# Accounting Grade 12 Paper 1 KZN Prelim 2020 Memo

> Grade 12 Accounting Paper 1 memorandum from the KZN Prelim 2020, 4 pages. Read online or get the free PDF download, question paper linked when available.

- Page: https://www.hlayiso.com/library/2020-kzn-prelim-p1-memo/af80eb25-b069-4a73-93e6-4a6a12b913bc
- Updated: 2026-09-27
- Subject: Accounting
- Grade: Grade 12
- Document type: Memorandum
- Year: 2020
- Exam period: KZN Prelim
- Paper: 1
- Curriculum: CAPS
- Pages: 4

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## About this document

Accounting · Grade 12 · KZN Prelim · 2020. Memorandum, 4 pages. Read online or download the PDF.

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## Document text

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### Page 1

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7 education

Department: |
Education

PROVINCE OF KWAZULU-NATAL

oR RRR SERS S SSE REESE RE REE EERE EEE EE ERE

" ACCOUNTING P14 :
: MEMORANDUM :
" SEPTEMBER 2020 :
J

NATIONAL
SENIOR CERTIFICATE

MARKS: 150
MARKING PRINCIPLES:

1, Penatties for foreign items are applied only if the candidate is not losing marks elsewhere in the question for that
item. No double penalty applied.

2 Penaties for placement or poor presentation (e.g. details) are applied only if the candidate is earning marks on
the figures for that item.

3 Full marks for correct answer. If answer incorrect, mark the workings provided.

4 If pre-adjustment figure is shown as the final figure, award one mark. Not the method mark for the answer. Note:
if figures are stipulated in memo for components of workings, these do not carry the method for final answer.

5. Unless otherwise indicated, the positive or negative effect of any figure must be considered to award the mark. If
no + or — sign or bracket is provided, assume that the figure is positive.

6. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from
candidates.

7, 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 reasonableness of the answer

before awarding the mark.

10. Operation’ means ‘Check operation’. ‘One part correct’ means ‘Operation & one part correct’. Note: check
operation must be +,-,x,+, or per candidates

W In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect, indicate
with a 63. Note: do not award marks for workings if numerator and dencminator are swapped-this also applies to
ratios.

12. _ Be aware of candidates who provide valid alternatives beyond the marking guideline.

13. Codes: f=foreign item; p=placement,

2o

This memorandum consists of 7 pages

Accounting P41 2
NSC
QUESTION 1
a 144 Inflow of cash ~
1.1.2 Capital employed “
1.1.3 Depreciation v is
1.14 Outflow of cash “ Hl

1.2.2

Preparatory Exam 2020

Ordinary share capital

Authorised:
2.000 000 shares
Issued:
1 200 000 Shares in issue at the beginning 4200 000Y
(40 000) v | Shares repurchased (ASP: R3.50“) Operation (140 000) 4
800 000M | Shares issued during year at R4.48 each bpetaton 3 584 000M
1 960 000~ | Shares in issue at end 7 644 000V 8

Cash Flow Statement for the year ended 30 June 2020

Cash flow from operating activities 52 000v%
Cash generated from operations 639 100
Interest paid (82 000) ~
Taxation paid (75 600 7— 8 0007 — 12 500) or (65 100 | CY)

(-75 600 + 8 000 + 12 500) Spemaiiotsnepaipeonest

Dividends paid Sperationcore. bar

(210 000 + 240 000v v) or ( 210 000 + 414 000 -174 ae

Cash flow from investing activities

(374 900) ~ @

Purchase of fixed assets Saaion -)
(1.505 400 + 61 000v + 23 500v — 1201 500v) or (388 400) M4} ( <
(-1 505 400 - 61 000 — 23 500 + 1 201 500)

Sale of fixed assets 23 500”
Change in fixed deposit (10 000) ~

Cash flow from financing activities 3 260 000vM

Sale of shares 3584 000M
Shares repurchased (40 0007 x R4.10) (164 000) 1 (32)
Repayment of loan (160 000) ~

