Accounting Grade 12 Paper 1 NW June 2025 Memo (English)

PROVINCIAL ASSESSMENT GRADE 12 ACCOUNTING P1 JUNE 2025 MARKING GUIDELINES MARKS: 150 MARKING PRINCIPLES: 1. Unless otherwise stated in the marking guideline, 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. Penalties for placement or poor presentation (e.g. details) are applied only if the candidate is earning marks on the figures for that item. 3. Unless otherwise stated, give full marks for correct answer. If answer incorrect, mark workings. 4. If a pre-adjustment figure is shown as a final figure, allocate the part-mark as a working mark for that figure (not the method mark for the answer). Note: figures are stipulated in marking guideline components of workings, these do not carry the method mark for parts thereof. 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. If candidates provide more than the required number of responses, inspect all responses to give benefit to the candidate. Penalties may be applied for foreign entries if candidates earn full marks on a question (max -2 per Q). 8. These marking guidelines is not for public distribution, as certain items might imply incorrect treatment. The adjustments made are due to nuances in certain questions. 9. Where penalties are applied, the marks for that section of the question cannot be a final negative. 10. Where method marks are awarded for operation, markers must inspect the reasonableness of the answer. 11. “Operation” means check operation. 'One part correct' means operation and one part correct. Note: check operation must be +, -, x, ÷, as per candidate’s calculation (if valid) or per marking guideline. 12. In calculations, do not award marks for workings if numerator & denominator are swapped – this also applies to ratios. 13. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect at least in part. Indicate with a . 14. Be aware of candidates who provide valid alternatives beyond the marking guidelines. Note that one comment could contain different aspects. 15. Codes: f = foreign item; p = placement/presentation. This marking guideline consists of 11 papers. Copyright reserved Please turn over

Accounting/P1 2 NW/June 2025 Grade 12 – Marking Guidelines QUESTION 1: CONCEPTS, INCOME STATEMENT AND BALANCE SHEET 1.1 1.1.1 D ✔ 1.1.2 A ✔ 1.1.3 E ✔ 1.1.4 C ✔ 1.1.5 B ✔ 5 Copyright reserved Please turn over

Accounting/P1 3 NW/June 2025 Grade 12 – Marking Guidelines 1.2 WANKARABA LIMITED 1.2.1 Statement of Comprehensive Income for the year ended 30 April 2025 Sales (7 523 000✔– 40 600✔) 7 482 400✔ Cost of sales (7 482 400✔ - 260 000 + (260 000  x100/80) 325 000✔✔ x 100/160✔) * (4 717 125) Gross profit Operation 9  2 765 275 Other Operating Income Operation  103 856 Rental income (119 808– 20 352✔✔) *  99 456 Provision for bad debts adjustment (50 000✔– 45 600  (912 000 x 5%)✔✔) * 4 400 Gross Operating Income Operation 9  2 869 131 Operating expenses Operation  (1 216 106) Wages and Salaries 457 745✔ Insurance (42 000 – 4 500✔) Operation 37 500 Directors' fees (687 500 – 27 500✔) Operation 660 000 Trade inventory deficit (843 136 + 25 375 - 835 000) 33 511✔✔ Depreciation (25 200✔+ 2 150✔) *  27 350 Operating profit Operation 11 1 653 025 Interest income 565 000 Profit before interest expense Operation  2 218 025 Interest expense (480 000) ✔ Net profit before tax 1 738 025✔ Income tax 4 (486 647)✔ Net profit after tax 1 251 378 33 *One part correct Copyright reserved Please turn over

Accounting/P1 4 NW/June 2025 Grade 12 – Marking Guidelines 1.2.2 Statement of financial position as at 30 April 2025 EQUITY AND LIABILITIES ORDINARY SHAREHOLDER EQUITY ✔✔ (900 000 x 6,28) 5 652 000 Ordinary share capital 3 500 000 Retained income  3 2 152 000 NON-CURRENT LIABILITIES 4 185 000 Loan: Mahikeng Bank (5 100 000✔+ 480 000✔) x  75%✔ 4 4 185 000 CURRENT LIABILITIES 2 524 189 Trade and other payables (967 350✔+ 20 352)  Check Rent income 987 702 Short-term loan (5 580 000 x 25%)  1 395 000 Shareholders for dividends (900 000 x 13c) 117 000✔✔ SARS (Income Tax) (462 160✔ - 486 647)  10 24 487 TOTAL EQUITY AND LIABILITIES 12 361 189 17 *One part correct *Operation QUESTION 1 55 Copyright reserved Please turn over

