# Accounting Grade 12 Paper 1 KZN June 2020 Memo > Grade 12 Accounting Paper 1 memorandum from the KZN June 2020, 7 pages. Read online or get the free PDF download, question paper linked when available. - Page: https://www.hlayiso.com/library/kzn-2020-june-p1-memo/cc58ece5-7e55-4cd0-afcc-29c3666cd075 - Updated: 2026-09-27 - Subject: Accounting - Grade: Grade 12 - Document type: Memorandum - Year: 2020 - Exam period: KZN June - Paper: 1 - Curriculum: CAPS - Pages: 7 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 Paper 1 KZN June 2020 Memo](https://www.hlayiso.com/library/kzn-2020-june-p1-memo/cc58ece5-7e55-4cd0-afcc-29c3666cd075) ## About this document Accounting · Grade 12 · KZN June · 2020. Memorandum, 7 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 CUUCALIVII Department: Education PROVINCE OF KWAZULU-NATAL ACCOUNTING MARKING GUIDELINE JUNE 2020 PAPER ONE Pree ee eee ee a eee NATIONAL SENIOR CERTIFICATE GRADE 12 MARKS: 150 MARKING PRINCIPLES: 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. Penalties for placement or poor presentation (e.g. details) are applied only if the candidate is earning marks on the figures for that item. Full marks for correct answer. If answer incorrect, mark the workings provided. If a 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. 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. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from candidates. 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. Operation’ means ‘Check operation’. ‘One part correct’ means ‘Operation & one part correct’. Note: check operation must be +,-,x,+, or per candidates operation. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect, indicate with a Ed. Note: do not award marks for workings if numerator and denominator are swapped-this also applies to ratios. Be aware of candidates who provide valid alternatives beyond the marking guideline. Codes: f=foreign item; p=placement. This memorandum consists of 8 pages ### Page 2 Downloaded from hlayiso.com Accounting paper one 2 June common test 2020 QUESTION 1 Choose the correct word from those given in brackets. Write only the word next to the Question number (1.1.1 – 1.1.4) in the ANSWER BOOK. 1.1.1 E 1.1.2 C 1.1.3 A 1.1.4 B 4 1.2 Statement of Comprehensive Income for the year ended 31 May 2020. Sales (15 520 000 + 90 000) Operation 15 610 000  Cost of sales (9 700 000  + 62 500 ) (9 762 500)  Gross profit Operation 5 847 500  Other operating income Operation one part correct 204 490  Rent income (202 500 – 16 500) Two or nothing 186 000  Bad debts recovered (15 700 + 2 000) Two or nothing 17 700  Provision for bad debts adjustment (45 000  – 44 210 ) 790  Gross income 6 051 990 Operating expenses Operation one part correct (1 681 190)  Salaries and wages (541 000 – 25 000) Two or nothing 516 000  Employers contributions (21 000 – 2 500 – 250) Two or nothing 18 250  Directors fees (480 000 + 430 000) Two or nothing 910 000  Audit fees 38 000 Sundry expenses Balancing figure 14 940  Packing material (78 000 + 3 000 – 78 500) Two or nothing 2 500  Bad debts 45 000  Insurance 55 000 Depreciation 65 000 Loss due to fire (36 000 x 20/80) Two or nothing 9 000  Trading stock deficit (1 200 000 – 62 500 – 1 130 000) Two or nothing 7 500  Operating profit Candidate must use 28% on sales 4 370 800  Interest income 72 000 Operating profit before interest expenses Operation 4 442 800  Interest expense Operation (42 800)  Net profit before taxation 4 400 000  Taxation (1 320 000)  Net profit after tax 3 080 000  36 Foreign entry -1 max -2 TOTAL MARKS 40 Copyright reserved Please turn over ### Page 3 Downloaded from hlayiso.com Accounting paper one 3 June common test 2020 QUESTION 2 2.1 Ordinary share capital note AUTHORISED SHARES 300 000 Shares ISSUED SHARES: 100 000  Shares issued on 1 June 2019 1 000 000  100 000  Shares issued on 1 January 2020 Balancing figure 1 500 000  (10 000)  Buy-back of shares @ 12.50 (2 375 000/190 000) (125 000)  190 000  Shares issued at the end 2 375 000  8 2.2 RECONCILIATION BETWEEN NET PROFIT BEFORE TAXATION AND CASH GENERATED FROM OPERATIONS Net profit before tax (165 200 x 100/28) 590 000 