NATIONAL SENIOR CERTIFICATE GRADE 12

Transcription

1 NATIONAL SENIOR CERTIFICATE GRADE 12 ACCOUNTING NOVEMBER 201 MEMORANDUM 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 a pre-adjustment figure is shown as a final figure, allocate the part-mark for the working for that figure (not the method mark for the 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. 5. Where indicated, part-marks may be awarded to differentiate between differing qualities of answers from candidates. 6. This memorandum is not for public distribution, as certain items might imply incorrect treatment. The adjustments made are due to nuances in certain questions. 7. Where penalties are applied, the marks for that section of the question cannot be a final negative. 8. Where method marks are awarded for operation, the marker must inspect the reasonableness of the answer before awarding the mark. 9. In awarding method marks, ensure that candidates do not get full marks for any item that is incorrect at least in part. 10. Codes: f = foreign item; p = placement/presentation. This memorandum consists of 19 pages.

2 Accounting 2 DBE/November 201 QUESTION Value-added tax % First In First Out 1.1. Perpetual/Continuous 1.2 Calculate the final amount payable to SARS on 31 July 201. VAT Control any one part correct OR = Calculate the total amount paid for carriage on the purchases on 11 June marks R (1 600 x 215 ) = operation any one part correct Calculate the value of the closing stock on 30 June 201 using the weighted-average method x marks marks = R operation any one part correct 8

3 Accounting 3 DBE/November Explain the effect that this will have on the gross profit. Gross profit will increase (by R20 850) ONE valid reason for changing the stock valuation method: FIFO is a more suitable method of valuing stock of blazers as blazers are discrete units which are easily identified. ONE valid reason against changing the stock valuation method: It is unethical to change the method of stock valuation with the intention to manipulate financial records This is fraud and shows a lack of business ethics It is important that financial records are consistent from one year to the next for comparability Harry is concerned about the control of his stock of blazers. He has sold blazers during the year. Give a calculation to support his concern = 785 On hand = 580 Shortfall = 205 any one part correct OR = Sold = Shortfall = 205 TOTAL MARKS 35

4 Accounting DBE/November 201 QUESTION The bookkeeper, Litzie, says it is not necessary for her to prepare a Creditors' Reconciliation Statement because the creditors send monthly statements to the business anyway. What would you say to her? State TWO points. Any TWO valid points The statement could contain errors. This is an internal control measure (by checking to an external statement). This will lead to detection of errors/omissions/fraud. 2.2 No. Balance A B C D E F Creditors' Ledger of KZ Stores Statement of account received from Valley Ltd G H * * 16 * Any ONE part correct NOTE: Sign and amount must be correct to award the mark(s)

5 Accounting 5 DBE/November Explain what action should be taken against J van Wyk. State TWO points. Any valid point J van Wyk must be subjected to a disciplinary hearing Can be dismissed for theft Sanctioned to refund the employer for the costs What must the business do to prevent a similar incident in future? Explain THREE points. Any THREE valid points Division of duties amongst employees. Each person serves as a checker for another. Conduct internal audits to minimise the possibility of fraud and errors by checking documents. Physical stock control (regular and random). Security checks at entrance and exit points. When goods are received, the receiving officer must check the stock received to the invoice and order form. Inform suppliers of the procedure for delivering goods to the business and do not deviate from this. 6 TOTAL MARKS 30

6 Accounting 6 DBE/November 201 QUESTION SHARE CAPITAL AUTHORISED SHARE CAPITAL ordinary shares ISSUED SHARE CAPITAL (75 000) Ordinary shares in issue on 1 March 2013 Ordinary shares issued during the year Ordinary shares re-purchased (average price of R7,50 ) Ordinary shares in issue on 28 February operation ( ) operation RETAINED INCOME Balance on 1 March Net profit after tax Shares repurchased ( x 2,90 ) ( ) Ordinary share dividends operation one part correct (82 000) Interim dividends Final dividends ( x 0 cents ) one part correct Balance on 28 February 201 operation

7 Accounting 7 DBE/November VIJAY LIMITED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION) ON 28 FEBRUARY 201 ASSETS Non-current assets operation (total assets current assets) Fixed assets (carrying value) operation Financial asset: Fixed deposit Current assets operation Inventories Trade and other receivables ( ) Cash and cash equivalents TOTAL ASSETS transfer total equities and liabilities EQUITY AND LIABILITIES Shareholders' equity operation Ordinary share capital see Retained income see Non-current liabilities Loan : William Bank ( ) one part correct Current liabilities operation Trade and other payables ( ) Shareholders for dividends Refer SARS : Income Tax ( ) Current portion of loan see loan *all amounts can be included in Trade and other payables TOTAL EQUITY AND LIABILITIES operation

