Accounting Grade 12 KZN Prelim 2017 Question Paper

Downloaded from hlayiso.com MAR 1, 2 Paw This memorandum consists of 14 pages eee Education KwaZulu-Natal Department of Education REPUBLIC OF SOUTH AFRICA SU BSS SREGHGEGHBSESSESUR SRN ERSEEEGRARGENEEEHaE EE, ACCOUNTING MEMORANDUM SEPTEMBER 2017 fecensenseee enn NATIO NAL SENIOR CERTIFICATE ‘00 MARKING PRINCIPLES: Penalties for foreign items are applied only if the candidate Is not losing marks elsewhere in the question for that item. No double penaity applied, penalties for placement or poor presentation (e.g, details) are applid only if the candidate is eaming marks on the figures for that item. Full marks for correct answer. if answer incorrect, mark the workings provided, if a pre-adjustment figure is shown as the final figure, award one mark. Not the method mark for the answer. ‘This memorandum is not for public. distribution, as certain items might imply incorrect treatment. The adjustments made are due to nuances in a certain question. Where penalties are applied, the marks for that section of the question cannot be a final Negative. Where method marks are awarded for operation, the marker must inspect the reasonabl before awarding the mark. Operation’ means ‘Check operation’. ‘One part correct’ means ‘Operation & one part correct’. In awarding method marks, ensure that candidates do Be aware of candidates who Provide valid altematives Codes: f=foreign item: p=placement. hot get full marks for any item that Is incorrect. * . . o . leness of the answer Accounting 2 Preparatory Examination September 2017 QUESTION 1 44 114 [Debit 44.2 Debit debtors control and credit interest Income. ” 14,3 Debit order ~ 1AA Stale cheque 7 1.24 CRI CPJ 407 200 121 165 47007 9607 5207 6 6807 9007 Bre UR 4 2007 1.2.2 | Bank reconciliation statement on 28 F, bruary 2017. Credit balance as per bank statement [at 95157) Credit outstanding deposit o 25 000v Credit outstanding deposit P y 17 0007 7 Credit amount wrongly debited ‘ 12007 Debit outstanding cheques No. 321 i] 13 0007 531 :| 6 5007 561 is i] 8 1007 : Debit balance as per bank account 25 1150 | iad opwalieroriartea I] 52715] 52715] | 9 1.2.3 | As the internal auditor you are not happy with the manner in which cash is being controlled in this business. identify ONE problem and provide a figure to Support your answer. Give advice on how this Problem can be avoided in future. Problem Advice Outstanding deposit of R25 000 Create a policy for regular or daily On 6 February 2017. ” depositing. v” Copyright reserved Please tum over

Downloaded from hlayiso.com ‘Accounting 3 Preparatory Examination September 2017 Accounting 4 Preparatory Examination September 2017 1 Creditors ledger Creditors reconciliation QUESTION 2 statement [ 38 100 40 800 . 2.1.1 [After taking into account the errors ‘and omissions, calculate the @ -4100V¥ VAT amount that is either payable to or receivable from SARS. i) ¥1 80077 Indicate whether this amount Is receivable or payable. Gi 32 00077 Bo 600 “+ 138 600Y — 47 040v — 12 B80V — 9 800 + 1 680V (w) + 40077 — 14000 V¥—4 704V¥ = 141 4560) Payable to SARSY pata on vy) ~1 8007 - 1 800 or — (3 600) ™ +21 900" 00 ~ 138 600 + 47 040+ 288 98 680 Spartan br beth ial - 89600 ~ + 47 040+ 12 880+ 9 800 —1 36 200 36 200 13 +14 000 + 4 704 = 141 456 Payable to SARS OR Explain how the creditor's reconciliation statement can assist the VAT coe 7 <a business in terms of their internal control measures. State TWO 89 points. 12.880 138 600 9 800 1680 ‘AnyTWO télevant'answers Vv v¥ 14 ooo 141 456 * It will assist the business in detecting errors/omissions in their Payable to SARS 4 . books. 229 880 229 880 * {twill show errors/omissions in the statement received. * Detect fraudulent activities and take action against it. 4 TOTAL MARKS: 12 40 2.1.2 [The internal auditor discovered that the owner, M Ngubane, used the VAT collected from customers to pay expenses of the business. Therefore, he was unable to pay the VAT owed to SARS on the due date. State ONE point of advice that you would offer M Ngubane concerning this practice. * Ngubane must keep accurate records of VAT and make timeous submissions to SARS. + The business is an agent of SARS- money collected on behalf of SARS should not be used to defray other operational expenses. 2 Copyright reserved Please tum over Copyright reserved Please tum over

