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Directorate: Curriculum FET

ACCOUNTING

Grade 12

Revision

WORKBOOK

Gr 12 Accounting Revision Workbook

INVENTORYACTIVITY 1: Inventory (June 2016) (40 marks; 30 minutes)

1.1 CONCEPTS

1.1.1

1.1.2

1.1.3

1.1.4 4

1.2 LYNN STORES1.2.1 Calculate the value of the closing stock on 29 February 2016 using the

weighted-average method.

8

1.2.2 Calculate the following for the year ended 29 February 2016:

Cost of sales:

Gross profit:

6

1.2.3 Calculate the average stock-holding period (in days) on 29 February 2016.

5

2


1.2.4 Calculate the value of the closing stock by using the FIFO method.

7

1.3.1 Identify ONE problem in Shop 1 and ONE problem in Shop 2. Quote figures. In EACH case, give ONE point of advice.

Branch Problem Advice

Shop 1

Shop 2

6

1.3.2 Explain TWO good decisions that Chad has made in respect of Shop 3. Quote figures.

4

TOTAL MARKS40

3


ACTIVITY 2: Inventory (Feb/March 2017) (40 marks; 30 minutes)

2.1 CONCEPTS

2.1.1

3

2.1.22.1.3

2.2.1 Calculate the unit price of cricket bats on 1 July 2015.

2

2.2.2 Calculate the value of the stock on hand on 30 June 2016 using the weighted-average method.

10

2.2.3 Calculate the gross profit on 30 June 2016.

5

4


2.2.4 Calculate how long (in days) it is expected to sell the closing stock of 465 cricket bats. Use the closing stock in your calculation.

4

2.2.5 Provide a calculation to support André's concern about the control of cricket bats.

7

How can André solve this problem? Explain ONE point.

2.3 Identify ONE problem relating to each branch. Quote figures to support your answer. In each case, offer Bennie advice.

9

BRANCH PROBLEM (with figures) ADVICE

Parys

Pretoria

Pofadder

TOTAL MARKS40

5


ACTIVITY 3: Inventory (November 2017) (35 marks; 25 minutes)

3.1 CONCEPTS3.1.1

4

3.1.2

3.1.3

3.1.4

3.2 HOT-WHEELS (PTY) LTD

Motorbikes:3.2.1 Calculate the value of the closing stock on 30 September 2017 using

the specific identification method.

7

3.2.2 Mike requires your advice on the three different models of motorbikes in which he is trading. Explain TWO points of advice.

Point 1:

Point 2:

4

6


Helmets:3.2.3 Calculate the value of the closing stock on 30 September 2017 using

the weighted-average method.

9

3.2.4 Is the weighted-average method appropriate to value the helmets? Explain ONE point.

3

3.2.5 Mike suspects that helmets are being stolen from the shop despite security cameras being installed. Provide a calculation to verify his suspicion.

5What can Mike do to improve the internal control of stock? State THREE points.

Point 1:

Point 2:

Point 3:

3

TOTAL MARKS35

7


ACTIVITY 4: Inventory (Feb/March 2018) (35 marks; 25 minutes)

4.14.1.14.1.24.1.3

3

4.2.1 Calculate the value of the closing stock according to the FIFO method on 31 December 2017.

6

4.2.2 Calculate the cost of sales.

Calculate the gross profit.

8

4.2.3 Calculate the value of the closing stock on 31 December 2017 by using the weighted-average method.

6What will be the effect on the gross profit if the owner changes to this valuation method? Provide figures.

3

8


4.3 You are provided with information relating to Leno Furnishers. They sell tables, chairs and beds for cash only. The owner is concerned that the figures provided reflect poor internal control and decision-making.

Identify ONE problem for each product. Quote figures. In EACH case, give advice on how to solve the problem.

Product Problem (with figures) Advice

Tables

Chairs

Beds

9

TOTAL MARKS35

9


ACTIVITY 5: Inventory (June 2018) (40 marks; 30 minutes)

5.1.1 Calculate the value of the closing stock of bicycles on 31 May 2018.Workings Answer

Tempo

Cruze

Ryder

8Calculate the cost of sales for the year ended 31 May 2018.

4

Workings Answer

Calculate the gross profit for the year ended 31 May 2018.

3

Workings Answer

5.1.2 Calculate the selling price of a Ryder bicycle.

3

Workings Answer

Calculate the average number of Ryder bicycles sold per month.

3

Workings Answer

Indicate how long it will take Fred to sell the closing stock of the Ryder bicycles. Show calculations.

3

Workings Answer

10


Give ONE possible reason for the slow sales of Ryder bicycles.

Give advice (ONE point) to Fred in this regard.

4

5.2.1 Explain why it was NOT a good idea to change to a cheaper supplier of T-shirts. State TWO points.

Point 1:

Point 2:

4

5.2.2 Celia decided to change the supplier in 2018 and to change the mark-up %. How has this decision affected the business? State TWO points.

Point 1:

Point 2:

4

5.2.3 Make TWO separate suggestions to Celia to improve the profit on pants in 2019.

Point 1:

Point 2:

4

TOTAL MARKS40

11


(Q 5.2, Nov 2018)

ACTIVITY 6: Inventory Valuation (20 marks; 15 minutes)

6. PACKER'S SUITCASE SHOP

6.1 Calculate the value of the closing stock on 30 June 2018 using the first-in-first-out method.

Workings Answer

5

6.2 Charles suspects that suitcases have been stolen. Provide a calculation to support his concern.

Workings Answer

5

6.3 Charles is concerned about the volume of stock on hand.Calculate for how long his closing stock is expected to last.

Workings Answer

6ONE problem with keeping too much stock on hand:

ONE problem with keeping insufficient stock on hand:

4

TOTAL MARKS20

12


(Q2, May/Jun 2019)

ACTIVITY 7: Inventory Valuation (40 marks; 30 minutes)

7.1 7.1.17.1.27.1.3 3

7.2 PHOTO-FIX TRADERS

7.2.1 Calculate:

Value of closing stock of cameras

Workings Answer

9

7.2.2 Value of closing stock of photo frames

Workings Answer

8

7.2.3 The owner suspects that photo frames are being stolen. Provide a calculation to confirm his suspicions.

Workings Answer

5

13


7.2.4 Tom is thinking of employing an assistant at a wage of R3 500 per month to control the stock of photo frames. Explain why this is NOT a good idea. Provide TWO points with figures/calculations.

