# Accounting Grade 12 Eastern Cape June 2014 Memo > Grade 12 Accounting memorandum from the Eastern Cape June 2014, 18 pages. Read online or get the free PDF download, question paper linked when available. - Page: https://www.hlayiso.com/library/accounting-gr12-memo-june-2014emo-26-5-14/2db52252-f313-4800-8ce0-cf28f6a6d14c - Updated: 2026-09-27 - Subject: Accounting - Grade: Grade 12 - Document type: Memorandum - Year: 2014 - Exam period: Eastern Cape June - Curriculum: CAPS - Pages: 18 Breadcrumbs: [Home](https://www.hlayiso.com/) › [Library](https://www.hlayiso.com/library) › [Grade 12](https://www.hlayiso.com/library/grade-12) › [Accounting](https://www.hlayiso.com/library/grade-12/accounting) › [Accounting Grade 12 Eastern Cape June 2014 Memo](https://www.hlayiso.com/library/accounting-gr12-memo-june-2014emo-26-5-14/2db52252-f313-4800-8ce0-cf28f6a6d14c) ## About this document Accounting · Grade 12 · Eastern Cape June · 2014. Memorandum, 18 pages. Read online or download the PDF. Read it free online on the page above; download the PDF from there. ## Document text Text extracted from the PDF. Layout, diagrams and tables may not survive extraction. ### Page 1 Downloaded from hlayiso.com ACCOUNTING MEMORANDUM COMMON TEST JUNE 2014 NATIONAL SENIOR CERTIFICATE GRADE 12 MARKS: 300 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 penalty for misplaced item). No double penalty applied. 2. Full marks for correct answer. If answer incorrect, mark the workings provided. 3. If pre-adjustment figure is shown as the final figure, no marks will be allocated. 4. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect. 5. Codes: f = foreign item; p = placement This memorandum consists of 19 pages. Copyright Reserved Please Turn Over ### Page 2 Accounting Downloaded from 2 hlayiso.comJune 2014 Common Test NSC – Memorandum QUESTION 1 1.1 Why is it important for a business to prepare a monthly Bank Reconciliation Statement? Provide TWO points. Any TWO points   Good explanation = 2 marks; Satisfactory = 1; Incorrect =0 Possible answers:  To improve internal control by minimising fraud or error because records are checked to an external source.  To improve internal control by identifying outstanding cheques and deposits.  The books of the business and that of the bank should agree and the bank balance should be the same in both books  To compare the books of the business with that of the bank in order to detect errors and dishonesty at an early stage. Expected responses for 1 mark:  Internal control purposes  To reconcile the bank account 4  To identify the correct bank balance and update records  To identify outstanding cheques and deposit 4 1.2 One of the cheques not presented to the bank has been treated incorrectly. Which cheque is it and explain your choice. Indicate the correct course of action to be taken. Cheque no 892 for R12 340 is stale (older than six months) Indicate the correct course of action 3 3 It must be cancelled in the Cash Receipts Journal (CRJ) in February  1.3 Calculate the correct totals in the CRJ and CPJ for 28 February 2014. CRJ CPJ 146 970 68900 1 800 2 100 12 340 920 600 50 000 161 110 122 520 6 6 Operation if one part correct Copyright Reserved Please Turn Over ### Page 3 Accounting Downloaded from 3 hlayiso.comJune 2014 Common Test NSC – Memorandum 1.4 BANK RECONCILIATION STATEMENT AS AT 28 FEBRUARY 2014 DEBIT CREDIT Credit balance as per Bank statement 42 440 Outstanding deposit (27 February 2014) 18 000 Credit amount wrongly debited 800 Outstanding cheques No.897 (10 January 2014) 8 700 No.905 (28 February 2014) 1 200 No.908 (15 March 2014) 3 100 Debit balance as per Bank Account 48 240 61 240 61 240 -1 for foreign items (max -2) Give the method mark if the figure is above 9 650 in the bank account 7 7 1.5 Explain how cheque No.908 should be treated when preparing the financial statements as at 28 February 2014, and explain the reason for this treatment. Increase bank account and increase creditors OR Increase the bank and creditors figures in the Balance Sheet notes respectively. OR Debit bank and credit creditors control 4 Explain the reason for this treatment. 