Adjustment in respect of : Depreciation 16 645 Interest on loan 120 000  Operating profit before changes in working capital Operation one part correct 726 645  Net change in working capital Operation one part correct 37 765  Decrease in inventory (145 000 – 125 000) Two or nothing 20 000  Decrease in trade and other receivables (139 000 – 115 000) Two or 24 000  nothing Decrease in trade and other payables (56 800 – 50 565) Two or nothing (6 235)  Cash generated from operations Operation one part correct 764 410  10 2.3 Cash Flow Statement for the year ended 31 May 2020 Cash flow from operating activities Operation one part correct 379 585  Cash generated from operations See 2.1 764 410  Interest paid See 2.1 (120 000)  Dividends paid (14 000 + 100 000) or (14 000 + 360 000 – (114 000)  260 000) One mark One mark Tax paid (165 200 – 10 375 – 4 000) or (4000 + 10 375 – 165 (150 825)  200) Cash flow from investing activities operation one part correct (121 285)  Purchases form Fixed assets (814 800 – 16 645 – 19 430 - 979 440) (200 715)  (979 440 + 16 645 + 19 430 – 814 800) Proceeds from sale of fixed assets 19 430  Changes in financial assets 60 000 Cash flow from financing activities operation one part correct 630 000  Proceeds from shares issued 1 500 000  Buy-back of shares (150 000)  Changes in loan (720 000) Net change in cash and cash equivalent 888 300 Cash and cash equivalent at the beginning (421 000) Copyright reserved Please turn over ### Page 4 Downloaded from hlayiso.com Accounting paper one 4 June common test 2020 Cash and cash equivalent at the end 467 300 20 2.4 Besides paying back the loan, the directors have taken other major decisions that have affected the cash balance. State TWO other major decisions (exceeding R200 000) and quote the figures from the Cash Flow Statement. In EACH case, state how the decision will affect the future of the company. DECISION FUTURE EFFECT ON COMPANY Decision and amount Valid explanation Purchase of fixed assets Capital growth – investment in fixed assets will lead to R200 715  expanded business activities  • Creation of employment • Cater for more customers to increase profits Issue of shares R1 500 000 • Financing expansions/ extensions of fixed assets   • Expanded shareholder base will affect dividends • Improve cash flow 4 2.5 Debt/equity ratio 350 000  : 2 499 900  0,14 :1  or 0,1 : 1 Operation one part correct 3 TOTAL MARKS 45 Copyright reserved Please turn over ### Page 5 Downloaded from hlayiso.com Accounting paper one 5 June common test 2020 QUESTION 3 3.1.1] BY 3.1.2] Cv 3.1.3 | Av 3 3.2.1 RETAINED INCOME Balance at the beginning 7 480 v Buy back of shares (40 000 x 1.25) Twoornothing | _(50 000) Vv Net profit after tax 681 720 v Ordinary share dividends (389 200) Interim dividends 179 200 v Final dividends 210 000 v Balance at the end Operation one partcorrect | _250 000 M1 Z 3.2.2 Balance Sheet (Statement of Financial Position) on 30 April 2020. Assets Non-current assets TA-CA 4 279 800M Tangible assets 4079 800 Financial assets (415 000vY — 215 000v) 200 000” Current assets (cL x2) Inventory 222 600 Trade and other receivables Balancing figure 886 400M Cash and cash equivalent (212 400v + 215 000v) 427 400v Total assets NCA + CA Or Total equity and liabilities = Total assets 5 816 200M Equity and liabilities Shareholders’ equity (610 x 680 000) = 100 4 148 000M Ordinary share capital SE-RI 3 898 000M Retained income ‘See 321 Non-current liabilities Loan(1 500 000v — 465 000v + 165 000” — 300 000v) 1035 000 two marks + 165 000 one mark — 300 000 one mark Current liabilities 768 200M Trade and other payables (231 920v + 210 000v + 26 280”) 468 200M Current port of loan 300 000M Total equity and liabilities Operation one part correct CL + NCL + SE 25 Foreign nts (nax 2)" Mpacomont pr no TOTAL MARKS 35 Copyright reserved Please turn over ### Page 6 Downloaded from hlayiso.com Accounting paper one 6 June common test 2020 QUESTION 4 4.1.1 Calculate the amount of dividends Veli would earn for the financial year ended 29 February 2020. Shares repurchased do not qualify for final dividends. Interim: 23 000 + 2 000 = 25 000 X 0,30 = R 7 500  Final: 25 