Explanation Figures

Point 1

Point 2

6

7.3 MANAGEMENT OF INVENTORIES

Product Problem Solution

Cupboards

Tables

Chairs

9

TOTAL MARKS40

14


RECONCILIATIONSACTIVITY 1: Creditors' reconciliation (June 2016) (18 marks, 15 minutes)

1.1.1 CREDITORS' LEDGER CREDITORS' RECONCILIATION STATEMENT

Balance 110 170 111 600(a)(b)(c)(d)(e)(f)(g)

14

(h)

1.1.2 State TWO internal control measures that the business can use to prevent similar incidents from happening in future.

4

TOTAL MARKS18

15


ACTIVITY 2: Bank reconciliation (Mar 2017) (16 marks; 15 minutes)

2.1.1 Calculate the correct balance of the Bank Account in the General Ledger on 31 July 2016.

Provisional Bank balance R16 785

Correct Bank balance

Favourable/Unfavourable: ________________8

2.1.2 Bank Reconciliation Statement as at 31 July 2016

6

2.1.3 Explain ONE internal control measure that the business should implement to ensure that this will not happen in the future.

2

TOTAL MARKS16

16


ACTIVITY 3: Debtors' reconciliation and Age analysis (June 2017) (30 marks, 25 minutes

3.1 TRUE OR FALSE3.1.1

3.1.2

3.1.3 3

3.2 MIZZY BOUTIQUE

Use the table provided to indicate corrections that must be made to the Debtors' Control Account and the debtors' list.

Provide figures and a plus (+) or minus (–) sign for each correction.

Debtors' Control Account

Debtors' List

Balance/Total on 28 February 2017 R37 710 R39 490

(a)

(b)

(c)

(d)

(e)

(f)Balance/Total on 28 February 2017 13

3.3 GLENDALE TRADERS

3.3.1 Explain how a debtors' age analysis can assist with internal control over debtors.

2

17


3.3.2 Calculate the percentage of total debts exceeding the credit terms.

4

3.3.3 Explain ONE problem (with figures) relating to EACH of the following debtors:

DEBTOR PROBLEM WITH FIGURES

D Pillay

4W Patel

3.3.4 Explain TWO problems (with figures) relating to debtor D Gouws.

4

TOTAL MARKS30

ACTIVITY 4: Bank Reconciliation And Internal Control (Nov 2017) (30 marks; 25 minutes)4.1

4.1.1

4.1.2

4.1.3 3

18


4.2.1Calculation of CRJ total Calculation of CPJ total

90 500 85 920

Bank account balance:

14

4.2.2 Bank Reconciliation Statement on 30 June 2017

9

19


4.2.3 Explain the problem relating to deposits. Quote evidence.

Explain TWO strategies to prevent this in future.

Strategy 1:

Strategy 2:

4

TOTAL MARKS30

ACTIVITY 5: Debtors' Reconciliation (March 2018) (25 marks; 20 minutes)

5.1.1 Explain why the debtors' age analysis is considered to be an effective internal control measure. State ONE point.

2

20


5.1.2 Explain TWO different problems highlighted by the debtors' age analysis. In EACH case, provide the name of a debtor and figure(s).

PROBLEM DEBTOR AND FIGURE(S)

6

5.2 DEBTORS' RECONCILIATION

5.2.1 CORRECTIONS TO THE DEBTORS' CONTROL ACCOUNT ON 30 NOVEMBER 2017Balance before errors and omissions 25 700

(i)

(ii)

(iii)

(iv)

(v)

Correct Debtors' Control balance 7

5.2.2 DEBTORS' LIST ON 30 NOVEMBER 2017L Nkosi (5 700

S Muller (11 100

M Welthagen ( –1 900

B Sandleni (15 900

Correct total of Debtors' List 10

TOTAL MARKS25

21


ACTIVITY 6: Reconciliation And Age Analysis (FS, Sep 2017) (35 marks; 30 minutes)6.1 CONCEPTS

6.1.1

6.1.2

6.1.3

6.2.1 Calculate the correct Bank Account balance on 30 June 2017.

6.2.2 Bank Reconciliation Statement on 30 June 2017

22


6.3 Creditors' Reconciliation

Creditors' Control Creditors’ List

Balance/total 184 870 170 490

A

B

C

D

Balance/total

6.4 Identify TWO problems regarding the control over debtors. Provide relevant names and/or figures. In each case provide ONE point of advice to the owner.

PROBLEM ADVICE

23

TOTAL MARKS35


(Q2.2 Nov 2018)

ACTIVITY 7: Creditors Reconciliation (21 marks; 15 minutes)

7.1 CREDITORS' LEDGER: ACCOUNT OF MARITI

SUPPLIERSSTATEMENT OF

ACCOUNT

Balance 147 820 145 060

(a)

(b)

(c)

(d)

(e)

(f)

13

7.2 The internal auditor insists that direct payments (EFTs) must be used to pay suppliers. Explain ONE reason to support his decision.

2Explain ONE internal procedure to ensure control over this system.

2

7.3 Besides dismissing Vernon, provide ONE suggestion for action to be taken against him.

Provide ONE suggestion to prevent this problem in future.

4

TOTAL MARKS21

24


(Q1, May/June 2019)

ACTIVITY 8: Bank Reconciliation (20 marks; 15 minutes)

8.1 Calculate the correct Bank Account balance on 31 May 2019.

Provisional Bank balance R19 400

Favourable/Unfavourable: 9

8.2 Bank Reconciliation Statement on 31 May 2019

DEBIT CREDIT

7

8.3 State TWO internal control measures that the business can use to ensure that this will not happen in the future.

4

TOTAL MARKS20

25


MANUFACTURING

ACTIVITY 1: Manufacturing (Nov 2016) (45 marks; 35 minutes)

1.11.1.11.1.21.1.31.1.4 4

1.2.1 Calculate direct labour cost.

8Calculate direct material cost.

