Accounting Grade 12 Paper 1 MP Prelim 2023 Memo

Downloaded from hlayiso.com NATIONAL SENIOR CERTIFICATE GRADE 12 ACCOUNTING P1 SEPTEMBER 2023 MARKING GUIDELINES MARKS: 150 MARKING PRINCIPLES: 1. Penalties 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. Full marks for correct answer. If answer incorrect, mark the workings provided. 3. If a pre-adjustment figure is shown as a final figure, allocate the part-mark for the working for that figure (not the method mark for the answer). 4. 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. 5. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from candidates. 6. Where penalties are applied, the marks for that section of the question cannot be a final negative. 7. Where method marks are awarded for operation, the marker must inspect the reasonableness of the answer before awarding the mark. 8. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect at least in part. 9. Codes: f=foreign item; p=placement/presentation. 10. Teachers must do the paper before they start marking. This marking guideline consists of 9- page Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting/P1 2 MDE/September 2023 NSC-Marking Guideline QUESTION 1 1.1 1.1.1 B  1.1.2 D  1.1.3 A  1.1.4 C  4 1.2 KING LIMITED 1.2.1 ORDINARY SHARE CAPITAL Ordinary shares at R6,00 1 200 000 see below AVP (SBB amount / 40 000) 7 200 000 60 000 x 100/25 Do not accept 60 000 (40 000)  Shares repurchased at an average price  (240 000) balancing figure 300 000  Ordinary shares issued during the year  2 550 000 Ordinary shares at the end 9 510 000 1 460 000 8 RETAINED INCOME NOTE ON 28 FEBRUARY 2023 Balance at the beginning Inspect operations from bottom (+OSD + SBB - NPAT) *324 000 Net profit after tax (408 800 x 72/28)  1 051 200 Repurchase of shares Ignore brackets  (60 000) Ordinary share dividends Ignore brackets operation ( 522 200) Interim dividends 420 000 Final dividends (1 460 000  x 7 cents ) *102 200 Balance on 28 February 2023 793 000 8 *One part correct Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting-P1 3 MDE-September 2023 NSC-Marking Guideline 1.2.2 STATEMENT OF FINANCIAL POSITION ON 28 FEBRUARY 2023. ASSETS NON-CURRENT ASSETS * 9 447 060 (50 000 one mark + 120 000 one mark + 120 000 one mark) Fixed assets (8 532 560 + 600 000 – 290 000 ) * 8 842 560 (806 000 x 75%) three marks Fixed deposit (806 000 – 201 500 ) 10 * 604 500 CURRENT ASSETS Total Assets – Non Current Assets  4 295 540 Inventory balancing figure  2 847 240 Trade and other receivables (1 067 800 + 48 000  - 1 000 ) * 1 114 800 See FD Cash and cash equivalent (132 000  + 201 500 ) * 333 500 TOTAL ASSETS See TE and L 9  13 742 600 EQUITY AND LIABILITIES Ordinary Shareholders’ equity 3 *10 303 000 Ordinary share capital  9 510 000 Retained income  793 000 NON-CURRENT LIABILITIES 1 200 000 (3 000 000 one mark – 600 000 one mark – 600 000 one mark) Loan (1 800 000  – 600 000 ) 6 * 1 200 000 CURRENT LIABILITIES * 2 239 600 Trade and other Payables (1 441 000  + 72 000 + 6 600  - * 1 518 600 1 000) Short term loan see loan above  600 000 Shareholders for dividends see 1.2.1  102 200 SARS: Income tax (408 800  - 390 000 ) * 18 800 TOTAL EQUITY AND LIABILITIES 12  13 742 600 40 *one part correct -1 F foreign items (max -2) For misplaced items mark workings only -1 P max (if no, or inappropriate details) TOTAL MARKS 60 Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting-P1 4 MDE-September 2023 NSC-Marking Guideline QUESTION 2 2.1 CASH EFFECTS FROM OPERATING ACTIVITIES 757 680 * Cash generated from operations 1 493 560 Interest paid (246 000 )* One part correct Dividends paid (100 000 + 140 000 ) (240 000) * One part correct Taxation paid (253 500  + 6 780  – 10 400 ) OR (249 880)* (-253 500 – 6 780 + 10 400) 