Statement, the following provisional totals appeared in the Cash Journals on 31 July 2015: : e CRJ R146 970 } « CPJ R 68 900 C. The Bank Statement for July reflected the following: Bank charges R1 300. Interest on an overdraft R920. Debit order for insurance R600. Direct deposit of R1 800 for rent received from tenant. ¢*@e# # Dz. Cheque no. 892 must be cancelled. E. Cheque no. 897 did not appear in the July 2015 Bank Statement. F. The outstanding deposit (10 May 2015) cannot be traced and the cashier at that time has since disappeared. It was decided to write off this amount. G. A cheque received from Zulu Traders dated 25 November 2015 for R15 000 was not recorded in the July 2015 Cash Receipts Journal. It was also not deposited in July. H. The following items appear in the July 2015 Cash Journals but not on the Bank Statement: e Adeposit of R18 000, dated 27 July 2015. e Cheque No. 905, R1 200, dated 31 July 2015. e Cheque No. 908, R3 100, dated 15 December 2015 was issued to a creditor ZZ Nongoma for supplying goods. L. The Bank Statement on 31 July 2015 reflects a favourable bank balance of R44 040. coe ote eum 36 Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accounting eptember 2015 Preparatory Examination +» Nac QUESTION 2 (85 Marks; 51 Minutes) INCOME STATEMENT, NOTES TO BALANCE SHEET You are provided with information relating to Grey Limited. The company sells TV game stations and repairs TV game stations for their customers. REQUIRED: 2.1 Choose the correct word/s from those given below to. complete the sentences: working capital financial asset operating expense cash and cash equivalents | operating profit borrowed capital qualified finance cost unqualified 2.1.1. The difference between current assets and current liabilities is referred toas... 2.1.2 The audit report states: “the financial statements fairly present, in all material respect.” This will be regarded as a/an ... report. 2.1.3 Interest on the bank overdraft in the Income Statement is classified as a/an ... 2.1.4 A fixed deposit which will mature within the next financial year will be regarded as part of ... in the Balance sheet. (4) 2.2 Prepare the Asset Disposal Account to record the sale of vehicles. See information B, numbers 7 and 8. (10) 2.3 Prepare the Income Statement (Statement of Comprehensive Income) for the year ended 30 June 2015. (51) 2.4 Prepare the following notes to the Balance Sheet: 2.4.1 Ordinary share capital (8) 2.4.2 Retained income (12) Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accounting eptember 2015 Preparatory Examination . NSC INFORMATION: A. Figures extracted from the Pre-adjustment Trial Balance on 30 June 2015: Ordinary share capital (1 July 2014) R5 225 000 Retained income (1 July 2014) 770 000 Trading stock 197 000 Debtors control 85 000 Creditors control 78 800 Land and buildings 8 100 000 Vehicles 1 900 000 Equipment 600 000 Accumulated depreciation on vehicles 815 000 Accumulated depreciation on equipment 180 000 Mortgage loan from: Pinetown Bank 80 000 , Medical aid fund 41 000 Pension fund 32 000 Provision for bad debts 4 200 SARS: PAYE 67 000 SARS: Income tax (provisional tax payment) DR 140 000 Sales 7 200 000 Debtors allowances 30.000 Cost of sales 4 780 000 Rent income 93 800 Interest income 12 000 Interest expense 7 000 Salaries and wages 270 000 Bad debts recovered 600 Employers contribution to Pension Fund and Medical aid 72 000 Audit fees 68 000 Directors fees 470 000 ) Consumable stores 12 000 Insurance 148 000 Sundry expenses 2 Dividends on ordinary shares (interim) R100 000 Copyright Reserved Please Turn Over