6

1.2.2 Production Cost Statement for the year ended 29 February 2016:

Prime cost

Cost of production of finished goods 8

26


1.2.3 Calculate the break-even point for 2016.

5Explain whether the owner should be concerned or not. Provide figures.

3

1.2.4 The owner is not satisfied with the internal control of the raw material (fabric).

STOREROOM:Raw material stolen

FACTORY:Raw material wasted

CALCULATION: metres of fabric

STRATEGY

11

TOTAL MARKS45

27


ACTIVITY 2: Manufacturing (June 2016) (50 marks; 40 minutes)

2.1 ABE ACCESSORIES

2.1.1

Factory Overhead Cost Note

15

2.1.2

Production Cost Statement for the year ended 29 February 2016 Direct material 350 000

Direct labour cost

Prime cost/Direct cost Factory overhead cost

Total cost of production

Cost of production of finished goods

8

28


2.2 NEW FASHION MANUFACTURERS

2.2.1

Gloria is concerned about the wastage of direct materials. Calculate the number of metres of fabric that was wasted.

5Gloria feels that the wastage is significant. Provide a calculation to support her opinion.

3

2.2.2

Give TWO possible reasons for this wastage and, in EACH case, give advice to prevent this from happening in future.

Reason Advice

1.

2.4

2.2.3

Calculate the break-even point for the year ended 29 February 2016.

4Explain why the business should be satisfied with the number of units made during the current financial year. State TWO points.

4

29


2.2.4

What effect will it have on the production cost of a dress? Provide a calculation to support your answer.

3State TWO other consequences of importing the direct material.

4

TOTAL MARKS50

30


ACTIVITY 3: Manufacturing (Nov 2017) (55 marks; 45 minutes)

3.1 GEVEN MANUFACTURERS

3.1.1 PRODUCTION COST STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2017Direct material costDirect labour costPrime costFactory overhead cost

Total cost of production

14

3.1.2 ABRIDGED INCOME STATEMENT FOR YEAR ENDED 28 FEBRUARY 2017

Sales

Cost of sales

Gross profitAdministration cost Selling and distribution cost Net profit

14

31


3.2 GYMWEAR MANUFACTURERS

3.2.1 Shirts:

Calculate the break-even point for shirts.

4Identify ONE variable cost (with figures) that has not been well controlled. Give TWO possible reasons for this problem.

ONE VARIABLE COST WITH FIGURES REASONS

Reason 1:

Reason 2:

4Explain why Jan might be concerned about the large decreases in the other TWO variable costs.

4Jan does not understand why the unit cost of production has increased when neither his fixed costs nor the variable costs have increased. Explain why this is so. State ONE point (with figures).

4

32


3.2.2 Shoes:

Calculate the % increase in the selling price of shoes.

3Jan decided to improve the quality of the shoes and to export them. Explain how the direct material costs and the selling and distribution costs were affected by this decision. Provide figures.

4Jan was concerned that the increase in price would have a negative impact on the business. Explain whether his concern was justified. State TWO points.

Point 1:

Point 2:

4

TOTAL MARKS55

33


ACTIVITY 4: Manufacturing (Mar 2018) (45 marks; 35 minutes)

4.1 GLAMOUR DRESS CREATIONS

4.1.1 PRODUCTION COST STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2017

21

Prime cost

Total manufacturing cost Work-in-process (1 March 2016) 76 000

Production cost of finished goods

4.1.2 Calculate the net profit for the year ended 28 February 2017.

7

4.2 LIGHTING SOLUTIONS

4.2.1 Calculate the factory overhead cost per unit for the year ended 31 December 2017.

2

4.2.2 Explain why George would not be concerned about the 28,1% increase in total variable cost from R936 000 to R1 200 000.

3

34


4.2.3 Give TWO reasons for the increase in the selling and distribution cost per unit.

2

4.2.4 Calculate the break-even point for the year ended 31 December 2017.

4Comment on the production level for 2017. State TWO points. Quote figures.

4

4.2.5 Lighting Solutions are considering importing raw materials because it is cheaper and of a higher quality. Name TWO aspects that they must consider before finalising their decision.

2

TOTAL MARKS45

35


ACTIVITY 5: Manufacturing (Mar 2017) (45 marks; 35 minutes)

5.1 MOSES MANUFACTURERS

5.1.1 PRODUCTION COST STATEMENT ON 30 APRIL 2016

Direct labour cost 716 960

Prime cost

Total manufacturing cost

16

Work in process at beginning of year 142 000


5.1.2 Complete the abridged (shortened) Income Statement to calculate the net profit for the year ended 30 April 2016.

Gross profit 1 250 000

Net profit 8

36


5.2 UNIT COSTS AND BREAK-EVEN ANALYSIS

5.2.1 Explain the difference between fixed cost and variable cost.

2

5.2.2 Calculate the break-even point for 2017.

5

5.2.3 Comment on the break-even point and the level of production for 2016 and 2017. Explain why the owner should be satisfied or not.

6

5.2.4 Identify the variable cost that should be of great concern to the owner. Explain and provide a calculation to support your answer.

4

5.2.5 Despite the fact that there was a decrease in the fixed costs per unit, the owner is still not satisfied with his control over the fixed costs. Explain and provide calculation(s) to support his opinion.

4

TOTAL MARKS45

37


(Q1, Nov 2018)

ACTIVITY 6: Manufacturing (40 marks; 30 minutes)

6.16.1.1

6.1.2

6.1.3 3

6.2 KRIGE SHIRTS6.2.1 Calculate direct labour cost.

9

6.2.2 PRODUCTION COST STATEMENT FOR THE YEAR ENDED 31 JULY 2018

Direct material cost 528 300

12

Prime cost

Total production cost

Work-in-progress (1 August 2017)


38


6.3 GEMMA'S MANUFACTURERS

6.3.1 Calculate the break-even point for the year ended 31 August 2018.

5

6.3.2 Compare and comment on the break-even point and the production level achieved over the last two years. Quote figures.

