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ACCOUNTING GRADE 12 TOPICS

PAPER 1

FINANCIAL REPORTING

&

EVALUATION

Revision Material (Suggested solutions)

PAPER ONE TOPICS

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|Topics |Page |

|1 |Income statement and Notes |2-13 |

|2 |Calculation of the correct Profit |14-20 |

|3 |Balance Sheet and Notes |21-34 |

|4 |Cash Flow Statements and Analysis |35-44 |

| |and Interpretation of Financial Statements | |

|5 |Audit Reports |45-50 |

| | | |

| |

| |

|ACTIVITY 1 ASC JUNE 2019 |

| | | |

|INCOME STATEMENT AND NOTES | |

| | | |

|4.1 |4.1.1 | |

| |C Π | |

| |Balance Sheet |4 |

| | | |

| | | |

| |4.1.2 | |

| |D ( | |

| |Income Statement | |

| | | |

| | | |

| |4.1.3 | |

| |B ( | |

| |Cash Flow Statement | |

| | | |

| | | |

| |4.1.4 | |

| |A ( | |

| |Audit Report | |

| | | |

| | | |

| | | |

|4.3 |MVVS LTD Foreign entries –1 max -1 | |

| |Placement -1 (if marks scored elsewhere) max –1 | |

| | | | |

|4.3.1 |Statement of Comprehensive Income (Income Statement) for the year ended 31 March 2019 | |

| |# Give method mark if R6 236 000 | |

| | | |

| |Sales (10 563 280( + 36 720() | |

| |10 600 000 |53 |

| |(* | |

| | | |

| |Cost of sales (6 236 000 + 24 000 (() | |

| |(6 260 000) | |

| |(*# | |

| | | |

| |Gross profit Sales - COS 7 | |

| | | |

| |4 340 000 | |

| |( | |

| | | |

| |Operating income operation | |

| |112 000 | |

| |(* | |

| | | |

| |Rent income | |

| |99 500 | |

| | | |

| | | |

| |Bad debts recovered | |

| |7 800 | |

| |(( | |

| | | |

| |Provision for bad debts adjustment | |

| |1 600 | |

| |(( | |

| | | |

| |Profit on sale of asset | |

| |3 100 | |

| |(( | |

| | | |

| | | |

| | | |

| | | |

| | | |

| |Gross operating income GP + OI 8 | |

| |4 452 000 | |

| |( | |

| | | |

| |Operating expenses operation | |

| |(3 710 000) | |

| |(* | |

| | | |

| |Directors' fees | |

| |1 262 100 | |

| | | |

| | | |

| |Water and electricity | |

| |218 000 | |

| | | |

| | | |

| |Telephone | |

| |75 600 | |

| | | |

| | | |

| |Audit fees | |

| |104 000 | |

| | | |

| | | |

| |Sundry expenses | |

| |61 001 | |

| | | |

| | | |

| |13 000 three marks | |

| |Salaries and wages (1 280 000 (+ 9 100( + 3 900(() | |

| |1 293 000 | |

| |(* | |

| | | |

| |Employer's contributions | |

| |318 200 | |

| |(( | |

| | | |

| |Bad debts (22 300 ( + 8 000 (() | |

| |30 300 | |

| |(* | |

| | | |

| |Consumable stores | |

| |49 800 | |

| |(( | |

| | | |

| |Insurance (79 500 (– 38 250 (() | |

| |41 250 | |

| |(* | |

| | | |

| |156 799 three marks 94 250 two marks | |

| |Depreciation (34 999 + 80 000 + 41 800) + (92 500 + 1 750) | |

| |( ( ( ( ( | |

| |251 049 | |

| |(* | |

| | | |

| |Trading stock deficit (364 200 (– 24 000( - 334 500() | |

| |See COS above 28 | |

| |5 700 | |

| |29 700 three marks | |

| |(* | |

| | | |

| | | |

| | | |

| | | |

| | | |

| |Operating Profit GOI – OE | |

| |742 000 | |

| |( | |

| | | |

| |Interest income | |

| |balancing figure; cannot be 0; accept -ve based on workings | |

| |26 000 | |

| |( | |

| | | |

| |Profit before interest expense NPBT + IE | |

| |768 000 | |

| |( | |

| | | |

| |Interest expense (1 430 200 ( + 304 800 ( – 1 658 000() | |

| |(77 000) | |

| |(* | |

| | | |

| |Net profit before tax | |

| |691 000 | |

| | | |

| | | |

| |Income tax Ignore brackets | |

| |(193 480) | |

| |(( | |

| | | |

| |Net profit after tax must subtract income tax | |

| |10 | |

| |497 520 | |

| |( | |

| | | |

|4.3.2 |NOTES TO THE BALANCE SHEET | |

| |Fixed/Tangible Assets (Brackets must be included, where applicable, to score marks) | |