Accounting Downloaded from hlayiso.com ptember 2015 Preparatory Examination + NSC . INFORMATION: B Adjustments and additional information: 1. A credit note issued to a debtor, Mpisane dated 27 June 2015 was not recorded in the books. The credit note was for: e Goods returned by Mpisane, R 7 200. The mark-up on goods sold was 50% on cost. No entries have been made for stock stolen on 7 June 2015. The insurance company has informed Grey Limited that they have transferred R42 000 into the business bank account in respect of the insurance claim. Grey Limited bears 20% of any stock loss. The physical stock count on 30 June 2015 revealed the following on hand: ® Trading stock, R144 000 * Consumable stores R3 000 An employee was left out of the Salaries Journal for June 2015. The details from his pay-slip were: Gross salary R10 000 PAYE deduction (18%) R1 800 Pension deduction (7,5%) R_ 750 Medical aid R1 200 _ Net salary R6 250 The business contributions were: « Pension fund 10,5% of gross salary « Medical aid.: Rand-For-Rand basis The provision for bad debts must be decreased by R340. The tenant has paid his rent for July 2015 in advance. NOTE: The rent was increased by R700 on 1 April 2015 and that the premises were rented since the beginning of the financial year. Copyright Reserved Please Turn Over

Downloaded from hlayiso. co , Accounting ‘September 2015 Preparatory Examination . ‘ nse 7. An old vehicle was sold for R70 000 cash on 31 December 2014. The fixed asset register revealed the following regarding this vehicle: Cost price R 800 000 Accumulated depreciation on 1 July 2014 R 750 000 This transaction has not yet been recorded by the bookkeeper. 8. Make provision for depreciation as follows: ® Vehicles at 15% p.a. on cost price e Equipment at R39 500 9, The authorised share capital comprises 3 000 000 ordinary shares. * There were 2 000 000 ordinary shares issued at the beginning of the financial year. e A further 250 000 new ordinary shares were issued on 1 May 2015 at R2,50 each. These shares qualify for final dividends. « The directors decided to buy back 10 000 shares from Z. Zondi at R3,10 per share. An electronic transfer was made for the full amount. Zondi is still entitled to final dividends. 10. Final dividends were declared at 12 cents per share. 11. After taking into account all adjustments the Net profit for the financial year amounted to: Before tax R1 200 000. After tax R840 000. Copyright Reserved Please Turn Over

Accounting D own | oa d e d fro m h | AY!ISO-COM. tory Examination NSC QUESTION 3 (67 Marks; 40 Minutes) MANUFACTURING 3.1. ZWIDE PAMPERS MANUFACTURING Robert Zwide owns Pampers Manufacturers. The business produces nappies for babies. The financial year ended on 28 February 2015. They have been negatively affected by electricity load shedding. REQUIRED: Prepare the following for the Financial year ended 28 February 2015: 3.1.1. Note for Direct labour cost (13) 3.1.2 Note for Factory overhead cost (21) ( ; 3.1.3. Production Cost Statement on 28 February 2015 (11) INFORMATION: 1. BALANCES ON 1 MARCH 2014 Raw material stock R600 000 Work-in-process stock R80 900 Consumable stores stock: Factor R11 000 The following stock were purchased on credit: * Raw material R2 000 000 C « Consumable stores: Factory R50 000 No entry was made for the carriage of the following stock: e Raw material R18 000 « Consumable stores : Factory R2 000 Depreciation on factory plant and equipment amounted to R76 500. Factory maintenance for the year amounted to R8 000. A further amount of R3 000 is owed to Williams Works for repairs done to a factory machine on 26 February 2015. Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accounting September 2015 Preparatory Examination . . NSC 6. An amount of R80 000 was paid for water and electricity (this cost must be shared in the ratio 7:3 between the factory and the office respectively). 7. Rent is allocated between the factory and the administration office on the basis of floor area. The factory comprises 560 square meters, while the office comprises 280 square meters. The annual rent for the entire premises was R33 600. 8. Factory insurance amounted to R72 000. 9. Salaries and wages: e The 30 factory workers who make nappies are each required to be on duty for 8 hours per day. * Per month, there are 4 weeks of 5 working days each. The normal rate is R25 per hour per person. « Although load shedding is a problem, workers are paid for the full hours on duty, according to union agreements. * In order to make up for the lost time, 15 factory workers each worked 20 hours overtime per month from 1 October 2014 to 28 February 2015. The overtime rate is double the normal rate. « The factory foreman is paid a salary of R8 000 per month. Due to problems caused by the load shedding, he was required to work longer hours and did not take holidays. His salary was increased by R1 500 per month from 1 October 2014. « The factory cleaner worked for 48 weeks in the year and was paid a wage of R800 per week. 10. BALANCES ON 28 FEBRUARY 2015 Raw material stock R418 000 Work-in-process stock R850 700 Consumable stores stock: Factory __ . R8 000 Copyright Reserved Please Turn Over