9 * one part correct / correct use of brackets 2.2 Calculate the following amounts for the Cash Flow Statement: 2.2.1 Proceeds on disposal of fixed assets. Workings Answer OR: 7 986 780  + 2 617 880 – 540 560 – 9 868 900 Accept brackets here 7 986780 195200 195 200 OR: 2 617880 540560 one part correct -9 868 900 – 540 560 + 7 986 780 + 2 617 880 9 868900 ignore sign 5 2.2.2 Funds used to repurchase shares. Workings Answer 305 000 three marks (50 000  x R6,10 ) + 10 000  315 000  OR 6,30 three marks Both parts to be added 50 000 x (6,10 + 0,2) + 10 000 one part correct 5 ignore sign 2.2.3 Repayment of loan Workings Answer 1 500 000 – 2 600 000 1 100 000  ignore sign 2 2.2.4 NET CHANGE ON CASH AND CASH EQUIVALENT (540 000)  one part correct must be negative Balance on 1 March 2022 490 000 Balance on 28 February 2023 (5 000 – 55 000) (50 000)  4 Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting-P1 5 MDE-September 2023 NSC-Marking Guideline 2.3 Calculate the following financial indicators on 28 February 2023: 2.3.1 % Net profit after tax on sales. Workings Answer 845 000 – 253 500 591 500  x 100* 14,6%  One part correct 4 050 000  % sign not necessary accept 33% OR 33 4 2.3.2 Calculate: Debt-equity ratio Workings Answer 0,2 : 1  1 500 000 : 8 750 500  One part correct in form x:1 Accept 0,17:1 3 2.3.3 Net assets value per share (NAV) Workings Answer 8 750 500  x 100* 1 350 000 648 cents  One part correct Cents or rand not necessary 3 2.3.4 % Return on average shareholders’ equity (ROSHE) Workings Answer See NPAT above 7,9%  591 500  x 100 One part correct ½  (8 750 500 + 6 270 000 ) % sign not necessary 5 accept 7.88% OR 8 15 020 500 two marks 7 510 250 three marks TOTAL MARKS 40 Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting-P1 6 MDE-September 2023 NSC-Marking Guideline QUESTION 3: BLUE LTD AND MOON LTD 3.1 BLUE LTD 3.1.1 Explain why Lee Khan should be satisfied on the liquidity position of Blue Ltd. Quote TWO financial indicators with figures. Financial indicators   figures  Comment  could be included with financial indicator and trends.  Current ratio increased from 0,9:1 to 1,3:1  Acid-test ratio increased from 0,6:1 to 1,1:1  Debtors improved from 42 days to 34 days The business will be able to cover its short term debts. Debtor are paying closer to the acceptable 30 days credit terms. 6 3.1.2 Explain whether the company is managing risk and gearing efficiently. Quote TWO relevant indicators with figures and trends to support your comment. Financial indicators   figures and trend  Comment  could be included with financial indicator and trends Debt-equity ratio; decreased from 0,2:1 to 0,1:1 % return on average capital employed (ROTCE); increased from 14,0% to 15,6%  The company is still lowly geared / low financial risk / does not rely too much on borrowed capital.  Positive gearing / ROTCE is greater than interest rate on loan 13%. 6 3.1.3 As a shareholder you are concerned about the dividend pay-out policy.  Calculate the dividends pay-out rate for this current year. The dividends pay-out rate is 32/72,5 x 100 = 44 %  2  Provide ONE reason for your concern about the current dividend pay-out policy. Any relevant concern   Dividends paid are low; was also low last year  The company is retaining a greater portion of net profits / plans must be stated or outlined in the director’s reports.  Shareholders’ investments are not being considered / need to keep shareholders satisfied / to be assured that their investment is worthwhile. 