Accounting Downloaded from hlayiso.com 5 Preparatory Examination September 2017 Calculate the value of the closing stock on 28 February 2017 using the weighted-average method. R312 900V + R1 375 000 — R13 500v 610” + 2400v - 20v 1674 400 2990 (rina) _ R560 X 420V = R235 200M closing stock :Operition one part correct Calculate the average stock-holding period (in days) on 28 February 2017. ‘See22t AY (312 900 + 235 200%) x 365 T4sg agar s60.224 (1674 400 ~ 235 200) 274 050 cima} x 365 1 439 200 1 69,5 days!) Oparatin ote ait corréct Comment on the stock-holding period and explain how this would affect the business. Comment Any felévant ariswer vv Improved from 100 days (2016) to 69.5 days. Jackets are seasonal wear and 69.5 days is a relatively good period. How this would affect the business. Any televant answery ~ Increase in sales volume thereby increasing profits made by the business. 2.24 | Calculate the value of the closing stock by using the FIFO method. 380Y x R675 ¥ = R256 500“ 40v x R640Y = R25 600¥ = R282 1004 Openition oie part cect TOTAL MARKS: 40 “ Copyright reserved ‘Accounting 6 Preparatory Examination September 2017 QUESTION 3 3.1 3.1.4 [AY 3.1.2 | Cv 3.1.3 [By 3 3.2.1 Next page 3.2.2 Tangible asset Land and =} Vehicles Equipment buildings Carrying value at the beginning | 2 000 000v” 264 000V 110 000” Cost price at the beginning 2000 000 800 000 760 000” Accumulated depreciation at the - (536 000) (650 000) beginning Movement Additions 30000007] —- 110 000% Disposal at carrying value - (100 000) - vv Depreciation = (83 200) “| (141 374) M1 See3.24 Carrying value at the end 5 000 000” 80 8004 108 6264 Cost price at the end 5 000 000 | 300 000v 870 000” Accumulated depreciation at the (0) (219 200) | (761 374) ¥ end “~ 49 Trade and Other Receivables Trade debtors (280 200 — 90 000v - 720V) the part-corrett 189 480M) - Less provision for bad debts (11 000-1525) SiiSKARABoVe (9 474) Vi Net trade debtors 4180 006 Prepaid expense 5 000v Accrued income (12 10042975) S86 15 0754 SARS- Income tax (290 000 - 282 000) 8 000vv _Oppratiorr O68 parcorect 208 081% 4 ae Copyright reserved Please tum over

Downloaded from hlayiso.com Accounting 7 Preparatory Examination September 2017 Accounting 8 Preparatory Examination September 2017 224 Income Statement for the year ended 28 February 2017 JUESTION 4 Sales (9 472 000 ~ 70 000 — 45 000 — 45 000”) 9312 OY a 90-000 we THI . 44 Cost of sales salad 400/150 (6 208 000) M1 441] C are 41.210” Gross profit Operation 3 104 000M) 4131E7 Other operating income ‘Operation 193 466M 4.1.4] BY v Rent income (153 420 - 11 04077) 742 0807 4ASIA 5 Profit on sale of asset 20 000v 4.2.1 Ordinary Share Capital note Bad debts recovered 3 860Y Authorised shares 4900 000 shares Provision for bad debts adjustment (11 0007 — 9 474) 15264 issued shares One part correct 1000000 [shares @ R5 R5 000 000 Trading stock surplus (1 620 000v’- 60 000¥- 1 534 000: 26 000M | 400 000v_j shares @ R9.20 Balancing figure R3 680 000M OR (-1620 000 + 60 000 + 1 534 000) (One part correct (120 000) ¥ | shares bought back@R6.20¥Y (R744 000)” Gross income 3207 466 7280 000M _| shares @ R6.20 Operation ore panicorrect | __R7 936 000” 8 Other operating expenses Spite 2.378811) 4.2.2. Cash Flow Statement on 30 June 2017. Salaries and employers contribution 926 687 _ Cash flow from operating activities 153 000M Directors fees 860 000 Cash generated by operations 4 225 800 Audit fees (79 000 + 6 0007) 85 000V Interest paid (144 000) ivi i 7 vv) Packing material (13 600 — 1 200v) 12 400V Dividends paid oro 200 \408 000 28 000) one saeco ua ‘Sundry expenses ( 292 330 — 5 000v) 287 330% or ( -250 000 — 408 000 + 128 000) i 7 7 7) Bad debts (12 1007 * 7207) 72 6207 1a Pa Gon ase boos OO) onsite 15 Depreciation ( 83 200% + 109 999vv + 1 375v) 194 5744) Cash flow from investing activities Operation (650 000) 4 194.974 three marks: Gné pait correct Purchases of fixed assets - (4.013 200 + 200 000 + 112 000v - 2875 200) or Operating profit Operation 918 655) (2.875 200 ~ 4.013 200- 200 000~ 112.0000) _dperatot_| (1 450 000)E1 Interest income (27 000“ + 12 100“ “+ 2 975v +9 300”) 51 3754) Proceeds on sale of fixed assets 200 000 597400 tis fides ‘One’ pait comstt Decreased In fixed deposit 600 000 Operating profit before interest expense Operation 970 0308 Cash flow from financing activities Steen 1544 00085 Proceeds on shares issued See 4.2.4 3.680 000% Interest expenses (30 030) v Buy back of shares (120 000” x 8,80v) (1.056 000) ¥ Net profit before taxation Sparton 940 000m Repayment of loan - - {1.080 000) - — Net change in cash and cash equivalent Opération 1.047 000% Taxation (840-000 x30/100) (282 000) ¥ Cash and cash equivalent at the beginningieso0co=scon | (842 000) “v 12 [Net profit after taxation Spatalion 658 000m) | 47 Cash and cash equivalent at the end 205 000 23 Foreign tenis “1 (maxe2) Award minke for wotgs Roch oilaplaced, -1 or placement; max-2 ~1 i nermctct fr (042 000) TOTAL MARKS 80 Copyright reserved Please tum over Copyright reserved Please tum over