6

6.3.3 Give TWO reasons for the increase in direct material cost. Suggest ONE way to control this cost.

REASONS:

SUGGESTION:

5

TOTAL MARKS40

39


(Q3, May/June 2019)

ACTIVITY 7: Manufacturing (40 marks; 30 minutes)

7.17.1.17.1.27.1.37.1.4 4

7.2.1 Calculate: The value of the closing stock using the first-in-first-out stock valuation method

Workings Answer

5Calculate: Direct material cost

Workings Answer

4

7.2.2 Factory overhead cost

TOTAL b/f 84 330

8

7.2.3 Provide evidence (figures) to justify his concern. In each case, also give a possible reason for the increase in EACH unit cost, apart from normal inflation.

COST EVIDENCE REASON

Total fixed cost per unit

Direct labour cost per unit

6

40


7.2.4 Calculate the break-even point on 31 December 2018.

Workings Answer

4Explain whether or not there was any improvement in the trends of the level of production and the break-even point from one year to the next. Quote figures.

4The owner cannot understand why he is making a better profit this year. Explain how this happened. Provide TWO points. Quote figures.

5

TOTAL MARKS40

41


BUDGETSACTIVITY 1: Budgeting (June 2016) (40 marks; 30 minutes)

1.1 (a) Operating profit

12

(b) Cost of sales

(c) Wages

(d) Rent income

1.2.1 Calculate the monthly salary due to the sales manager in June 2016.

4

1.2.2 Calculate the total credit sales expected in July 2016.

4

42


1.2.3 Calculate the cost price of the new vehicle purchased on 1 May 2016.

4

1.3 Comment on the control of telephone and water and electricity. What advice would you offer Susan? State ONE point.

Comment:

Advice:

4

1.4 Susan wants to reduce the maintenance budget to R500 per month and then use this saving for staff training. What should she consider before making this change? State TWO points.

4

43


1.5 Explain how Susan responded to this threat. State THREE points. Provide figures/calculations to support your answer.

6Explain whether Susan's response was successful or not. Provide figures.

2

TOTAL MARKS40

ACTIVITY 2: Budgeting (Nov 2016) (40 marks; 30 minutes)

2.1.1 TWO items recorded incorrectly in the Cash Budget:

2

2.1.2 TWO items in the Cash Budget that would NOT appear in a Projected Income Statement:

2

44


2.2 DEBTORS' COLLECTION SCHEDULEMONTHS CREDIT SALES SEPTEMBER OCTOBER

July 120 000 8 400

9

August 151 200 60 480September 172 800 86 400October

155 280

2.3 AMOUNTS FOR THE CASH BUDGETWORKINGS AMOUNT

(a) Cash sales for September

(b) Payments to creditors for October

18

(c) Directors' fees for October

(d) Interest on loan for October

45


2.4.1 The directors changed the method of payment to the salespersons.

Explain how this has benefitted the salespersons. Quote figures.

Explain how this has benefitted the business. Quote figures.

4

2.4.2 The directors are not concerned about the overspending on packing material. Explain why this is so. Quote figures or calculations.

5

TOTAL MARKS40

46


ACTIVITY 3: Budgeting (March 2017) (40 marks; 30 minutes)

3.1 Calculate the expected monthly percentage of goods sold on credit.

4

3.2 Debtors Collection Schedule for March 2017MONTH CREDIT SALES FEBRUARY MARCH

December 2016 74 000 16 280

January 2017 68 000 27 200 *

February 2017 70 000 24 010 *

March 2017 64 000 *

Cash from debtors 67 490 *5

3.3.1 Explain why the owner is concerned. Give TWO reasons with supporting figures.

4

3.3.2 Suggest ONE solution for this problem.

2

47


WORKINGS ANSWER3.4.1

(a) Payment to creditors

6

(b)Salaries of sales assistants 5

3.4.2 Calculate the percentage increase in rent on 1 March 2017.

4

3.4.3 Calculate the amount of the interest on investment expected to be received in March 2017.

4

3.5 Identify TWO payments that you consider to be poorly managed in February 2017. In EACH case, give a suggestion to improve the internal control of the items identified.

PAYMENT ADVICE

6

TOTAL MARKS40

48


ACTIVITY 4: Budgeting (June 2017) (45 marks; 35 minutes)

4.1 Comment on the control of EACH item and give ONE point of advice in each case.

COMMENT ADVICE

Telephone

Staff training

4

4.2 Identify TWO items incorrectly entered in the Cash Budget.

2

4.3 CREDITORS' PAYMENT SCHEDULE

MONTH CREDIT PURCHASES MAY JUNE

March R64 000 6 400April R72 000 10 800

May 57 000

June R96 000

74 2009

49


4.4CALCULATION AMOUNT

(i)

Cash sales

(ii)

Cash purchases of stock

(iii)

Delivery expenses

(iv)

Salaries and wages

(v)

Repayment of loan

(vi)

Cash at end of month

(vii)

Cash deficit for the month

21

50


4.5 Piet wants to save on costs by not offering a free delivery service. Is this a good idea? Explain.

3

4.6 Explain ONE advantage and ONE disadvantage of each option.

OPTION ADVANTAGE DISADVANTAGE

Raise a new loan

Hire (lease) the assets from Computer Solutions

Ask a friend to become equal partner

6

TOTAL MARKS

45

51


ACTIVITY 5: Budgets (Nov 2017) (30 marks; 25 minutes)

5.1 Explain the main purpose of a Cash Budget.

Explain the main purpose of a Projected Income Statement.

2

5.2.1 Larry expects debtors to settle accounts by the end of the month following the sales transaction month.

Use the November figures to calculate the % of debtors that are expected to comply with the credit terms.

Use the November figures to calculate the % of bad debts expected.

9

5.2.2 Larry does not believe that his debtors' control clerk, Shirley, deserves a bonus on 31 October 2017.

Provide evidence to support his opinion.

Offer Larry advice to improve debtors' collections (TWO points).

Point 1:

Point 2:

4

52


5.3.1 Calculate the fixed % of sales used by Larry to budget for delivery expenses.

Calculate the amount of the loan to be repaid on 31 December 2017.

6

5.3.2 Refer to variances in Information D. Explain why Larry would feel that all these variances are problems for his business.