4 The funds have not been transferred by the bank as at 28 February 2014. The amount is still owed to creditors as at 28 February 2014. 1.6 Explain why a post-dated cheque received by Belino Traders on 10 February 2014 but dated 25 March 2014 does not appear in the Bank Reconciliation Statement. Any ONE reason:  Post dated cheques received are recorded in the PDC register  PDC’s are deposited on the day they are due  PDC has no effect until the due date 2  Rule of prudence-do not record until certain 2 Copyright Reserved Please Turn Over ### Page 4 Accounting Downloaded from 4 hlayiso.comJune 2014 Common Test NSC – Memorandum 1.7 Refer to information G. The bookkeeper has decided to write off the amount of R50 000.  Which GAAP principle will the bookkeeper apply in this case? Briefly explain this principle.  The bookkeeper wants to prevent a problem such as this in future. Give TWO solutions to improve internal control in this regard. Which GAAP principle will the bookkeeper apply in this case? Briefly explain this principle Principle of Prudence  The bookkeeper wants to prevent a problem such as this in future. Give TWO solutions to improve internal control in this regard.  Division of duties: The person completing the deposit slip must not be the same person depositing the money at the bank.  Deposit slips must agree to total of the receipts and cash slips  Check via internet banking that deposits are reflected daily.  Request the bank to send an sms each time a deposit is made  3 3 QUESTION 2 2.1 Tangible asset/fixed asset note. LAND AND TANGIBLE ASSETS VEHICLES EQUIPMENT BUIDINGS Carrying value at beginning of the operation operation year 1 900 000 480 000 340 000 Cost 1 900 000 600 000 650 000 Accumulated depreciation - (120 000) (310 000) Movements Additions 0 450 000 70 000 Any figure Disposal 0 (90 000) - operation Depreciation - (99 900) (102 750) operation operation Carrying value at the end of year 1 900 000 740 100 307 250 Copyright Reserved Please Turn Over ### Page 5 Accounting Downloaded from 5 hlayiso.comJune 2014 Common Test NSC – Memorandum Cost 1 900 000 870 000 720 000 Accumulated depreciation - (129 900) (412 750) 17 2.2 Ordinary share capital note 17 Authorised: Number of authorized ordinary shares: 2 000 000 shares ISSUED: 600 000 ordinary shares in issue at beginning of financial year R 3 000 000 10 000 shares bought back during the financial year at R5 R(R50 000) 40 000 shares issued during the year at R8 R320 000 operation 630 000 ordinary shares in issue at the end of the financial year R3 270 000 4 4 2.3 Retained income Balance at the beginning of the financial year 44 700 Funds used for buy-back of shares (10 000 x R2) (20 000)  (1 300 000 + 5 000 – 99 900 – 102 750+ 650 - 330 900) Net profit after tax for the year operation if one part correct 772 100 Dividends operation (458 500) Interim/Paid 206 500 Final/Recommended (630 000 X 0.40) 252 000 Balance at the end of the financial year 338 300 operation 15 15 2.4 DURBAN LIMITED BALANCE SHEET AS AT 28 FEBRUARY 2014 Copyright Reserved Please Turn Over ### Page 6 Accounting Downloaded from 6 hlayiso.comJune 2014 Common Test NSC – Memorandum ASSETS NON-CURRENT ASSETS 2 987 350 Fixed/Tangible assets operation see 4.1 2 947 350 Financial assets: fixed deposit (120 000 – 80 000) 40 000 CURRENT ASSETS 1 131 950 Inventories (527 