| | | |

| | | |

| |Land and buildings |8 |

| |Vehicles | |

| |Equipment | |

| | | |

| |Carrying value at beginning of financial year | |

| |12 500 000 | |

| |275 000 | |

| |280 500 | |

| | | |

| |Cost | |

| |12 500 000 | |

| |750 000 | |

| |398 000 | |

| | | |

| |Accumulated depreciation | |

| |- | |

| |(475 000) | |

| |(117 500) | |

| | | |

| |Movements | |

| | | |

| | | |

| | | |

| | | |

| |Additions at cost | |

| |- | |

| |627 000( | |

| |- | |

| | | |

| |Disposals at carrying value | |

| |- | |

| |- | |

| |(6 500)(( | |

| | | |

| |Depreciation | |

| |- | |

| |See Inc Stmt | |

| |(156 799)( | |

| |(94 250) | |

| | | |

| |Carrying value at end of financial year | |

| |12 500 000 | |

| | | |

| | | |

| | | |

| |Cost | |

| |12 500 000 | |

| |1 377 000 | |

| |370 000( | |

| | | |

| |Accumulated depreciation | |

| |- | |

| |(631 799) ( | |

| |475 000 + depr | |

| |(190 250) | |

| |(( | |

| | | |

| | | | |

| |Ordinary share capital | |

| |Authorised: | |

| | | |

| | |6 |

| | | |

| |8 000 000 shares | |

| | | |

| | | |

| | | |

| |Issued: | |

| | | |

| | | |

| | | |

| |1 200 000 | |

| |shares in issue at beginning | |

| |4 800 000 | |

| |( | |

| | | |

| |(150 000) | |

| |shares re-purchased (ASP: R4.00 () | |

| |(600 000) | |

| |( | |

| | | |

| |850 000 | |

| |shares issued during year | |

| |balancing figure if one item correct | |

| |5 100 000 | |

| |( | |

| | | |

| |1 900 000 ( | |

| |shares in issue at end | |

| |9 300 000 | |

| |( | |

| | | |

| |OR: | |

| |Issued: Note: Candidates might not round off the ASP to nearest cent; this | |