8 Accounting 8 DBE/November Calculate the return on average shareholders' equity for see = 22,0% ½ ( ) see marks 5 3. From 2013 to 201 the directors made a deliberate decision to change the policy on the distribution of profits in the form of dividends. Comment on this change. Quote financial indicators or figures to support your answer. The EPS/DPS (pay out rate) dropped from 100% or all of the 82 cents in 2013 to 59% or 100 out of 170 cents in 201. The business is retaining more funds for future expansions/ development 3.5 Comment on whether the shareholders should be satisfied with the percentage return and the market price of their shares. Quote TWO relevant financial indicators (actual figures/ratios/percentages) and their trends. Give an additional comment in each case. The ROSHE: increased from 18,3% to 22% This exceeds the return on alternative investments of 9% The market price of the share decreased from 1060 cents to 1032 cents while the NAV increased from 786 cents to 86 cents. Any valid additional comment e.g. This is disappointing and the directors should assess the reasons./the market price still exceeds the NAV (investors are prepared to pay extra for the shares). 6

9 Accounting 9 DBE/November The external auditors, Hassan and Jacob, have employed Janet to work on the audit of Vijay Ltd. Janet owns shares in Vijay Ltd. Explain why this is a problem. It is a conflict of interest/unethical. She could influence the results in a positive or negative way. Overlooking issues/insider information. Give a valid solution. She should sell the shares if she wants to continue working on the audit. She must be removed from this audit or take on other projects within this audit firm. Disclose the vested interest formally. TOTAL MARKS 65

10 Accounting 10 DBE/November 201 QUESTION.1 Calculate the missing amounts (indicated by a, b and c) in the Fixed/Tangible Asset Note for the year ended 28 February 201. NO. WORKINGS AMOUNT a b c Sold : New: Old: ( = x 20% ) one part correct METEOR SUPERMARKETS LTD CASH FLOW STATEMENT FOR YEAR ENDED 28 FEBRUARY 201 Cash flow from operating activities operation ( ) Cash generated from operations Interest paid (88 500) Taxation paid ( ) one part correct (in brackets) Dividends paid ( ) or ( ) one part correct (in brackets) 1 mark 1 mark 1 mark ( ) ( ) Cash flow from investing activities operation ( ) Purchase of fixed assets ( ) see.1 a one part correct ( ) Proceeds from the disposal of fixed assets see.1 b Cash flow from financing activities operation Proceeds from the sale of shares Share buy-back ( x R9,50) (75 000) Change in loan Net change in cash and cash equivalents operation ( ) Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year ( ) * 31 * Operation from top OR R OR (R )

11 Accounting 11 DBE/November At the AGM, a shareholder stated that the Cash Flow Statement reflects poor decisions by the directors. Explain TWO points, with relevant figures, to support his opinion. Any TWO valid answers: Explanation Figures Dividends of R cause a negative figure for cash retained from operating activities. Fixed assets bought are very high (R ) which leads to a bank overdraft. The directors allowed a large bank overdraft of R to result from high payments for dividends/fixed assets. The buy-back of shares (R75 000) caused cash flow problems....1 Calculate the net asset value per share for x = 610 cents one part correct or 609,6 cents or R6, Calculate the debt-equity ratio for : see..2 = 0,1 : 1 3

12 Accounting 12 DBE/November Comment on the liquidity position of the company. Quote THREE relevant financial indicators (actual figures/ratios/percentages) and their trends. Any THREE valid financial indicators: Name of financial indicator Figure and trend Current ratio: Decreased from 3,6 : 1 to 1,6 : 1. Acid test ratio: Decreased from 3,1 : 1 to 1,2 : 1 Stock turnover rate: Increased from 5,1 to 6,8 times p.a. Debtors' collection period: Increased from 35 to 0 days General comment: Any valid comment related to the indicators selected. Excellent answer = 3 marks; Good = 2; Satisfactory/Poor = 1; Incorrect = 0 Expected responses: The current ratio and acid test ratio were possibly too high in 2013 as current assets do not earn any return. They may be more efficient in 201/possibly too low in 201. The stock turnover rate has improved which assists liquidity and is appropriate for a supermarket. The debtors are paying more slowly and this trend must be rectified (normal credit terms 30 days). 9.6 The directors decided to increase the loan during the current financial year. Quote TWO financial indicators (actual figures/ ratios/percentages) that are relevant to their decision. Explain why this was a good decision, or not. ROTCE This is 18,8% DEBT/EQUITY RATIO This is 0,1 : 1 (see..2) Explanation: Positively geared as ROTCE is higher than interest rate Low financial risk (as it relies more on funds from internal sources) 8