COMMENT ON VARIANCES

Sales

Advertising

Packing materials

Delivery expenses

9

TOTAL MARKS30

53


ACTIVITY 6 Projected Income Statement (March 2018) (45 marks; 35 minutes)

6.1.1 Calculate the mark-up percentage on spare parts used in the Projected Income Statement for March 2018.

3

6.1.2 Calculate the % decrease in service fee income expected in April 2018.

3

6.1.3 Calculate the additional space (in square metres) the business will rent from April 2018.

4

6.1.4 Calculate the interest rate on the fixed deposit.

5

6.2 Comment on the control of stock and explain how Vusi intends to correct this. Quote figures.

4

54


6.3.1 Vusi is thinking of purchasing the business premises rather than renting it. State ONE advantage and ONE disadvantage of this option.

Advantage:

Disadvantage:

4

6.3.2 Vusi offers a free delivery service of spare parts to customers, but plans to discontinue this service on 31 March 2018.

State TWO points to support this decision.

4

6.3.3 Calculate the cost of the new vehicle that he plans to purchase on 1 April 2018.

4

55


6.4.1 Explain whether Water and electricity has been well controlled, or not.

36.4.2 Explain whether you agree with Vusi's decision not to use the full

budget for Advertising.

36.4.3 Explain whether Consumable stores have been well controlled, or not.

46.4.4 Explain how Vusi's decision about the mark-up percentage on spare

parts has affected the business.

4

TOTAL MARKS45

56


(Q6, Nov 2018)

ACTIVITY 7: Cash Budgets (35 marks; 30 minutes)

7.1 Debtors' Collection Schedule for October 2018

MONTHS CREDIT SALES SEP. 2018 OCT. 2018July 369 600 81 312August 384 400 211 420September 403 200 76 608October 420 000

369 3407

7.2 Calculate: (i) Cash sales for September

Workings Answer

(ii) Rent income for October

Workings Answer

9

(iii) Payments to creditors in October

Workings Answer

7.3 Calculate the % increase in salaries of sales assistants for October 2018.

Workings Answer

3Explain whether the sales assistants should be satisfied with this increase.

2

57


7.4 Refer to Information E.

7.4.1 Explain the effect of the new competitor on any TWO items in the budget for September. Provide figures.

4

7.4.2 Identify TWO changes Donald implemented in October in response to the new competitor. Quote figures. Give ONE reason for EACH change.

Item (with figures) Possible reason

6

7.4.3 Explain why Donald feels that his decisions were successful. Provide TWO points (with figures).

Point 1

Point 2

4

TOTAL MARKS35

58


(Q6, May/Jun 2019)

ACTIVITY 8: Budgets (30 marks, 25 minutes)

8.1 Identify TWO items in the Cash Budget that will not appear in a Projected Income Statement.

2

8.2 (i) Calculate: Rent income, June 2019

Workings Answer

7

(ii) Calculate: Fixed deposit: Protea Bank, July 2019

Workings Answer

(iii) Calculate: Cash purchases of trading stock, July 2019

Workings Answer

8.3 Calculate the total purchases for April 2019.

Workings Answer

2

8.4 DEBTORS' COLLECTION SCHEDULE

CREDIT SALES JUNE JULYMAY 576 000 374 400JUNE 159 030JULY 855 000TOTAL 533 430

8

59


8.5.1 Comment on the following (provide figures):

Effect of the advertising on sales

3Payment to creditors

2

8.5.2 Identify TWO strategies (except advertising) that the business used to achieve sales targets for May 2019. Quote figures.

4Explain whether these were good strategies, or not. Provide ONE point with figures.

2

TOTAL MARKS30

60


VATACTIVITY 1: VAT (March 2016) (15 marks; 10 minutes)

VAT CONCEPTS

1.1.1

31.1.21.1.3

1.2 VAT CALCULATIONS

Calculate the correct amount of VAT the business has to pay. Show ALL workings.

12

TOTAL MARKS15

61


ACTIVITY 2: VAT (June 2016) (17 marks, 10 minutes)

2.1 2.1.12.1.22.1.3 3

2.2.1 Calculate the VAT amount that is either payable to or receivable from SARS.

12

2.2.2 What comment would you offer Nelson concerning this practice? State ONE point.

217

ACTIVITY 3: VAT (Nov 2016) (10 marks; 8 minutes)

Calculate the amount receivable from or payable to SARS for VAT on 31 August 2016.

10Receivable/Payable:

62


ACTIVITY 4: VAT (March 2017) (14 marks; 10 minutes)

4.1 CONCEPTS

4.1.1

4.1.2

4.1.3 3

4.2 VALUE-ADDED TAX (VAT)

4.2.1 Calculate the amount of VAT either receivable from or payable to SARS on 31 July 2016.

Receivable/Payable: __________________9

4.2.2 The owner wants to change the VAT amount on bad debts from R840 to R4 200. Give ONE reason why you would disagree with him.

2

TOTAL MARKS14

63


Activity 5: VAT (March 2018) (15 marks; 10 minutes)

5.1 Calculate the VAT amount that is either receivable from or payable to SARS on 31 July 2017.

11

5.2 Nomvula has ordered goods with a marked price of R35 000 from Beta Suppliers. The sales director of Beta Suppliers, Jim Frow, has offered to sell these goods to Nomvula for R15 000, provided that they do not have to issue an invoice. Comment on the offer made by Jim. State TWO points.

4

TOTAL MARKS

15

64


ACTIVITY 6: VAT (MCED, June 2018) (30 marks; 25 minutes)

6.1 Choose the correct one between brackets:

6.2 Explain the THREE different types of VAT and give an example of each?

6.3 Explain the difference between VAT INPUT and VAT OUTPUT.

VAT INPUT

VAT OUTPUT

65

6.1.1

6.1.2

6.1.3 3

6

4


6.4 Use these entries to calculate the correct amount owing to SARS/ or owed by SARS. Show your workings.

TOTAL MARKS

30

(Q2.1, Nov 2018)

ACTIVITY 7: VAT (14 marks; 10 minutes)

7.1 WORKINGS ANSWER

(a)

(b)

(c)

10(d)

66

17


7.2 Explain what you would say to Samson. Provide TWO points.

Point 1

Point 2

4

TOTAL MARKS

14

(Q1.1, May/Jun 2019)

ACTIVITY 8: VAT (13 marks; 10 minutes)

8.18.1.1

8.1.2 2

8.2 Calculate the amount receivable from or payable to SARS for VAT on 30 April 2019.

Workings Answer

11Receivable/Payable:

TOTAL MARKS13

67


FIXED ASSETS(Q5.3, Nov 2018)

ACTIVITY 1: FIXED ASSETS (21 marks; 15 minutes)

MINDEW LIMITED

1.1 WORKINGS ANSWER(i)

(ii)

17

(iii)

(iv)

(v)

1.2 Explain how the internal auditor should check that movable fixed assets were not stolen.

2

1.3 As an independent auditor, what advice would you give? Provide ONE point.

2

TOTAL MARKS

21

68


COMPANIES / FIN STATEMENTS / ANALYSISACTIVITY 1: Statement of Financial Position (Balance Sheet) ; Audit Report (June 2016)

(65 marks; 50 minutes)1.1 CONCEPTS

1.1.11.1.21.1.31.1.4 4

1.2 PARADISE LIMITED

1.2.1 Ordinary share capital

6

Retained incomeBalance at beginning of year 1 634 000

10

Ordinary share dividends

Balance at end of year

69


1.2.2 STATEMENT OF FINANCIAL POSITION (BALANCE SHEET)ON 29 FEBRUARY 2016ASSETS

35

NON-CURRENT ASSETS

Fixed deposit: Sandton Bank

CURRENT ASSETS 3 538 600

TOTAL ASSETS

EQUITY AND LIABILITIES

ORDINARY SHAREHOLDERS' EQUITY

Ordinary share capital

NON-CURRENT LIABILITIES

CURRENT LIABILITIES

Trade and other payables

TOTAL EQUITY AND LIABILITIES

70


1.3 AUDIT REPORT

1.3.1 What type of audit report did Topstar Ltd receive? Choose from the following: unqualified, qualified, disclaimer.

Reason:

3

1.3.2 To whom is an audit report addressed?

Reason:

3

1.3.3 Explain why the auditor mentioned IFRS in the audit report.

2Explain why the auditor mentioned the Companies Act (Act 61 of 1973) in the audit report.

2

TOTAL MARKS65

71


ACTIVITY 2: Audit Report; Statement of Comprehensive Income (Income Statement)(Nov 2016) (70 marks; 55 minutes)

2.12.1.12.1.22.1.32.1.4

4

2.2 AUDIT REPORT

2.2.1 To whom is the audit report addressed?

1

2.2.2 Who has to ensure that the financial statements are prepared and presented at the annual general meeting?

1

2.2.3 Fralezi Ltd received a/an (qualified/unqualified/disclaimer of opinion) audit report.

Explain your choice.

2

2.2.4 Explain why the independent auditors referred to pages 11–29 in the report.

2

72


2.3 FRALEZI LTDSTATEMENT OF COMPREHENSIVE INCOME (INCOME STATEMENT)FOR THE YEAR ENDED 30 JUNE 2016Sales Cost of sales Gross profit Other income

Operating expensesDirectors' feesSalaries and wagesSundry expenses

Operating profitInterest incomeProfit before interest expenseInterest expenseNet profit before taxIncome tax for the yearNet profit after tax 504 000

TOTAL MARKS70

60

73


ACTIVITY 3: Company Financial Statements and Interpretation (March 2017) (75 marks; 60 minutes)

3.1 GANDHI LTDSTATEMENT OF COMPREHENSIVE INCOME (INCOME STATEMENT) FOR THE YEAR ENDED 28 FEBRUARY 2017

Sales

Cost of sales

Gross profit 3 150 000

Other income

Commission income 12 000

Gross incomeOperating expensesSalaries and wages 824 000Depreciation 216 500Sundry expenses

Operating profit

33

Interest incomeNet profit before interest expenseInterest expenseNet profit before taxIncome tax (396 800)Net profit after tax

74


3.2.1 ORDINARY SHARE CAPITAL

AUTHORISED SHARE CAPITAL

1 200 000 ordinary shares

ISSUED SHARE CAPITAL

Ordinary shares on 1 March 2016 3 084 000

10

3.2.2 RETAINED INCOME

Balance on 1 March 2016 674 500

10


Balance on 28 February 2017

3.3 EQUITY AND LIABILITIES SECTION OF THE STATEMENT OF FINANCIAL POSITION (BALANCE SHEET)

SHAREHOLDERS' EQUITY


CURRENT LIABILITIES

16TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES

75


3.4.1 Calculate B Sly's percentage shareholding in the company before and after the share buy-back.

Before the buy-back:

After the buy-back:

4

3.4.2 Explain why the other shareholders will be concerned about this transaction.

2

TOTAL MARKS75

76


ACTIVITY 4: Statement of Comprehensive Income (Income Statement) and Fixed Assets (June 2017) (70 marks; 55 minutes)

4.14.1.1

4.1.24.1.34.1.4

4

4.2 MTOMBENI LTD

4.2.1 Calculate: Carrying value of the vehicle sold on 30 November 2016

5Calculate: Total depreciation on equipment on 28 February 2017

7

77


4.2.2

MTOMBENI LTD

Statement of Comprehensive Income (Income Statement) for the year ended 28 February 2017:

Sales (5 500 000

Cost of sales (3 150 000

Operating expenses

Directors' fees 380 000

Audit fees 54 000

Operating profit

Interest income

78


Net profit after interest income

Net profit before tax

Income tax

Net profit after tax 864 000

54TOTAL MARKS

70

79


ACTIVITY 5: Fixed Asset, Statement of Financial Position (Balance Sheet); Audit report (Nov 2017) (65 marks; 50 minutes)5.1 (a) Calculate the carrying value of Land and Buildings on 1 March 2016.

2(b) Calculate the total depreciation on Vehicles on 28 February 2017.

6(c) Calculate the carrying value of Vehicles on 28 February 2017.

4(d) Calculate the carrying value of Equipment sold on 31 December 2016.

6(e) Calculate the total carrying value of Fixed Assets on 28 February 2017.

4

80


5.2 ODETTE LTDSTATEMENT OF FINANCIAL POSITION (BALANCE SHEET)ON 28 FEBRUARY 2017

ASSETSNON-CURRENT ASSETS

CURRENT ASSETS

Inventory 408 880Trade and other receivables

Cash and cash equivalents

TOTAL ASSETS



Ordinary share capital Retained income 520 000


37

CURRENT LIABILITIES


81


5.3 AUDIT REPORT

As a shareholder, what concerns would you have regarding this audit report? Explain THREE points.