| |could lead to differences of approximately R710 to R790 | |

| | | |

| |1 200 000 | |

| |shares in issue at beginning | |

| |4 800 000 | |

| |( | |

| | | |

| |850 000 | |

| |shares issued during year | |

| |balancing figure if one item correct | |

| |5 233 500 | |

| |OR 5 235 000 | |

| |( | |

| | | |

| |(150 000) | |

| |shares re-purchased ASP: R4,89 ( | |

| |ASP: R4,90 | |

| |(733 500) | |

| |OR (735 000) | |

| |( | |

| | | |

| |1 900 000 ( | |

| |shares in issue at end (R4,89 or R4,90) | |

| |9 300 000 | |

| |( | |

| | | |

|TOTAL MARKS |

| |

|71 |

ACTIVITY 2 NSC, NOV 2018

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|TOTAL MARKS |

| |

|46 |

|ACTIVITY 3 ASC JUNE 2017 |

| |

| |

|4.1 | | |

| |4.1.1 | |

| |D ( |4 |

| | | |

| |4.1.2 | |

| |C ( | |

| | | |

| |4.1.3 | |

| |A ( | |

| | | |

| |4.1.4 | |

| |B ( | |

| | | |

| | | |

|4.2 |MTOMBENI LTD | |

| | | |

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

| | | |

| |100 500 three marks | |

| |190 000 ( – (72 000 ( + 28 500 (() = 89 500 ( one part correct |5 |

| | | |

| |Calculate: Total depreciation on equipment on 28 February 2017 | |

| | | |

| |New: | |

| |32 000 ( x 6/12 ( x 10% = 1 600 ( one part correct but not for 10% |7 |

| | | |

| |Old: | |

| |133 000 two marks | |

| |= (218 000 (– 85 000() x 10% = 13 300 ( one part correct but not for 10% | |

| |(250 000 – 32 000) one mark | |

| | | |

| |Total = 14 900 ( one part correct | |

| | | |

| | | |

|4.2.2 |MTOMBENI LTD |

| | |

| | |

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

| |*one part correct |

| | |

| | |

| | |

| |Sales (5 500 000 – 32 500 (+15 000 () |

| |5 482 500 |

| |(* |

| | |

| |Cost of sales (3 150 000 + 9 375 () |

| |(3 159 375) |

| |( |

| | |

| |Gross profit 6 |

| |2 323 125 |

| | |

| |( Sales - COS |

| | |

| |Other operating income |

| |198 950 |

| |(* |

| | |

| |Rent income (169 500 (+ 16 500 (() |

| |186 000 |

| |(* |

| | |

| |Bad debt recovered |

| |4 750 |

| |( |

| | |

| |** Profit on sale of asset (97 700 (– 89 500( see 4.2.1 ) |

| |8 200 |

| |(* |

| | |

| |Gross operating income 10 |

| |2 522 075 |

| |(* |

| | |

| |Operating expenses |

| |(1 356 075) |

| |(* |

| | |

| |Directors' fees |

| |380 000 |

| | |

| | |

| |Audit fees |

| |54 000 |

| | |

| | |

| |Bad debts (13 600 (+ 1 900 () |

| |15 500 |

| |( |

| | |

| |Salaries and wages 488 500 two marks 1 755 two marks |

| |(475 000 ( + 13 500 (+ 1 620 ( + 135 ( |

| |490 255 |

| |(* |

| | |

| |Consumable stores |

| |61 700 |

| |(( |

| | |

| |Insurance (19 220 (+ 1 780() |

| |21 000 |

| |( |

| | |

| |Bank charges (7 760 ( + 870 () |

| |8 630 |

| |( |

| | |

| |Sundry expenses |

| |140 085 |

| |( |

| | |

| |** Trading stock deficit (386 500 (– 9 375 ( – 374 000 () |

| |R12 500 two marks only see cost of sales |

| |3 125 |

| |(* |

| | |

| |** Provision for bad debts adjustment (4 030( – 3 650() |

| |380 |

| |( |

| | |

| |Depreciation (28 500 ( + 138 000 ( + 14 900() |

| |see 4.2.1 see 4.2.1 |

| |181 400 |

| |(* |

| | |

| |Operating profit 30 |

| |1 166 000 |

| |(GOI-OExp |

| | |

| |Interest income Missing figure NP after Interest income – Operating profit |

| |Cannot work out to be a negative figure |

| |178 000 |

| |(( |

| | |

| |Net profit after interest income NPBT + Interest expense |

| |1 344 000 |

| |( |

| | |

| |Interest expense |

| |(144 000) |

| |(( |

| | |

| |Net profit before tax NPAT + Income tax |

| |1 200 000 |

| |( |

| | |

| |Income tax |

| |(336 000) |

| |(( |

| | |

| |Net profit after tax 8 |

| |864 000 |

| | |

| | |

|Foreign items -1 max -2 ** Award marks to workings if item misplaced; -1 for placement; max -2 | |

|All other misplaced items marked as incorrect | |

| |54 |

| | |

|ACTIVITY 4 ASC, 2015 JUNE | |

| | | |

| | | |

|4.1 |Write only the letter (A–E) next to the question number. | |

| | | |

| |4.1.1 |4 |

| |E ( | |

| | | |

| |4.1.2 | |

| |C( | |

| | | |

| |4.1.3 | |

| |D ( | |

| | | |

| |4.1.4 | |

| |B ( | |

| | | |

| | | |

| | | |

| | | |

| | | |

|4.2.1 |See Income Statement on the next page. | |

| | | |

|4.2.2 |Ordinary Share Capital Note | |

| | | |

| |Authorised | |

| | | |

| |1 000 000 ordinary shares |8 |

| | | |

| | | |

| | | |

| |Issued | |

| | | |

| |(700 000 | |

| |Shares in issue on 1 Mar. 2014 | |

| |(5 600 000 (x) | |

| | | |

| |(100 000 | |

| |Shares issued during the year at R12 each | |

| |(1 200 000 (y) | |

| | | |

| |((160 000) | |

| |Ignore brackets | |

| |Shares bought back (average issued price of R8,50() Not R9,10 | |

| |If (x+y) ÷ 800 000 | |

| |((1 360 000) | |

| |One part correct | |

| |Ignore brackets | |

| | | |

| |640 000 | |

| |Shares in issue on 28 Feb. 2015 | |

| |( 5 440 000 | |

| |Operation; | |

| |One part correct | |

| | | |

| | | |

| | | |

| | | |

| | | |

| | | |

|4.2.3 |Retained Income Note | |

| | | |

| |Balance at beginning of financial year | |

| |( 1 368 000 | |

| | |11 |

| |Net profit after tax | |

| |see 4.2.1( 1 260 000 | |

| | | |

| |if 910-avg price above | |

| |Buy back of shares (160 000 ( x 60c () | |

| | | |

| |*( (96 000) | |

| |Ignore brackets | |

| | | |

| |Dividends | |

| |*( (1 080 000) | |

| |Ignore brackets | |

| | | |

| |Interim (700 000 (x 80c) Regard 80c as part of workings to assess if one part correct for final method mark | |

| |*( 560 000 | |

| | | |

| |Final (800 000 ( x 65c) Regard 65c as part of workings to assess if one part correct for final method mark | |