Downloaded from hlayiso.com Preparatory Examination September 2017 Calculate the Current ratio for 2017. 1015 000” : 468 OOO” 2.2 : 1&1 operation one part Gorect Comment on the following financial indicators: Comment with figures vv | Reason for change vv % gross Increased from 39% to + Advertising used to profit on 42%. 42% is less than the increase sales. the cost of | mark-up of 50% * Improved marketing sales. strategies. + Purchased from cheaper suppliers, + Trade discount allowed to customers. ‘% operating | Improved/decreased from + Kept within budget expenses 25% to 19% + Avoided wastage on sales. + Increase sales - * Cut down expenses From 2016 to 2017 the directors made a deliberate decision to change the policy on the distribution of profit in the form of dividends. Explain this change. Quote figures/calculations to support your answer. Response: for figures/ealculation 4“ 47 They paid out (45+45 x100)100% all their earnings in 2016 compared to (30+49 x 100) 61% of their earnings in 2017. + The business is retaining funds for future expansions/development/to improve NAV. Responséforv 7 The DPS decreased from 45 cents to 30 cents by 15cents and the EPS improved from 45 cents to 49 cents by 4 cents. Copyright reserved Please tum over Accounting 10 Preparatory Examination September 2017 4.26 Shareholders are satisfied with the issue price of the new shares. Quote TWO financial indicators with figures to support this statement. * New shares have been sold at 920 ise 42.1 cents above the NAV of 695 cents (2017) _. + New shares have been sold at 920 #ee4'211 cents above the market value per share of 810 cents 4.2.7 One of the directors feel that the loan should be pald as soon as possible. Do you agree? Explain. Quote TWO financial indicators with figures to support your answer. Nov eran Debt equity ratio is 0,06 : 1 which means the business is in position to borrow more monies. This indicates low risk. The retum on total capital employed (ROTCE) for 2017 is 24% which is greater than the interest rate of 16%. This indicates positive gearing. v 4.28 The shareholders should be satisfied with the return on their investment and the companies’ earnings. Explain TWO financial indicators with figures to support this opinion. RRpTGRHON I Ga YY Return on shareholders’ equity improved from 10,6% to 18%. 18% is higher than retum on alternative investment of 6% by 12%. Eamings per share improved from 45 cents to 49 cents see423 per share Copyright reserved TOTAL MARKS 60 Please tum over

