Accounting Grade 12 KZN March 2017 Memo

Education KwaZulu-Natal Department of Education REPUBLIC OF SOUTH AFRICA ACCOUNTING MARCH 2017 COMMON TEST NATIONAL SENIOR CERTIFICATE | GRADE 12 | MARKS: 100 TIME : 1 hour NB: this question paper consist of 8 pages. Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accounting March 2017 Common Test 2 NSC INSTRUCTIONS AND INFORMATION Read the following instructions and be sure to follow them carefully: 1. This question paper consists of 8 pages. 2. A special ANSWER BOOK consisting of 5 pages is provided in which to answer all the questions. 3. Answer ALL the questions. 4. Workings must be shown in brackets in order to earn part marks. 5. Non-programmable calculators may be used. 6. You may use dark pencil or black / blue pen to answer the questions. 7. Marks will be deducted for missing details and foreign entries. 8. All calculations, where applicable, must be rounded off to two decimal places. 9. Use the information in the table below as a guide when answering the question paper: Question 1: 20 Marks, 12 Minutes The topic of this question is: Content: e Return on total capital employed Calculation of ratio’s and audit report e Return on shareholders’ equity e Audit report Question 2: 20 Marks, 12 Minutes The topic of this question is: Content: Interpretation of ratio's e Financial Statements Question 3: 30 Marks, 18 Minutes The topic of this question is: Content: e Income statement Financial Statements e Balance sheet « Ordinary share capital Question 4: 30 Marks, 18 Minutes Cash Flow Statement « Cash Flow Statement Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accounting 3 March 2017 Common Test NSC QUESTION 1 (20 Marks, 12 Minutes) 1.1. RATIO’S You are provided with information, taken from the books of Inkuzi Ltd, for the financial year ended 28 February 2017. This company is listed on the Johannesburg Securities Exchange (JSE). REQUIRED: Calculate the following: 1.1.1 Return on average shareholders’ equity (ROSHE) (5) 1.1.2 Return on total capital employed (ROTCE) (8) INFORMATION: A. I 2017 2016 Shareholders’ equity 5 148 000 3 226 000 Share capital 4 800 000 3 000 000 Retained income 348 000 226 000 Mortgage Loan: TKO Bank 800 000 500 000 | Current Liabilities 537 500 489 900 Creditors and other payables 136 800 151 300 LSARS (Income tax) 25 700 0 Shareholders for dividends 375 000 240 000 Bank overdraft 0 98 600 B Interest expense R135 000 Cc. Net profit before tax R1 179 800 | D Income tax R352 800 | E. Net profit after tax R827 000 | 1.2 AUDITORS’ REPORT AND BUSINESS ETHICS 1.2.1 Who is responsible to see to it that the financial statements are drawn up? (2) 1.2.2. To which main group of people should the auditors address their report and why is the report directed to this group of people? (3) 1.2.3 The auditor's report refers to the International Financial Reporting Standards (IFRS). Explain why the auditors have to bring the IFRS into account when they give their opinion. (2) Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accounting 4 March 2017 Common Test NSC QUESTION 2 "(20 Marks, 12 Minutes) Your friend, Sibusiso Smith, wants to buy shares in a company which sells computers. He asks you for advice and presents you with the following financial indicators of two companies that he is considering. Both companies have the same number of shares. REQUIRED: Answer the following questions. In each case compare and quote the relevant financial indicators (figures, ratios or percentages) of both companies to support your explanations. 2.1 Compare and comment on the dividend pay-out policy of the two companies. 2.2 Comment on the financial gearing of both companies. Explain which company is making more use of loans and state whether it is a good idea or not, for that company to do so. 2.3 Refer to the market price of the shares and the net asset value per share. What advice would you offer Sibusiso Smith about investing in either company? INFORMATION: A. Financial indicators of Ladysmith Ltd and Dundee Ltd. Both companies financial year ended on 28 February 2017. ee Ladysmith Dundee | Ltd Ltd Market price per share (JSE) 445 cents 315 cents Net asset value per share (NAV) 316 cents 342 cents Earnings per share (EPS) 63 cents 92 cents Dividends per share (DPS) 56 cents 46 cents Return on average capital employed (ROTCE) 21,2% 9.6% Return on shareholders’ equity (ROSHE) 19.7% 7.6% Debt/equity ratio 0.9:1 0.52:1 Current ratio 1.43:1 41 Acid test ratio 0.5:1 1.6:1 (6) (8) (6) Current interest rate on loans 11% 11%. Current interest rate on alternative investment 10% 10% Copyright Reserved : Please Turn Over