450 + 9 000) operation if one part correct 536 450 Trade and other receivables(290 000 – 2 100 + 9 100 + 1 000 + 95 000) 393 000 Cash and cash equivalents (122 000 + 500 + 80 000) operation if one part correct 202 500 TOTAL ASSETS operation 4 119 300 EQUITY AND LIABILITIES SHAREHOLDERS’ EQUITY operation if one part correct 3 608 300 Share capital operation see 4.2 3 270 000 Retained income operation see 4.3 338 300 NON-CURRENT LIABILITIES operation if one part correct 40 000 Loan from: Zola bank (120 000 – 40 000 – 40 000) operation if one part correct 40 000 CURRENT LIABILITIES operation if one part correct 471 000 Trade and other payables(62 000 + 30 000 + 10 000 + 7 000 + 252 000 431 000 + 70 000) operation if one part correct Current portion of loan operation 40 000 TOTAL EQUITY AND LIABILITIES operation 4 119 300 Balance sheet totals do not have to agree to get method marks for totals Workings may be shown outside the face of BS- award part marks 38 38 QUESTION 3 3.1 Calculate the value of the closing stock for the following stock items. Show all workings Copyright Reserved Please Turn Over ### Page 7 Accounting Downloaded from 7 hlayiso.comJune 2014 Common Test NSC – Memorandum 3.1.1 Grocery (use the FIFO method) 15 x 910 = 13 650 52 x 900 = 46 800 = 60 450 operation 3.1.2 Bicycles (use the Specific Identification method) BMX 140 2 X 400 = 800 BMX 400 1 X 600 = 600 BMX 305 1 X 510 = 510 BMX 200 2 X 300 = 600 BMX 300 7 X 500 = 3 500 BMX 205 2 X 380 = 760 = 6 770 operation 10 10 3.2 Calculate cost of sales for: 3.2.1 Grocery. Opening stock (12 x R940) R 11 280 Purchases (16 000 + 28 000 + 53 400 + 90 000 + 13 650 - 2 800 – 4 500) R193 750 operation Less closing stock (R60 450) see 3.1.1 Cost of sales R 144 580 operation 11 11 Copyright Reserved Please Turn Over ### Page 8 Accounting Downloaded from 8 hlayiso.comJune 2014 Common Test NSC – Memorandum 3.3 As internal auditor, what would you say to the owner and accountant? State TWO points Any two valid comments:    Specific Identification method is more precise.  Get clearance from SARS to make the changes  The business should keep to the existing method to ensure comparability across years unless very valid reason for change which is not the case here.  Decision should not be made on the basis of what is easier or what will result in less tax. They must choose the most appropriate method or must not manipulate the profit (unethical) 4 4 3.4 What advice would you offer to the owner in this regard? Any valid advice  it will be nepotism, and it’s unethical  Procurement policy must be in place and must ensure that employees abide by this policy.  It is important to support loyal suppliers but the quality and price of the product must not be compromised. 3 3 QUESTION 4 Copyright Reserved Please Turn Over ### Page 9 Accounting Downloaded from 9 hlayiso.comJune 2014 Common Test NSC – Memorandum 4.1 ASSET DISPOSAL ACCOUNT Feb  Feb (106 000+ 2014 28 Vehicles GJ 210 000 2014 28 17 500) GJ 123 500 Accumulated depreciation operation   Bank GJ 120 000 Profit on sale of GJ 33 500 asset  operation 243 500 243 500 10 10 4.2 ZOLA LIMITED: INCOME STATEMENT FOR THE YEAR ENDED 30 APRIL 2014 Sales (5 250 000 – 72 600) 5 177 400 Cost of sales (3 743 500) Gross profit 1 433 900 Other operating income operation 117 450 Rent income (88 400 – 5 700) 82 700 Bad debts recovered 1 150 Profit on sale of asset 33 500 Provision for bad debts adjustment (10 050 – 9 950) 100 Gross income 1 551 350 Operating expenses operation (1 119 410) Directors fees (420 000 – 16 800) 403 200 Audit fees 36 900 Packing material (11 550 – 450) 11 100 Salaries and wages 330 000 Marketing expenses 240 000 Bad debts (6 000 + 1 000) 7 000 Sundry expenses 31 885 Trading stock deficit ( 477 