Downloaded from hlayiso.¢ °. nse Accounting 3.2. ZWIDE PAMPERS MANUFACTURING: ELETRICITY LOAD-SHEDDING PROBLEM INFORMATION: 1. Although the business aims at producing 900 000 nappies per year, during the current financial year they produced only 848 000. Robert Zwide blames this on the load-shedding. 2. They sell the nappies at a mark-up of 40% on cost. 3. Load-shedding by Eskom occurred from 1 October 2014 to 28 February 2015 on 3 days per week for 3 hours per day. 4. Refer to information 9 in question 3.1 above for further information on salaries and wages. REQUIRED: 3.2.1 Calculate: *# The number of unproductive hours, for all worker, that were caused due to load-shedding. e The Rand amount lost on direct wages as a result of the load shedding. 3.2.2 Apart from these unproductive hours, explain TWO other ways in which load shedding have negatively affected the business. 3.2.3 What advice would you provide to Robert to counteract the effect of load shedding? Provide TWO points. Copyright Reserved Please Turn Over ptember 2015 Preparatory Examination (5) (3) (4) (4)

{ ) Accounting 3.3. DIEGO COSTA MANUFACTURING Diego Costa Manufacturing manufactures watches. The financial year ended Downloaded from hlay on 28 February 2015. 3.3.1 Calculate the number of units that Diego Costa Manufacturing needed 3.3.2 Comment on the number of watches they are producing. Quote figures NSC to produce in order to break even in 2015. iso.com September 2015 Preparatory Examination or financial indicators to support your answer. (Refer to 3.3.1) INFORMATION A Total cost and cost per unit for 2015. [ — Total cost Cost per unit Variable costs 892 000 111,50 Direct material cost 480 000 Direct labour cost 264 000 Sales and distribution cost 148 000 Fixed costs 452 000 56,50 Factory overheads 344 000 Administration costs 108 000 Total cost 1 344 000 B. Total number of watches produced during this financial year was 5 000. Cc. Selling price is R311, 50 per watch. Copyright Reserved (4) (2) 67 Please Turn Over

Downloaded from hlayiso,¢: NSC Accounting QUESTION 4 (55 Marks; 33 Minutes) CASH FLOW STATEMENT AND INTERPRETATION OF INFORMATION You are provided with information, taken from the books of Sharks Limited, for the financial year ended 30 June 2015. REQUIRED: 4.1. Calculate the following for the financial year ended 30 June 2015: 4.1.1 Stock turnover rate (4) 4.1.2 % return on total capital employed (use the average in your calculation) (7) 4.2 The shareholders are pleased with the return, earnings and dividends: * Quote THREE financial indicators that indicate this. * Quote figures and trends to support the shareholders’ opinion. (6) 4.3 Calculate the missing figures i in the Cash Flow Statement represented by letters (a) to (d). (17) 4.4 The directors decided to increase the loan during the current financial year: Quote TWO financial indicators (actual figures/ratios/percentages) that are televant to their decision. Explain why this was a good decision, or not. (8) 4.5 The existing shareholders are happy with the price at which the new shares were issued: Comment on the price at which the 100 000 new shares were issued. Quote TWO financial indicators/figures to support your comment. (4) 4.6 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. (6) * Explain how these decisions would benefit the company. (3) Copyright Reserved Please Turn Over QIN ory Examination