Downloaded from hlayiso.com Accounting 5 March 2017 Common Test NSC QUESTION 3 (30 Marks; 18 Minutes) The financial year of Mbuso Limited ends on 28 February 2017. The bookkeeper of Mbuso Limited took the year-end adjustments into account and calculated the net profit before tax as R900 000. However, it was discovered that some adjustments were not taken into account and some were entered incorrectly when calculating the net profit before tax. REQUIRED: 3.1 Calculate the correct net profit after tax for the year ended 28 February 2017. (7) 3.2 Complete the Liabilities section of the Balance Sheet (Statement of Financial Position) on 28 February 2017. Where notes are not required, calculations must be shown in brackets for part marks to be earned. (14) 3.3 Prepare the following note to the Balance Sheet (Statement of Financial Position): 3.3.1. Ordinary Share Capital (9) INFORMATION: A. The following extract was taken from the list of balances which appeared in the ledger of Mbuso Limited on 28 February 2017, before any additional adjustments and information were taken into account: Ordinary Share capital 2 Retained Income (1 March 2016) R310 000 Equipment 350 000 | Accumulated depreciation on equipment 145 000 Provision for bad debts 1650 Bank overdraft 550 000 SARS: Income tax (Dr.) 242 800 Creditors Control ? : Deferred income 11 000 : Expenses payable 15 200 | Loan: Nongoma Bank 794 000 Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accounting 6 March 2017 Gommon Test NSC B. The following adjustments and additional information were either omitted or entered incorrectly when calculating the net profit. 1. An invoice issued to a debtor for goods sold on credit for R 70 000, was recorded as a credit note for unsatisfactory goods returned. The mark-up for this sale was 60% on cost. 2. According to the profit and loss account the insurance amounted to R27 000. This amount included an annual premium of R7 200 which was paid on 1 November 2016. 3. In the profit and loss account, the amount for Rent income amounted to R91 300. The accountant did not take into account that the tenant paid the rent for March 2017 in advance. The rent had increased by R700 per month on 1 October 2016. 4. The loan statement received from Nongoma Bank reflected the following: Balance at the beginning of the year R880 000 Interest capitalized R103 600 for the year Monthly payment to Nongoma Bank R15 800 per month | Balance at the end of the year R794 000 In terms of the loan agreement, fixed monthly repayment of capital plus interest is to be paid until the loan is settled. Interest was not taken into account when the Income Statement was prepared. 5. The total current assets amounted to R1 704 000 6. Income Tax for the year amounted to R247 800 7. The current ratio for 2017 is 1,5:1 8. Share capital: = On 1 March 2016 the ordinary share capital amounted to R2 400 000. " 60 % of the authorised share capital of 500 000 shares were issued. =» On 1 July 2016 the directors issued an additional 100 000 shares at R8,20. = On 10 January 2017 the directors decided to buy back 70 000 shares from the estate of a deceased shareholder at R8,60 per share. This transaction was completed successfully, but no entry has been made as yet. These shares qualify for final dividends. 9. Final dividends were declared at 80 cents per share on 28 February 2017. Copyright Reserved Please Turn Over

Downloaded from hlayiso.com Accounting 7 March 2017 Common Test NSC QUESTION 4 (30 Marks; 18 Minutes) You are provided with an extract from the financial records of M.G Limited on 28 February 2017, the end of the financial year. They are authorised to issue 1 200 000 shares. By 28 February 2017 they had issued 540 000 of these shares. REQUIRED: 4.1 Complete the Reconciliation of net profit before tax and cash generated from operations on 28 February 2017. (9) 4.2 Complete the Cash Flow Statement on 28 February 2015. (21) Copyright Reserved Please Turn Over