500 – 470 000) 7 500 Depreciation (17 500 + 19 700 + 8 625 + 6 000) operation if 51 825 one part correct Operating profit 431 940 Interest income (13 315 + 8 960) operation if one part correct 22 275 Operating profit before interest expense 454 215 Interest expense (15 000) Operating profit before taxation 439 215 Taxation (140 000) Copyright Reserved Please Turn Over ### Page 10 Accounting Downloaded from 10 hlayiso.comJune 2014 Common Test NSC – Memorandum Net profit for the year operation 299 215 42 Foreign items -1 each (max -2) 42 4.3 4.3.1 TRADE AND OTHER RECEIVABLES Trade debtors ( 198 000 – 1 000 + 2 000) 199 000 Provision for bad debts (9 950) Net trade debtors 189 050 Prepaid expense 16 800 Accrued income 8 960 SARS-income tax (150 900 – 140 000) 10 900 Operation if one pact correct 225 710 11 11 QUESTION 5 5.1 5.1.1 Explain ONE method that Mandla Mbambo could have used to collect audit evidence.  Interview debtors  Use the records of the business Any relevant answer 2 2 5.1.2 Calculate the new outstanding balance of Khethiwe Mdluli after taking into account errors and omissions. Balance 7 400  Bank (5 940) Sales 4 000 DAJ (340) DJ 530 5 650 Operation if one part is correct Copyright Reserved Please Turn Over ### Page 11 Accounting Downloaded from 11 hlayiso.comJune 2014 Common Test NSC – Memorandum 7 7 5.1.3 Calculate the amount of discount that Mduduzi Hlatshwayo received when he settled his account.   4 1600 + 850 = 2 450 x 100 = 98  Operation if one part is correct 3 3 Copyright Reserved Please Turn Over ### Page 12 Accounting Downloaded from 12 hlayiso.comJune 2014 Common Test NSC – Memorandum 5.1.4 Debtors age analysis of Five Ways Pharmacy 90 Days + 60 Days 30 Days Current Nonjabulo Mgabhi - 2 584 1 780 450 3 Operation 3 5.1.5 If Debtors are not paying their accounts, a business can take legal action against them, but this would cost money. What THREE strategies should Mandla Mbambo consider before deciding whether to take legal action or write off the bad debts.  To remind debtors constantly and timeously  The amount that the debtor owe us.  Loss that will be incurred due to legal action and bad debts.  Send final demand letters for outstanding debts. Accept any relevant answer 3 3 5.1.6 Five Ways Pharmacy is obviously having a problem controlling its debtors, Mandla Mbambo has been brought in to try and rectify the situation which he claimed he did very well. Do you agree with his statement? Give TWO opinions to support your answer. Opinion : Yes Supporting answers:  All debtors are treated the same no matter how much a debtor owes the business  Mistakes have been identified and corrected.  Some debtors are responding to his new policy. Any relevant answer 5 5 Copyright Reserved Please Turn Over ### Page 13 Accounting Downloaded from 13 hlayiso.comJune 2014 Common Test NSC – Memorandum 5.2 Use the table to indicate the differences that were discovered when comparing the account in the Creditors ledger with the statement received from Zulu Suppliers. Write only the amount in the appropriate column and a plus (+) or minus (-) sign to indicate an increase or decrease in the balance. Calculate the correct balance/total at the end. Creditors ledger of Statement from Zwane Traders Zulu Suppliers Balance R 7 750 R 11 000 1. – 2 000 2. + 400 3. - 50 4. + 8 100 5. + 4 500 + 4 500  OR + 9 000  Operations, both totals Balance/Total 17 100 17 100 11 11 Copyright Reserved Please Turn Over ### Page 14 Accounting Downloaded from 14 hlayiso.comJune 2014 Common Test NSC – Memorandum QUESTION 6 6.1 State where the following statements are TRUE or FALSE. 