13 Accounting 13 DBE/November The Bakker family owns shares in this company. Explain the effect that the repurchase of shares on 31 December 2013 had on their control of the company. Give a calculation(s) to support your answer. The family is now the majority shareholder. Before the repurchase the family's shareholding was: x 100 = 9,3% After the repurchase the family's shareholding is: x 100 = 51,0% TOTAL MARKS 75

14 Accounting 1 DBE/November 201 QUESTION List FOUR items that should not have been placed in this Cash Budget. Discount received Bad debts Cost of sales Depreciation on vehicles -1 for each superfluous additional item if four marks are earned 5.2 CREDITORS' PAYMENT SCHEDULE MONTH CREDIT PURCHASES OCTOBER NOVEMBER DECEMBER August September October November December If x 10% x 95% operation one part correct Calculate the total sales for September x 100 = operation one part correct Calculate the percentage increase in rent income in December x = 12,5% operation one part correct 3

15 Accounting 15 DBE/November Calculate the salaries and wages amount for December x 108,5% = operation one part correct 5.3. Calculate the rate of interest on the loan x 100 x 12 = 9% operation one part correct Calculate the period for which enough stock is on hand (in days) on 30 September x 365 = 7,3 days operation one part correct Explain whether this is appropriate for the business. Because the shelf life is 2 months, the business will be left with stock that cannot be sold/will be destroyed/will be sold cheaply Calculate the mark-up percentage achieved for the year ended 30 September two marks x = 5% operation one part correct

16 Accounting 16 DBE/November Comment on whether or not the change in the mark-up percentage has benefited the business. Give a calculation(s) to support your opinion. Answer for FOUR marks: The decrease in mark-up resulted in a decrease in gross profit. GP for 2013 = R x 60/160 = R GP for 201 = R R = R Answer for ONE mark: The decrease in mark-up resulted in an increase in sales. Increase in sales = R R = R TOTAL MARKS 0

17 Accounting 17 DBE/November 201 QUESTION BRIAN'S BRELLIES Calculate the direct labour cost. (one part correct) Normal time: x R95 = x Bonus: x 12% if 12% of figure above one part correct FACTORY OVERHEAD COST Sundry factory expenses Indirect material ( ) Salary of factory foreman ( ) Rent expense ( x 5 / 8 ) Insurance ( ) x 75% Water and electricity ( x 80 ) TOTAL operation (one part correct) for foreign items (advertising) PRODUCTION COST STATEMENT FOR THE YEAR ENDED 31 JULY 201 Direct material cost Direct labour cost see Prime cost operation Factory overhead cost see Total production cost operation Work in process (1 August 2013) Work in process (31 July 201) (2 600) Cost of production of finished goods operation (must be subtracted)

18 Accounting 18 DBE/November BEN'S CATERING Identify ONE unit cost for doughnuts and TWO unit costs for pies that were major problems in 201, considering that the inflation rate was 5%. Identify cost Figures ONE unit cost for doughnuts (Quote figures.) Direct labour cost R1,55 R1,90 (+ 22%) Problem Valid advice Problem and advice Possible cause of the problem: Workers are not operating efficiently/wages increased/more overtime Advice: Assess the efficiency of workers/offer incentives/time and motion studies/restrict overtime OR Selling and distribution cost R0,70 R1,15 (+ 50%) Do not accept Administration cost TWO unit costs for pies (Quote figures.) Direct material cost R2,20 R5,05 (+ 29%) Factory overhead cost R2,50 R3,38 (+ 35%) Do not accept Administration cost OR Possible cause of the problem: Salespersons not efficient/transport costs increased Advice: Offer commission on sales/look for cheaper forms of transport Problem and advice Possible cause of the problem: Lack of expertise of workers/poor quality raw materials/increased raw materials cost/theft of raw materials Advice: Investigate causes of wastage/look for a cheaper supplier/better quality of raw material/better training/improve security Possible cause of the problem: Low production increased fixed cost per unit/increase in certain costs, e.g. rent Advice: Increase units produced to reduce unit cost/advertise the product better/diversify the range/economise on expenses, e.g. rent/water/ electricity 12

19 Accounting 19 DBE/November Calculate the number of extra doughnuts he must produce and sell to make an additional profit of R Assume that the unit costs and selling price for 201 remain unchanged. OR / 3,00 = extra units one part correct (R8 R5) 3,00 = = units Name the product which has been negatively affected by the new competitor. Pies Comment on how this would have affected the net profit on this product. Production decreased: units Production below break-even point of units This means that a loss will be made on the pies. 5 TOTAL MARKS 55 TOTAL: 300