ACCOUNTING GRADE 12

MID-YEAR EXAMINATION

2 June 2009

09H00

EXAMINER: MRS J ABRAHAMS

MODERATOR: MRS A MOYCE

WESTERFORD HIGH
SCHOOL

Question Topic Learner’s mark Mark allocation

Debtors, Creditors and Bank
1
Reconciliation
25

2 Companies – Ledger accounts 50

Cash flow, ratio’s and
3
commenting
70
Inventory valuations and
4
validations
30
Financial statements of a
5
company
90

6. Company concepts and records 35

300

Learner’s name: …………………………………………………………………… (please print)

QUESTION 1

1.1 Which debtor is in arrears?

2
1.2 Which two internal measures will you put in place to ensure that collection
from debtors takes place timeously?

1.3 Calculate the amount owed to Sweet Apple Traders by Fruity Traders

1.4 One of the cheques not presented for payment on the Bank Reconciliation
Statement has been treated incorrectly.
Which cheque is it?

Give a reason for your choice.

 What will the correct entry be in the books of Fruity Traders?

1.5 Calculate the Bank Balance as per Bank Account in the General Ledger

1.6 Give one reason why the preparation of reconciliations is important for internal
control

25
QUESTION 2

2.1 Briefly explain the following:

Share Capital

2
Briefly explain the following:
Share Premium

2
Briefly explain the following:
Retained Income

2.2 Calculate the correct net profit before tax for the year

6
2.3
SARS (Income Tax)

11

APPROPRIATION ACCOUNT

15
2.4 Point in favour:

Point against:

2.5 Consider the complaint by Mary Moosa regarding Bhengu’s directors’ fees. Do you
agree with her? Explain

Consider the complaint by Ken Kelly. Is Bhengu’s response acceptable? What else
could he have said?

50
QUESTION 3

3.1
CASH FLOW STATEMENT FOR THE YEAR ENDED 29 FEBRUARY 2008
R 000’s

CASH FLOW FROM OPERATING ACTIVITIES

Cash generated from operations

Interest paid

Dividends paid

Taxation paid

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of tangible assets

Proceeds from disposal of tangible assets

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from the issue of new shares

Repayment of non-current liabilities

NET CHANGE IN CASH AND CASH EQUIVALENTS

Cash and cash equivalents: beginning of year

Cash and cash equivalents: end of year 30

NOTES TO THE CASH FLOW

CASH GENERATED BY OPERATIONS

R 000’s

Profit before taxation

Adjustment for:

Depreciation

Interest expense

Operating profit before changes in working capital

………………………….. in inventory

Increase in Trade and other receivables/debtors (40 000)

Increase in Trade and other payables/creditors (65 000)

3.2 Calculate the percentage return on shareholders’ equity

6
3.3 Comment briefly on the financial risk and return on own capital by
referring to:
Debt-equity ratio

Return on shareholders’ equity

3.4 Calculate the earnings per share for 2008

3.5 Would the shareholders be happy with the dividends per share? Give a reason
for your answer.

4
3.6 Is the company liquid? Briefly explain by quoting figures from the financial
statements or financial indicators.

70
QUESTION 4

4.1 Calculate the gross profit using the FIFO method according to the periodic
inventory system.

4.2 Give two possible reasons why the CEO of Zola Traders wants you to use
the FIFO method instead of the weighted average method. Quote figures
from the information given and 4.1 to support your answer.

6
4.3 Would you as a professional accountant agree to comply with all the
requests made by the CEO? Provide two detailed explanations to support
your answer.

4.4 As an experienced accountant identify one problem that you have found
with the stock figures given by the CEO. Show relevant calculation to
support your answer.

4
4.5 What solutions would you offer to the CEO to help solve the problem
identified in 4.4 Provide three solutions.

30
QUESTION 5
BALANCE SHEET OF ZABS LIMITED ON 29 FEBRUARY 2008
5.1 NOTES R

ASSETS

Non-current Assets

CURRENT ASSETS

Cash and cash equivalents 6 200

TOTAL ASSETS

EQUITY AND LIABILITIES

Capital and Reserves

Non-current Liabilities

Current Liabilities

10

TOTAL EQUITY AND LIABILITIES 30

5.2.1 TANGIBLE Land and
ASSETS Buildings Vehicles Equipment TOTAL

Carrying value 420 000 44 100

Cost 420 000 101 000 73 500 594 000

Accumulated depreciation (29 400)

Movements

Carrying value 450 000

Cost 450 000 131 000 73 500 654 500

Accumulated depreciation (33 650) (33 810) (67 460) 20

5.2.2 TRADE AND OTHER RECEIVABLES

Net trade debtors

Trade debtors 38 400

Provision for bad debts

9
5.2.3 RETAINED INCOME

Balance

Net profit after tax 70 696

Ordinary share dividends

 Balance 10
5.2.4 TRADE AND OTHER PAYABLES

Trade creditors 46 000

15

5.3 What aspects need to be considered when deciding whether to raise more
finance through increasing loans or the issuing of more shares?

90
QUESTION 6

6.1 Briefly explain why a company has to have “Limited” or “Ltd” in its name

6.2 ACCOUNT DR ACCOUNT CR A O L AMOUNT

Eg. Directors Fees Bank - - 0 150 000

1. 32 400

2. 143 550

3. 24 000

4.

4.

5. 154 356

6.

27

6.3.1 How many shares will the company issue?

3
6.3.2 What is the minimum number of shares Gary will have to buy to keep
control of the company?

35

TOTAL: 300 MARKS