C. Additional information: (i) Ordinary share capital: @ 1500 000 shares have been authorised. Downloaded from hlayiso.com _ Accounting 15 September 2015 Preparatory Examination ’ ' NSC INFORMATION A. Extract from Income Statement for the financial year ended 30 June 2015: - ey Sales 9 000 000 Cost of sales 5 625 000 Depreciation 380 000 Interest on loan 185 000 Net profit before tax 1 330 000 Net profit after tax 931 000 B. Extract from Balance Sheet as at 30 June: 2015 2014 “y Fixed assets 4 326 000 1489 000 Ordinary shareholders equity 7 850 000 6 450 000 Ordinary share capital 5 950 000 5 200 000 Retained income 1 900 000 1 250 000 Mortgage loan (Nongoma bank 13% p.a.) 1 800 000 950 000 SARS (income tax) CR_ 32000| DR_ 18000 Shareholders for dividends 105 000 71 500 | Trading stock 670 000 580 000 * 650 000 shares were in issue at the end of the previous financial ) year, 30 June 2014. * 100 000 ordinary shares were issued on 1 May 2015. « 50 000 ordinary shares were repurchased from unhappy shareholders. They repurchased at R 11 per share. The average issue price was R8, 50 per share. (ii) Fixed assets: « Equipment was bought during the year. « Assets were sold at book value for R140 000. (iii) | Good Day Bank is offering a 9 % interest rate on all investments. Copyright Reserved Please Turn Over

NSC ‘ Accounting D own | oa d e d fr om h | AYISO.GO Mater Examination D. Financial indicators for the past two years: The following financial indicators were calculated for the past two years: “un SE | 2015 2014 ] Current ratio 1,5:1 1:1 Stock turnover rate 2 7 times : Debt-equity ratio 0,23: 1 0,15 :4 ' % return on average shareholders’ equity 13% . 12% % return on total capital employed 2? 15% Dividends per share 34 cents 20 cents Earnings per share 133 cents 120 cents 1 Net asset value per share 1121 cents 992 cents Market price on JSE 1 050 cents 980 cents | E. Cash Flow Statement for the year ended 30 June 2015. Cash flow from operating activities | | Cash generated by operations 1 800 000 | interest paid | (485 000) Dividends paid (201 500) Tax paid (a) Cash flow from investing activities : Purchases of fixed asset (b) \ Proceeds on sale of fixed asset 140 000 Increase in fixed deposit 60.000 | Cash flow from financing activities Proceeds on shares issued Buy-back of shares Increase in mortgage loan (c) (d) 850 000 Net change in cash and cash equivalent Cash and cash equivalent at the beginning 190 000 Cash and cash equivalent at the end (547 500) 55 Copyright Reserved Please Turn Over

Downloaded from hlayiso.com , Accounting eptember 2015 Preparatory Examination NSC QUESTION 5 (23 Marks; 14 Minutes) STOCK VALUATION AND INTERNAL CONTROL. 5.1. STOCK VALUATION You are provided with information relating to Sibusiso Car Dealers. The owner, Sibusiso, sells used cars. The business uses the specific identification method of valuing stock. The information given below relates to the month of August 2015. REQUIRED: 5.1.1 Explain why it would be unreasonable for this business to value its stock items on the basis of FIFO or weighted average. Provide TWO points. (4) 5.1.2 Explain why it would be unreasonable for certain businesses to use the specific identification method, e.g petrol shop. Provide TWO points. (4) 5.1.3. Sibusiso Car Dealers does not want the cost prices of stock items to be public knowledge. What strategies could they use to keep the cost prices confidential? (2) 5.1.4 Calculate the gross profit earned during August 2015. (4) INFORMATION: Description ™ Cost price Published . selling price 1_ series coupe 270 000 305 000 2 series coupe 290 000 360 000 3_series coupe 350 000 440 000 4 series coupe 400 000 470 000 5 series coupe 850 000 970 000 Items 2, 3 and 5 are sold for cash during August 2015 at their published selling price. Copyright Reserved Please Turn Over