Accounting/P1 5 NW/June 2025 Grade 12 – Marking Guidelines QUESTION 2: ORDINARY SHARE CAPITAL AND RETAINED INCOME NOTES, CASH FLOW STATEMENT AND FINANCIAL INDICATORS 2.1 2.1.1 current asset✔ 2.1.2 limited✔ 2.1.3 net asset value✔ 2.1.4 materiality principle✔ 2.1.5 liquidity✔ 5 2.2 2.2.1 ORDINARY SHARE CAPITAL AUTHORIZED 3 680 000 Ordinary shares ISSUED: 920 000✔✔ Ordinary shares in issue at the 1 012 000 beginning of the year 320 000 Ordinary shares issued on 1 March 761 200✔ 2024 (20 000)✔ Shares bought back on 28 February (28 600) * 2025 @ R1,43✔ 1 220 000 Ordinary shares in issue at the end of 1 744 600 the year 8 2.2.2 RETAINED INCOME Retained income at the beginning of the year 2 474 800 Net income after tax 1 195 200 ✔✔ Buyback of 20 000 shares @ R0,50✔ (10 000) ✔ Ordinary share dividends (458 800)  Paid (1 240 000✔x 0,15✔) 186 000 Declared 272 800✔ Retained income at the end of the year 3 201 200 10 Copyright reserved Please turn over

Accounting/P1 6 NW/June 2025 Grade 12 – Marking Guidelines 2.3 Calculate the amount that will appear in the Cash Flow Statement for: 2.3.1 Taxation Accept alternative calculations, reversed signs or ledger account 23 800✔+ 464 800✔+ 16 400✔= 505 000 4 2.3.2 Dividends paid Accept alternative calculations, reversed signs or ledger account 154 000✔+ 186 000= 340 000 Check 2.2.2 3 2.3.3 Shares bought back 28 600 + 10 000 = 38 600 Or 20 000✔x 1,93✔= 38 600✔ 3 2.4 Prepare the following sections of the cash flow statement: 2.4.1 Change in working capital 222 000 Decrease✔in stock 104 000✔✔ 328 000 – 224 000 Decrease✔in debtors Operation 76 400 239 600 – 316 000✔ Increase✔in creditors Operation 41 600 129 600✔ – 88 000 10 2.4.2 Cash flow from financing activities 562 600 Return on shares issued 761 200✔ Buyback of shares See 2.3.3 (38 600)  28 600 + 10 000 Repayment of loan (160 000) ✔ 960 000 – 800 000 4 Copyright reserved Please turn over

Accounting/P1 7 NW/June 2025 Grade 12 – Marking Guidelines 2.4.3 Net change in cash equivalents 321 400 Cash and cash equivalents – beginning (111 000)✔✔ (15 000 – 126 000) Cash and cash equivalents - end 210 400✔ 4 QUESTION 2 51 QUESTION 3: ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS 3.1 Calculate the following financial indicators: Net asset value of Limpopo Ltd 4 233 600✔ = 1 120 cents 378,000✔ Debt-Equity Ratio of Boland Ltd 606 690✔ : 3 033 450✔ = 0.2 : 1 6 3.2 Your colleague is of the opinion that the liquidity situation of Limpopo Ltd is better than that of Boland Ltd. Quote TWO financial indicators with appropriate figures to support his opinion. Quote two financial figures. Two indicators✔✔and figures✔✔  The acid test of Boland Ltd is 3.31 : 1 and Limpopo Ltd is 1.3 : 1  The inventory turnover rate of Boland Ltd is 5 times and Limpopo Ltd is 9 times. Explain✔✔  Limpopo Ltd has a better acid test than Boland Ltd. Boland Ltd has too much inventory on hand.  Limpopo Ltd sells inventory faster, 9 times, during the year compared to Boland Ltd's 5 times. 6 Copyright reserved Please turn over