Net change in cash and cash equivalent 2 937 100M

Cash and cash equivalent at the beginning (2 000~ — 17 100) |* (15 100) &

(450 000) =| 4)

Cash and cash equivalent at the end Bpsmsiion

2 922 000M | | 32

NBMUSEBACREB isicomipulsery torsuttiow

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Accounting P1 3 Preparatory Exam 2020
NSC
1.2.3 | Apart from the dividends, identify TWO good decisions. Explain the effect of

company. Quote figures.

each decision on

Consequence
Sale of shares, Improves cash flow — business can take advantage of
R3 584 000v investment opportunities ~ ri
Purchase of fixed assets, | Improves operating efficiency — business can eam
R388 400 greater profitsv”
Share repurchased, Improve NAV which could impact positively on the market
R164 000 price of shares/improves DPS hence present
shareholders will be satisfied/ improve EPS which creates
better i of the company.
Repayment of loan, Lower financial risk/Low geared
R160 000

1.2.4

Calculate: Net asset value per share (NAV)

7683200 x 100

1 960 000
SOR LTT ee _— 7
= 392 cents dpecstiohsoneiparncbiect

Calculate: Return on average shareholders’ equity (ROSHE)
TBA-BOOSTWO marks
257 400 v—75600"_ x 100
‘2 (7 683 200 v'+ 4 495 400) | 1
COC TNS WES

(Check average and muttipty by 100)

1.25

The directors are pleased that the operating efficiency of the business has

improved. Quote and explain TWO financial indicators to support their opinion.

vv

ased from 39.2% to 31.5% - effective control

% operating expenses on sales —

over expenses.

% operating profits on sales — increased from 6.5% to 12.7% - effective control of

expenses and higher mark-up % achieved. 4

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TOTAL MARKS

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Accounting P1 4 Preparatory Exam 202
NSC
QUESTION 2
21 NO ACCOUNT DEBITED ACCOUNT CREDITED AMOUNT
A. | Ordinary share capitalv Ba iinitnienct naseags | F129 000%
Retained incomev Bank R225 000~
B. | Directors fees” Accrued expense” R522 000v
Cc. | Banky Debtors control” R12 800”
Bad debts“ Debtors control R19 200v E
{one mark:-for both, debtors ‘control, accounts)
2.2 _ STATEMENT OF FINANCIAL POSITION (BALANCE SHEET) ON 29 FEBRUARY 2020.
ASSETS
NON-CURRENT ASSETS (2 772 300 —1 327 050) {TAXCAY 1 445 250 @
Fixed assets (1 445 250 - 200 000) {NCAFA) 1245250 @
3| Financial assets: Fixed deposit 200000 v
CURRENT ASSETS (884,700:x 4:5) 1 327 050vv
Inventories Opelatich ove pat comect 530820 7
Trade and other receivables PTA aca) 769689 &
Cash and cash equivalents “ ©"765689 26541 v
3 | TOTAL ASSETS it 27723004
EQUITY AND LIABILITIES
SHAREHOLDERS’ EQUITY 1 144 000 vZI
Ordinary share capital 864 000 4
3] Retained income 280 000
NON-CURRENT LIABILITIES 743 600
s[loan (920000 v— 153 600 “+ 65 400 ~ — 88 200 ) 743 600M
CURRENT LIABILITIES 884 700
Trade and other payables (440 000 + 11500 v+ 5000 v) 456 500 &
Current portion of loan Fecknce 88 200
SARS: Income tax (540 000 — 525 000) 15 000"
Bank overdraft (25 000 - 5 000 ) 20 000vv
Shareholders for dividends iii eigursy 305 000 %
41| TOTAL EQUITY AND LIABILITIES tine Bai corsok 2 772300 4 BE
SARS ‘Thadetanatother payables; Pe)

Foreign entries — 1 Max — 2

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Accounting F

2.3.1

2.3.2

2.3.3

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NSC

ricparnury cxam 2U20

Type of audit report:
Unqualified ~
Reason:
Any.valid‘eason ~

Fairly present / no irregularities found/ no problems encountered

To whom is an audit report addressed?
Shareholders “

Reason:
c sisi uhaeboe
Paltnans Wrmtseteneneecinice

Any-validtéason vv

Independent auditors are appointed by the shareholders/the shareholders are the
owners of the company.