Accounting Downloaded from hlayis o.com March 2017 Common Test NSC INFORMATION: A. Extract from the Income Statement 28 February 2017 Net profit after tax 1 260 000 Depreciation ? Interest expense 89 600 Income tax 540 000 B. _The following balances were extracted from the Balance Sheet: Cc. Fixed assets Equipment purchased on 1 March 2014 for R80 000, was sold on.31 August 2016 for cash at the carrying value. Depreciation on equipment is calculated at 15% p.a. on diminished method. D. Share capital and dividends ca RTA ENA ea TANIA 900 000 shares were in issue on 1 March 2016. The company issued 125 000 ordinary shares at R13,20 per share on 1 July 2016. 75 000 ordinary shares were repurchased from the estate of a deceased shareholder at R3,10 above the average price on 28 February 2017. These shares do qualify for final dividends. 2017 2016 Share capital ? 4500 000 Retained income 266 260 270 720 Loan: Siya Bank 652 000 665 600 SARS (Income tax) 13 540 (Cr) 17 520 (Dr) Trade debtors 238 600 288 600 Prepaid expenses 31 200 24 800 Trade creditors 490 000 410 000 | Income received in advance 47 800 59 200 | Inventories. 312 000 248 000 Cash and cash equivalents (bank) 2 000 003 91 200 | Bank overdraft 15 200 126 390 } Shareholders for dividends 2? 140 000 Final dividends of 12 cents have been declared on 28 February 2017. Total dividends for the year ended 28 February 2017 amounted to R225 500. Copyright Reserved TOTAL MARKS: 100

Education KwaZulu-Natal Department of Education REPUBLIC OF SOUTH : ACCOUNTING : m ANSWER BOOK : H MARCH 2017 . NATIONAL | SENIOR CERTIFICATE GRADE 12 | QUESTION MARKS MOD N.B. This answer book consist of 5 pages | | | | |

Downloaded from hlayiso.com Accounting 2 March 2017 Common Test QUESTION 1 1.1.1 | Return on average shareholders’ equity (ROSHE) —— 1.1.2 | Return on total capital employed ROTCE 1.2.1 [Who is responsible to see to it that the financial statements are drawn up? To which main group of people should the auditors address their report and why is the report directed to this group of people? 1.2.2 1.2.3 [The auditor's report refers to the International Financial Reporting Standards (IFRS). Explain why the auditors have to bring the IFRS into account when they give their opinion. Copyright reserved Please Turn Over

Downloaded from hlayiso.com Accounting 3 March 2017 Common Test QUESTION 2 ee — 2.1 Compare and comment on the dividend pay-out policy of the two companies. ] 2.2 Comment on the financial gearing of both companies. Explain which company is making more use of loans and state whether it is a good idea or not, for that company to do so. a a EN 2.3 Refer to the market value of the shares and the net asset value per share. Copyright reserved What advice would you offer Sibusiso Smith about investing in either company? SS 1) ee nn Please Turn Over

Downloaded from hlayiso.com Accounting 4 March 2017 Common Test QUESTION 3 3.1 Calculate the correct net profit after tax for the year ended 28 February 2017. Net profit before tax 900 000 3.2 Complete the Liabilities section of the Balance Sheet (Statement of Financial Position) on 28 February 2017. Where notes are not required, calculations must be shown in brackets for part marks to be earned. Non-current liabilities Current liabilities 3.3 [ Ordinary Share Capital ] 2.400 000 | | — Copyright reserved Please Turn Over | | |

Downloaded from hlayiso.com Accounting 5 March 2017 Common Test QUESTION 4 4.1 Complete the Reconciliation of net profit before tax and cash generated from operations on 28 February 2017. Cash flow from investing activities Purchase of Fixed assets (229 620) ' Cash flow from financing activities | | 21 Copyright reserved

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