Downloaded from hlayiso.com Accounting " Preparatory Examination September 2017 Accounting 12 Preparatory Examination September 2017 “"ESTION 5 5.2.3 [Production cost statement for the year ended 28 February 2017. Direct material $60:5.2:1 492 000%) §.1.1 | Factory over head costv” Direct labour (175 000V + 15 750”) 190 7507 5.1.2 | Selling and distribution cost v Prime cost Spetion 682 750 5.1.3 | Direct material cost “ Factory overheads _ see 5.2.2 286 6004 5.1.4 | Administration costy 4 Production cost operation 969 350M _ Work-in-process at the beginning _ 150 000v _ 7119 350 Work-in-process at the end (1193804870000) | (249 350) J 13 4 [Calculate the Direct Material Cost Opening stock 780 000 Production cost of finished goods | Opening stock v \Y — % i Purchases (400 0007 —7 0007) 393 0007 (1.200 000v + 170 000: 500 000“) ‘Operation ‘one part correct 870 000M Carriage on purchases _ _ 5 000v" Less closing stock _ {86 000) ~ 5.3.1 | Calculate the Break-even point for 2017. — walla 97 600“ opération one part correct 492 000M 6 25v—17v (sito rebiay 12.200 units (71 Speranbiting wait corect 4 2.2 | Calculate the Factory Overhead Cost Depreciation 32 000 5.3.2} Explain why the owner should be concerned about the break-even | Sundry expenses(85 600 — 2 600) x 60/100 43800 | point. Provide TWO points. Indirect material (25 000 + 35 000 — 9 000v— 18 000”) 33 000M _ Orie part corect_ | Number of units produced is 12 200 same as the break-even point of 12 200. indirect labour (350 000” x 20/100) +5 609. ¥+ 700¥ 76 300M) Which means the business is making no profit or loss. ““ (107000 twos) 6 S00.tWo thks) Ori bart correct Rent expenses (56 5007 +5 5007) 1 200/1 e007 een Although the number of units produced increased from R11 800 to 12 200 | Water and electricity (98 000) 4/8 a 49 000VV still no profits were realized because fixed costs also increased v “ ‘opération:one-partcorrect | 286 600M 17 Copyright reserved 5.3.3 Please tum over Provide one reason for the decrease in the Direct Material Cost. Any valid explanation “¥ + There was less wastage of raw material in producing the product. * More efficiency when producing the | product. + Sourcing out cheaper suppliers. jing in bulk to negotiate discounts. Copyright reserved * TOTAL MARKS 50 Please tum over

Accounting 6.1.3 STION 6 Downloaded from hlayiso.com 13 Preparatory Examination September 2017 Prepare a Debtors Collection Schedule for November 2017. Month and credit sales September | October November August 1246 000 498 400 249 200 r September 910 000 302 575 364 000 482 000. October 630 000 209 475 252 000v v November 616 000V¥ 204 820v * TOTAL 800 975 822 675, 638 820M) ‘Operation one part correct se, of creat ties less Ex dscourt The payment to creditors for November 2017. Or 900 000 X 100/160 X 40% = 225 000 337 500Y x 40/60¥ = 225 D00W operation one part:comeet The loan amount for October 2017 3 000M x 12¥ x100/16V = 225 O00L dperaiién one pat conect The amount for advertising in September 2017 7 630V x 100/109V = 7 DOO! Oferéllétione'pabcsmedt EXPLANATION Vv v ADVICE Yo v FUEL: Over spent / poor control of vehicles / possible unforeseen increase in petrol prices/fuel wastage Such increases in fuel prices must be anticipated and considered in budgeting / look at trends /minimise wastage / monitor drivers by using logbooks and tracking devices for distances. RENT INCOME: Poor collection strategy used by the business Possible that the tenant has left and the premises have been left unoccupied. Ensure that tenants have to place certain number of months’ notice before leaving: Appoint a collector. Copyright reserved Please turn over Accounting Preparatory Examination September 2017 6.2 MANAGEMENT OF FIXED ASSETS figures. Give John ONE point of advice Identify ONE different problem regarding each vehicle/driver. Quote for EACH problem identified. 7 7a a Tore aera Advice” Any relevant advice Vehicle 1 | Sibusiso was absent for 8 (Sibusiso) | days./ He is the highest paid driver, R8 000 where other drivers earn R5 000 Investigate the reason for his absence. Vehicle 2 | Jabulani is travelling too (Jabulani) | many kilometres (4 600 km for 80 trips = 58 km per trip) which is higher than the maximum of 40 km per customer./He is travelling more km than Xolani (4 200 compared to 2 800 km) but doing fewer trips (70 compared to 110). Possible disciplinary action against Jabulani for unauthorized use of vehicle./Improve internal contro! over the use of the vehicles. Vehicle 3 (Xolani) Xolani is doing the most number of trips (120) but his vehicle is the oldest and the most expensive to run (RO,81 per km). Consider replacing this vehicle as it is expensive to maintain. Purchase a new vehicle to replace this old vehicle. TOTAL MARKS 30 Copyright reserved