Anyvalidiexplanation vv

Financial statements comply with international financial reporting standards/the
company operates in a global economy/shareholders are from various parts of the
world

Companies Act (71 of 2008)
Company is abiding by the law/stipulated standards are maintained/shareholders’

investment is safe/creates investor confidence in the company/the Companies Act
stipulates the manner in which financial statements must be prepared.

TOTAL
MARKS

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Accounting P1 6 Preparatory Exam 2020
NSC
QUESTION 3
34
3.4.4 cy
3.1.2 Dy
3.1.3 Av
3
3.2.1 Retained income:
Balance at beginning 560 000
Net profit after tax (90 000 v x 70/30 ~) dpération o 210 000m
Share buy-back (30 000 V x2“) Spetation ore pant comes (60 000)
Dividends (270 000 v x 34/100 ~) spetaion one par sorta (91 800)
Paid 27 500
Final/declared (91 800 — 27 500) fividends less interini Operation 64 300 4
Balance at end _bieriicn ona bart covrect 618 200 11

3.2.2

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As an existing shareholder, what factors/ financial indicators would you
assess in determining whether R10.20 per share is a fair issue price? Provide
reasons for your choices.

vv

NAV: improved from 490 cents to 1 033 cents/ by 543 cents
Market price: improved from 485 cents to 850 cents / by 365 cents

Khethiwe owns 43% of the shares in issue on 30 June 2019. Calculate the
number of additional shares she must purchase in order to be a majority
shareholder.

She currently owns: 300 000 x 43% = 129 000 shares ”
To be majority shareholder she needs: (370 000 x 50%) + 1 = 185 001 shares ”

She needs to buy: 185 001 — 129 000 = 56 001 shares Y

Koos Trimp (the CEO) has suggested that Khethiwe should be given the first
option to purchase the additional shares before they are advertised to the

ublic. What advice would you offer to the directors conc: U

See Jeamoehts erning this proposal?
mMdlearlincomiplete’explanation

MNES vv

Legislation and governance regulations must be followed by everyone/the directors

must apply the law to safeguard the integrity of the business/insider trading is illegal

and unethical/nepotism as the CEO is abusing his position.

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Accounting P1 7 Preparatory Exam 2020
NSC
3.2.3 [Companies buy back shares from time to time. Explain TWO benefits of
share buy-backs.
‘Accept shart explanations;:may be phirésed differently
Part-malks foruntiéarincomplete €xplanation
Anytwo'valid benefits vv vv
It improves the NAV which could impact positively on the market price of shares/it
improves EPS which creates a better image of the company/it improves the DPS
hence present shareholders will be satisfied/ shows that the company is solvent
and liquid. 4
3.2.4 | Quote TWO financial indicators (with figures and trends) that Indicate an
improvement in the idity position of the business.
Paitamiatks for unclean fe explanation
Finandialindicators (with figures) Showihg'the ends vv vv
Current ratio: increased from 1.4:1 to 1.9:1
Average debtors collection period: decreased from 57 days to 38 days
3.2.5 [The company paid back a large portion of the loan. Explain why this was a
decision. Quote TWO financial indicators (with figures).
Debt/equity ratio: decreased from 0.5:1 to 0.2:1. Lower financial risk/low geared
ROTCE: decreased from 22.3% to 20.8%. Still positively geared as it is greater
than interest on loan (11%). 4
3.2.6 [Calculate the dividend pay-out policy over the past two years. Provide a
possible reason for the current policy adopted.
2019: 52/63 x 100 = 82.5% Vv
2020: 34/84 x 100 = 40.5% vv
A greater % was retained in 2020 for future expansion purposes. “
TOTAL MARKS
. 40

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