2 Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting-P1 7 MDE-September 2023 NSC-Marking Guideline 3.2 MOON LTD 3.2.1 Explain whether the shareholders should be satisfied with the returns on their investment or not. Quote ONE financial indicators with figures to support your opinion. Financial indicators  figures and trend  Comment  could be included with financial indicator and trends ROSHE increased from 7,9% to 8,8% Although lower than alternative investments, the upward trend is encouraging OR: Return of 8,8% is less than interest on alternative investments. 4 3.2.2 Explain whether the company paid a fair price for the shares repurchased. Provide TWO financial indicators with figures in your comment. Financial indicators  figures   The price offered benefits the company as it is less than the market price of 1120 cents (by 120 cents).  Less than the NAV of 1050 cents (by 50 cents). 4 3.3 Shareholding of Lee Khan: 3.3.1 Calculate Lee’s % shareholding in Blue Ltd and comment on your findings.  900 000 / 1 700 000 = 52,9%  one part correct COMMENT:  Lee owns more than 50% of the shares; has a controlling interest; Is the majority shareholder/ decision marker. 5 3.3.2 Lee wants to maintain his % shareholding in Blue Ltd after the issue of additional shares. Calculate the minimum number of shares he should buy in Blue Ltd and the amount he would have to spend.    One part correct 75 001 x 8,30 = 622 508,30 or 75 100 x 8,30 = 623 330 975 000 – 900 000 + 1 Accept 75 100 shares or 51% of 1 950 000 4 3.3.3 Would you advise Lee to buy the additional shares in Blue Ltd or to rather invest in Moon Ltd. Provide ONE point, with reason. ONE reason  Buy in Blue – remain majority status and try to make directors accountable for progress. OR buy in Moon Ltd because they show an upward trend in share price; more demand for the shares. 2 TOTAL MARKS 35 Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting-P1 8 MDE-September 2023 NSC-Marking Guideline QUESTION 4 QATAR HOTELS LTD 4.1 Sponsorship and other parties: Refer to paragraph 1. Provide a reason why trade unions would want to be interested in the financial records and the performances of companies. Any valid point   To protect the interest of workers, e.g. job security.  For salary negotiations etc. 2 Explain why listed companies like Mzansi Hotels Ltd might want to spend money to sponsor such projects. Any valid explanation   It is part of CSR (king code)  Improve the image of the company (good publicity)  Tax deductable 2 4.2 Directors: Refer to paragraph 2. Explain the difference between an executive and a non-executive director. Executive director: are involved with internal functioning (operations) of the company / hands-on / their decisions may be based on a narrow view.  Non-executive director: have a wider perspective of the business environment / exercise a watch-dog role / keep executive directors on check.  2 Copyright reserved Please turn over

Downloaded from hlayiso.com Accounting-P1 9 MDE-September 2023 NSC-Marking Guideline 4.3 Concerns of shareholders: Refer to paragraphs 1, 2 and 3. As a concerned shareholder, what questions would you ask at AGM? Provide THREE different questions. In EACH case explain an appropriate reason. Different questions    Reason     What plans do they have to address  For continuity / going concern. the financial crisis of the company?  What was the cause of a loss of R166  For proper planning/ transparency/ million in the 2021/2022 financial accountability. year?  What is the planned percentage  Transparency and fairness. increase of the Director’s fees when compared to percentage increase of wages and salaries for workers?  How is this decision to sponsor Rugby  Return on investment / gains on tournament going to benefit the sponsorship. company  How solvent is the company (what is  They are desperately seeking extra the status of the Statement of loans and finance from investors. Financial Position) 9 TOTAL MARKS 15 Copyright reserved Please turn over