| |*( 520 000 | |

| | | |

| |Balance at end of financial year | |

| |*Operation one part correct | |

| |*( 1 452 000 | |

| | | |

| | | |

| | | |

| | | |

| | | |

| PRINCE LIMITED | |

| | *Operation, one part correct | |

| INCOME STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2015 | |

| | |

|20 963 600 (2 marks) | |

|Sales (14 974 000(x140/100(– 53 600() |42 |

|*( 20 910 000 | |

| | |

| | |

|Cost of sales | |

|(14 974 000) | |

| | |

|5 | |

|Gross profit | |

|*( 5 936 000 | |

| | |

| | |

|Other income | |

|*( 355 700 | |

| | |

| | |

|Rent income (374 950( – 29 500(() | |

|28 075: 1 mark; 1 425: 1 mark | |

|*( 345 450 | |

| | |

| | |

|Bad debts recovered | |

|( 4 150 | |

| | |

| | |

|Provision for bad debt adjustment | |

|(( 6 100 | |

| | |

| | |

| | |

| | |

| | |

|9 | |

|Gross operating income | |

|*( 6 291 700 | |

| | |

| | |

|Operating expenses Operation; Gross operating income – operating profit | |

|If no brackets, just mark operation | |

|((4 195 900) | |

| | |

| | |

|Auditors' fees | |

|147 600 | |

| | |

| | |

|Advertising | |

|960 000 | |

| | |

| | |

|Salaries and wages (1 300 000( +17 000(+ 3 000() | |

|20 000: 2 marks | |

|*( 1 320 000 | |

| | |

| | |

|Directors' fees (1 130 000( + 20 500() | |

|( 1 150 500 | |

| | |

| | |

|Packing material (76 200( – 8 500() | |

|( 67 700 | |

| | |

| | |

|Sundry expenses Balancing figure; any reasonable figure | |

|( 164 900 | |

| | |

| | |

|Bad debts (24 000( + 42 000() | |

|( 66 000 | |

| | |

| | |

|Trading stock deficit | |

|(( 20 000 | |

| | |

| | |

|Depreciation | |

|( 299 200 | |

| | |

| | |

| | |

| | |

| | |

|19 | |

|Operating profit Operation; Subtotal-Interest income | |

|( 2 095 800 | |

| | |

| | |

|Interest income (53 260( + 25 940() or 990 000 x 8% | |

|*( 79 200 | |

| | |

| | |

| | |

|2 175 000 | |

| | |

| | |

|Interest expense Ignore brackets; | |

|Ignore operation as NPBT is worked out from tax | |

|(( (375 000) | |

| | |

| | |

|Net profit before tax If NP + tax | |

|((1 800 000 | |

| | |

| | |

|Income tax | |

|(540 000) | |

| | |

|9 | |

|Net profit after tax | |

|((1 260 000 | |

| | |

|ACTIVITY 5 NSC , NOV 2016 |

| |

| | | |

|3.1 |3.1.1 | |

| |Expense ( Accept recognisable abbreviations | |

| | |4 |

| |3.1.2 | |

| |Current asset ( | |

| | | |

| |3.1.3 | |

| |Current liabilities ( | |

| | | |

| |3.1.4 | |

| |Net working capital ( | |

| | | |

|3.3 |FRALEZI LTD |

| |INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2016 |

|Sales (4 777 300 Π– 35 700 () One part correct |( 4 741 600 | |

|Cost of sales Award 3 marks if = Sales + 297 200 ÷ 1,7 |((( (2 964 000) | |

|Gross profit One part correct, COS must be subtracted |( 1 777 600 |7 |

|Other income Operation one part correct |( 110 640 | |

|Rent income (101 900 ( + 6 000 (( – 8 300 (Π) One part correct |( 99 600 | |

|-2 300 four marks | | |

|Bad debts recovered |( 10 540 | |

|** Provision for bad debts adj. (3 732(– 3 232 () One part correct |( 500 | |

|Could be an expense if error made | | |

| | | |

|Gross operating profit Operation |( 1 888 240 |12 |

|Operating expenses Operation |( (1 177 000) | |

|Directors' fees |Π 375 000 | |

|Salaries and wages |Π 365 540 | |

|Sundry expenses Any figure less than Op Exps total; ignore brackets |(( 129 406 | |

|Beware of inappropriate figures being inserted in this line e.g. discount, insurance | | |

|Depreciation (124 260 (– 6 300( + 5 040(() | 123 000 | |

|–1 260 three marks One part correct | | |

|–14 700 + 13 440 three marks | | |

|Audit fees (23 000 ( + 7 250 Π) |Π 30 250 | |

|Repairs (100 000 ( + 6 000 () |Π 106 000 | |

|Packing material (13 600 (– 3 700 () |Π 9 900 | |

| 1 748 three marks |( 22 344 | |

|Advertising (20 596 ( + 1 900((– 152() One part correct | | |

|Loss due to theft (9 300 Π + 1 260 () See depr adj above; opposite sign |( 10 560 | |

|OR (28 560 one m/mark – 18 000 one mark) One part correct | | |

|** Trading stock deficit One part correct but not 225 500 |( 5 000 | |

|(209 500 ( + 21 000 (( – 225 500 () Could be a surplus if error made | | |

| | |32 |

| | | |

|Operating profit Check = Sales x 0,15 |( 711 240 | |

|Interest income Profit before interest expense – Operating profit |(( 28 480 | |

|Profit before interest expense Operation from bottom up |( 739 720 | |

|Interest expense Must be correctly placed & subtracted; brackets not essential |(( (39 720) | |

|Net profit before tax Operation; must be more than R504 000 |( 700 000 | |

|Income tax for the year Ignore brackets |(( (196 000) |9 |

|Net profit after tax |504 000 | |

|Foreign items –1 (max –2) ** Award marks to workings if item misplaced; -1 for placement; max -2 | |