000 – 3 000 = 22 000 X 0,50 = R11 000  R18 500  One part correct 3 4.1.2 Veli is not satisfied with the dividend policy of Wembezi Ltd. Explain why. Quote and compare relevant financial indicators to support his feelings. For 2 marks each: The pay-out policy for 2019 was 75% (120/160)  and for 2020 it decreased to 50% (85/170)  For 1 mark each: EPS increased from 160c to 170c and DPS decreased from 120c to 85c One mark One mark 4 4.1.3 Veli wants to sell his shares in Wembezi Ltd and invest his funds in an alternative investment. Quote and explain TWO relevant indicators, other than dividends and earnings, to support his intention. Ratio, explanation and figure   • Return on shareholder’s equity (ROSHE) decreased by 3% from 23% to 20%. • Market price decreased by 110 cents from 750 cents to 640 cents. • Net asset value per share decreased by 105 cents from 760 cents to 655 cents. 4 4.1.4 Why would the company spend money on skills development? Explain ONE point. ANY RELEVANT ANSWER  • It develops the workers and improves worker productivity • Companies are expected to equip workers with the necessary skills and knowledge (King Code/Legislation). 2 4.1.5 Refer to Information A. How did the company benefit from this? Name ONE example and quote figures. Example  figure  • Sales increased by R4 800 000 from R13 700 000 to R18 500 000. • Workplace accident cost decreased by R15 000 from R23 000 to R8 000. • Loss on production decreased by R5 000 from R7 000 to R2 000. 2 Copyright reserved Please turn over ### Page 7 Downloaded from hlayiso.com Accounting paper one 7 June common test 2020 4.2.1 Comment on the liquidity position of the company. Quote THREE financial indicators (with figures) in your answer. Current ratio  decreased from 1,7 : 1 to 0,9 : 1  Acid test ratio  decreased from 0,6 :1 to 0,4 : 1  Rate of stock turnover  decreased from 5 times to 3 times by 2 times.  If candidates provide additional irrelevant indicator, search for the correct ones in the answer provided by the candidate and award marks accordingly. For those who provide more than three options, penalty of -2 for any irrelevant indicators (max -2). 6 4.2.2 One of the directors feel that the loan should be paid as soon as possible. Do you agree? Explain. Quote TWO financial indicators with figures to support your answer. No  Financial indicators and figures   Explanation   Debt equity ratio is 0,06 : 1 which means the business is in position to borrow more monies. This indicates low risk. The return on total capital employed (ROTCE) for 2020 is 24% which is greater than the interest rate of 16%. This indicates positive gearing. 5 4.2.3 The shareholders should be satisfied with the return on their investment and the companies’ earnings. Explain TWO financial indicators with figures to support this opinion. Explanation with figures.   Return on shareholders’ equity improved from 10,6% to 18%. 18% is higher than return on alternative investment of 6% by 12%. Earnings per share improved from 45 cents to 49 cents per share 4 TOTAL MARKS 30 Copyright reserved Please turn over ## Related documents - [KZN 2020 June P2 QP](https://www.hlayiso.com/library/kzn-2020-june-p2-qp/aebab627-a5be-4328-8b2b-aee3f80cce83) — Accounting · QP · 2020 - [2020 KZN Prelim P1 QP](https://www.hlayiso.com/library/2020-kzn-prelim-p1-qp/7d905a97-970a-4c23-8a93-54f8f6650432) — Accounting · QP · 2020 - [Accounting P1 NSC Nov 2020 Answer Book Afr](https://www.hlayiso.com/library/accounting-p1-nsc-nov-2020-answer-book-afr-2/f42d3e7f-93f7-42d0-9ab9-a62420582442) — Accounting · Addendum · 2020 · Afr - [ACCOUNTING P2 GR12 MEMO SEPT 2020 English](https://www.hlayiso.com/library/accounting-p2-gr12-memo-sept-2020-english/b6d54b19-200a-4cbf-aaad-8df18fd74e19) — Accounting · Memo · 2020 · Eng - [2020 FS Prelim P2 Memo](https://www.hlayiso.com/library/2020-fs-prelim-p2-memo/69f20652-9cb5-4b56-9da4-77702b5cf90a) — Accounting · Memo · 2020 - [2016 KZN June Memo](https://www.hlayiso.com/library/2016-kzn-june-memo/f370d234-2813-4e5b-8c39-f416ea0e8128) — Accounting · Memo · 2016 ## 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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