Point 1:

Point 2:

Point 3:

6

TOTAL MARKS65

82


ACTIVITY 6: Statement of Financial Position (Balance Sheet); Audit Report(March 2018) (65 marks; 50 minutes)

6.16.1.16.1.26.1.36.1.46.1.5

5

6.2 ORBIT LTD

6.2.1(a) ORDINARY SHARE CAPITAL

Authorised 6 000 000 sharesIssued

8

(b) RETAINED INCOMEBalance on 1 July 2016 874 000

11


Balance on 30 June 2017

83


6.2.2 ORBIT LTDSTATEMENT OF FINANCIAL POSITION (BALANCE SHEET)ON 30 JUNE 2017

ASSETS

NON-CURRENT ASSETS Fixed/Tangible Assets Fixed deposit 380 000

CURRENT ASSETS Inventory 478 000

TOTAL ASSETS


SHAREHOLDERS' EQUITY Ordinary share capital Retained income


28

Loan: Helping Bank

CURRENT LIABILITIES



84


6.2.3 As a shareholder, explain your concern regarding the proposed buy-back of shares. Provide calculations to support your concern.

6

6.3 AUDIT REPORT: DF ENTERPRISES LTD

6.3.1 (a)(b) 2

6.3.2 (a) The audit report below indicates a/an (qualified/unqualified) opinion.

1(b) Explain why the shareholders should be concerned about this audit report. State TWO points.

4

TOTAL MARKS65

85


ACTIVITY 7: Cash Flow and Interpretation (Nov 2017) (85 marks, 65 minutes)

7.17.1.17.1.2

7.1.3

7.1.44

7.2 SO-FINE LTD


AUTHORISED SHARE CAPITAL1 200 000 ordinary shares

ISSUED SHARE CAPITAL900 000 Ordinary shares on 1 September 2016

7Ordinary shares on 31 August 2017 5 292 000

RETAINED INCOMEBalance on 1 September 2016 147 370Net profit after income tax 438 130

9


`

Balance on 31 August 2017

86


7.2.2 SO-FINE LTD

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 AUGUST 2017

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operationsInterest paid

Dividends paid

Income tax paid ?

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of fixed assets ?? ?

Change in investments

CASH FLOWS FROM FINANCING ACTIVITIES? ?? ?

Change in non-current liabilities

19

Net change in cash and cash equivalents ?Cash and cash equivalents – opening balance ?

Cash and cash equivalents – closing balance ?

7.2.3 Calculate the percentage operating profit on sales.

3Calculate the debt-equity ratio.

4

7.2.4 Calculate the dividends per share (DPS) of a shareholder who owned the same number of shares for the entire financial period.

4

87


7.3 CASTRO LTD

7.3.1 Comment on the price of R9,10 charged by Castro Ltd for the new shares issued.

3

7.3.2 Explain how the issue of new shares has affected the financial gearing and risk of Castro Ltd. Quote TWO financial indicators.

6

7.3.3 If Henry wanted to retain his 60% shareholding in the company, how many shares would he have had to buy?

3How much would he have had to pay?

2Henry decided NOT to buy these shares. Apart from the % shareholding, explain TWO reasons why he has made a mistake by not taking up this option.

Reason 1:

Reason 2:

6

88


RONKI LTD

7.3.4 Comment on the liquidity of Ronki Ltd. Quote TWO financial indicators.

6

7.3.5 Comment on the price paid by Ronki Ltd for the repurchase (buy-back) of shares.

3

7.3.6 Explain THREE ways in which Henry has benefited from the repurchase of the shares by Ronki Ltd.

Point 1:

Point 2:

Point 3:

6

TOTAL MARKS

85

89


ACTIVITY 8: Fixed Assets, Cash Flow and Interpretation (Mar 2018) (70 marks; 55 minutes)

8.1 NO. WORKINGS AMOUNT(a) Additions to buildings

15

(b) Total depreciation on equipment

(c) Disposal of equipment at carrying value

8.2.1 WORKINGS ANSWERCalculate the income tax paid.

58.2.2 Calculate the dividends paid.

38.2.3 Calculate the net change in cash and cash equivalents.

4

8.3 CASH EFFECTS OF FINANCING ACTIVITIES

10

90


8.4.1 Calculate the debt-equity ratio.

38.4.2 Calculate the earnings per share (in cents).

38.4.3 Calculate the return on average shareholders' equity (ROSHE).

5

8.5 Explain why the directors felt that the 630 cents offered on the shares repurchased was a fair price. Quote TWO financial indicators with figures.

4

8.6.1 The directors revised the dividend pay-out policy for the current financial year.

Calculate the percentage of earnings distributed as dividends for each year to show this change.

4

91


8.6.2 Give ONE reason why the directors took this decision.

28.6.3 Explain why the shareholders may not be satisfied with the return they

earn. Quote a financial indicator or figure(s).

3

8.7 Apart from the dividends, identify THREE good decisions. Explain the effect of each decision on the company. Quote figures.

GOOD DECISIONS(with figures) EFFECT ON COMPANY

Decision 1:

Decision 2:

Decision 3:

9

TOTAL MARKS70

92


(Q3, Nov 2018)

ACTIVITY 9: Fin. Statements & Audit Reports (75 marks; 60 minutes)

9.19.1.1

9.1.2

9.1.3

9.1.44

9.2.1 TEMBISO LTDSTATEMENT OF COMPREHENSIVE INCOME (INCOME STATEMENT)FOR THE YEAR ENDED 28 FEBRUARY 2018

Sales

Cost of sales (4 856 000)

Gross profit

Other operating income 879 440

Gross income

Operating expenses

Salaries and wages 501 200

Operating profit

Interest income

Net profit before interest expense

28

Interest expense

Net profit before tax

Income tax

Net profit after tax 959 400

93



AUTHORISED SHARE CAPITAL

1 600 000 ordinary shares

ISSUED SHARE CAPITAL

71 480 000 Ordinary shares on 28 February 2018 8 816 000

RETAINED INCOME

Balance on 1 March 2017 376 600

7


Balance on 28 February 2018

9.2.3 EQUITY AND LIABILITIES SECTION OF THE STATEMENT OF FIN. POSITION


Ordinary share capital 8 816 000Retained income


CURRENT LIABILITIES

16


TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES

94


9.3 AUDIT REPORT

9.3.1Point 1 Opinion

1

Point 2 IFRS and Companies Act

2

Point 3 Independent

2

9.3.2Point 4 TWO examples of ethical responsibilities:

Example 1:

Example 2:

4

Point 5 TWO examples of audit evidence:

Example 1:

Example 2:

4

TOTAL MARKS

75

95


(Q4, Nov 2018)

ACTIVITY 10: Cash Flow and Interpretation (70 marks; 55 minutes)

10.1 CALCULATION OF FINANCIAL INDICATORS FOR 2018

10.1.1 Calculate: % operating expenses on sales Workings Answer

210.1.2 Calculate: Acid-test ratio

Workings Answer

410.1.3 Calculate: % return on shareholders' equity

Workings Answer

4

10.2 FIGURES FOR 2018 CASH FLOW STATEMENT

10.2.1 Calculate: Change in investmentsWorkings Answer

210.2.2 Calculate: Income tax paid

Workings Answer

410.2.3 Calculate: Fixed assets sold (at carrying value)

Workings Answer

5

96


10.3 EXPLANATIONS ON CASH FLOW STATEMENT

10.3.1 Explain why the directors are satisfied with the improvement in cash and cash equivalents since 1 July 2016. Quote figures.

310.3.2 Identify THREE decisions that the directors made to pay for land and

buildings.

Decision 1(with figures)



6Explain how these decisions affected the capital employed in the 2018 financial year. Quote figures.

Explain how these decisions affected the financial gearing in the 2018 financial year. Quote TWO indicators and their figures.

610.3.3 From the Cash Flow Statement identify ONE decision made by the

directors in 2017 that they did NOT make in 2018, besides the points mentioned above. Give a possible reason for the decision in 2017.

Decision (with figures) Possible reason

3

97


10.4 DIVIDENDS, RETURNS AND SHAREHOLDING

10.4.1 Calculate: Total interim dividends paid for the 2018 financial year

Workings Answer

Calculate: Interim dividends per share for the 2018 financial year

Workings Answer

610.4.2 Calculate total dividends earned by Dudu Mkhize for the 2018 financial

year.

Workings Answer

5

10.4.3 Calculate the minimum number of additional shares that Dudu should have bought.

Workings Answer

3

98


10.5.1 Explain why it was necessary to purchase properties in other provinces instead of in KZN.

2Explain whether the decision to purchase these properties had the desired effect on sales. Quote figures.

3Explain another strategy they used to solve the problem of low sales. Quote figures.

3

10.5.2 Give advice on what Ben Palo should say about the following topics:

Advice on what to say on earnings per share:

3Advice on what to say on % return earned:

3

Advice on what to say on share price on the JSE:

3

TOTAL MARKS70

99


(Q4, May/Jun 2019)

ACTIVITY 11: Audit Report; Company Financial Statements (80 marks; 60 minutes)

11.1 11.1.111.1.211.1.311.1.4 4

11.2 AUDIT REPORT

11.2.1 Choose the correct word from those given in brackets.

Give ONE reason.

3

11.2.2 Give ONE reason why the Companies Act requires public companies to be audited by an independent auditor.

2

11.2.3 Newspaper reports have indicated that Kego and Murray Associates have been found guilty of misconduct in terms of audit work done at several large firms. Explain how this may influence shareholders of Everest Ltd. State TWO points.

4

100


11.3 MVVS LTD

11.3.1 Statement of Comprehensive Income (Income Statement) for the year ended 31 March 2019

Sales Cost of sales

Gross profit Operating income

Rent income 99 500

Gross operating income Operating expenses

Directors' fees 1 262 100Water and electricity 218 000Telephone 75 600Audit fees 104 000Sundry expenses 61 001

Operating profitInterest income

Profit before interest expenseInterest expense

Net profit before tax 691 000Income tax

Net profit after tax 53

101


11.3.2 NOTES TO THE STATEMENT OF FINANCIAL POSITION (BALANCE SHEET)

Fixed/Tangible Assets

Land and buildings Vehicles Equipment

Carrying value at beginning of financial year 12 500 000 275 000 280 500

Cost 12 500 000 750 000 398 000Accumulated depreciation - (475 000) (117 500)

MovementsAdditions at cost - -

Disposals at carrying value - -

Depreciation - (94 250)Carrying value at end of financial year 12 500 000

Cost 12 500 000 1 377 000Accumulated depreciation - 8

Ordinary share capital

Authorised:8 000 000 sharesIssued:1 200 000 shares in issue at beginning

6

TOTAL MARKS

80

102


(Q5, May/Jun 2019)

ACTIVITY 12: Cash Flow (75 marks; 60 minutes)

12.112.1.112.1.212.1.312.1.4 4

12.2 KULFI LTD

12.2.1 RETAINED INCOME NOTE: Balance on 1 March 2018

Net profit after tax


12Balance on 28 February 2019

12.2.2 Calculate: Income tax paid

Workings Answer

4Calculate: Dividends paid

Workings Answer

4

103


12.2.3 Cash effects of investing activities

9

Net change in cash and cash equivalents

4

12.2.4 Calculate: Acid-test ratio

4

Workings Answer

Calculate: Debt-equity ratio

4

Workings Answer

Calculate: % return on average shareholders' equity (ROSHE)

Workings Answer

5

12.2.5 The shareholders are satisfied with the improvement in the liquidity position. Quote THREE financial indicators (with figures) to support this statement.

6

104


12.2.6 The company increased the share capital by R840 000, and the loan by R550 000.Explain how this affected the gearing and risk of the company. Quote TWO financial indicators.

12

Explain what the directors have done with this cash inflow. State TWO points.

4

12.2.7 Provide calculations to show the change in the pay-out rate.

4Give ONE reason why many shareholders were satisfied with the change in policy. Quote figures.

2

12.2.8 Explain how the repurchase of the shares benefited Martha's shareholding. Quote figures.

4

TOTAL MARKS75

105

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