6.1.1 False 6.1.2 False 6.1.3 True 6.1.4 False 6.1.5 False 5 5 6.2.1 Cash generated from operations for the year ended on 28 February 2014 Net profit before tax (522 900 X 100 / 70) operation if one part correct 747 000 Adjustments in respect of: Depreciation 56 000 Interest expense 19 500 Net profit before changes in working capital 822 500 Changes in working capital (3 500) Inventory (220 000 – 185 000) (35 000) Debtors (141 000 – 113 000) (28 000) Creditors (145 000 – 85 500) 59 500 operation if one part correct 819 000 8 8 Copyright Reserved Please Turn Over ### Page 15 Accounting Downloaded from 15 hlayiso.comJune 2014 Common Test NSC – Memorandum 6.2.2 Cash flow statement for the year ended 28 February 2014 Cash flow from operating activities operation 210 400 Cash generated from operations see 6.2.2 819 000 Interest paid (19 500) Dividends paid (300 000) Tax paid(18 000 + 224 100 + 47 000) (289 100) Or (-18 000 – 224 100 – 47 000) operation if one part correct Cash flow from investing activities 990 100 Purchases of non-current assets (1 928 600 + 56 000 + 1 100 000 (147 000) – 2 937 600) operation if one part correct Or ( -1928 600 – 56 000 – 1 100 000 + 2 937 600) Proceeds on sale of non-current assets 1 100 000 Decreased in fixed deposit(753 000 – 715 900) 37 100 Cash flow from financing activities operation if one (80 000) part correct Proceeds on sale of shares (100 000 X 9) 900 000 Buy-back of shares (20 000 X 8.5) (170 000) Decreased in non-current liabilities (130 000 – 940 000) or (940 000 – 130 (810 000) 000) Net change in cash and cash equivalent operation 1 120 500 Cash and cash equivalent at the beginning (87 500) Cash and cash equivalent at the end 1 033 000 NB: do not ignore brackets for outflow of funds 20 20 6.2.3 6.2.3.1 Debt/equity ratio 130 000 : 2 600 000 0.05 : 1 operation if one part correct 3 3 Copyright Reserved Please Turn Over ### Page 16 Accounting Downloaded from 16 hlayiso.comJune 2014 Common Test NSC – Memorandum 6.2.3.2 % return on average shareholders’ equity (after tax) 522 900  X 100 ½(2 600 000 + 1 768 000) 1 522 900 X 100 2 184 000 1 23.94% operation if one part correct 5 5 6.2.3.3 % return on total capital employed 747 000 + 19 500 X 100 ½(2 730 000 + 2 708 000) 1 766 500 X 100 2 719 000 1 28.19% operation if one part correct 6 6 Copyright Reserved Please Turn Over ### Page 17 Accounting Downloaded from 17 hlayiso.comJune 2014 Common Test NSC – Memorandum 6.3 6.3.1 Comment on the price at which the new shares were issued for both companies, will the Directors and the shareholders are satisfied with this? Explain, quoting relevant figures from the question in each company. Opinion in each company  Any two valid ratios or figures in each company  Quoting of relevant indicators in each company  Mkhabela LTD Opinion: No Expected response:  They sold the shares at 260 cents under the market price value (450 cents compared to 710 cents)  They sold the shares at 85 cents under the NAV (450 cents compared to 535 cents)  The existing shareholders are being disadvantaged. They could have raised a lot more if they had sold at the market price (189 000 x 260 cents = R491 400) Nyembe LTD Opinion: Yes Expected response:  They sold the shares at 280 cents above the market price value (1 200 cents compared to 920 cents)  They sold the shares at 80 cents above the NAV (1200 cents compared to 1120 cents  The existing shareholders and Directors will be happy to raise (189 000 x 280 cents) R529 200. 10 10 Copyright Reserved Please Turn Over ### Page 18 Accounting Downloaded from 18 hlayiso.comJune 2014 Common Test NSC – Memorandum 6.3.2 Consider the use of loans by the two companies:  Which company is making more use of loan? Quote a financial indicator for each company.  