Accounting Down | oa de d fro m h | AYISO,GOM ator Examination a NSC 5.2 INTERNAL CONTROL OF INVENTORY: PROBLEM SOLVING You are provided with information taken from Nokubonga Stores on 31 August 2015. The owner, Nokubonga, is uncertain as to whether she should be satisfied with the control of all of these items. REQUIRED: « Identify a problem in respect of the manner in which each item has been managed. « Quote figures to support your comment. « In each case offer Nokubonga practical advice for the future. Opening units(opening TV SETS CELL PHONES (9) RADIOS stock) 120 220 318 Number of units. sold 600 2250 120 during the year Number of units purchased 680 2 500 430 for the year. Number of units per 200 430 628 physical count at year-end Selling price per unit R8 000. R1 200 R800 Sales R4 700 000 R2 700 000 R96 000 Copyright Reserved Period of stock on hand 120 days 69 days 1884 days rn 23 Please Turn Over

, Accounting Downloaded from hlayiso.com eptember 2015 Preparatory Examination NSC QUESTION 6 ‘ (34 Marks; 20 Minutes) CASH BUDGET AND INTERNAL CONTROL You are provided with information relating to Ixopo (Pty) LTD. The financial year of the business ended on 31 July 2015. The company issued 800 000 ordinary shares on 31 July 2015 and is planning to repurchase 100 000 ordinary shares in July 2015 from unsatisfied shareholders. REQUIRED: 6.1. Why it is a good idea to compare budgeted against actual figures? (2) 6.2 Refer to the Cash Budget under information 4. Identify TWO items that was incorrectly entered in the Cash Budget. (2) 6.3 Complete the Debtors Collection Schedule for July 2015. (10) 6.4 Calculate the following: 6.4.1 Percentage increase in salary and wages with effect from July 2015. (3) 6.4.2 Missing figures A and B in the extract from the Cash Budget. (7) 6.5 At the end of July 2015 you identified the following when comparing the budgeted against the actual figures: e Explain what you would mention to shareholders about each of the following items at the end of July 2015. * In each case explain what effect these items will have on the company. (8) ——_ JULY 2015 BUDGETED ACTUAL Buy back of shares 300 000 300 000 Audit fees 50.000 105 000 Directors fees 170 000 340 000 Advertising 20 000 0 6.6 Shareholders are thinking of purchasing the business premises rather than renting it. Explain ONE major advantage and ONE major disadvantage of this option. (2) Copyright Reserved Please Turn Over

Accounting Downloaded from hlayiSO,GOM ator Examination » NSC INFORMATION: A. Sales, purchases of stock and cost of sales: Total sales for April 2015 to July 2015 were as follows: Month Total sales April R120 000 4 May R200 000 June R280 000 July R320 000 « 40% of all sales are cash, the rest is on credit. «# The mark-up is 60% on cost of sales at all times. * Stock is replaced on monthly basis. « 70% of all purchases are cash, the rest is on credit. B. Debtors collection: Debtors are expected to pay as follows: qualify for 2.5% discount for early payment. * 50% pay in the following the sales transaction month (30 days). « 18% pay in the second month (60 days). * 2% are written off. Cc. Creditors payment: Creditors are paid in the month after purchases to receive 5% discount. Copyright Reserved * 30% are expected to pay their account in the month of sale (current) to Please Turn Over he

Downloaded from hlayiso.com _, Accounting September 2015 Preparatory Examination ‘ of NSC 4. IXOPO LTD. EXTRACT FROM CASH BUDGET FOR JUNE AND JULY 2015. JUNE 2015 JULY 2015 RECEIPTS Cash sales 120 000 140 000 Collection from debtors ? ? PAYMENTS | Directors fees 200 000 170 000 Audit fees - 50 000 Salary and wages 90 000 100 800 Funds for share buy-back - 300 000 Vehicles bought on credit 190 000 - Payment to creditors 35 625 A | Cash purchase of stock 122 500 B | Depreciation 12 800 12 800 Advertising 2 000 2 000 Land and buildings - 3 000 000 | Rent expense 30 750 30 750 34 () GRAND TOTAL: 300 Copyright Reserved

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