|TOTAL MARKS | |

| | |

| |60 |

| | |

|64 | |

| | |

|ACTIVITY 6 2020 DBE TRAINING MANUAL |

| |

|Using Financial Indicators to complete the Income Statement |

| | |

| |Incomplete Income Statement: |

| | | | |

| |Sales | |7 612 500 | |

| |Cost of sales |7 612 500 x 100/175 |(4 350 000) | |

| |Gross profit |subtract |3 262 500 | |

| |Operating income |7 612 500 x 16% |1 218 000 | |

| | | | | |

| |Gross operating income |add |4 480 500 | |

| |Operating expenses |GOI – OP |(2 805 750 | |

| | | | | |

| |Operating profit |22% x 7612 500 |1 674 750 | |

| |Interest income | |22 250 | |

| |Profit before interest expense |add |1 697 000 | |

| |Interest expense |Balancing figure |(97 000) | |

| |Net profit before income tax |448 000 x 100/28 |1 600 000 | |

| |Income tax | |(448 000) | |

| |Net profit after income tax |subtract |1 152 000 | |

| | | | |

ACTIVITY 1 NOV 2019

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ACTIVITY 2 NOV 2015

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|TOTAL MARKS |

| |

|13 |

ACTIVITY 3 PRELIM KZN 2019

| | | | | |

| |3.2 |Net profit before tax |1 | |

| | | |449| |

| | | |200| |

| | | | | |

|TOTAL MARKS |

| |

|19 |

ACTIVITY4 PRELIM GP 2017

|3.2 |AMARA LIMITED |

|3.2.1 |Calculate the Net Profit after Tax. | |

| | | |

| |R | |

| | | |

| |Incorrect Net Profit before Tax | |

| |1 024 400 | |

| | | |

| |Telephone | |

| |( (3 000) | |

| | | |

| |Insurance | |

| |( 4 500 | |

| | | |

| |Rent Income [pic] | |

| |((( (26 400) | |

| | | |

| |Stationery | |

| |( 500 | |

| | | |

| |Net profit before tax one part correct | |

| |(1 000 000 | |

| | | |

| |Income Tax NPBT X 0,28 | |

| |(( (280 000) | |

| | | |

| |Net Profit after tax tax must be deducted one part correct | |

| |(720 000 | |

| | | |

|TOTAL MARKS |

| |

|10 |

ACTIVITY 5 PRELIM NC 2017

|3.1 |Calculate the correct NET PROFIT AFTER TAX for the year ended 30 June 2017. | |

| | | |

| |Incorrect profit before tax |12 |

| |R324 000 | |

| | | |

| |Interest on loan (37 600 - 20 000) | |

| |(17 600)(( | |

| | | |

| |Loss on fire | |

| |(800)(( | |

| | | |

| |Packing material (60 000 x 80%) | |

| |(48 000)(( | |

| | | |

| |Directors' fees | |

| |(21 000)( | |

| | | |

| |Audit fees | |

| |(5 000)( | |

| | | |

| |Salaries | |

| |30 000( | |

| | | |

| | | |

| |261 600 | |

| | | |

| |Income tax (28% x 261 600) | |

| |Check calculations 28% of net profit | |

| |(73 248)(( | |

| |(One part correct) | |

| | | |

| |Net profit after tax | |

| |188 352( | |

| |(Operation, one part correct) | |

| | | |

|TOTAL MARKS |

| |

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ACTIVITY 1 NSC 2019

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|ACTIVITY 2 NSC 2018 |

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|ACTIVITY 3 NSC 2017 |

|QUESTION 3 | | |

| | | |

|3.1 | | |

| (a) |Calculate the carrying value of Land and Buildings on 1 March 2016. | |

| | | |

| |2 550 000 – 325 000 = 2 225 000 (( no part marks | |

| | |2 |

| | | |

|(b) |Calculate the total depreciation on vehicles on 28 February 2017. | |

| |Allocate the marks to correct workings even if subtotals not shown. | |

| | | |

| |New: |6 |

| |422 550 x 20/100 x 6/12 = 42 255 (( | |

| | | |

| |Old: one mark | |

| |350 000 x 20/100 = 70 000 but can only write off R34 999 ((( | |

| |(350 000 – 315 000) = 35 000–1 = 34 999 | |

| |42 255 + 34 999 = 77 254 ( one part correct | |

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

| |Note: Apply Marking Principle10 | |

| |Mark one line only – choose line to benefit candidate | |

| | |4 |

| |see (b) above one part correct | |

| |35 000 ( + 422 550 ( – 77 254 ( = 380 296 ( | |

| | | |

| |OR | |

| |one mark one mark one method mark one method mark | |

| |772 550 – (315 000 + 77 254 see (b) above = 380 296 | |

| |392 254 two marks | |

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

| |Note: Apply Marking Principle10 | |

| |Mark one line only – choose line to benefit candidate | |

| | |6 |

| |30 900 four marks 18 900 three marks | |

| |22 800 two marks | |

| |120 000 ( – (12 000 (+ 10 800 ( + 8 100 (() = 89 100 ( one part correct | |

| |108 000 two marks | |

| | | |

| |OR | |

| | | |

| |one mark one mark one mark two marks one method mark | |

| |120 000 – 12 000 – 10 800 – 8 100 = 89 100 | |

|(e) |Calculate the total carrying value of fixed assets on 28 February 2017. | |

| |Note: Apply Marking Principle10 | |

| | |4 |

| |see (c) above one part correct | |

| |2 550 000 ( + 380 296 ( + 50 994 ( = 2 981 290 ( | |

|3.2 |BALANCE SHEET OF ODETTE LTD ON 28 FEBRUARY 2017 | |

| |Accept -ve figures for balancing items if these are due to prior errors by the candidates | |

| |Ignore foreign items Placement presentation – 1 if marks earned in each case | |