Explain whether or not it was a good idea for that company to make use of loans. Quote one financial indicator. Nyembe LTD  Debt/equity ratio of Nyembe is 3.1 : 1  while Mkhabela is 0.2 : 1  No or not good  Return on capital employed for Nyembe 16.8%  which means that the return they are earning is lower than the interest rate of 17% on loan. That indicates negative gearing  6 6 6.3.3 MR Mathebula is of the option that the Directors of Nyembe are generally happy with handling of its working capital more effectively and in a better liquidity situation than Mkhabela LTD. Explain and quote THREE financial indicators to support his opinion Financial indicator  Quoting of figures  Explanation   Current ratio of Nyembe is 2:1 and of Mkhabela LTD is 5, 1.1. Nyembe has enough current assets to cover his current liabilities whereas Mkhabela is holding too much of his funds in the form of current assets which may not result in a return for the business  Acid test ratio of Nyembe LTD is 1 : 1 and of Mkhabela is 0.8 : 1. Nyembe can cover his short term debt. Mkhabela is holding much of his trading stock (stock piling)  Stock turn- over rate of Nyembe is 10 times while Mkhabela is 6 times. Stock of Nyembe is sold fast compared with trading stock of Mkhabela Do not accept average debtors collection period and average creditors payments period 9 9 Copyright Reserved Please Turn Over ## Related documents - [ACCOUNTING ANSWER BOOK 26 .5 .14 D](https://www.hlayiso.com/library/accounting-answer-book-26-5-14-d/6ebe92f4-f615-4ca3-8569-bf1e32af1c92) — Accounting · Addendum · 2014 - [ACCOUNTING P1 GR12 MEMO JUNE 2023 English](https://www.hlayiso.com/library/accounting-p1-gr12-memo-june-2023-english/b15a4456-2317-4298-9022-fc735fdc6214) — Accounting · Memo · 2023 · Eng - [ACCOUNTING P1 GR12 MEMO JUNE 2022 Afrikaans Final](https://www.hlayiso.com/library/accounting-p1-gr12-memo-june-2022-afrikaans-final/46a00290-3eef-4646-8f78-18a84ed5df72) — Accounting · Memo · 2022 · Afr - [ACCOUNTING P2 MEMO GR12 P2 JUNE 2022 Afrikaans Final](https://www.hlayiso.com/library/accounting-p2-memo-gr12-p2-june-2022-afrikaans-final/8607a9eb-4290-4d74-af8b-7bb6e58e91eb) — Accounting · Memo · 2022 · Afr - [ACCOUNTING P2 MEMO GR12 P2 JUNE 2022 English Final](https://www.hlayiso.com/library/accounting-p2-memo-gr12-p2-june-2022-english-final/edb5d545-b8d8-4365-b883-b3b3de78130f) — Accounting · Memo · 2022 · Eng - [Accounting Nov 2014 Answer Book Afr](https://www.hlayiso.com/library/accounting-nov-2014-answer-book-afr/2ee1a360-1246-4e7c-8ba2-c5b341079807) — Accounting · Addendum · 2014 · Afr ## More from Grade 12 Accounting - [Accounting](https://www.hlayiso.com/library/accounting/8f42a6a4-9593-4d36-86b1-d890dd1bb1bf) — Guide - [ACCOUNTING P1 GR12 AB JCT ENG D watermark](https://www.hlayiso.com/library/accounting-p1-gr12-ab-jct-eng-d-watermark/77ae8297-53f7-47b3-8e29-57bd38f30483) — Addendum · 2025 · Eng - [ACCOUNTING P1 GR12 QP JCT 2025 AFR D watermark](https://www.hlayiso.com/library/accounting-p1-gr12-qp-jct-2025-afr-d-watermark/c6a5692b-3cb0-464b-bb82-67d6ce83bfdd) — QP · 2025 · Afr - [ACCOUNTING P1 GR12 QP JCT 2025 ENG D watermark](https://www.hlayiso.com/library/accounting-p1-gr12-qp-jct-2025-eng-d-watermark/84d92eb0-f5bd-4442-bb6d-c55cdc52e25d) — QP · 2025 · Eng - [ACCOUNTING P2 QP GR12 JCT 2025 ENG D watermark](https://www.hlayiso.com/library/accounting-p2-qp-gr12-jct-2025-eng-d-watermark/13425f71-aba6-4328-b084-d9b108884315) — QP · 2025 · Eng - [Accounting P1 (English) June 2025 Answer Book](https://www.hlayiso.com/library/accounting-p1-english-june-2025-answer-book/7e96e433-56f8-43a1-9a38-c68c465746dd) — Addendum · 2025 · Eng ## Collection - [Grade 12 past papers](https://www.hlayiso.com/grade-12/past-papers) --- Hlayiso: free CAPS and IEB past papers, memos, notes and study guides for South African learners. 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