Accounting/P1 8 NW/June 2025 Grade 12 – Marking Guidelines 3.3 Boland Ltd decided to pay off a large amount on the loan during the financial year. Quote TWO financial indicators with appropriate figures to show why this was not a good decision by the directors. (Leverage effect) Financial indicator and figures✔✔ ✔✔ Valid comment ✔✔ Relevant figures: Debt : Equity is 0.2 : 1 (Check 3.1) ROCE is 18,9% Commentary: Any two reasons  The company is low-risk and therefore there is no need to repay the loan quickly.  The company is positively geared. The ROCE of 18,8% is higher than the interest rate of 11% on loans. 6 3.4 Comment on the value of the two companies' shares on the JSE. Explain how these figures will influence your choice of the companies. Financial indicator and Choice of Company its explanation with figures I will invest in Boland Ltd because the demand for Market price is 715 cents their shares is good. Boland Ltd which is more than the OR NAV of 540 cents. I will not invest in Boland Ltd because the shares are overpriced. I will invest in Limpopo Ltd because the shares JSE price is 910 cents are undervalued. Limpopo Ltd which is lower than the OR NAV of 1 120 cents. I will not invest in Limpopo Ltd because the shares are not in demand. 6 QUESTION 3 24 Copyright reserved Please turn over

Accounting/P1 9 NW/June 2025 Grade 12 – Marking Guidelines QUESTION 4: CORPORATE GOVERNANCE AND AUDIT REPORT 4.1 CORPORATE GOVERNANCE 4.1.1 Winston can be described as a (whistle-blower/employee) in this situation. Whistle-blower✔ 1 4.1.2 It is absolutely essential that the identities of those who report misconduct are protected. No ONE that can be used to convince the directors that they cannot openly thank Winston. Any ONE valid point✔✔ Partial marks for incomplete/unclear answers.  The identity of whistle-blowers must be protected so that they are not targeted.  Employees may be afraid to report violations and prefer to remain silent if they are not sure that their identity will be protected.  Workers can be encouraged to report incidents anonymously as this can increase reporting. 2 4.1.3 Provide ONE term to describe the “gift” that the Purchasing Manager received. Bribe/Kick-back✔ 1 4.1.4 Indicate ONE internal measure that the company can implement to prevent a recurrence of such an incident in the future. Any ONE valid point✔✔ Partial marks for incomplete/unclear answers.  The business must have a policy for receiving gifts/awarding tenders.  Employees must be transparent in their negotiations and all “gifts” they receive from clients/suppliers must be declared.  Separation of duties: The Purchasing Manager should not be the person who awards tenders and receives goods. 2 Copyright reserved Please turn over

Accounting/P1 10 NW/June 2025 Grade 12 – Marking Guidelines 4.1.5 A concerned shareholder has heard about the incident. Provide two possible questions that he could ask at the next AGM regarding the company's tender policy. TWO marks per relevant question.✔✔ ✔✔Partial marks for incomplete/unclear answers.  Does the company have a tender policy?  Was the correct procedure followed in awarding the tender?  Why was Winston's supervisor reluctant to investigate the incident?  Is Winston's supervisor perhaps in cahoots with the Purchasing Manager?  What consequences does the Purchasing Manager face?  Will the company allow the Purchasing Manager to keep the laptop?  Will the company take action against the Purchasing Manager? 4 4.2 AUDIT REPORTS 4.2.1 Indicate which type of audit report Pilanesberg Limited received. Provide one reason for your choice. Report type: Unqualified✔✔ Any 1 reason✔✔ This is a good report. The words: 'reasonable account' indicate that the auditors did not encounter any problems. 4 4.2.2 Give ONE reason why the Companies Act requires public companies to be audited by an independent auditor. Any ONE valid reason ✔✔  Independent opinion will be presented.   Separation between management and ownership.  Shareholders' interests are protected  Business operates with shareholders' money  To detect/reduce the possibility of fraud. 2 Copyright reserved Please turn over

Accounting/P1 11 NW/June 2025 Grade 12 – Marking Guidelines 4.2.3 Newspaper reports have indicated that Motepo Partners has been found guilty of maladministration in relation to audit work carried out at several large firms. Explain how this could affect shareholders of Pilanesberg Ltd. State TWO points. Any TWO relevant marks ✔✔ ✔✔ Future shareholders not relevant to this answer The question asks about the impact on shareholders and not the consequences on share prices etc.  The shareholders will not be able to rely on the audit report.  The shareholders will not re-elect auditors at the next AGM. (will be dismissed).  The shareholders may insist on a re-audit by another reputable audit firm.  The shareholders may insist on legal action if the audit was done fraudulently.  Existing shareholders may dispose of/sell their shares. 4 QUESTION 4 20 TOTAL: 150 Copyright reserved