| |ASSETS | | | |

| |NON CURRENT ASSETS (TA – CA) |4 010 940 |( | |

| |Fixed assets See (3.1 e) |2 981 290 |Ρ | |

|3 |Financial assets (Fixed Deposit) |1 029 650 |Ρ | |

| |Non-current assets – Fixed assets | | | |

| | | | | |

| |CURRENT ASSETS CL X 2,1 |870 660 |(( | |

| |Inventory |408 880 | | |

| |Trade and other receivables |84 080 |Ρ* | |

| |67 200 ( – 270 (( + 6 800(( +10 350 (( | | | |

| |Cash and cash equivalents |377 700 |Ρ | |

| |CA – Inv – T & OR | | | |

|12 |TOTAL ASSETS SHE + L |4 881 600 |Ρ | |

| | | | | |

| |EQUITY AND LIABILITIES | | | |

| |SHAREHOLDERS EQUITY 675 000 ( x 620 c ( |4 185 000 |Ρ | |

| |900 000 x 75% | | | |

| |Ordinary share capital SE – 520 000 |3 665 000 |Ρ | |

|4 |Retained income |520 000 | | |

| | | | | |

| |NON-CURRENT LIABILITIES |282 000 | | |

|4 |Loan: Beque Bank |282 000 |(* | |

| |376 000–92 000 | | | |

| |( ( ( | | |37 |

| |284 000 + 48 000 – 50 000 | | | |

| |332 000 two marks | | | |

| | | | | |

|NB: See |CURRENT LIABILITIES |414 600 |(* | |

|alternative | | | | |

|version to | | | | |

|allow for | | | | |

|SARS as a | | | | |

|T&OR | | | | |

| | # Trade and other payables 184 000( + 5 600( | 189 600 |(* | |

| |## SARS: Income tax 222 000 (( – 209 000 ( |13 000 |(* | |

| |518 000 x 30/70 | | | |

| | See no. of shares|162 000 |(* | |

| |in SHE | | | |

| |Shareholders for dividends (675 000 ( x 0,24() | | | |

| |Current portion of loan |50 000 |Π( | |

|14 |TOTAL EQUITY AND LIABILITIES |4 881 600 |Ρ* | |

| | |

| |*one part correct |

| |#Trade and other payables can combine the other elements under current liabilities. Allocate the part-marks accordingly. |

| |If SARS and S/Hs for divs are included in T&OP, award one method mark in each case for workings included. |

| |## Inspect treatment of SARS (income tax) to check if candidate deducts interest from net profit to calculate tax |

|ACTIVITY 4 NSC 2018 |

|QUESTION 4 |

| | | |

|4.1 | | |

| |4.1.1 | |

| |C | |

| |( |5 |

| | | |

| |4.1.2 | |

| |E | |

| |( | |

| | | |

| |4.1.3 | |

| |D | |

| |( | |

| | | |

| |4.1.4 | |

| |A | |

| |( | |

| | | |

| |4.1.5 | |

| |B | |

| |( | |

| | | |

| | | |

|4.2 |ORBIT LTD | |

| | | |

|4.2.1 | | |

|(a) |ORDINARY SHARE CAPITAL | |

| |Authorised | |

| |6 000 000 shares | |

| |Issued | | |

| |4 200 000 ( |Ordinary shares in issue at beginning of |3 150 000 |( | |

| | |year | | | |

| | | | | |8 |

| | | | | | |

| |(60 000) ( Ignore |Shares repurchased during the year at |*(45 000) Ignore |(* | |

| |brackets |R0,75(( (ASP) one part correct |brackets | | |

| |4 140 000 ( |Ordinary shares in issue at end of year one part |3 105 000 |( | |

| | |correct must subtract repurchase | | | |

| |*Do not accept: R210 000 or 60 000 x R3,50 | |

|(b) |RETAINED INCOME | |

| |Balance on 1 July 2016 |874 000 | | |

| |Net profit after income tax (408 800 ( x 72/28 () |1 051 200 |(* | |

| |OR: 1 460 000 – 408 800 | | | |

| |Shares repurchased (60 000 x R2,75 () 3,50 – ASP above |**(165 000) Ignore |(* | |

| |OR: 210 000 – figure for repurchase in (a) |brackets | | |

| | | | |11 |

| | | | | |

| |Ordinary share dividends |(1 540 800) Ignore |(* | |

| | |brackets | | |

| |Interim (paid) |630 000 |( | |

| |Final (recommended) (4 140 000 ( x 22 cents ( or 0,22 / 22% |910 800 |(* | |

| |Balance on 30 June 2017 *one part correct & |219 400 |(* | |

| |repurchase and OSD must be subtracted | | | |

| |*One part correct | |

| |** do not accept 210 000 or 0; | |

|4.2.2 |ORBIT LTD | |

| |BALANCE SHEET ON 30 JUNE 2017. | |

| | | | | | |

| |ASSETS | | | | |

| |NON-CURRENT ASSETS TA – CA | |3 822 600 |( | |

| |Fixed/Tangible Assets balancing figure | |3 442 600 |( | |

| |Fixed deposit |2 |380 000 | | |

| | | | | | |

| |CURRENT ASSETS operation | |1 037 800 |( | |

| |Inventory | |478 000 | | |

| |Trade and other receivables | |309 100 |( | |

| |317 000 (– 15 850(( + 7 950 (( one part correct | | | | |

| |Cash and cash equivalents | |250 700 |( | |

| | | | | | |

| |TOTAL ASSETS see Total Equity and Liabilities |9 |4 860 400 |( | |

| | | | | | |

| |EQUITY AND LIABILITIES | | | | |

| | | | | | |

| |SHAREHOLDERS' EQUITY operation | |3 324 400 |( | |

| |Ordinary share capital see 4.2.1 |3 |3 105 000 |( | |

| |Retained income see 4.2.1| |219 400 |( | |

| | | | | | |

| |NON-CURRENT LIABILITIES | |320 000 | | |

| | | | | | |

| | | | | |28 |

| | | | | | |

| |Loan: Helping Bank |4 |320 000 |( | |

| |(360 000 ((– 40 000() one part correct | | | | |

| |302 400 one mark + 57 600 one mark – 40 000 one mark | | | | |

| | | | | | |

| |CURRENT LIABILITIES operation | |1 216 000 |( | |

| |Award all marks if all items included in T&OP | |246 400 | | |

| |Trade and other payables one part correct | | |( | |

| |(239 800 ( + 6 600 () | | | | |

| |Shareholders for dividends see 4.2.1 | |910 800 |( | |

| |SARS: Income tax (408 800 – 390 000) | |18 800 |(( | |

| |one part correct | | | | |

| |Current portion of loan see loan | |40 000 |(( | |

| | | | | | |

| | | | | | |

| |TOTAL EQUITY AND LIABILITIES operation |10 |4 860 400 |( | |

| |Misplaced items mark figures but-1 each time (as per Nov 2017) | | |

| |Foreign entries -1 (max -2) | | |

| |Presentation / Incorrect or incomplete details -1 (max -2) | | |

| |SARS may not be shown as a current asset | | |

| | | | |

| | | | |

|4.2.3 |As a shareholder, explain your concern regarding the proposed | |

| |buy-back of shares. Provide calculations to support your concern. | |

| | | |

| |Explanation (( part-mark for unclear / incomplete answer | |

| | |6 |

| |Barry wants to increase his % shareholding (without investing in more shares) | |

| |He will become the majority shareholder which will enable him to influence all decisions taken. | |

| | | |

| |% shareholding of Barry after the share buyback: | |

| | | |

| |1 904 400 (/ 3 740 000 (( x 100 = 50,9%.( one part correct; accept 51% | |

| |(4 140 000 – 400 000) | |

|ACTIVITY 5 ASC 2018 , QUESTION 4 |

QUESTION 4

|4.1 | | |

| |4.1.1 | |

| |True ( |5 |

| |Accept abbreviations for T or F | |

| | | |

| |4.1.2 | |

| |False ( | |

| | | |

| | | |

| |4.1.3 | |

| |True ( | |

| | | |

| | | |

| |4.1.4 | |

| |False ( | |

| | | |

| | | |

| |4.1.5 | |

| |False ( | |

| | | |

| | | |

| |

|4.2 |MODISE LTD |

| | |

|4.2.1 |RETAINED INCOME Ignore foreign items; presentation -1 max |

| |Balance at beginning of year |R567 000 | |

| | | | |

| | | |12 |

| | | | |

| |Funds used for shares repurchased (250 000 x R0,25) | (( (62 500)* | |

| | |Ignore brackets | |

| |Net profit after tax (3 400 000 ( – 918 000 (() |( 2 482 000 | |

| |or 3 400 000 x 73% Operation, one part correct | | |

| |Ordinary share dividends Operation, one part correct |( (2 400 000)* | |

| | |Ignore brackets | |

| | Interim |( 672 000 | |

| | Final (4 800 000 ( x 36/100 () or 36 cents or 0,36 |( 1 728 000 | |

| |(4 550 000 + 250 000) Operation, one part correct | | |

| | | | |

| |Balance at end of year Operation, one part correct |( 586 500 | |

| |* figures must be subtracted | | |

| |

4.2.2 MODISE LTD

BALANCE SHEET ON 28 FEBRUARY 2018

|ASSETS | | |

|Non-current assets Operation, TA - CA |( 13 386 500 | |

| Fixed assets Operation, balancing figure |( 12 666 500 | |

|*(Fixed deposit / Investments / Financial assets |( 720 000 | |

|(48 000( x 12/10( x 100/8() Operation, one part correct | |(7) |

|Be aware of alternative methods of calculation | | |

| | | |

|Current assets No part marks (2 600 000 x 1,5) |(( 3 900 000 | |

| Inventories (1 015 000 ( + 25 000 () |( 1 040 000 | |

|*(Trade and other receivables Operation, one part correct |( 540 000 | |

|(554 000( – 33 240(( +19 240() | | |

|*( Cash and cash equivalents Operation, balancing figure |( 2 320 000 | |

| | | |

|TOTAL ASSETS See total for E + L |( 17 286 500 |(14) |

| | | |

|EQUITY AND LIABILITIES | | |

|Ordinary shareholders’ equity |(14 236 500 | |

|Operation, one part correct (i.e. RI figure from note): OSC + RI | | |

|Ordinary share capital |13 650 000 | |

|*( Retained income See 4.2.1; could be -ve; |( 586 500 |(3) |

| | | |

|Non-current liabilities |450 000 | |

|*( Loan from director (630 000( – 180 000 (() or 12/42 |( 450 000 |(5) |

|15 000 x 12 Operation, one part correct | | |

| | | |

|Current liabilities |2 600 000 | |

| Trade and other payables operation, balancing figure |#( 674 000 | |

| | | |

| | | |

| | | |

| | | |

| | | |

| | | |

| | |(9) |

| Shareholders for dividends See 4.2.1 |(1 728 000 | |

| See 4.2.1 or 3 400 000 x 27% |(( 18 000 | |

|SARS: Income tax (918 000(– 900 000( ) one part correct | | |

|*( Loan (current portion) see above |( 180 000 | |

| | | |

|TOTAL EQUITY AND LIABILITIES Operation, See OSHE + NCL + CL |( 17 286 500 | |

Ignore foreign items

*Do not award ticks for details if item incorrectly placed

If incorrect placement, mark workings; -1 in each case

Accept negative amounts for balancing figures based on candidates’ workings

# If evidence of current portion of loan included is in T&OP, award 2 method marks

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|38 |

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| | | |

|4.2.3 |The directors want to give R500 000 to a local school. | |

| |Give TWO reasons why companies take such decisions. | |

| | |4 |

| |Any TWO valid reasons (( (( Part-marks for unclear / incomplete answers | |

| | | |

| |This forms part of their corporate social investment (CSI) / responsibility (CSR) in accordance with the King Code | |

| |Leads to goodwill from the community (support/positive image/good publicity) | |

| |Creates a safer environment for the school / Contributes to better facilities for learners | |

| |Tax deductible | |

ACTIVITY 1 – NSC NOVEMBER 2019

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ACTIVITY TWO – NSC NOVEMBER 2018

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ACTIVITY THREE – NSC NOVEMBER 2017

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ACTIVITY 1 NSC NOV 2019

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| 9 MARKS |

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|ACTIVITY 2 NSC NOV 2018 |

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| 13 MARKS |

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|ACTIVITY 3 ASC JUNE 2019 |

CONCEPTS AND AUDIT REPORT

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| 13 MARKS |

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|ACTIVITY 4 ASC JUNE 2018 |

4.3 AUDIT REPORT

|4.3.1 |Briefly explain the role of an independent auditor. | |

| | | |

| |ONE valid explanation: (( Part-marks for unclear / incomplete answer |2 |

| | | |

| |The independent auditor expresses an opinion on the fair presentation of the financial statements | |

| |Protects the interests of the shareholders/public. | |

| | | |

| |Expected responses for max of 1 mark: | |

| |Checks the books/Internal control/Detects fraud | |

| | | |

|4.3.2 |Did Denga Limited receive a qualified/unqualified/disclaimer of opinion audit report? | |

| |Qualified report ( May be underlined in answer book | |

| | |3 |

| |Briefly explain your choice. Mark independent of the decision above | |

| | | |

| |Explanation (( Part-marks for unclear / incomplete answer | |

| |Valid responses for two marks: | |

| |The audit opinion expressed an exception whereby it qualified the report regarding the shortcoming/exception in the case of | |

| |advertising | |

| |Advertising expenses of R500 000 could not be verified. | |

| | | |

|4.3.3 |State THREE possible consequences for the independent auditor if he had NOT mentioned the advertising expense in his report. | |

| |Three different consequences (( (( (( | |

| |Disciplinary hearing (IRBA) |6 |

| |Arrested (if fraud) | |

| |Deregistered / struck off the roll | |

| |Suspended (during investigation) | |

| |Fined | |

| |Sued by shareholders (held liable) (if they are found to be negligent) | |

| |Lose clients / fired by clients (because his integrity would be questioned) | |

| 11 MARKS |

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|ACTIVITY 5 NSC FEB 2018 |

AUDIT REPORT

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| 7 MARKS |

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|ACTIVITY 6 NSC NOV 2017 |

| | | |

|3.3 |AUDIT REPORT | |

| | | |

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

| | | |

| |Any three different valid points (( (( (( | |

| |Part-marks for unclear/incomplete explanation |6 |

| | | |

| |Note: Candidates should not restrict responses to the commenting on the two specific points in the audit report as there | |

| |would be several concerns arising from those two points. | |

| | | |

| |Expected responses: | |

| |This is a disclaimer report (no audit opinion). | |

| |It will have a negative effect on the company e.g. reputation / share price / demand for shares / bad publicity / potential| |

| |investors lose confidence in the company. | |

| |The corporate governance of the company is compromised /not in line with King Code. | |

| |The correct procedure of approving directors' fees / bonuses was not followed. | |

| |The directors have abused their position. | |

| |The huge amount paid to directors could negatively affect the financial results/liquidity and solvency/profitability of the| |

| |company. | |

| |Insufficient audit evidence. | |

| 6 MARKS |

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INCOME STATEMENT

CALCULATION OF THE CORRECT PROFIT AFTER TAX

BALANCE SHEET

CASH FLOW STATEMENT AND ANALYSIS AND INTERPRETATION OF FINANCIAL STATEMENTS

AUDIT REPORTS

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